The EC Commission has approved plans by Union Carbide Corp (UCC, USA) and Enichem SpA (Italy) to form a 50:50 polyethylene joint venture with the name Polimeri Europe SRI. Despite the designation "Europe", the jv will also extend to the US, where Enichem will get its first access to PE capacity. The merger also will mark UCC's re-entry into the European PE market.

Enichem plans to bring its western European PE production, as well as marketing activities, into the new company. Exceptions are plants at Porto Torres in Sardinia and two ethylene crackers at Brindisi and Dunkirk. UCC will contribute its production technology, including the widely licensed "Unipol" process.

Despite competitors' reservations, the Commission ruled the jv would not distort existing competitive structures in Europe. As market shares are widely distributed - among DSM, BP, Exxon, Borealis and Dow – the new company would not be in a position to capture more than 25%. As UCC is not active in the upstream sector, the balance in the ethylene market also was not likely to be upset.

In any case, the new jv will add to PE capacities in Europe. On top of the 200,000 t/y plant already announced for Brindisi (startup date: 1996), plans call for two other PE units, including a 200,000 t/y LLDPE plant at Priolo, Sicily, to be completed during 1997, and a further 200,000 t/y unit at the Brindisi plant, bringing capacities there to 400,000 t/y and investment costs to more than $400m. All plants will use "Unipol" technology.

Milan is to be the headquarters of Poiimeri Europe. Enichem will appoint the chairman and general manager, while UCC will appoint the managing director. Meanwhile, moves to add cracker capacity in Europe have met with scepticism in the market. "Short-term euphoria," one player remarked, adding that a preferable alternative would be to connect sites to the pipeline.