Global roundup

04 November 2002 00:00  [Source: ACN]

Koch, Huntsman and Ripplewood were all reported to be interested in Hyundai Petchem in the week 31 October-4 November as Asahi Kasei revealed plans to exit acrylic fibre and Borouge said there was enough ethane for a monster cracker

From stories supplied by the CNI and ACN teams. See www.cnionline.com . For exclusive news and analysis, see the rest of ACN

NPC to raise PET project capacity

25 October. National Petrochemical Co (NPC) has decided to increase the bottle-grade PET capacity of its No1 project at Bandar Imam, Iran, to 177 000 tonne/year from 60000 tonne/year, according to the company's latest bulletin.

Shahid Tondguyan Petrochemical, the NPC subsidiary which operates the project, will also reduce the fibre-grade PETcapacity of the project to 235 000 tonne/year from 352 000 tonne/year.

The PET project will be integrated with a 350 000 tonne/year purified terephthalic acid (PTA) facility at the same site which will also be operated by Shahid Tondguyan.

Shahid Tongduyan said earlier this year the PTA unit was targeted to come onstream in mid-Q3 2003 while the PET project would start up four months later.

ABB to sell petchem division

25 October. ABB will sell its oil, gas and petrochemical division as part of a wide-ranging debt-reduction programme which includes job cuts.

Jurgen Dormann, the beleaguered Swiss engineering company's chief executive officer, said the sale is 'not just because we need the funds - this division does not fit strategically within the group.'

The divestment is also part of ABB's drive to reduce debt to US$2.6bn by the end of 2002. At the end of September, ABB's total net debt was US$5.5bn.

The oil, gas and petrochemical division is being left as a stand-alone business in preparation for the sale. ABB is reorganising the rest of the company into two units. Power and utilities are being brought together as the power technology division, while the industrial unit is merging with automation technology.

Union Carbide to appeal on asbestos case

25 October. Union Carbide said it will file appeals contesting the outcome of a limited jury finding against the company in a US court hearing class-action asbestos claims.

But a company spokesman said part of the ruling is a 'shining light' for a potentially positive outcome in Carbide's favour.

The jury in the West Virginia state court at Charleston, US, ruled that among 2000 plaintiffs seeking compensation for asbestos exposure, those who worked at the company's asbestos production sites during 1945-80 may seek compensatory damages from Carbide.

The jury also held that the plaintiffs who prove that their health problems are due to asbestos exposure at Carbide sites during those years may also seek punitive damages equal to three times their compensatory awards, if any.

In US courts, compensatory awards reimburse injured parties for their actual costs for medical care, lost wages and legal expenses. Punitive damages are awarded by juries to punish liable companies for what juries find to be reprehensible behaviour.

Koch, Huntsman study Hyundai

25 October. Koch and Huntsman are studying the acquisition of indebted South Korean giant Hyundai Petrochemical, said a source close to the company.

The source said Koch's top management recently flew from their headquarters in Wichita, Kansas, US, to Daesan to inspect Hyundai's plants.

And he added that Jacobs consultancy has sent a team to conduct due diligence on behalf of a client. The identity of the client was not immediately known.

None of the companies were immediately available for comment.

Borouge plans second C2 at Abu Dhabi

25 October. Borouge has started conceptual planning on a mega-scale cracker with a capacity of up to 1.2m tonne/year in Ruwais, Abu Dhabi, following the discovery of more ethane supplies, said Borealis board member Mohammed Al Azdi. Borouge is a 60:40 joint venture between Borealis and Abu Dhabi National Oil Co (Adnoc).

Al Azdi said Adnoc's new integrated onshore gas development phase 3 and Asab gas development phase 2 project (OGD-3/AGD-2) had shown that they could produce sufficient ethane to produce an additional 1.2m tonne/year of ethylene. The additional ethane is expected to be available by 2006.

He said additional ethylene production would allow Borouge to add massive PE capacities and possibly diversify into other ethylene derivatives.

Indo-Rama to raise Thai PET capacity

25 October. Indo-Rama Chemicals (Thailand) will increase its PET bottle-grade chip capacity to 84 000 tonne/year from 30 000 tonne/year in December 2002, said a company source.

