BASF is to shut two sites in Asia by the end of the year, citing overcapacity and low margins.
The Styropor plants in Pasir Gudang, Malaysia and Thane, India have a combined annual expandable polystyrene (EPS) production capacity of more than 100,000 metric tons.
BASF said 115 workers would be affected over the two sites when production stops by the end of 2012.
The firm added it plans to focus its Styropor activities on strategic markets and core products with better profitability.
Styropor is an expandable polystyrene invented by BASF and used in packaging applications.
Move to remain competitive
“These measures are part of BASF’s global strategy to foster value-oriented growth and will ensure that we remain competitive in markets where we add long-term value both to our customers’ businesses and to BASF,” said Wolfgang Hapke, president of BASF’s performance polymers division.
BASF said due to its properties as packaging material and its cost-efficient insulation performance, EPS is a product that is used in various applications for several decades and still has growth rates similar to that of GDP.
“The closure of BASF’s Styropor plants in Malaysia and India has become inevitable due to the high EPS overcapacities in Asia Pacific that have developed in recent years,” said Giorgio Greening, head of the global business unit foams.
“These overcapacities have led to extremely low margins which make our operations in India and Malaysia uneconomic.”
‘Carve out’ operation
BASF has started the preparation of a carve-out of the Styropor business and production at its sites in Argentina and Brazil.
In Chile, it is evaluating strategic options for the EPS business and is preparing a divestment of Aislapol, the firm’s EPS foam parts producer.
The Styropor business in South America has around 80 employees and an annual production capacity of 83,500 metric tons.
Greening added: “The carve-out of the Styropor business in Brazil and Argentina will help us to be flexible with regards to future strategic options.
“For the Styropor business in Chile the strategic evaluation is still underway.”