Summary
Ineos sends a clear message that it is willing and able to implement new technologies even in difficult times.
Analysis
This is good news for Ineos Nitriles and for customers. Although no mention is made of the cost or capital required by Ineos to install the technology, the rapid implementation at 3 sites indicates that the returns are attractive. Improvement in flexibility of the plants will contribute positively to returns and to perception of Ineos as a company willing and able to continue to invest in facility upgrades despite its’ high debt burden. Payback is presumably rapid and a prolonged downturn in the markets for automobiles and for appliances may allow Ineos Nitriles to further increase its share of the Acetonitrile market at the expense of competitors. With approximately 40% share reported already, growth in share can consolidate Ineos position as the dominant producer. We don’t know if those competitors (including Asahi Kasei, Panreac) are able or willing to follow with similar upgrades.
Ian Davenport consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
