By Liz White, editor
Kazincbarcika, Hungary - Hungarian isocyanates and PVC (polyvinyl chloride) producer BorsodChem Zrt has put its PVC business up for sale, and has had initial talks with interested parties, a spokesman for the company confirmed 21 April.
BorsodChem does not consider PVC to be a strategic business long term and aims to divest the PVC value chain, but will keep its caustic soda and chlorine operations, which are needed for isocyanate manufacture.
The company expects the isocyanates market to grow at above GDP levels in the long term, while the PVC market is fragmented and suffers from oversupply, chief executive officer Wolfgang Büchele told Hungarian business daily Napi Gazdasag. BorsodChem will take an active part in consolidating the PVC business, he said.
Meanwhile, low demand for TDI (toluene diisocyanate) in the current economic crisis has caused the group to suspend its ongoing TDI expansion. BorsodChem has about nine months work left to complete this expansion and will not complete the 200 kilotonnes-per-annum unit until there is evidence of "sustainable recovery," said Büchele (pictured), in a 31 March interview at the UTECH Europe 2009 event held in Maastricht.
"We will re-phase that [the TDI expansion] depending on market demand, which we assume will start to recover some time in the second half of next year," Büchele continued. "I don't think the fundamentals of the automotive and construction industry will be resolved in 2009," he said commenting that in the US, industry still has some way to go till it is on the path of sustainable recovery.
Demand for Borsodchem's products has dropped by 20-25 percent on a year by year basis, and the company, owned since 2005 by private equity groups Permira and Vienna Capital Partners, is also struggling with Euro 900 debt. High energy costs in Hungary and overstaffing are other factors which add to the company's business challenges.
BorsodChem also plans to cut back production at its older MDI (methylene diphenyl diisocyanate) plant, as demand in the market is currently low, and will idle this unit at the end of April until demand rises again, Büchele told Urethanes Technology International. But the debottlenecking of its other MDI plant, to raise its capacity by 30 percent, will continue and is scheduled to be finalised at the end of this year.
BorsodChem is doing well in pure MDI at present, the ceo continued, explaining that this is because its capacity split ratio is good. "We can run a higher split ratio than competitors plants typically run, and with reduced production at their side the volume is lower and so basically we are supplying the balance."