Global roundup

06 October 2003 00:00  [Source: ACN]

Strong earthquakes hit northern Japan, Methanex dropped its Western Australian methanol project, and the Indonesian Bank Restructuring Agency sold its stake in Chandra Asri in the week 26 September - 2 October. Also, Japan vowed to restrain the yen, and the European Commission fined a sorbates cartel US$158.8m

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

Quakes hit northern Japan

26 September. A series of powerful earthquakes shook the northern Japanese island of Hokkaido early today, injuring more than 400 people, causing widespread damage and blackouts and prompting officials to issue tidal-wave warnings.

Japan's Meteorological Agency measured the initial quake at 8.0 on the Richter scale - strong enough to cause major damage - and warned there could be aftershocks for up to 10 days even as smaller quakes continued to rattle the area.

Roads and buildings cracked, roof tiles fell and gravestones tumbled over.

The airport in the eastern town of Kushiro was closed after the ceiling of the control tower collapsed.

Sumitomo cuts H1 op profit forecast

26 September. Sumitomo Chemical has revised down its consolidated operating profit forecast by 15% to Yen23bn (US$205m) for the first six months to 30 September because of the high cost of naphtha feedstock and the low price of products such as caprolactam.

The company had earlier projected an H1 consolidated operating profit of Yen27bn. It has kept its H1 consolidated sales and net profit forecast steady at Yen5.70bn and Yen10bn, respectively.

For the full year to 31 March 2004, Sumitomo has slashed its consolidated operating profit forecast by 10.5% to Yen68bn and consolidated net profit forecast by 6% to Yen33bn. Consolidated sales have been kept steady at Yen1160bn.

US economists see chems bottoming

26 September. Economists at the American Chemistry Council (ACC) said the latest trade data indicate the global chemicals industry is 'bottoming out of the downward phase' and should see growth next year.

In the global chemicals industry, the ACC officials noted that the ACC's own index of chemical industry business indicates that global activity in the sector rose by 0.4% in July compared with a 0.1% gain in June. Overall, the global chemical industry is showing a 1.4% improvement over the same January-July period of last year.

SK Corp to go into olefins trading

27 September. SK Corp plans to diversify into olefins trading next year, a company source said on the sidelines of the European Petrochemical Association conference in Monte Carlo, Monaco.

The Ulsan-based refiner, aromatics, cracker and derivatives operator began trading in aromatics four years ago despite the fact that sister company SK Global, now known as SK Networks, also trades in chemicals.

However, a company source said there was no conflict of interest between the two companies as SK Networks' strength was very strong links with Saudi Arabia for moving product to Asia, whereas SK Corp's strength was exporting its own product to China and elsewhere in Asia. The quantities of olefins that would be traded were not immediately available.

SK Corp regularly exports ethylene from its two crackers, the capacity of which totals 800 000 tonne/year.

Jiasheng to start up new EPS line

28 September. Shanghai Jiasheng Group has completed work on the first of five new 60 000 tonne/year expandable PS (EPS) lines in Jiangyin, Jiangsu, China, and will bring the unit onstream in October.

A company official said the plant was completed and would likely start production in mid-October, after the 1-7 October national holiday.

Fire at Idemitsu Kosan burning out

29 September. A fire which has been raging for almost 24 hours in a naphtha storage tank at Idemitsu Kosan's 140 000 bbl/day refinery at Tomakomai City, Hokkaido, Japan, has nearly burned itself out after causing the collapse of part of the tank, a company official said.

The blaze broke out yesterday, apparently as a result of aftershocks from a series of earthquakes that hit the northern Japanese island on 26 September. The first quake, which registered 8.0 on the Richter scale, caused a fire in a storage tank at the refinery, although that blaze was quickly brought under control.

The official said the company had lost much of the 160 000 tonne of naphtha in the storage tank as a result of the latest fire, although it had managed to pump off some material from the tank as well as unload oil products from neighbouring tanks, which were in danger from the heat of the naphtha tank blaze.

