Moving back to Asia

01 February 2000 00:00  [Source: APC]

After declining significantly in 1997 and 1998, chemical markets in the Asia-Pacific began improving in the second quarter of 1999 and strengthened each month thereafter, according to Roger Moore, president of DuPont Asean. Moore adds that DuPont has been able to ride the economic 'crisis' with little problem because of its focus in speciality markets and the strong support it gave to its customers during the economic difficulties.

'In 1999 all markets in most of our product categories have shown double-digit growth, except for Australia which saw a marginal decline,' he added.

According to Pinti Wang, president and chief executive officer of US-based GTC Technology Corporation: 'The Asian markets are coming back. We are seeing more activity now than last year.' Wang adds that demand for GTC's polyester intermediate production technologies is 'picking up'. He sees the fastest improvements in the Chinese, Korean and Taiwanese markets. 'Although there is recovery in Malaysia and Thailand, it is coming at a slower pace', Wang added.

Ken Allen, vice president of international business development for Kellogg Brown and Root (KBR) said: 'Following the economic crisis, we do see signs of improvement. Despite the downturn in Asia, KBR has done well.' The company has significant contracts in Singapore and many other countries. Allen has also noticed that 'some marketplaces are improving more rapidly'.

The opportunities for US companies in the Asia-Pacific are also improving. Joseph Gentry, aromatics business manager for GTC, has noticed some changes occurring in some parts of Asia that are facilitating working there: 'Communication - phone fax and email - has improved.' GTC has made efforts to look at government-sponsored research institutes and companies throughout Asia and has discovered technologies that will be of benefit to western companies. GTC has also been involved in marketing these technologies for the international market.

Allen agrees that there 'are good opportunities in Asia. Historically, for KBR, Asia-Pacific has been an important market for us. We currently have $4bn in contract value and in 1999 we added $1.1bn to revenue backlog'. He says that KBR has several major projects under way in the region: a Singapore olefins project with Exxon; a gasifier project to supply syngas with Methatexaco in Singapore; a new JGC contract for Malaysia LNG; and the company recently completed LNG 'Train H' in Indonesia.

KBR considers the Asian gas business to be important and growing - very much as a function of economic growth rates. It is also noticing the revival of the olefins market according to Allen, but 'we do not really expect to see much growth until 2001'.

Asked if GTC plans to continue investing in Asia, Wang replied 'absolutely, we intend to put further resources into the region'. He believes that he is not alone. 'Last year and the year before were difficult, now we see more companies investing.' GTC seems to be certain that there will be growth in the market in Asia, both in the development of new and viable technology and through making viable technology a commercial reality. GTC is already receiving more inquiries from the region, mostly from India and China.

'DuPont envisages continued growth generally throughout Asia over the next few years, especially in China, Taiwan, Korea, Southeast Asia, Japan and the Indian subcontinent,' says Moore, reaffirming the view that the Asia-Pacific is recovering.

Strategies for gaining a foothold in the region and for developing a company's position are important.

'DuPont has its own manufacturing plants as well as joint ventures and alliances covering 14 countries in the Asia-Pacific. However, Moore thinks that Dupont's 'most important "investment" is in the training, development and continued increase in the number of DuPont employees in the region. These employees, totalling over 8000, including our joint ventures, are based throughout Asia'.

GTC's main business in Asia is licensing proprietary technology to outside companies. Wang thinks that India and China will need foreign technology more and more to help it modernise its petrochemical and refining industry. GTC is using a sales force, in combination with their parent company Foster Wheeler, to move into the Asian countries.

KBR's Allen believes that a series of long-standing relationships and alliances with other companies stand it in good stead. It has collaborated with JGC in the LNG arena for over 20 years. Last year the alliance was expanded to include other onshore gas projects. Other relationships include an ammonia collaboration with Toyo since the late 1960s and an alliance with Chiyoda of Japan over the past few years. Last year KBR took a shareholding in Chiyoda. 'Last but not least,' says Allen, 'we have fostered close relationships with most major trading companies in Japan - which have significantly helped business.'

According to Wang, GTC's main technologies in Asia are proprietary technologies to increase capacity and decrease material usage in the production of polyester intermediates and aromatics technologies along with ethylene oxide and ethylene glycol.

Gentry (Aromatics, GTC) sees the main sources of revenue coming from opportunities arising from the construction of new, and revamps of existing, steam crackers for pyrolysis of gasoline, benzene, toluene, xylene, BTX, styrene and isoprene/dicyclopentadiene and in catalytic reforming for xylene para-xylene, ortho-xylene and toluene. He adds that 'GTC is relatively new in this marketplace' but claims the company has made several improvements in the area and that its technology is useful for revamping old units.

