Westlake Chemical has rendered inactive, one of its ethylene plants in Lake Charles in the American state of Louisiana, running at reduced rates since Q3-08. A maintenance turnaround scheduled for this plant for the first half of 2009 will be brought forward to be performed during this down time. The chief factor influencing this shutdown has been significant deterioration in end user demand because of sizeable customer inventory destocking.
The company's plants have been operating at reduced rates since Q3 of this year due to the general weakened demand as a result of the continued deterioration in the U.S. and global economies and as a reaction to the concurrent sharp product price declines due to the recent collapse in energy and feedstock prices. In an effort to manage the build up of excess inventories and to control costs the company elected to idle the ethylene unit noted above until the market and demand recover. Lower production, weakened product demand and inventory write downs due to sharp drop in product prices will have a materially negative impact on the company's fourth quarter and full year 2008 results. The company does not anticipate further significant inventory write downs unless there are further material decreases in energy, feedstock and product prices.
"The slowing economic environment is having a more substantial impact on consumer demand and the entire supply chain than previously anticipated, resulting in reduced volumes and margins in our businesses," said Albert Chao, president and chief executive officer. "Our balance sheet and liquidity remain strong and we will build on that strong financial position and continue prudent financial discipline in response to current market challenges. Westlake's product mix and competitive assets are well positioned to create value for our shareholders as the economy improves."