Amidst Drastically Volatile Market, LyondellBasell Considering the Termination of its Polypropylene Unit in Brindsi
Petrochemical manufacturer, LyondellBasell, has announced its decision to cease operations of one of its polypropylene (PP) lines at the Brindisi site in Italy. The move, which follows an in-depth analysis, is attributed to the increasing challenges in the market landscape. Jim Guilfoyle, the Senior Vice President for Olefins and Polyolefins, EAMEI at LyondellBasell tags the decision on the antiquated and incompetent functionality of the earmarked unit decided to be halted in the ongoing competitive space.
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Located in Brindisi, LyondellBasell runs two PP units with capacities standing at 235,000 t/yr and 260,000 t/yr. The likely closure is expected to be of the latter unit, which primarily manufactures commodity PP homopolymer grades using LyondellBasell's proprietary Spheripol technology.
Introduced in 1982, this unit was the pioneer of the Spheripol process. Conversely, the remaining unit specializes in the production of high-end PP grades using the Spherizone technology.
In the face of these challenges, Guilfoyle emphasized the company's broader vision: "Our aim is to redirect our efforts towards reinforcing our stronghold in more profitable market segments."
Although a definitive timeline for the closure remains undisclosed, the company has initiated discussions with trade unions and other key stakeholders. Amidst this transition, LyondellBasell assures uninterrupted PP supplies for its clientele.
The backdrop to this decision is characterized by a softened demand in global polymer markets, especially within Europe. Economic factors such as soaring inflation and escalating interest rates have led to a decline in consumer expenditure on finished goods.
This trend is exacerbated by mounting financing expenses resulting from repeated interest rate elevations by central banks to counteract inflation. Such economic shifts have notably impeded large-scale construction ventures and purchases of consumer durables, sectors wherein PP has significant penetration.
Furthermore, predictions indicate that global PP capacity additions from 2023 to 2025 could suppress operating rates of PP plants. This anticipated addition, which is approximately double the volume required in line with demand growth, could further stress specific units.
On the supply side, Brindisi does not benefit from LyondellBasell's integrated upstream propylene production. The company relies on procuring up to 220,000 t/yr of feedstock propylene from Versalis' local Brindisi cracker, while the remainder is imported primarily from Priolo, Italy, incurring substantial transportation costs.
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According to the article by Procurement Resource, LyondellBasell is set to close one of its polypropylene lines in Brindisi, Italy, due to market challenges. This older unit utilized the pioneering Spheripol technology. While the company aims to concentrate on profitable sectors, Europe faces weakened polymer demand due to economic pressures.
Predicted global capacity increases may further burden such plants. Additionally, LyondellBasell's Brindisi operations face high costs in sourcing propylene, especially from imports.