SRF firms up greenfield polyester film

29 September. SRF Ltd has firmed up a proposal to set up a greenfield polyester film plant and is exploring the possibility of establishing such plants overseas.

SRF is planning to commission a 20 500 tonne/year polyester plant at Indore in Madhya Pradesh, India, by 2004 at a cost of Rs1.60bn (US$35.0m). When the company originally announced the project in April, its capacity was planned for 18 000 tonne/year.

Indian govt to sell stake in ICI India

29 September. The Indian government has invited expressions of interest from investors interested in bidding to acquire the 9.2% equity it has held in ICI India since the 1950s.

ICI Plc of the UK currently holds a 50.83% stake in the company - marginally short of the 51% stake that would give ICI India subsidiary status. Institutional and retail investors hold the balance of the shares.

The Department of Fertilisers has asked prospective bidders to lodge bids for the purchase of 3.76m equity shares. The value of these shares is Rs653.74m (US$14.0m), on the basis of an average price of Rs173.83 for each Rs10 scrip traded on the Bombay Stock Exchange.

Methanex scraps Aussie methanol plan

30 September. Methanex has decided not to proceed with the construction of a proposed 1.3m tonne/year methanol plant on the Burrup Peninsula in Western Australia, saying capital costs for the project have escalated to an unacceptable level.

Methanex will take a one-time, non-cash charge, which is expected to be about US$40m, in the third quarter to write off the costs of developing the project.

Company chairman and chief executive officer Pierre Choquette said the company had rigorously studied several combinations of sites, technologies and scales in Australia, but had been unable to develop a methanol project that delivered acceptable returns. Choquette said the company could not proceed with large capital projects that deliver only marginal returns.

ONGC mulls gas-based petchem complex

30 September. Oil and Natural Gas Corp (ONGC) may set up a gas-based petrochemical complex at Dahej in Gujarat, India.

ONGC chairman and managing director Subir Raha said the complex was one possibility after he was asked what the company would do with the ethane and propane flowing from its proposed gas-processing unit (GPU) at Dahej.

The company is expected to crystallise its views on the GPU and downstream petrochemical complex after it has received a detailed feasibility report on the project from Engineers India.

PQU to proceed with C2 expansion

30 September. Petroquimica Uniao (PQU) will move ahead with a 200000 tonne/year ethylene capacity expansion project, a company spokesman said.

The expansion, which will raise PQU's ethylene production capacity to 700 000 tonne/year, has been discussed for over a year, but was approved only recently.

The capacity increase will require an investment of US$150m and will be completed in 26-30 months, the spokesman said.

The project will use refinery gas in addition to naphtha as feedstock and will be the first cracker to use refinery gas in Brazil.

Japan vows to restrain yen

1 October. Japanese Finance Minister Sadakazu Tanigaki has said he will take 'decisive' steps to keep a strong yen from hurting the economy.

The currency has risen again, hitting Yen111.25 to the US dollar today despite intervention by the Bank of Japan to push it back down.

The rise was driven by a positive report from the Tankan survey of Japanese business sentiment, showing confidence at a three-year high.

NOC refinery near 100% after quakes

1 October. Nippon Oil Corp (NOC) has ramped up the operating rate of its 180000 bbl/day refinery in Hokkaido, Japan, to almost full capacity, following half a day's unscheduled shutdown caused by the earthquakes that hit the island on 26 September.

A company source said the quakes caused a blackout, which forced it to shut its refinery's reforming unit and hydrocracker for half a day. However, the company's 19000 tonne/year xylenes unit at the same site was unaffected.

Moody's affirms Asahi Kasei's rating

1 October. Moody's Investors Service has affirmed Asahi Kasei's A2 long-term debt rating, adding that the company's outlook is stable.

The rating affirmation reflects Moody's view that Asahi Kasei's reorganisation, which involved setting up a pure holding company and seven operating companies, will not materially change the risk profile of the bonds rated.

Asahi Kasei became a holding company by splitting its main operations into seven operating companies, each 100%-owned by the holding company, on 1 October 2003.

