INEOS Styrolution investment announcement Report

Insight 09 April 2018

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Report summary

INEOS Styrolution has announced that it is investing in a new styrene unit along the Gulf Coast. This would be the first new construction of a styrene unit in the region in 25 years were it to go forward. There are many factors to consider with the announcement, which we will go into in this deep-dive insight: why our prior view was that a unit like this was not likely to get built; why this announcement could be an attempt to gain leverage over counterparties or block others from entering the market; and why, were INEOS Styrolution to go forward with the investment, it would likely do well as a stand-alone investment and as a compliment to their corporate strategy.

Introduction
Analysis of the announcement
- INEOS Styrolution to build a world-scale styrene monomer plant in the US Gulf Coast
Why was our view that this didn’t make sense?
- Feedstock availability
- Destination of styrene produced
- New world-scale complexes
- Trade barriers and protectionism
- Review of Concerns
Why might this make sense for INEOS Styrolution?
- Why would INEOS Styrolution announce an investment without actually intendingto build anything?
- Why would an investment by INEOS Styrolution here actually make sense?
What happens to markets if INEOS Styrolution goes ahead with investment?
Conclusions