Consolidation continues in Europe's petrochemical sector.
Germany's BASF AG has formed European joint ventures (JV) with Shell International Chemicals Ltd. in polyethylene and Hoechst AG in polypropylene.
BASF said it entered into the JVs because both polyethylene and poly-propylene businesses require a large critical mass to withstand tough competition.
Before the ventures, BASF had total polyethylene capacity of 900,000 metric tons/year and total polypropylene capacity of 730,000 tons/year, all in Europe.
Shell JV details
With Shell, BASF has signed a letter of intent to set up a 50-50 company, with a new name and headquarters, to buy the European polyethylene business of Montell Polyolefins, itself a Shell venture with Italy's Montedison SpA.
Shell said the venture with BASF will operate at arm's length from its parent companies and have a combined capacity of 1.4 million tons/year of polyethylene.
In addition to former Montell assets, the venture will take over Germany's Rheinische Olefinwerke Wesseling (ROW), a 50-50 JV of BASF and Deutsche Shell.
ROW's polyethylene production will be absorbed by the new combine, while its polypropylene, styrene resins, and rubber production will continue on a toll basis for BASF or Shell.
Shell said the JV is slated for start-up in first half 1997, pending definitive agreements between the partners and approval from European authorities.
The BASF/Shell combine will take over Montell polyethylene production units in U.K. and France but not Montell's Spherilene polyethylene licensing business or its North American production operations.
A Montell official told OGJ the company is a relatively small player in polyethylene, with only 540,000 tons/year capacity, or 3% of the market: "It would have taken a significant amount of energy and capital for us to increase this."
Montell will instead focus on its polypropylene business, where it is almost three times larger than its nearest global rival, with a total 3.4 million tons/year total capacity.
Besides its current polypropylene dominance, Montell is building plants to produce two new propylene-based polymers.
Hoechst JV details
BASF's new polypropylene joint venture with Hoechst will establish a company to rival the European capacity of Montell.
Hoechst now will be able to produce 645,000 tons/year of polypropylene in Europe. The venture will not include a further 145,000 tons polypropylene capacity outside Europe.
The BASF/Hoechst joint venture also is slated to begin operations in first half 1997, and like the BASF/Shell combine, it will have autonomy from its parent companies and a new name and headquarters.
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