BP to close Lingen, Germany CX plant on poor profitability

(adds further market reaction from paragraph 7 onwards)

LONDON (ICIS)–BP will close its cyclohexane (CX) plant in Lingen, Germany, at the end of 2013 because of poor profitability, a spokesman at the chemical major said on Friday.

The plant has a nameplate capacity of 260,000 tonnes/year and is the fourth largest CX plants in Europe, according to ICIS plants and projects.

“It’s been announced to customers and staff and so on… the market conditions have changed,” a company spokesman said.

“The feedstock price – which is primarily benzene and hydrogen – don’t cover the costs of what we can get for it. As I say, the market conditions have changed and it’s no longer economical,” the spokesman added.

The permanent closure of the Lingen plant is likely to tighten the CX market because of the size of its capacity.

“Longer term, the big [supply] concern is the Lingen plant shutdown … They have a capacity of 260,000 tonnes/year… a big capacity,” a producer said.

Nevertheless, several sources said under-utilisation of CX capacity in Europe and globally as a result of weak derivative demand will mean that the lost volume will be easily filled by other CX plants both domestically and overseas.

“I don’t think they were putting a lot of volume on the market. It can always be imported from outside – from Saudi [Arabia], that is a big amount of volume… I think they’re probably closing because of under-utilisation. [The plant represents] 19% of total [European CX nameplate] production, I have the feeling its probably offset by demand reduction,” another producer said.

Several players, however, expect that producers will seek to increase the CX delta over benzene in the fourth quarter as a result of the announcement.

“What it means for the market? Its not good news. Nameplate capacity is pretty big, but the affected capacity is pretty poor … I don’t think there is going to be a shortfall as current capacity is not very high, but what counts is the feedstocks, I think producers will push to get a better return on the cyclo delta – they’re going to use that to re-enforce their strength on the delta,” a buyer said.

($1 = €0.75)