Temporary Closure of Shell and BASF Joint Venture Ellba's Styrene and Propylene Oxide Plant Raises Concerns in the European Market

According to reports, the joint venture Ellba, operated by Shell and BASF, has temporarily shut down its styrene and propylene oxide (PO) plant due to technical issues. When asked for comments, both partners chose not to make any statements.

Currently, it is unclear how long the plant will remain non-operational. However, it is evident that the production shutdown could further exacerbate the tight situation in the styrene market, leading to unstable supply at least in the near term. So far, only minimal downstream demand has alleviated the production bottlenecks. However, if demand rebounds as expected after the holidays, there may be production issues across Europe. It has been reported that some EPS suppliers are already unable to fully serve all customers due to the styrene shortage and have had to abandon some business.

According to the Polyglobe database from PIE (www.Polyglobe.net), out of the approximately 5.5 million tons per year of styrene capacity in Europe (excluding 680,000 tons per year in Russia), about one-third of the capacity is still available after the Ellba shutdown. Research by the PIE pricing team shows that the spot price of styrene continues to rise and is currently at $1550 per ton. Therefore, further price increases in polystyrene in September seem inevitable.

Overview of the joint venture Ellba:

Ellba, located in Moerdijk, the Netherlands, is a joint venture between Shell and BASF, with Shell responsible for the operation of the facility. The plant experienced an explosion and fire on June 3, 2014. Prior to the incident, the plant had a styrene monomer capacity of 550,000 tons per year and a propylene oxide capacity of 250,000 tons per year. The reconstruction work is still following the original design.

The complex facility system in Moerdijk also includes another styrene monomer and propylene oxide production plant with capacities of 450,000 tons per year and 210,000 tons per year, respectively. It also has an ethylene plant (900,000 tons per year), propylene steam cracking plant (500,000 tons per year), pure benzene extraction plant (500,000 tons per year), butadiene extraction plant (115,000 tons per year), butadiene hydrogenation plant (105,000 tons per year), ethylbenzene plant (640,000 tons per year), ethylene glycol plant (155,000 tons per year), ethylene oxide plant (305,000 tons per year), and cracked gasoline hydrogenation plant (750,000 tons per year).

BASF previously sold its stake in another joint venture to Shell:

On December 18, 2014, BASF announced that it had reached an agreement with Shell to sell its stake in the Singapore-based joint venture ELLBA Eastern to Shell. The financial details of the transaction were not disclosed by both parties.

As part of the agreement, BASF also signed a supply contract with Shell, under which Shell will continue to provide the necessary propylene oxide to BASF.

ELLBA Eastern is a 50:50 joint venture between BASF and Shell, located on Jurong Island, Singapore. The joint venture is operated by Shell and produces styrene and propylene oxide.

ELLBA Eastern commenced operations in 2002 and is fully integrated into Shell's production site on Jurong Island, Singapore, with a capacity of 250,000 tons per year for propylene oxide and 550,000 tons per year for styrene. Another BASF and Shell joint venture, ELLBA, located in Moerdijk, the Netherlands, is unaffected by this transaction.