Production capacity continues to exit the North American polystyrene market, most recently with Ineos Nova's announcement of the closing of its polystyrene plant in Belpre, Ohio.
The 220 million-pound-per-year-capacity plant will close by 31 January, officials with Ineos Nova said in a news release.
"Shutting down the Belpre site removes additional high-cost capacity and will enable us to further consolidate production at the company's most efficient manufacturing sites," Ineos Nova CEO Kevin McQuade said in the release.
The Belpre plant represents 12% of the firm's North American PS capacity and 4% of overall capacity in the region, officials added. Ineos Nova is a joint venture between Nova Chemicals and Ineos Group.
Specialty acrylic copolymer styrenic compounds made in Belpre under the NAS and Zylar trade names will be transferred to an Ineos Nova plant in Springfield, Massachussets.
The Belpre announcement comes less than two months after Ineos Nova said it will close a 120 million-pound-capacity PS plant in Montreal by the end of the year. The combined closings will leave Ineos Nova with about 1.6 billion pounds of annual North American PS capacity at plants in Joliet, Springfield and Decatur, Alabama.
In 2006 - prior to the formation of the joint venture - Nova closed a 300 million-pound PS site in Chesapeake, Virginia. Dow Chemical shut down a similar-size PS plant in Sarnia, Ontario, that same year. In total, almost 1 billion pounds of PS capacity shutdowns have been completed or announced since early 2006.
PS use in North America and Europe has declined in recent years, due in large part to higher prices for benzene, a chemical feedstock used to make styrene monomer. Passing through benzene costs has made PS more expensive than competing materials such as polypropylene and high density polyethylene.
"As a buyer, you don't want to see capacity come out; you want to see the market oversupplied," said Peter Feng, a market analyst with Chemical Market Associates Inc in Houston. "The problem is that polystyrene demand keeps going down and its cost structure keeps going up. "
"But there's nothing that [PS makers] can do about it, because prices for benzene [feedstock] and crude oil keep pushing through. So [PS] consumers are responding by using other materials or by finding ways to use less polystyrene."
Through September, construction-related PS sales were down almost 30% in the US and Canada, contributing to an overall PS sales decline of almost 6% in the region, according to the American Chemistry Council in Arlington, Virginia.
Prices for benzene were around $3.50 per gallon in October and November, after being above $4 earlier in the year. The price is expected to decline in December before rising again in the first half of 2008, Feng said.