Styrolution/Braskem Brazilian ABS project suspended

Germany-based styrenics producer Styrolution and Braskem, the Brazilian producer of thermoplastic resins in America and a global leader in biopolymers, have announced their mutual agreement to suspend a future joint venture in Brazil to produce ABS. The decision was driven by Styrolution and was a result of the current adverse market conditions and uncertain market outlook.

In October 2013, both parties signed a memorandum of understanding (MOU) to investigate the potential formation of a joint venture to build and operate an ABS plant in Brazil. The proposed 100 kilotonnes plant was intended to supply speciality styrenics, acrylonitrile butadiene styrene (ABS) and styrene acrylonitrile (SAN) copolymers, to customers in Brazil and throughout South America. In the meantime, the market and business environment in South America and in specifically Brazil deteriorated significantly as compared to 2013.

The companies say that this opportunity could be revisited once market dynamics and future demand outlook have sustainably turned favourable again.

And Styrolution says that with a population of over 200 million the Brazilian market still remains attractive in the mid and long-term once the current economic downturn is overcome and the joint venture’s key target industries, such as household appliance and automotive industries return to the previous significant growth rates.

“Styrolution was very pleased with the trustful and excellent partnership with Braskem to explore the opportunities of the joint venture. Sadly, the rapid deterioration of the business climate in the region has significantly increased market and project execution risk.” says Kevin McQuade, CEO, Styrolution. “Styrolution remains strongly committed to South America as one of the emerging target regions of our Triple Shift growth strategy, which calls for expanding our footprint in emerging markets, growing our speciality styrenics business and focusing on select, higher-growth industries. We will keep working hard to remain the preferred partner of our customers in South America and provide them with excellent styrenics products and solutions out of our plants in North America and Europe.”