Work on the capacity expansion is under way at the plant in Mab Ta Phut, Thailand. Output from the plant will be sold in the domestic and export markets.

Al-Zamil secures PDH-PP project licences

25 October. The Al-Zamil Group has secured government industrial licences for its propane dehydrogenation (PDH)-PP project in Al-Jubail, Saudi Arabia, said Abdulaziz Al Zamil, chairman of executive committee of the Al-Zamil Group.

The project will produce 450 000 tonne/year of propylene and 250 00 tonne/year of PP. The Al-Zamil Group plans to integrate the project with a 200 000 tonne/year acrylonitrile unit and is considering adding a 100 000 tonne/year acrylic fibre facility.

Dow to freeze wages and cut hiring

25 October. Dow Chemical said it will eliminate employee and executive raises in 2003, cut next year's hiring by half and reduce controllable costs by US$350m to reduce capital spending by 20%.

The company declined to provide more specifics on how it will realise the savings but said it hoped to improve cash flow by US$1bn.

Dow Chemical chief executive officer Michael Parker said Dow will take a business-by-business approach to re-examine plans and budgets for 2003 and will intensify efforts to 'optimise the supply chain.'

Parker said: 'In 2003, the goal will be to make improvements that will free up approximately US$500m in cash through inventory reduction, reduced logistics costs and savings in raw material costs.'

Ripplewood also in for Hyundai

28 October. Ripplewood Holdings, a private equity fund company, is interested in Hyundai Petrochemical's assets, said a source close to Hyundai.

SK to build compounding unit in China

28 October. SK Corp plans to invest Won10bn (US$8.1m) to build a 20 000 tonne/year polymer compounding plant in Guangdong, China, said a company spokesman. The plant is likely to include a PP compounding line.

Construction will begin in November and startup is expected to take place in September next year. SK plans to increase the plant's capacity to 30 000 tonne/year by 2004.

The spokesman added that two more plants would be built in China by 2005, lifting total compounding capacity to 100 000 tonne/year.

Bayer sells agrochem business to BASF

28 October. Bayer CropScience announced the sale of a package of selected insecticides and fungicides to BASF for Euro1.19bn (US$1.16bn).

Under the deal, BASF will get the assets and rights related to two insecticides with active ingredients fipronil and ethiprole as well as a number of fungicides with active ingredients prochloraz, iprodione, triticonazole, fluquinconazole and pyrimethanil for certain regions and application fields.

BASF will also acquire the Aventis CropScience manufacturing plant in Elbeuf, France.

Bayer said the deal fulfills a major condition imposed by the European Commission (EC) and the US Federal Trade Commission (FTC) relating to its Euro7.25bn acquisition of Aventis CropScience. BASF and Bayer stressed their deal is subject to approval from the EC and the FTC.

Iran's NPC signs loan agreement

29 October. National Petrochemical Co (NPC) of Iran has signed an agreement with Societe Generale for a Euro25m structured export loan which is backed by the Export Credits Guarantee Department (ECGD) of UK, according to NPC's latest news bulletin.

The loan will be used by NPC's subsidiary Fajr Petrochemical to finance the purchase of air separation units from Air Products. Fajr will be operating a utility complex to meet the requirements of planned petrochemical projects in Bandar Imam.

This is the first export structured financing for NPC. NPC's petrochemical exports have been offered as collateral for the loan.

Atofina to sell paints to Bain Capital

29 October. Atofina, the chemicals division of TotalFinaElf, has agreed to sell its SigmaKalon paints business to global private investment firm Bain Capital.

TotalFinaElf said an MoU has been concluded with Bain but it gave no financial details of the deal or any firm indication of the sale timetable.

SigmaKalon, which made an operating profit last year of Euro112m (about US$109m) on a turnover of around Euro1.7bn, is one of Europe's largest suppliers of decorative paints and has a major presence in the marine, anti-corrosion and industrial paints markets.

Asahi to exit acrylic fibre business

29 October. Asahi Kasei Corp has decided to exit the acrylic fibre business due to declining domestic demand and volatile raw material costs.

