BRUSSELS (ICIS)--Belgian group Solvay is planning to take action to deal with overcapacity and poor market conditions in Europe’s PVC market but has ruled out a quick sale of its assets.With Europe’s economic crisis hitting demand amid an oversupplied and fragmented PVC market, Solvay is planning to take action to help alleviate unsatisfactory conditions which have hit the profitability of its PVC labels operations.

Speaking to ICIS late on Wednesday after the announcement of anew company structurefor the merged Solvay/Rhodia group, Clamadieu said the company has avery good cost position in PVC in Europe in terms of its industrial footprint, having invested to transform all but one plant to membrane technology.

Over the cycle PVC lables has been a cash contributor for Solvay and even today it is not losing money, he said, adding: “It’s clear from the financial results that we’re far from earning our cost of capital for this business. Profitability has been affected by the European situation – it’s a challenge. As long as a business is not bleeding cash you have some time to find a solution.”

PVC labels over the cycle is a significant cash contributor to Solvay and it has value. So the action plan can’t be “quick and dirty” – it’s probably more complex than that to put a plan in place.

The group is also taking action to tackle problems in the global polyamide market. Clamadieu said the market is oversupplied but differs to PVC because it is already consolidated with only three nylon 6,6 players globally and five plants producing adiponitrile.

Over the last years there has always been a plant having some technical issues so we had the feeling we were in a well-balanced market.Now they are all working well, the markets are not very dynamic and there is overcapacity. The company is looking at different technologies such as catalysts. But it is co-owned with Invista which adds a degree of complexity because they have to agree what they want to do.