In this week's Chemical Market Reporter

10 September 2001 00:30  [Source: ICIS news]

Top Headlines

Spec chems beat downward trend on Wall Street

Despite poor earnings performance in the first half and a cautious outlook for the remainder of the year, certain specialty chemical stocks have significantly outperformed the broader market as measured by the S&P 500. Renewed investor interest in non-technology stocks and a market correction in a sector that has underperformed for years have driven the gains but the question is whether outperformance can continue.

FDA warns of PVC med products risks

The US Food and Drug Administration (FDA) warned last week that some medical products made from polyvinyl chloride (PVC) could expose some patients to unsafe amounts of di-2-ethylhexyl-phthalate (DEHP), but the agency said it has not seen any evidence of ill effects in humans. FDA released its long-awaited safety assessment on DEHP, a chemical used to soften PVC medical devices such as bags and tubing used to administer fluids, medication, blood, oxygen and nutritional formulas to patients.

Celanese to post a loss in 2001, cut 850 jobs

Celanese expects to post a net loss this year stemming from the fast deterioration in the European technical polymers market and a sudden decline in the Asian acetyls sector. In its second profit warning within a month, the company predicted that cash flow would be 20% lower this year at $365m (Euro405m) before special charges.

Celanese to close N Am acetyls plants, mulls methanol

Celanese plans to close a number of acetyls plants in North America after giving its second profit warning since July. The company is shutting a 90 000 tonne/year acetic acid plant in Canada. Two vinyl acetate monomer (VAM) units, with total annual capacity of 200 000 tonne, in Canada and Mexico also are earmarked for closure. David Weidman, Celanese Chemicals' chief executive, told analysts that the two VAM units are "disadvantaged" because of their size and the acetic acid facility was on a "poorly positioned" site and used an old, high-cost technology. "In acetic acid and VAM, we anticipate maintaining our market share and will not have to disrupt supplies to customers," he said. The company is also considering mothballing a methanol facility at Clear Lake, Texas.

Companies settle for $120m on Texas cleanup

A group of refining and petrochemical companies have settled with the US Justice Department and the State of Texas, agreeing to pay $120m to clean up a contaminated dump site in Texas. The settlement represents the second largest in the history of the US Superfund program. It involves ExxonMobil, Shell Oil, Crown Central Petroleum, Occidental Chemical, Goodyear Tire & Rubber, Rohm and Haas, El Paso Group, Phillips Petroleum and Vacuum Tanks. Terms of the settlement call for the federal government to receive $111.3m plus interest with $8.7m plus interest going to Texas. The funds will be used to reimburse costs of cleaning up the contaminated Sikes Disposal Pits Superfund Site near Crosby, Texas.

California court dismisses MTBE suit

In dismissing an industry lawsuit, a district court in California said last week that the federal Clean Air Act does not bar the state from banning use of methyl tertiary butyl ether (MTBE) in reformulated gasoline. The Oxygenated Fuels Association (OFA), which filed the lawsuit on behalf of MTBE manufacturers, said it would seek a review of the decision in the US Court of Appeals for the Ninth Circuit.

Industri Kapital eyes Kemira acquisition

After starting two years ago to put together a Scandinavian specialty chemicals entity with a focus in resins and coatings ingredients, Stockholm, Sweden-based Industri Kapital is bolstering that plan with a bid to acquire Kemira of Finland. The move would create a major specialty chemicals business with pro-forma sales of $3.9bn. The Swedish equity fund management company first acquired and then merged Neste Chemicals of Finland with the chemical activities of Dyno of Norway. It then took over Perstorp of Sweden last year with the goal of adding the third component in an operation founded on formaldehyde chemistry with annual sales of around $2bn.

In the News

BP expands sulfone capacity

BP's engineering polymers unit is expanding the capacity of its sulfone polymers plant in Marietta, Ohio and its sulfone monomer plant in Augusta, Georgia. BP expects the new capacity to be on stream by the fourth quarter. The Marietta expansion will boost the plant's Radel R polyphenylsulfone production by 40%. The Augusta monomer expansion will add 15%. The polysulfone monomer and polymer businesses are part of BP's engineering polymers business, which it has agreed to sell to Solvay as part of a swap for Solvay's polypropylene business. In addition, the two companies will merge their high-density polyethylene businesses.

Atofina ramps up intermediates

Atofina Chemicals has completed a 25% capacity expansion at its tin-intermediates facility in Mobile, Alabama. This completes the second phase of a three-tiered capacity improvement program begun early this year. When the final phase is completed at year-end, total capacity will have increased by 37.5%.

Boehringer completes $225m expansion

As part of its push into biopharmaceuticals, Boehringer Ingelheim has completed a $225m investment by completing its new plant in Biberach, Germany, its largest investment to date. The expansion is expected to double the company's capacity. The company says production of the first biopharmaceutical medicines is expected as early as 2003.

Rockwood restructures its electronics business

Rockwood Specialties is restructuring its electronics businesses. Rockwood's electronic chemicals, wafer reclaim and photomasks businesses will now conduct operations as a specific business of Rockwood.

