Styrolution and Braskem imply joint venture project not scrapped—just on hold

Styrolution, a leading global styrenics supplier with headquarters in Frankfurt am Main, Germany, and Brazil-based Braskem, the largest producer of thermoplastic resins in America and pioneer of plant-based polyethylene, have called off their plans to establish a future joint venture company in Brazil. The decision, which was driven by Styrolution, was taken by mutual agreement the companies, said, in the light of the current adverse market conditions and uncertain market outlook.

Styrolution CEO Kevin McQuade.

In October 2013, both parties signed a memorandum of understanding (MOU) to investigate the potential formation of a joint venture to build and operate an ABS plant in Brazil. The proposed 100 kt plant was intended to supply specialty styrenics, acrylonitrile butadiene styrene (ABS) and styrene acrylonitrile (SAN) copolymers, to customers in Brazil and throughout South America. In the meantime, the market and business environment in South America and in specifically Brazil deteriorated significantly as compared to 2013.

“Styrolution was very pleased with the trustful and excellent partnership with Braskem to explore the opportunities of the joint venture. Sadly, the rapid deterioration of the business climate in the region has significantly increased market and project execution risk,” said Styrolution CEO Kevin McQuade.

However, with a population of over 200 million the Brazilian market still remains attractive in the mid- and long-term once the current economic downturn is overcome and the joint venture’s key target industries, such as household appliance and automotive industries, return to the previous significant growth rates. Hence, once market dynamics and future demand outlook have sustainably turned favorable again, the project may well be dusted off for another look. The region is one that Styrolution is watching closely.

“Styrolution remains strongly committed to South America as one of the emerging target regions of our Triple Shift growth strategy, which calls for expanding our footprint in emerging markets, growing our specialty styrenics business and focusing on select, higher-growth industries,” said McQuade.

“We will keep working hard to remain the preferred partner of our customers in South America and provide them with excellent styrenics products and solutions out of our plants in North America and Europe.”