2006-09-04 Resin Problems Continue for Pallet Makers (Written by: MHM Staff)

Rising resin prices have pinched plastic pallet and container maker for several years. One reason cited has been lack of production in North America. It appears the trend will continue.
The Dow Chemical Company (Midland, Mich.) announced that it will close its Polystyrene (PS) production facility at Sarnia, Ontario, Canada at the end of 2006.

"The Polystyrene plant in Sarnia has given us excellent service and been supported by dedicated employees," said Jeff Denton, Dow Product Director for Polystyrene in North America. "A number of factors, including the significant cost increase of doing business at Sarnia due to the closing of the Low Density Polyethylene facility, the need for capital improvements to the aging PS plant to maintain
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Dow standards, and the difficult long-term market conditions facing the PS industry, made it necessary to shut down the Sarnia PS plant."

The closure will begin early in the 4th quarter 2006 with one train and will be concluded by the end of the year. No PS production is expected in 2007. Dow customers can expect a continued high level of service and quality. Dow's focus will be to generate as much capacity as possible from its other six North American Polystyrene plants to service customer demand. Dow will fulfill contractual obligations appropriately, but may not be able to maintain the current level of supply to all customers.

"The closing of the Polystyrene plant in Sarnia reflects the competitive business climate that Dow expects to face in the industry over the long term," said Davida Johnson, global business v.p. - polystyrene. "We must act responsibly to maximize the efficiency of Dow's asset utilization to ensure the sustainability and profitability of Dow's PS business."

Dow has six other polystyrene plants in North America.

In March 2006, ethylene shipments to Sarnia through the Cochin Pipeline were unexpectedly suspended by the pipeline's owner, BP, for safety reasons. Since then identifying an alternate economically sustainable source of ethylene to supply the LDPE plant has been a top priority for Dow. Multiple options were looked at, including imports and other sources in the area, but none could meet Dow's needs.

The Polystyrene plant at Sarnia has a capacity of 300 MM/lbs annually and employs 32 people.