09 February 2004 00:01 [Source: ACN]
From stories supplied by the CNI and ACN teams. See www.cnionline.com. For exclusive news and analysis, see the rest of ACN
30 January. Sinopec has received government approval for a Rmb3.5bn (US$422.8m) domestic bond issue.
The bulk of the funds from the issue will be used to construct pipelines for imported crude and refined oil products, although some will also be used for technological improvements in synthetic resin, fertiliser and other chemical production.
30 January. SK Corp is to go ahead with the construction of a new benzene, toluene and xylenes (BTX) unit at Ulsan, South Korea, which is expected to have a total capacity of 650 000 tonne/year. Individual capacities have yet to be determined.
SK said last October it was considering building a BTX plant alongside its Ulsan refinery (ACN 6 October 2003).
Construction of the project, which is expected to cost Won221.1bn (US$188.4m) is expected to start in February 2005, with startup scheduled for June 2006.
The project will be fed by surplus naphtha from SK Corp’s Ulsan refinery.
Negotiations are taking place with potential foreign investors, including Japanese petrochemical producers, interested in taking a stake in the project.
SK, which already produces 450 000 tonne/year of benzene, 1.05m tonne/year of xylenes and 600 000 tonne/year of toluene, plans to use continuous catalytic regeneration technology for the new BTX project’s reformer. It has yet to choose the technology licensors.
30 January. Japan’s unemployment rate fell to its lowest level in two-and-a-half years in December, indicating improved business conditions and an upturn in consumer confidence. The rate dropped to 4.9% from 5.2%, having started the year at a record 5.5%.
The sharpest growth in jobs was reported in the medical care, welfare and restaurant and lodging sectors, supporting the belief that the export-led recovery has now spread to the domestic economy.
30 January. Formosa Plastics Corp (FPC) and polyethylene (PE) producer USI Group are considering building a worldscale naphtha cracker complex at Linyuan, Kaohsiung, Taiwan, at a cost of more than NT$30bn (U$898.7m).
The cracker, which would have an ethylene capacity of at least 1m tonne/year, is still in the early planning stage. However, both companies said it could be operational within four years if the necessary Taiwanese government approvals can be obtained speedily.
*Much ado about nothing?
2 February. LG Chem reported a 7% fall in full year operating profit to Won479.4bn (US$409m) for its financial year ended 31 December 2003 due to the Iraq war, Sars (severe acute respiratory syndrome) and the sluggish global and domestic economies.
The South Korean petrochemical major posted a 4.9% rise in net profit to Won362.1bn, from Won345.3bn, in spite of squeezed margins.
LG Chem’s information and electronic materials business performed the best among all the company’s divisions with year-on-year increases in sales and operating profit of 59% and 151% to Won96.2bn and Won699.1bn, respectively.
For the current full year to 31 December 2004, the company has forecast an operating profit of Won591.5bn, a net profit of Won485.1bn and sales of Won6260bn.
2 February. TPI Polene has won a further delay to the restart of a court-supervised mediation process between itself and its creditors.
The Thai cement and low-density polyethylene producer said it had won the additional time from the Thai Bankruptcy Court to enable it to raise further funds for debt repayment.
The mediation process was brought to a halt in August last year for a period of six months. It will now not restart until 26 April.
TPI has allocated US$300m, mostly raised from its recent public offering of shares, for repayment of debt at a discount to its creditors. It is awaiting completion of a due diligence report ahead of a proposed new borrowing of US$450m for repayment to its original creditors.
The discount on the repayment will be determined through the mediation process. The company’s creditors are owed about US$950m in principal and US$150m in accrued interest.
2 February. Dow Chemical has completed its acquisition of the acrylates business of Celanese for an undisclosed sum.
With the acquisition, Dow becomes one of the largest global producers of acrylate esters.
Under the deal, Dow will buy Celanese’s 150 000 tonne/acrylates production facilities at Clear Lake, Texas, US. Dow will also purchase Celanese’s acrylates product line, including inventory, intellectual property and technology for crude acrylic acid, glacial acrylic acid, ethyl acrylate, butyl acrylate, methyl acrylate and 2-ethylhexyl acrylate.
Dow is also acquiring the technology of its Boehlen, Germany, plant which is being operated through agreements with Celanese.
3 February. Indian Petrochemicals Corp Ltd (IPCL) has revised some of its proposed capacity expansions, which are to be brought onstream in phases over the four financial years beginning from 1 April 2004.
The revised proposals include the expansion of its naphtha cracker at Baroda, Gujarat, by 40 000 tonne/year of ethylene to 170 000 tonne/year. The company had originally intended to raise ethylene capacity to 200 000 tonne/year. Benzene capacity is to still be raised by 20 000 tonne/year to 50 000 tonne/year
It also intends to expand its Baroda complex’s polypropylene (PP) capacity by 15 000 tonne/year to 145 000 tonne/year, its polybutadiene rubber capacity by 15 000 tonne/year to 65 000 tonne/year and its acrylonitrile capacity by 8000 tonne/year to 38 000 tonne/year. PP was earlier due to be raised to 149 500 tonne/year, polybutadiene to 70 000 tonne/year and acryolinitrile to 34 500 tonne/year.
The company will also expand its polyvinyl chloride (PVC) capacity at Gandhar by 135 000 tonne/year to 285 000 tonne/year, its monoethylene glycol (MEG) capacity by 39 000 tonne/year to 139 000 tonne/year and its ethylene dichloride capacity by 25 000 tonne/year to 265 000 tonne/year. PVC had been scheduled to be increased to 350 000 tonne/year and MEG to 140 000-200 000 tonne/year.
