Germany-based Styrolution is planning to close its polystyrene (PS) plant in Indian Orchard, MA by the end of this year. Closing this plant will cut PS production by about 150,000 tons and will affect 58 jobs.
The company said the closure comes following years of overcapacity in the North American polystyrene market, which have also impacted Styrolution, making it necessary for the company to take action to secure this business for the future.
"Polystyrene remains a core business for the company," the company said in a news release. "The much improved cost structures resulting from this measure will help strengthen its position long-term."
The company will continue to serve the North American PS market from its plants in Decatur, AL and Channahon, IL and Altamira, Mexico.
"The steps we are taking today align capacities with market needs and support our value approach to standard products like polystyrene. Polystyrene is and will continue to remain a core pillar of our business. This optimization of our cost structures for polystyrene in North America will help Styrolution secure its long-term position as the world's leading polystyrene supplier," said Alexander Glueck, president of Americas for Styrolution, in a news release.
PS is estimated to have below GDP growth globally for the next five years.
"There's no shale gas benefit for benzene - no feedstock advantage," said Priya Ravindranath, principal analyst for IHS at the Global Plastics Summit held this past November. "There's no respite for polystyrene, at least in the near future."
The overall global demand for polystyrene has declined by 6% from the time period 2003-2013. While the demand for PS continues to see a steady decline, the prices, driven by benzene, is increasing.
The 2013 global PS demand was 10.5 million metric tones. About 37% of that global demand is consumed by packaging. Specifically, in the U.S. about 61% of PS is used for packaging.
But overall demand for PS in packaging has declined by 0.8%, with the majority of the decline in North America and Europe.
Ravindranath said that a key reason for the decline is the substitution of PS for other materials, such as PET and PP in packaging. With the higher prices of PS it can't compete with the lower costs of other materials. In fact, the NAM PS prices are at the highest level seen to date, driven by benzene.
Delivering local supply of transparent specialties in EMEA
By the end of third quarter of 2014, Styrolution will commence production ofits transparent specialty, NAS (SMMA) at the company's plant in Ludwigshafen, Germany. Currently, NAS is supplied to the EMEA region from Indian Orchard and compounded locally into the transparent product Zylar.
Styrolution plans to shift NAS production from Indian Orchard, MA to its site in Decatur, AL where the company will convert a general purpose polystyrene line into a swing line to also produce NAS. The Decatur site's "infrastructure, excellent rail and road access, and proximity to commercial shipping lines on the Tennessee River will offer customers continued supply reliability," the company stated. The transfer of NAS production from Indian Orchard to Decatur is expected to be completed by the end of the third quarter 2014.