Sunoco sells Delco chemical works to Brazil firm
Raises $350M from Marcus Hook, Pittsburgh, Texas chemical works; NJ refinery shutdown complete
As rumored: "Sunoco, Inc. said today that it has reached an agreement to sell its subsidiary Sunoco Chemicals, Inc., comprised of its polypropylene business, to Braskem S.A.," of Brazil, "for approximately $350 million in cash," by March 31. CEO Lynn Elsenhans said polyprop " has not been able to meet its cost of capital and provides us with capital to redeploy for future growth..." Sunoco statement here.
"Included in the sale are Sunoco's polypropylene manufacturing facilities in Marcus Hook, Pennsylvania; La Porte, Texas; and Neal, West Virginia, which have the combined capacity to produce approximately 2.1 billion pounds of polypropylene annually. The sale also includes Sunoco's Research and Technology Center located in Pittsburgh, Pennsylvania.
"Sunoco will retain its phenol and derivatives business, which has manufacturing assets located in Philadelphia, Pennsylvania and Haverhill, Ohio. Sunoco expects to record a pre-tax loss on the sale in the first quarter of 2010 of approximately $185-$195 million.
"Sunoco also announced today that it has permanently shut down its previously idled Eagle Point refinery in Westville, New Jersey due to continuing weak demand for refined products and unfavorable market conditions... Refined product storage and handling operations there will continue.... Sunoco is exploring a number of options for using the site in the future, including as a potential center for biofuels production."
Oil refining has followed demand out of the US to Asia, writes Bloomberg News here.
"As refineries from New Jersey to New Mexico close at the fastest pace in three decades," the gross profit (crack spread) between oil costs and prices have been depressed in the US and Asia by low demand. But elsewhere, refineries and oil traders in Asia are enjoying fatter profits as China demand rises: "That means higher profits for oil companies and traders in Asia, where consumption is growing 13 times faster than in Europe and the U.S. That's also why Morgan Stanley can buy jet fuel in Taiwan and ship it 11,500 miles to Port Everglades, Florida, and still make money."