Wang has noticed that 'Asian companies are now more conscientious about environmental activities. 'We are developing technologies to support the needs in India, for example for clean fuels production, eg, desulphurisation of deisel fuel and gasoline.' He says these countries understand world trends and want their countries match the western.

Allen says: 'As a company [KBR] likes working in the region. We have a long track record of successfully completed projects there.' He adds that, obviously, there have been ups and downs, but on average Asia has been one of the most important regions for KBR.

The belief of these companies that the Asia-Pacific market is recovering is backed up by the increasing number of developments in the region in recent weeks.

Early in January, GTC Technology strengthened its portfolio of paraxylene technologies with a marketing alliance with an Indian company. GTC will be the exclusive worldwide marketer of aromatics technologies for Indian Petrochemical (IPCL) of Vadodara, India, which include selective toluene disproportionation (STDP), toluene methylation, xylene isomerisation, and transalkylation.

STDP converts toluene to benzene and C8 aromatics rich in paraxylenes, which can be easily converted to high-purity paraxylenes by simple crystallisation.

The methylation process also produces a paraxylene concentrate stream using low-cost toluene and methanol feedstock. GTC claims that this technology yields the highest quantity of paraxylene per unit of toluene of any method available in the market.

The transalkylation technology allows GTC to offer a conversion technique that uses C9+ aromatics to produce additional xylenes. Completing the range of new offerings is GTC's isomerisation technology, which includes both ethylbenzene (EB) dealkylation and EB isomerisation type of systems. The EB conversion rates for these processes are among the highest available in the market.

DuPont and Fluor Daniel announced an agreement to license, design and construct the world's first industrial plants for the production of polyester packaging resins based on DuPont's NG-3 'next generation' technology. The initial focus of the alliance will be on licensing the new technology to markets in Asia, where demand for packaging resin is increasing at the quickest rate.

DuPont will provide the basic technology as well as operating and technical know-how, broad-ranging technical services, and licensing rights under its extensive patent portfolio. Fluor will provide proprietary engineering, construction and operations services to deliver the technology to manufacturing licensees in the most cost-effective fashion.

LG Dow Polycarbonate, the 50:50 joint venture between LG Chemical, South Korea, and Dow Chemical of Midland, Michigan, US, has commenced construction of its new polycarbonate plant at the Yochon Petrochemical Industrial Complex. The plant, which will ultimately have an annual capacity of 130 000 tonne, is scheduled to be operational in the first half of 2001. Completion of this plant will mark LG Dow's entrance into the developing Asian market outside of Japan. This market has witnessed a rise in demand for polycarbonate products of more than 10% annually.

'The presence of this plant in Yochon will significantly enhance local supply and availability of polycarbonate, which is an important development in light of the fact that Korea currently depends on imports to meet half of its total local demand,' said KH No, president of LG Dow Polycarbonate.

Patrick Ho, president of Dow Chemical Pacific, says that when the plant is fully operational, LG Dow is expected to ship $350m worth of polycarbonate annually, and will also likely post an annual average of $120m in import substitutes.

Construction of the plant will contribute to the regeneration of the Korean petrochemical industry, which has faced challenges due to the financial crises of the past few years. The plant also represents the largest investment in the Korean petrochemical industry since the beginning of the difficulties.

Meanwhile, Cargill Dow Polymers (CDP) has selected Japan to be among the first of its planned world-scale facilities to produce commercial polymers from renewable resources such as corn. The parent companies of the 50:50 joint venture, Dow Chemical and Cargill, are investing more than $300m in the business.

The first production facility is in Blair, Nebraska, US. CDP plans to bring the new facility onstream in late 2001 with a capacity of 140 000 tonne/year, which should satisfy initial global demand.

The company hopes to bring onstream a new plant every two years, the next of which should be in Europe where there is a large demand for natural packaging materials, a spokesman for CDP said, followed by a third plant in Japan.

CDP claims it will be 'the first company to offer its customers a family of polymers derived entirely from renewable resources with the cost and performance necessary to compete with traditional fibres and packaging materials'. By applying its NatureWorks technology to the processing of natural plant sugars CDP has created a proprietary polylactide polymer (PLA) which is fully biodegradable.

CDP has recently entered into the sales contracts with Japanese market leaders such as Kanebo Gohsen, Kuraray, Mitsubishi Jushi and Unitika, who have already committed to developing products from NatureWorks PLA.

Andy Shafer, commercial director for Japan and North America for CDP, says that 'the Japanese market is a critical market for Cargill Dow Polymers'.

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