Sumitomo, Mitsui postpone polyolefins merger

Japan's Sumitomo and Mitsui have "postponed indefinitely" the merger of their polyolefins operations, following a declaration by the Japan Fair Trade Commission (JFTC) that the deal would be in violation of several counts of the Antimonopoly Act. Sumitomo and Mitsui had been expecting to establish their 50:50 joint venture entity, Sumitomo Mitsui Polyolefin Company, on 1 October. "We have decided to make adjustments to our proposed joint venture to bring it in line with the JFTC's recommendations," said a Sumitomo spokesman.

Pertamina renews interest in TPPI amid much activity

Pertamina, Indonesia's state-owned refining major, will actively participate in the long-troubled Petrochemical Trans-Pacific Indotama (TPPI) olefins and aromatics project. Although it is chiefly interested in TPPI's aromatics division, Pertamina is also seeking to revive the endeavour's olefins operation.

BASF aims for a top spot in contract manufacturing

BASF is targeting a leading position in the custom manufacturing market for pharmaceuticals following the sale of its pharma unit. Though still a minor player in the field, the company sees substantial opportunity for growth given its experience in the pharma industry. BASF said its goal is to grow its custom business significantly above the 8-9% annual growth average in the pharma segment of the market.

Eastman split brings dividend cut

Eastman Chemical has revealed further key details of its split into two separately traded companies in its recent Form 14A filing with the US Securities and Exchange Commission (SEC), including financial information on payment of dividends and debt allocation. In the split, Eastman Chemical will distribute one share of Eastman Company for each share of Eastman Chemical to shareholders. The remaining company will be renamed Voridian.

Centocor, Dow, Epicyte in plant-based antibody pact

Dow Chemical and Epicyte Pharmaceutical have aligned with Centocor to develop a therapeutic human monoclonal antibody in plants. The agreement underscores the potential for plant-based technology to fill the expected capacity gap as protein-based drugs flood the pharmaceutical pipeline.

Texas rail spur plan moves ahead

The plan by San Jacinto Rail Ltd (SJRL) to build a 13-mile spur to create competitive rail service for plastics and chemical industry shippers in the Bayport Industrial District of Texas is moving forward. SJRL's latest move is the filing of a petition with the Surface Transportation Board (STB) for approval of the proposed $80m rail line in Pasadena, near Houston.

Hercules to cut 300 jobs - more to come in Europe

Unveiling the first steps in its restructuring plan aimed at cutting annual costs by $100m by the second quarter 2002, Hercules will initially eliminate about 300 jobs - 3% of its workforce - and release an unspecified number of outside contractors by 30 September. The cost reduction program was first announced in late June.

Equilon increases nonene capacity

Equilon Enterprises has raised the nonene capacity of its plant in Anacortes, Washington by 20% to roughly 49 909 tonne/year. The increase follows a 13 611 tonne/year expansion there two years ago.

Merck KGaA targets folates for supplements, med foods

Merck KGaA is targeting the dietary supplement and medical foods market with a new product entry, a derivative of folic acid. Merck KGaA's US specialty chemicals affiliate, EM Industries, recently launched in the US its L-methylfolate product Metafolin, a derivative of folic acid in a stable crystalline form that it says offers supplement manufacturers a reasonable product shelf life. A European launch of the product is expected in late 2003. With Metafolin, Merck is targeting the supplement market and to some extent specific niches in the medical food market, with specific niches, such as people who have difficulty metabolising folic acid.

Flamma forms Chinese amino acid venture

Flamma SpA of Italy, and Jinghzou Shine Star Biological Engineering (JSS) of Hubei in China have formed a joint venture called Gongan Flamma Biochemicals. The new company will produce oral grade amino acids for pharmaceutical and nutraceutical applications. The products will be marketed in China by JSS and worldwide by Flamma.

Pharmdule and Aventis team up in vaccine production

Under plans to ensure a global supply of four-component meningococcal vaccine, Aventis Pasteur has signed a deal with Pharmadule, a division of Pharmadule Emtunga AB, under which Pharmadule will supply Aventis with a turnkey modular plant for meningitis vaccine.

Bayer nears deal to buy Aventis CropScience

Bayer is close to reaching agreement with Aventis and Schering AG on the acquisition of their Aventis CropScience joint venture. To comply with French regulations on take-overs, Aventis has started consulting employee representatives in France to prepare for an announcement of a deal within the next few weeks.

Major Markets

Styrene demand and prices remain weak

Butadiene inventories fall - outlook unclear

Linseed oil prices rally on Canadian flax exports

Nucleic acids manufacturers to fuel genomic revolution

Dow BioProducts to boost wheat straw/polyurethane sales

Polyols market set for moderate growth

US urea market remains weak

Fluorocarbon industry adapting to regulations

J&J files NDA for new formulation for Risperdal

Further News

EPA's Whitman urges assistant confirmation

Consumer group supports ephedra ban

Varsal builds MSA facility in China

Greenpeace pushes for toxic chem shipping ban

British Vita to sell $260m stake in Spartech

Stinnes reorganises chemicals division

PolyOne reorganises further

Nova expects wider Q3 loss

TotalFinaElf's chem units post Q2 earnings declines

Akzo buys out non-stick coatings jv

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By: Gary Taylor
+1 713 525 2653

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