In brief
Indorama Ventures says it plans to discontinue operations at its purified terephthalic acid (PTA) plant in Montréal-Est, with closure preparations expected to start in September 2024. The company attributes the decision to changes in the polyester market, including overcapacity in China, feedstock cost pressures, lower demand and inflation. It says the move is part of a strategic portfolio review intended to respond to changing industry conditions. Indorama Ventures says customers will continue to receive supply through its U.S. production assets and global operations. The company also says it will support affected employees, including by exploring redeployment within the Group, and work with local suppliers to reduce the effects of the closure. The release identifies the plant as an asset acquired in 2015.
Key takeaways
- Indorama Ventures plans to close its PTA plant in Montréal-Est, with preparations due to begin in September 2024.
- The company cites industry overcapacity, feedstock costs, lower demand and inflation among the pressures behind its decision.
- Indorama says its U.S. assets and global operations will maintain customer supply and service.
- The company says it will offer affected employees support and explore redeployment opportunities within the Group.
Montreal, Quebec, Canada, August 7, 2024 -- Indorama Ventures' Combined PET business segment announced today that it plans to discontinue operations at its Purified Terephthalic Acid (PTA) plant in Montréal-Est, with preparations for the closure beginning in September 2024.
The decision comes in response to significant changes in the polyester industry, particularly due to new builds and continued overcapacity in China with majority of it integrated, which have pressured Western producers. These feedstock cost pressures, along with decreasing demand and the inflationary environment as well as expensive feedstock, have led to low utilization rates and other plant closures in the region. In order to be resilient and continue to be cost competitive in light of these structural changes in the industry dynamics, Indorama Ventures has undertaken a strategic review of its portfolio including asset optimization where necessary. Customers will not be affected by this closure, as Indorama Ventures' production assets in the US and its extensive global footprint will ensure continued competitive and reliable supply solutions.
Muthukumar Paramasivam, President and Co-leader of the Combined PET Segment at Indorama Ventures expressed: "We are deeply saddened to make this announcement today. This was an extremely difficult decision, and it was not made lightly. However, it is a necessary step to adapt to challenging market conditions. We extend our heartfelt thanks to all our Montréal-based employees for their dedicated and loyal service since we acquired this asset in 2015. The management team at Indorama Ventures is very mindful of the impact of this decision, and we are committed to mitigating the adverse effects on our employees and the local community.”
“We are dedicated to offering professional support in various ways to affected employees, including providing redeployment opportunities within the Group where possible. Additionally, we will work closely with local suppliers to minimize the impact on their operations and assure our customers that their supplies and service will remain unaffected,” said Mr. DK Agarwal, Deputy Group CEO, Indorama Ventures.
Earlier in 2024, the company announced 'IVL 2.0,' signaling a new strategic chapter focused on optimizing financial structures, fostering organic growth, and delivering enhanced value to customers through sustainable solutions. The strategic pillars include optimizing asset utilization, driving operational excellence, unlocking portfolio value, and maintaining leadership in core markets.
Indorama Ventures is a global leader in PET production, with operations spanning Asia, Europe, and the Americas.
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Questions around this news
Why is the Montréal-Est PTA plant closing?
The company attributes the decision to structural pressures in the polyester industry, including new production capacity and continued overcapacity in China, much of it integrated. It also cites feedstock costs, weaker demand and inflation, which have contributed to low plant utilization and other closures in the region.
When will preparations to close the Montréal-Est plant begin?
Indorama Ventures announced plans to discontinue operations at the plant on August 7, 2024. Preparations for the closure are scheduled to start in September 2024. The release does not provide a date for when operations will end or describe a detailed closure schedule.
Will customers continue to receive supply after the plant closes?
The company says customers will not be affected by the closure. It plans to rely on its US production assets and global operations to maintain supply and service. The release does not specify which facilities will supply particular customers or provide further details about supply arrangements.
What support does the company plan to offer affected employees?
The company says it intends to provide professional support to affected employees, including opportunities to move to other roles within the group where possible. It also says management is mindful of the closure’s effects on employees and the local community, and plans to work with local suppliers to reduce disruption.
