Concretely, the company based at Wayne, Pennsylvania, with extensive operations in Europe and Asia, said it is considering the potential shutdown of several production facilities that it calculates would improve annual profitability by around $60 million.

Trinseo announced last month that it was in talks with the works council at its Böhlen, Germany, styrene plant about closing the facility that lost about $30 million between June 2021 and June 22. If the plant closed, it said the styrene needs of downstream businesses could be covered entirely by output from its plant at Terneuzen, the Netherlands, and external purchases.

To optimize its production and supply chain for polycarbonate and downstream PC compounds, Trinseo has also initiated discussions with its works council at Stade, Germany, about the potential closure of one of its PC production lines there. This, it said, would lower costs and greatly reduce exposure to the cyclical merchant PC market.

Pointing to the current overcapacity in Europe, the company said it is also studying plans for reducing SB Latex capacity at its Hamina, Finland plant starting in January 2023.

Additional details of the plans are to be discussed at the Q3 2022 earnings conference call on Nov. 3. In a preliminary look at figures for the three months, the plastics producer forecast that net income from continuing operations will be a negative $118-123 million. Adjusted EBITDA should range between a negative $42 million and a negative $37 million.

CEO Frank Bozich said third-quarter results were negatively impacted by several factors, including the “historically high” natural gas prices that resulted in negative styrene margins in Europe throughout the quarter. Customer demand, particularly in consumer durables and building and construction applications, was “very low” both in Europe and Asia.

On top of this, a steep decline in raw material prices led to a high level of customer destocking, largely in polystyrene, ABS and polycarbonate, and Trinseo was forced to take inventory write-downs of about $25 million.

After a dismal quarter, Bozich said management believes that fourth quarter results and cash generation should be “sequentially higher,” based on moderately stronger orders in Asia and the potential idling of European styrene assets.

Author: Dede Williams, Freelance Journalist