Dear Customer,

As we explained in previous communications, due to the effects of Hurricanes Katrina and Rita on the U.S. Gulf Coast, Basell declared force majeure on September 26 as to all polypropylene products that are manufactured in North America and sold by Basell.

Since that time, Basell has made significant progress in recovering from the damages and disruptions caused by the hurricanes and we are pleased to report that both the Lake Charles, Louisiana and Bayport, Texas plants are again producing prime products. All of our copolymer production facilities are back to producing product at near-normal levels, although there are still some ethylene supply restrictions in the Gulf Coast. However, our homopolymer production capabilities are restricted due to the recent declaration of force majeure by Nova Chemicals around its production of monomer in Canada.

The typical seasonal slowdown in demand for our products has allowed us to rebuild our inventories to close to pre-hurricane levels; however we are still working to replenish our delivery stock points, many of which were virtually emptied during the past two months as we worked to move as much material to our customers as possible. 

As a consequence of the above, we must keep our previous declaration of force majeure in place.  We are hopeful, however, that we will be in a position to lift the declaration of force majeure as to our Gulf Coast copolymer production no later than December 15; the exact timing will depend on the progress made in replenishing the stock points and restoration of full supply of ethylene.  With regard to the production of homopolymer in Canada, we anticipate that the declaration of force majeure will remain in place somewhat longer until the situation with Nova has been resolved.

We will continue to provide additional updates as new information becomes available.

Thank you very much for your cooperation and understanding during this extraordinary situation. Please contact your Basell account manager if you have any questions about this letter.

Sincerely,

Randy G. Woelfel
President, North America