The company will stop production at its 71 130 tonne/year plant in Fuji city, Japan, by the end of March 2003. Sales of the product will cease by end-June 2003. Asahi said it would work closely with its customers to help them look for product from alternative sources.

Plans are also under way to reassign the 189 staff currently involved in the acrylic fibre operations.

Asahi markets acrylic fibre under the Cashmilon, Pewlon and Lastan brand names.The company was Japan's first acrylic fibre producer when it first started producing Cashmilon using its proprietary technology in 1959. The company said the withdrawal from the Yen15bn (US$121m) acrylic fibre business was in line with Asahi's newly announced Ishin-05 corporate mid-range strategic initiative.

BP takes $140m charge on Indon assets

30 October. BP Chemicals has taken a US$140m writedown on its Indonesian manufacturing assets.

The provision, which was made in the third quarter financial results, followed BP's decision to sell its 75% stake in the PE joint venture PT Peni.

BP explained that the writedown followed a review of immediate prospects and opportunities for future growth in a highly competitive regional market.

The writedown followed an earlier US$185m adjustment of the value of its Indonesian PE assets, which BP announced in February last year.

Borouge to run plants at 100% in 2003

30 October. Borouge will be able to operate its two Borstar bimodal PE lines in Ruwais, United Arab Emirates, at 100% next year, said Harri Bucht, chief executive of the company.

Total production in 2002 will not be up to the nameplate capacity of 450 000 tonne/year because the company encountered some technical problems. It has been successful at operating the two lines at 100% only intermittently in the last 10 months.

Bucht also said the company is working on a business plan for the next few years that would see Borouge come out of the red as early as next year.

BASF, Petrobras to cut SAP capacity

30 October. Sagging South American demand for super-absorbent polymers (SAP) has prompted BASF and Petrobras to cut capacity plans by half for their Brazilian joint-venture project.

Announced in July 2000, the joint venture originally had planned to build a 300 000 tonne/year acrylic acid-SAP facility in Guaratingueta. Of that total, the venture planned 100 000 tonne/year of SAP.

But as demand for SAP and its derivatives in South America has not increased at the rate originally projected by BASF, the new plant will have an 80 000 tonne/year capacity of acrylic acid and a 60 000 tonne/year capacity of SAP.

The plant should begin operations in early 2006, according to a BASF spokesman.

Qatofin to invite tenders in March

30 October. Qatofin plans to invite tenders from engineering contractors for the construction of its 1.3m tonne/year cracker in Ras Laffan, Qatar, in March 2003 after the completion of a final project definition in December, said Christian Schambel, project director for Qatofin.

He added that selection of bidders will take place in September-October 2003.

The project is a 45.7:53.3:1 joint venture between Qatofin, Q-Chem and Qatar Petroleum (QP). Qatofin, which was formed recently, is 36% owned by Atofina, 1% by QP and 63% by Qatar Petrochemical Co (Qapco) while Q-Chem is a 49:51 joint venture between Chevron Phillips Chemical and QP.

Qatofin aims to commission the cracker and a 450 000 tonne/year lldPE plant in mid-2007.

Schambel added that tenders for the lldPE unit will be invited in June 2003 and selection of bidders will take place in September 2003.

Financial closure and award of contracts are targeted to be achieved by May 2004.

Ethylene from the cracker project will also feed Q-Chem's 350 000 tonne/year hdPE plant and a 350 000 tonne/year alpha olefins unit, both in Mesaieed, Qatar. These units are also expected onstream in mid-2007.

Surplus ethylene will either be exported or supplied to Qatar Vinyl Co's plants in Mesaieed.

CPC sells ice cream to sweeten profits

30 October. State-owned Chinese Petroleum Corp (CPC) of Taiwan has started selling its own brand of ice cream in an effort to increase profits ahead of its privatisation in 2003. A company spokesman said more than 40 convenience stores located at CPC's petrol stations in Kaohsiung, Taiwan, started selling CPC-made ice cream in September.

Sales have been encouraging, and there are plans to sell the product at all convenience stores located at CPC's petrol stations throughout Taiwan. CPC is also thinking of increasing the number of flavours to more than 20, from the original red bean, sweet corn, pineapple, yam and peanut flavours.

