Plants: Olin to close global epoxy facilities due to weak demand; Adani stays committed to developing US$4 bn PVC plant in India, despite reports

US chemicals maker Olin Corporation says that it has made the decision to cease operations at its Cumene facility in Terneuzen, Netherlands, and solid epoxy resin production at its facilities in Gumi, South Korea and Guaruja, Brazil. The restructuring comes against its lower fourth quarter results with net income down 36% year on year to US$197 million and sales down 19% year on year to US$1.9 billion.

Olin's first quarter 2023 results are forecast to include approximately US$57 million of restructuring charges associated with these plans of which approximately US$15 million of these restructuring charges represent non-cash asset impairment charges. The cash component of these charges is expected to be paid over the next three years.

"This is another step to right-size our global Epoxy asset footprint to the most cost-effective asset base to support our strategic operating model," remarked Scott Sutton, Chairman/CEO.

He added, "Our epoxy business continues to experience weak global epoxy demand and excess supply availability. This action reinforces our commitment to lift our epoxy business earnings to a more sustainable level. We will continue to evaluate and execute additional actions that right-size the business to achieve reinvestment economics across our epoxy portfolio."

Olin also produces chlorine and caustic soda, vinyls, epoxies, chlorinated organics, bleach, hydrogen, and hydrochloric acid.

Meanwhile in other news, Indian conglomerate Adani Group says it expects funding for its greenfield US$4 billion coal-to-polyvinyl chloride (PVC) project to be firmed up in the next six months, rebutting recent reports that work had been suspended on the PVC plant in Mundra, Gujarat.

It issued a statement to say that after the financial closure, “full-fledged procurement and construction activities at the site will commence,” adding, “we are committed to completing the project in an expeditious manner so as to meet the original timelines."

The Gautam Adani-led conglomerate says it has been reassessing its capital expenditure plans after a scathing report by US-based short-seller Hindenburg Research that had published irregularities accusing the Adani of large-scale accounting fraud and stock manipulation. Adani has denied these allegations.

The group lost market value to the tune of around US$140 billion across its various companies but has has recovered some ground since by repaying loans to retrieve pledged shares, paring costs and reassuring lenders as well as investors.

While the engineering design and other activities are underway at the petrochemical plant “in an accelerated mode," the conglomerate says it has “decided to keep the major equipment procurement and site construction activities on hold" until funding is secured.

In 2021, Adani Enterprises had set up a wholly-owned subsidiary, Mundra Petrochem Ltd, to work on a greenfield coal-to-PVC plant at Adani Ports and Special Economic Zone land in Kutch district.

The unit was to have a PVC production capacity of 2 million tonnes/year, to satisfy rising PVC demand in India. India currently meets over 50% of its demand through imports. Industry sources estimate India’s PVC demand growth at around 7% with cumulative consumption at 3.5 million tonnes/year.

The project was expected to produce PVC grades such as suspension PVC resin, chlorinated PVC (CPVC), and emulsion PVC (past). Feedstock coal of about 3.1 million tonnes/year for this project was to have been sourced from Australia, Russia, and other countries.

(PRA)

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