Ibra sells Chandra Asri stake to Glazers

1 October. The Indonesian Bank Restructuring Agency (Ibra) has sold the state's holding in Chandra Asri, Indonesia's only cracker operator, to Glazers & Putnam Investment Ltd for Rp602bn (US$71.8m), an Ibra spokesman said.

Ibra's assets in Chandra Asri were estimated by the restructuring agency at US$1.09bn in December 2002. This means Ibra has been forced to sell off its assets at around only 6% of their book value.

Of the cracker operator's total share capital, 25.86% is now held by Glazers, 24.59% by Japanese companies, and 49.55% by former Chandra Asri chief Prajogo Pangestu through investment company Inter Petrindo Inti Citra.

Chandra Asri's sales in 2002 were US$370.4m. The company made a net loss of US$11.1m.

Iraqi jobless stage violent protests

1 October. Iraqis demanding jobs set cars ablaze and threw stones while local security forces responded with gunfire to disperse protests reflecting frustration at the parlous state of the post-war economy.

Violence erupted at demonstrations in Baghdad and the northern city of Mosul on the day occupying authorities in Iraq sought to launch a new era of normality with the start of the first school year since Saddam Hussein's downfall.

In central Baghdad, several dozen protesters looking for work at a US-backed local security force hurled stones at the building. Flames and black smoke poured from a police car and a civilian vehicle while gunfire echoed around the area.

EC fines sorbates cartel $158.8m

1 October. The European Commission (EC) has fined four sorbates producers a total of Euro138.4m (US$158.8m) for operating a price cartel between 1979 and 1996.

Hoechst was fined Euro99m, while three Japanese firms, Daicel, Ueno and Nippon Synthetic, had to pay Euro16.6m, Euro12.3m and Euro10.5m, respectively.

A fifth member of the cartel, Chisso Corp, was granted full immunity as it provided the EC with information on the cartel.

The EC said its investigation began in the autumn of 1998 after an approach from Chisso representatives. The investigation showed that, between the end of December 1978 and 31 October 1996 (30 November 1995 for Nippon), Hoechst, Chisso, Daicel Chemical Industries, Nippon Synthetic Chemical Industry and Ueno Fine Chemicals Industry operated a cartel by which they agreed prices and allocated volume quotas for each other.

New EG plant for Sabic affiliate

1 October. Sabic has announced that a second new ethylene glycol (EG) plant will be built for its affiliate, Jubail United Petrochemical Co, in al-Jubail on Saudi Arabia's east coast.

The 625 000 tonne/year capacity plant, which is due onstream by the end of 2005, will complement a 575000 tonne EG plant currently under construction in al-Jubail and due for completion in the second half of next year.

Sabic said the new EG plant will use technology from Scientific Design - a company managed by Sabic and Sud-Chemie through a 50:50 joint venture.

The capital cost of the new plant was not disclosed, and Sabic said a construction contract had yet to be awarded. It added, however, that the successful contractor would be announced later this year.

India, Asean to sign free-trade deal

2 October. India is to sign an agreement with the Association of Southeast Asian Nations (Asean) next week that would lead to the creation of a full free-trading area within a decade. The agreement will be signed next week at the Asean summit in Bali, Indonesia.

Legal threat to SK Networks' bailout

2 October. A French bank's legal move to retrieve its US$30m of loans to SK Networks (formerly SK Global) could wreck a proposed bailout of the fraud-ridden company. Union de Banques Arabes et Francaises has taken court action to prevent SK Networks' shares in its affiliate, SK Telecom, being used as collateral to secure the US$2.5bn rescue package agreed by other creditors.

The bank's move to recover its money threatens to push SK networks into liquidation if it does not pay.

Workers to vote on Honam wage deal

2 October. Honam Petrochemical's management and union representatives have reached a tentative agreement on a new wage deal, which will be put to a vote by union members next week.

Honam's management has raised its offer for an annual wage increase to 6-7% from 5.8% and offered a one-month bonus as well.

Earlier, Honam's workers had set their management a deadline of 25 October to come up with an agreement to their demand for a 9.5% annual wage increase, or face possible industrial action.

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