Firm blames low PE demand for temporary plant closure

By Jane Byrne

- Last updated on GMT

Related tags Food packaging Packaging materials Packaging

LyondellBasell, a supplier of rigid and flexibile food packaging material, has cited a slump in demand for polyethylene as the reason for the temporarily idling of two of its low density polyethylene (LDPE) plants in the UK and France.

The Netherlands-based company manufactures LDPE for use in food packaging film, blow-molded food packaging bottles as well as lids, caps and closures.

The idling of the units at Carrington in the UK and Fos-sur-Mer in France follows the price hike of €100 per tonne on all polyethylene (PE) grades that the company imposed at the start of this month.

The manufacturer said that although demand for PE has significantly improved compared to the fourth quarter of last year, normal patterns have not been achieved yet and that it was exploring additional ways to lower its costs and streamline operations in response to a very difficult global economic environment.


Waldemar Oldenburger, communications spokesperson for LyondellBasell, told that the company will review demand levels for PE in the second quarter of 2009 and make a decision then as to whether they will resume production in the two LDPE facilities.

He said that the company’s flexibility in PE production in Europe is helping to ensure that it meets the current level of demand for the material from its varied customer base.

Chapter 11 filing

Last month the company announced that its US operations and one if its European holding companies had voluntarily filed to reorganize under Chapter 11 of the US Bankruptcy Code, and it said that, pending Court approval, it had made arrangements for up to $8bn in debtor-in-possession (DIP) financing to fund continuing operations.

The manufacturer said that a dramatic softening in demand for its products and unprecedented volatility in raw materials costs impacted negatively on the company in the last two quarters of 2008, with December particularly difficult, as many of its customers postponed orders to reduce their inventories.

The company added that it anticipated the situation to be short-term and expected customers to increase their purchasing in 2009, but that the decision to file Chapter 11 would provide the company with the time and resources necessary to position the business for the long term.

Nova loss

Earlier this month, Nova Chemicals, Canada’s largest chemical maker, reported a net loss of $214 million also citing weak demand for plastic resins.

Sales tumbled 36 per cent to $1.15bn, the biggest decline since the fourth quarter of 2000, the company said in a statement.

Nova said that industry-average prices for polyethylene, used in bags, plastic films and bottles, dropped 34 per cent from a year earlier, with polyethylene sales volumes dropping 18 per cent.

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