Midland, Michigan - In a sudden move, Dow Chemical Co. said 3 Feb that it will permanently shut down its 100-kilotonnes-per-annum capacity toluene diisocyanate (TDI) production plant in Freeport, Texas, in the second quarter of 2010.
Dow said the plant will shut, "because manufacturing TDI there is no longer economically viable."
According to the company, "Dow Polyurethanes has secured an alternative supply source and will continue to provide consistency, quality, and supply reliability." The company did not specify what this alternative TDI source is.
Dow's nearest TDI plant to Freeport is a 60 ktpa plant at Camaçari in Brazil. The group said in mid-2008 that it was thinking of expanding this unit and would carry out a feasilbility study to assess the potential.
Dow Polyurethanes said it will offer a "seamless transition" for North American customers. There will be no changes in sales specifications, quality, or logistics and Dow will continue to honour its contracts for TDI.
"To remain competitive, businesses must continually optimise production units around the globe, and operate only those facilities that meet requirements for efficiency, overall cost-competitiveness and long-term sustainability," the announcement continued.
Dow's Freeport TDI plant was closed for nearly a month in October 2009 as a result of an equipment breakage, forcing the group to declare force majeure on supplies.
The Freeport facility has 54 employees. Dow Polyurethanes said it will work with Dow Texas Operations to minimise the impact of this decision on the workforce.
The major outlets for TDI are flexible foam for furniture and bedding, and here demand in North America has been shrinking in recent years, following strong competition in these markets from Chinese producers.
As a result, the flexible foam market in North America suffered a 13.5-percent drop in production from 2006-2008, from 797 kt to 596 kt, according to data from IAL Consultants Ltd. TDI demand in the region in 2008 was at 245 kt, according to IAL data.
Other major suppliers of TDI in the US are BASF Corp. and Bayer Material Science.
While demand in North America has been waning, demand in Asia Pacific has been rising, and suppliers are planning to add considerable capacity. In China for example, Bayer is building a 250 ktpa TDI plant near Shanghai, due to be operational this year, while Wanhua Group has announced plans to add 300 ktpa of TDI in Yantai, with no start-up date announced.