According to the spokesman, CPC has been manufacturing ice cream at its Kaohsiung plant site since the 1960s. Until September this year, ice cream was sold at a discount only to CPCstaff.

Toray plans China polyester boost

30 October. Toray Industries plans to boost its polyester film output in Yizheng, Jiangsu, China, to 21 000 tonne/year from 6000 tonne/year by adding a new line, said a company spokesman.

It expects to bring the additional 15 000 tonne/year of polyester film onstream in H1 2004. The company's new line will cost Yen5bn (US$40.6m) to build and will employ Toray's proprietory technology.

Toray operates the existing plant through its 50:50 joint venture with the Yihua Group China.

Duties on S Korean polyester chips

30 October. China has decided to impose preliminary antidumping duties on imports of South Korean polyester chips with effect from 29 October.

Daehan Synthetic Fibre will be subject to a preliminary duty of 8%; Kohap Corp, 16%, Huvis Corp, 41%; Saehan Industries, 30%; Toray Saehan, 6%; SK Chemical, 13%; Hankook Synthetic, 8 %; and other producers, 52%.

Investigations into the dumping case started on 3 August 2001.

DuPont to cut 650 jobs

30 October. DuPont will eliminate 650 positions in its coating and colour technologies unit and take a fourth- quarter restructuring charge of 4 cent/share in a move that is expected to save US$60m.

A DuPont spokesman said no plants are expected to be closed. The cuts represent less than 1% of DuPont's 79 000 workforce. Of the estimated savings, DuPont said about one third will be realised in 2003 with the remainder in 2004.

DuPont coatings and colour technologies include performance coatings and titanium technologies businesses.

BP, Atofina to upgrade Lavera jv

30 October. BP and Atofina will invest Euro250m (US$244.5m) by 2011 to upgrade production facilities at their 50:50 Naphachimie joint venture in Lavera, France.

The modernisation is part of BP and Atofina's strategy to integrate refining and petrochemicals activities.

It includes the replacement by 2007 of 20 old 25 000 tonne/year furnaces with four or five 120 000 tonne/year units, a new separation column to improve ethylene production and the construction of a single control room for the entire site. The new furnaces, which will cost around Euro20m each, will provide savings in ethylene production, energy and maintenance.

Following the modernisation, Naphtachimie will debottleneck its 720 000 tonne/year steam cracker to 1.1m tonne/year. The debottlenecking could take place between 2006 and 2011. The Euro250m investment is further to BP's announcement in April that it will invest over Euro120m this year at Lavera.

Sud-Chemie in China syngas jv

30 October. Sud-Chemie and China's Liaoning Huajin Chemical signed an agreement to form a 60:40 joint venture to manufacture synthesis gas catalysts in China.

The joint venture, which will employ a total of 158 staff, will commence production of synthesis gas catalysts under German and Chinese management in December.

Sud-Chemie would not reveal how much it has invested in the joint venture Sud-Chemie Liaohe Catalyst.

BP to shut Marl PS

31 October. BP is to permanently shut a 30 000 tonne/year PS line at Marl, Germany, due to low prices and overcapacity. A BP spokesman said the closure, planned for the beginning of next month, would reduce BP's approximately 430000 tonne of total European PS capacity by about 7%.

BP, which has about 240 000 tonne of PS capacity at Marl, explained that the line to be closed was one of its oldest and least efficient. It is understood there are unlikely to be any redundancies as a direct result of the closure.

Nanhai C2 up for approval on 1 Nov

31 October. Shell and China National Offshore Oil Corp (CNOOC) are expected to give official approval on 1 November for their worldscale US$4bn cracker complex in Nanhai, China. Both parties are expected to 'consider favourably a recommendation to proceed with the project', Shell said.

Major construction work for the project, which centres on an 800 000 tonne/year cracker, is due to start in early 2003 with startup scheduled in phases from end-2005.

Petrochemical results in Asia and the West

Asian petrochemical players posted mixed results for the quarter ended 30 September 2002. Those who performed well did so largely due to cost controls and integration, counteracting high feedstock costs.

