Koppers to close phthalic anhydride production line at Stickney facility

Koppers, a wholly owned subsidiary of Koppers Holdings, has announced that it will cease phthalic anhydride production at its Stickney, Illinois facility in 2025.

The decision, which affects approximately 25 employees, is based on significant near-term capital expenditure requirements that end-market forecasts do not justify from an economic perspective. A side benefit is an improved environmental footprint for the facility as annual emissions of certain regulated air pollutants are expected to be reduced by 50% to 70%.

Koppers plans to close the facility in mid-2025 and expects to gradually reduce phthalic anhydride production over the next six months as the company builds inventory as needed to supply existing contracts through 2025. The closure of the phthalic anhydride facility will not impact Stickney’s coal tar distillation business, which produces products including creosote, carbon asphalt and pavement sealer base.

Stickney's phthalic anhydride plant was built to produce chemical intermediates used in the manufacture of plasticizers, polyester resins and alkyd coatings using naphthalene, a byproduct of the coal tar distillation process, as a feedstock. As coal tar supplies decline, phthalic anhydride margins decline as lower naphthalene production leads to the need to supplement production with a greater proportion of high-cost third-party feedstock.

The move is expected to result in a pre-tax earnings charge of $51 million to $55 million by the end of 2026. Approximately $28 million of non-cash charges are expected to be recorded in 2024 and 2025, and approximately $23 million to $27 million of cash charges will be incurred over the next two years, primarily for plant cleaning, waste disposal and demolition costs. Ongoing operating and capital expenditure savings are factored into the company's current 2025 targets of $300 million in adjusted EBITDA and $65 million to $75 million in capital expenditures.

Leroy Ball, Koppers CEO, said: "The decision to close the phthalic anhydride plant demonstrates our continued willingness to rigorously evaluate our portfolio and divest underperforming businesses when it is clear that conditions are not improving. By focusing on our core strengths, we can continue to strengthen our competitive position in a healthier market, resulting in better long-term returns. Ceasing operations at any plant is never easy, however, this will improve Stickney's performance, efficiency and emissions profile. I want to thank our dedicated employees who have worked hard over the years to provide our customers with quality products. I recognize the impact this decision has on them and am committed to ensuring they are supported during this transition."