LyondellBasell Unveils Plans for Closure of Polypropylene Plant in Italy

LyondellBasell Industries is taking steps to shut down one of its polypropylene resin units in Italy, a move that is expected to eliminate approximately 260,000 metric tons of annual production capacity. The company recently initiated consultations with territorial trade unions regarding potential job redundancies linked to the closure of one of its two polypropylene production units at its Brindisi facility in Italy.

Jim Guilfoyle, the Senior Vice President of Olefins and Polyolefins, conveyed the company's reasoning for this choice, asserting that, following a comprehensive analysis, they held the belief that shutting down this unit represented the most sustainable solution from both a strategic and financial perspective. He emphasized that the Brindisi unit, which is the world's oldest of its kind, has become economically uncompetitive.

Guilfoyle noted the challenging market environment for their polypropylene products produced at the Brindisi unit and stated that the outlook offers little improvement. He added, "The intention of our group is to strengthen the position of the company's other assets in higher value markets."

The Brindisi unit, which leverages LyondellBasell's Spheripol and Spherizone technologies, has an annual production capacity of 495,000 metric tons of polypropylene resins. The Spheripol process primarily produces homopolymer resins used in packaging applications, while the Spherizone line specializes in higher-value, specialty polypropylene for applications in piping, construction materials, automotive, and household products.

Spheripol and Spherizone polypropylene units have respective annual nameplate production capacities of 260,000 metric tons and 235,000 metric tons. The older unit, with a capacity of 260,000 metric tons, has been in operation since 1982.

This decision comes amid a challenging year for LyondellBasell Industries, marked by significant declines in sales and profits during the second quarter of 2023. Second-quarter sales dropped by 30 percent to $10.3 billion compared to the same period in 2022, while profits declined by 55 percent to $715 million. The company attributed these declines to lower feedstock costs in the U.S. and Europe, driving improvements in global olefins and polyolefins margins during the second quarter.

Looking ahead to the third quarter, LyondellBasell Industries anticipates that the typical benefits of summer seasonality will be offset by soft demand due to ongoing economic uncertainty. CEO Peter Vanacker affirmed the company's commitment to advancing its long-term strategy despite near-term macroeconomic challenges.

In June, LyondellBasell announced the closure of a color concentrates plant in Akron, Ohio, with production relocating to a facility in San Luis Potosi, Mexico. This plant was part of LyondellBasell's Advanced Polymer Solutions unit.

Additionally, the company has made sustainability-focused moves this year, including the acquisition of Italian compounder Mepol srl in March, which specializes in making recycled, high-performing technical compounds. In April, LyondellBasell acquired full ownership of recycling plants in the Netherlands and Belgium, previously operated in a 50-50 joint venture with Veolia Environment SA of France. These recycling plants produce blends using household plastic waste.

On Wall Street, LyondellBasell Industries' per-share stock price experienced a more than 1 percent increase to nearly $100 in late trading on September 6. The stock price has risen by almost 20 percent since the beginning of the year.