In the US and Europe, most companies recorded improved performances in Q3 2002 compared to the same period in 2001, braving adverse economic conditions.

Reliance Industries posted a 3% increase in operating profit to Rs46.1bn (US$953m) in H1 to 30 September 2002 from H1 last year on higher sales and better product prices. Net sales for H1 this year was Rs221.7bn, up from Rs218.3bn.

Reliance Industries' latest results follow its merger with Reliance Petroleum, and the Reliance Group's acquisition of a controlling stake in Indian Petrochemicals Corp Ltd (IPCL). IPCL is still reporting results separately.

Jilin Chemical Industrial reported a Rmb306.48m (US$37.03m) net loss for the third consecutive quarter and warned of a possible delisting of its A-shares from the Shenzhen Stock Exchange.

Net profit/loss for the corresponding period last year was not immediately available.

Jilin said cost control measures helped the company increase operating profit by 118.7% from Q3 2001 to Rmb270.5m.

Sinopec posted a 7% increase in operating profit to Rmb42.23bn in the first nine months of 2002, chiefly due to improved margins for refined oil products.

Net sales fell slightly by 3.2% to Rmb226.28bn. Net profit was up by 10.8% to Rmb9.05bn from Rmb8.17bn on cost saving.

Sinopec subsidiary Yizheng Chemical Fibre posted a 47.4% drop in net profit for the first nine months of 2002 to Rmb72.27m due to high feedstock costs and lower polyester prices. Operating profit dipped by 7.7% to Rmb520.95m while net sales fell by 1.6% to Rmb5.69bn.

Formosa Plastics Corp (FPC) posted a 2.1% drop in net profit for the first nine months of 2002 to NT$7.31bn (US$209.89m) due to higher income tax. Operating profit rose by 43% to NT$4.33bn on the back of higher sales and lower costs. FPC recorded a 4.3% increase in net sales to NT$48.25bn.

Nan Ya Plastics recorded a 52.4% rise in net profit for the first nine months of 2002 to NT$10.86bn from the same period in 2001 on higher investment gains and lower non-operating expenses. The company also saw a 4.6% decline in operating profit to NT$6.26bn despite a 4.3% increase in sales to NT$74.94bn.

Siam Cement recorded a 43.6% increase year-on-year in net profit to Baht9.51bn (US$219m) during the first nine months of 2002 on improved demand and gains from equity income. Net sales were Baht98.8bn, up slightly from Baht98.35bn in the same period last year. Operating profit rose 113.5% to Baht8.79bn.

TPI Polene reported a net loss of Baht1.39bn in Q3 2002, down from a net profit of Baht5.94bnin Q3 2001, largely due to foreign-exchange losses. It made an operating loss of Baht644.55m, compared with a Baht6.6bn operating profit in Q3 2001. Net sales rose by 7.7% to Baht4.04bn.

In the West, Dow Chemical's net profit doubled in Q3 2002 to US$128m from the same period in 2001 on a 5% sales increase to US$7bn, but the results were below the company's expectations. Feedstock and energy costs in the third quarter were up 6%, it said.

Eastman reported an 11% decline in net profit to US$24m on flat sales, citing costs from disruptions at plants and lower sales volumes. Its operating profit declined to US$61m from US$70m on sales of US$1.37bn.

Rohm and Haas' net profit for Q3 2002 rose 38% to US$73m on improved performance in its electronics, coatings and performance chemicals segments. Net sales rose 8% to US$1.5bn.

BP's chemicals business made a US$272m operating profit in Q3 this year after adjusting for a US$140m writedown for PTPeni (see p9). The improvement over the US$113m operating profit in Q3 2001 was mainly due to lower fixed costs. BP's chemicals sales in Q3 this year totalled US$3.72bn, up 13.7%.

Lower raw material and energy costs as well as savings from restructuring and productivity initiatives resulted in a significant rise in Celanese's Q3 profits for this year. Operating profit rose to Euro67m (US$64.9m)from a loss of Euro16m in Q3 2001. Net profit rose 95% to Euro39m. But net sales were down 9% at Euro1.12bn.

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