LyondellBasell Files for Bankruptcy, the First in the Chemical Industry for the New Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--LyondellBasell Industries (Rotterdam, The Netherlands) filed for bankruptcy protection on Tuesday, January 6, for its chemical operations in the United States and a business unit in Europe, Basell German Holdings GmbH. This bankruptcy filing comes almost exactly one year after the successful merger of Basell and Lyondell Chemical Company, creating one of the largest independent chemical companies in the world.

This is the first major bankruptcy filing in the Chemical Processing Industry (CPI) for the new year. The continued weak demand for chemical commodities globally during the last few months of 2008 created a challenging market for many CPI companies, especially those susceptible to inventory reductions and other cost-cutting measures of their clients.

Like many of its industry peers, LyondellBasell had idled production capacity at multiple chemical plant locations across the world over the last couple of months. The most recent plant to be idled was a large 1.2 billion-pound-per-year ethylene unit in Alvin, Texas, and in October of last year another ethylene unit located in La Porte, Texas. Both of these units will be down for an unknown amount of time while they wait for inventories to hit bottom and demand to begin resuming at a healthy pace.

At the time of this announcement on Tuesday, Industrial Info was tracking more than $300 million in capital and maintenance project spending planned by LyondellBasell across the world with some projects planned to begin construction in the coming few months. LyondellBasell has indicated this filing will help sustain continuing operations and hasn't confirmed the fate of pending capital and maintenance projects. A great deal of the spending identified for 2009 and early 2010 was for major olefin unit turnarounds, some of which will be delayed while others must be done to meet performance and compliance needs.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.