MOSCOW (MRC) -- Versalis, the chemicals subsidiary of Eni (Rome, Italy), has reduced production at its 65,000-metric tons/year acrylonitrile-butadiene-styrene (ABS) plant at Mantova, Italy, to 50% until at least February 2021 due to one of its suppliers declaring force majeure, reported Chemweek with reference to the company's notice to its customers on 18 December.
"Our main acrylonitrile supplier has stated force majeure. Based on the allocation and forecasts we received, the lower availability of this raw material will reduce our ABS production by about 50%, at least for the next two months of January and February 2021," Versalis said.
The company further explained that it might not be able to meet its contractual agreements until the end of the first quarter of 2021. "Due to that event, we are forced to state that Versalis SpA will not be able to fulfil its commitments and maintain the standard level of supply to your company indicatively until the end of the first quarter of 2021," Versalis told its customers.
Versalis added that it will buy ABS from alternative sources to replenish its stocks of ABS. "We guarantee that we have taken all necessary steps to minimize the damaging consequences of this event, such as, but not limited to, seeking alternative sources of acrylonitrile," Versalis said.
The operating reduction at Versalis could exacerbate the tight ABS market in Europe, said Philipp Deitmerg, engineering polymers director at IHS Markit. Ongoing strong demand coupled with low imports, rising exports, and increasing feedstock costs have led to a price rally in Europe in the last quarter of 2020, according to Deitmerg. "In addition to strong demand from segments such as appliances, toys, and consumer goods, the automotive market also performed way better with a demand last seen in 2018, further tightening the ABS market," Deitmerg said.
The reduction of ABS at Versalis may slow demand for styrene, said Tobias Spyra, styrenics and polyurethane feedstocks director at IHS Markit. "Although ABS is a smaller styrene derivative in Europe, the consumption of styrene into this chain will deteriorate for quite some time," said Spyra. "ABS has been a strong performer in Europe this year so far, thus leading to increased styrene demand while most other derivatives were struggling amid COVID-19 and its severe impact."
As MRC wrote before, in 2019, Versalis unveile plans to increase production capacity for ABS at its Mantua, Italy, facility. The project will boost ABS capacity at its existing unit by 30,000 t/y. The engineering phase ha already begun, and production was scheduled to start in 2020.
According to MRC's ScanPlast report, October ABS shipments to the Russian market virtually remained at the previous month's level, totalling 5,060 tonnes. Overall consumption of material in Russia was 37,120 tonnes in the first ten months of 2020, down by 6% year on year.
Eni is an Italian multinational oil and gas company headquartered in Rome. It has operations in in 79 countries, and is currently Italy's largest industrial company. The Italian government owns a 30.3% golden share in the company, 3.93% held through the state Treasury and 26.37% held through the Cassa depositi e prestiti. Another 39.40% of the shares are held by BNP Paribas.