Nova Chemicals is taking steps to improve the health of its styrenics business. No sooner had the ink dried on the Federal Trade Commission's approval of Nova's styrenics joint venture with Ineos when Nova pulled off another deal.
The Canadian company has secured exclusive rights to styrene production at Sterling Chemical's Texas City, Texas, facility. Nova will transfer the rights to the joint venture, Ineos Nova, when it launches on Oct. 1. Ineos Nova will also pay the $60 million price for the rights. "We believe this is a very significant step that will accelerate a return to financial health for the styrenics chain," said Nova CEO Jeffrey M. Lipton.
At a meeting for reporters and analysts last week, Lipton revealed that once both deals are done, the joint venture will almost certainly shut the Texas City plant to improve efficiency of its other styrenics operations. The facility has annual styrene capacity of 1.7 billion lb, representing about 11% of North American and 3% of global capacity.
The shutdown, Lipton said, will improve Ineos Nova's financials by about $30 million per year as the company moves customers to its other plants. He estimates that operating rates of styrene plants worldwide will increase from 88% currently to 91%. In North America, the increase will be from 82% to 93%.
Still to be heard from is the styrenics joint venture being formed by Chevron Phillips Chemical and Dow Chemical. It has received government clearance, and industry observers are hoping that, once complete, those partners will also close some capacity.