SABIC confirms plan to shutter UK ethylene cracker

Saudi Arabia Basic Industries Corp. (SABIC) is ceasing operation of its main olefins production unit at subsidiary SABIC UK Petrochemicals Ltd.’s Teesside petrochemicals complex in Wilton, UK.

“As part of [the operator’s recent review of operations to ensure] disciplined portfolio management and prudent capital allocation, SABIC has made the decision to permanently close the Olefins 6 cracker at [its] Teesside [UK] manufacturing site,” the company confirmed to OGJ in an early July e-mail.

Emphasizing the “decision is the result of a thorough analysis aimed at optimizing competitiveness and aligning with long-term strategic priorities,” SABIC said the planned closure of the Olefins 6 cracker followed the “strategic transformation review of [the company’s] asset base to define the optimal path forward and ensure SABIC remains agile and resilient in an evolving global landscape.”

Despite the pending Olefins 6 closure, SABIC told OGJ its co-located System 18 (S18) low-density polyethylene (LDPE) plant operations will continue to operate normally and that the company “remains focused on the safe, compliant, and reliable operation of its remaining assets in Teeeside.”

While SABIC did not immediately reveal a timeframe for the official shuttering of the Olefins 6 cracker, Unite the Union (Unite)—the region’s largest trade union—said in a June 25 statement reacting to the planned closure that “consultations” over the proposed permanent shutdown were set to begin on July 1.

Equipped with an ethylene production capacity of 865,000 tonnes/year (tpy), SABIC’s Olefins 6 unit—originally configured as a naphtha-based cracker— “has been offline since the end of 2020 and was due to be converted to run entirely on [ethane] gas feedstocks,” Unite said.

“Since it has been down, Unite members have been paid to keep the plant safe and to have it ready to come back online for future operations,” the organization said, noting its awareness of market rumors in May that SABIC may have been “looking to sell its European petrochemicals business amid high energy costs.”

Commissioned in 1979, the Olefins 6 cracker produced ethylene for use as feedstock by the S18 LDPE plant and for export via the nearby North Tees liquefaction and jetty installations, according to SABIC’s website.

Entered to operation in 2009, the S18 LDPE plant—one of the world’s largest single-stream, tubular LDPE units—uses process technology licensed by ExxonMobil Corp. to produce about 400,000 tpy of multiple LDPE grades in the form of polymer pellets used for manufacturing of food and agriculture packaging, as well as medical equipment, SABIC said.

Regional demand adjustments

Confirmation of the Olefins 6 closure follows SABIC’s recent optimization and capacity rationalization works elsewhere in the European Union amid ongoing projections for weakening demand in the region’s oversupplied market.

In 2024, subsidiary SABIC Limburg BV undertook the decommissioning and permanent closure of the Olefins 3 naphtha cracker at the Chemelot industrial park in Geleen, the Netherlands (OGJ Online, Apr. 22, 2024).

Delivered on schedule, the project involved shutdown of the 550,000-tpy Olefins 3 cracker and reconnection of its polymer and downstream assets to the Geleen site’s 675,000-tpy Olefins 4 unit, the latter of which remains in operation, SABIC said in its 2024 annual report.

In the Asia-Pacific—where demand is anticipated to grow—SABIC (51%) remains on track with partner Fujian Energy and Petrochemical Group (49%) for implementation of their jointly owned SABIC Fujian Petrochemicals Co. Ltd.’s (SFPCL) grassroots olefins and derivatives complex now under construction at the Gulei Petrochemical Industrial Park (GPIP) in Zhangzhou City, Fujian Province, China (OGJ Online, Mar. 28, 2024; Jan. 24, 2024).

The complex—which will feature a mixed-feed steam cracker with an annual ethylene capacity of up to 1.8 million tpy, supported by a series of downstream installations for production of ethylene glycol, polyethylene, polypropylene, polycarbonate, among others—is scheduled to be completed in 2026, SABIC confirmed in the 2024 annual report.

In its 2025 outlook for global petrochemical demand issued earlier this year, SABIC said it expected the market to continue facing oversupply as demand growth remained insufficient to absorb it, with operating rates unlikely to recover to pre-2020 levels in the near term.

To improve utilization rates, SABIC warned at the time that capacity rationalization through plant idling or closures may become unavoidable.