GERMANY – Global materials supplier Trinseo has announced plans to shut down its styrene plant in Boehlen, Germany, and close a polycarbonate (PC) line in Stade, Germany, to cut costs.
The company will also consolidate its polymethyl methacrylate (PMMA) sheet manufacturing site in Matamoros, Mexico, at the Aristech Surfaces production line in Florence, Kentucky, and reduce styrene-butadiene (SB) latex capacity at its site in Hamina, Finland.
According to Trinseo, the so-called asset restructuring initiatives are expected to improve profitability by approximately US$60 million, compared with the Q4 run rate, most of which will be realized in 2023.
Competitive shortcomings of the operations in Germany were cited as a primary reason for the closures. The size and capacity of the styrene production plant was insufficient to compete on the global market, said Trinseo, adding that elevated natural gas prices in Europe were also a factor.
The PC line is being shut down for similar reasons, as well as to reduce exposure to the cyclical “merchant polycarbonate market.”
Trinseo said it will continue to produce PC on the remaining lines for use in its downstream compounding business.
The overcapacity of SB latex in the European market prompted the decision to scale back production in Finland.
Trinseo expects to incur US$79 million to US$89 million of pre-tax, non-recurring charges by ending manufacturing activities at these facilities, US$55 million to US$61 million of which is expected to hit the fourth quarter of 2022, with the remainder expected to be incurred through 2024.
The cash amount of these charges is expected to be US$67 million to US$77 million. The timing and costs may differ from current estimates, cautioned Trinseo.
The charges are subject to ongoing negotiations with works councils, industrial associations, and government authorities.
The US$34 million EU fine
In the announcement, Trinseo also noted that it has settled a US$34.65 million (€32.6m) fine imposed by the European Commission (EC) for “participating in a cartel concerning purchases on the styrene monomer merchant market.” The fine was paid in full in December 2022.
A total of six companies involved in the cartel — Ineos, Sunpor, Synbra, Synthomer, Synthos, and Trinseo — were fined a total of US$166.86 million (€157m), save for Ineos, which revealed the existence of the cartel to the EC and, therefore, was absolved of a financial penalty.
According to the Commission, the six companies — all buyers of styrene monomer — exchanged sensitive commercial information and coordinated strategies ahead of monthly meetings that set the industry reference price of styrene.
They colluded to adjust the price of styrene to their advantage, thus distorting the competitive process, which is prohibited by EU competition rules.
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