LyondellBasell Industries is closing a polypropylene resin unit in Italy in a move that is likely to remove some 260,000 metric tons of annual production capacity from the market. The company stated in a 5 Sept. news release that it has started consultations with territorial trade unions for the management of potential redundancies in connection with the intended closing of one of its two polypropylene production units at its Brindisi location in Italy,
"After thorough analysis, we believe that closure of this unit is the most sustainable solution from a strategic and financial standpoint," said Jim Guilfoyle, olefins and polyolefins senior vice president.
"We understand the intended closure may impact some of our employees," he added. "We are committed to discuss solutions with unions and social parties to support them in the best way possible. The supply to our customers will continue."
According to Guilfoyle, the Brindisi unit is the oldest of its kind in the world. It has become uncompetitive, he said.
"The market environment for our [PP] products of this Brindisi unit has become increasingly challenging, and the outlook provides little improvement," he added. "The intention of our group is to strengthen the position of the company's other assets in higher value markets."
The Brindisi unit produces 495,000 metric tons per year of PP resins through LyondellBasell’s Spheripol and Spherizone technologies, according to S&P Global Commodity Insights data. Homopolymer resins produced via the Spheripol process are used primarily for packaging applications, while the Spherizone line produces higher value, specialty PP for applications in piping, construction materials, automotive and household products.
An article from consulting firm S&P Global said that the Spheripol and Spherizone PP units have annual nameplate production capacities of 260,000 metric tons and 235,000 metric tons, respectively. The article added that the 260,000 metric tons capacity unit is the older of the two, having been in operation since 1982.
Word of the Italian PP closing continues a challenging year for LBI. The firm saw sizeable drops in sales and profit in the second quarter of 2023.
Sales for the quarter were down 30 percent to $10.3 billion vs. the same quarter in 2022 as profit slid 55 percent to $715 million. Officials said in early August that global olefins and polyolefins margins improved modestly during the second quarter, driven by lower feedstock costs in both the U.S. and Europe.
Looking to the third quarter, officials said LBI "expects typical benefits from summer seasonality to be more than offset by soft demand due to ongoing economic uncertainty." CEO Peter Vanacker added that LBI "is steadfast in our resolve to advance on the three pillars of our long-term strategy despite near-term macro challenges."
In June, LBI announced the closing of a 64-employee color concentrates plant in Akron, Ohio. Production from the site will be moved to a plant in San Luis Potosi, Mexico. The plant was part of LBI's Advanced Polymer Solutions unit.
LBI also has made two sustainability-focused deals this year. In March, the firm acquired Italian compounder Mepol srl for an undisclosed price. Mepol, based in Riese Pio X, Italy, makes recycled, high-performing technical compounds at plants in Italy and Poland.
Then, in April, LBI acquired full ownership of recycling plants in the Netherlands and Belgium. The firm had owned half of Quality Circular Polymers BV in a 50-50 joint venture with Veolia Environment SA of France. The QCP mechanical recycling plants make blends using household plastic waste.
On Wall Street, LBI's per-share stock price was up more than 1 percent to almost $100 in late trading Sept. 6. The price has increased almost 20 percent since 1 Jan.