PP capacity at Nagothane, Maharashtra, is to be expanded by 15 000 tonne/year to 75 000 tonne/year.
Disclosing the revised expansion targets in a draft public offer document, IPCL said it expects to fund the projects through a combination of cash flow from operations and external borrowings.
It noted that it may increase or decrease the amount of its planned capital spending, or cancel currently planned projects, depending on market conditions and other factors.
3 February. China has levied antidumping duties on phenol imports from Japan, South Korea, Taiwan and the US. The duties will be in place for five years.
Mitsui Chemicals is to pay 6% and all other Japanese companies will pay 144%; Kumho P&B Chemicals will pay 5% and all other South Korean companies 16%; Formosa Chemicals & Fibres Corp will pay 3%, Taiwan Prosperity Chemical Corp 5% and all other Taiwanese companies 19%. All US companies are required to pay 36% duty.
3 February. Two foreign investment funds have bought a combined stake of slightly over 10% in SK Corp and are expected to support Sovereign Asset Management of Monaco in its bid to oust the company’s current board of directors.
Templeton Asset Management Ltd and the Boston-based Wellington Management Co have each bought stakes of around 5% in SK Corp. SK Corp is the de facto holding company for the SK Group.
Templeton acquired its 5.04% stake ahead of an end-2003 deadline, after which it would not have had voting rights in the company. It was not immediately clear how much of Wellington’s 5.03% stake was acquired ahead of the deadline.
The two funds are expected to support Sovereign, a 14.99% shareholder in SK Corp, in its challenge against the current board.
Sovereign is seeking to fill five seats on the current 10-member board, on which six seats will become available due to the expiration of the directors’ terms and the earlier resignation of one independent director.
Allies of SK Corp’s current chairman, Chey Tae-won, are believed to have a slight upper hand in voting rights ahead of a meeting on 14 March which will decide the make-up of the new board.
Sovereign is hoping that its nominees will draw support from small domestic and foreign shareholders.
Sovereign has been a vocal opponent of the current board because of its decision to bail out SK Group affiliates at the expense of SK Corp’s shareholders.
SK Corp in December announced a complex scheme to provide financial support in the amount of Won143bn (US$122.7m) to SK Shipping. It also provided a debt-for-equity swap of Won850bn to SK Global (since renamed SK Networks) earlier in the year.
3 February. Ciba Specialty Chemicals has forecast an improvement in profits and sales this year after announcing a 28% (14% in local currencies) slump to SF571m (US$453m) in 2003 operating profit over 2002.
Earnings before income tax, depreciation and amortisation (Ebitda) also fell last year, by 20% to SF937m, with sales down by 6% at SF6.65bn. The Ebitda margin fell to 14.1% from 16.6% in 2002, while net income was down 15% to SF344m.
Ciba blamed the lower earnings on adverse currency effects and the costs of temporary plant closures. However, it predicted that 2004 sales in local currencies, its Ebitda margin and net income in Swiss francs would exceed last year’s levels, assuming business conditions are at least comparable to 2003 and currency levels do not deteriorate.
Although Ciba did not quantify the expected improvements, it said that should a sustainable economic recovery take shape, it would expect ‘a rapid and substantial improvement in net income and margins’.
3 February. Republican Senate leaders said they would introduce a slimmed-down version of last year’s failed energy bill, including no liability protection for methyl tertiary butyl ether (MTBE) producers.
Senator Pete Domenici (Republican-New Mexico), chairman of the powerful Energy and Natural Resources Committee, said he would refashion a US$31bn energy bill blocked by the Senate in November, and possibly introduce it this month as part of a broader transportation bill. The senate is now considering the US$311bn transportation bill.
The high cost of last year’s mammoth energy bill, part of the reason for which was the MTBE liability protection, proved unacceptable to a majority of Democrats and some conservative Republicans. The two groups banded together last November to block Senate leaders from bringing the bill to a final Senate vote.
Domenici’s decision to exclude the liability protection will likely lead to a clash with members of the US House.
House Majority Leader Tom DeLay (Republican-Texas) had refused last year to support any proposal to remove MTBE liability protection. DeLay could not be reached immediately for comment on Domenici’s new plans for the energy bill.
3 February. Millennium Chemicals narrowed its 2003 net loss to US$184m from a 2002 loss of US$333m on higher sales, and tax benefits.
Sales in 2003 were US$1.7bn, up from US$1.6bn in 2002.
3 February. Akzo Nobel saw a 6% fall to Euro324m (US$402m) in 2003 chemicals operating profit, excluding non-recurring items, and a 4% fall in sales to Euro.440bn. It attributed the declines to exchange-rate losses, weak economic conditions and higher raw material and pension costs.
It added that it expects to sell the bulk of its catalysts, phosphorus chemicals and coating resins businesses by mid-year.
3 February. Toray Industries more than trebled its consolidated pre-tax profit to Yen10.74bn (US$101.9m) in the third quarter of the financial year ending 31 March 2004 from Yen3.12bn in the same period a year earlier. This was largely due to restructuring.
Net sales increased by 6.6% to Yen256.97bn from Yen241.10bn in Q3 2002-03, with the company’s synthetic fibre, carbon fibre and coloured filters for liquid crystal display businesses all doing well
Operating profit soared by 128.2% to Yen11.44bn from Yen5.01bn a year earlier.
Pre-tax profit for the first nine months of the company’s financial year trebled to Yen33.71bn from Yen11.00bn, while sales were up by 7% to Yen791.32bn and operating profit doubled to Yen36.17bn from Yen17.66bn.
Toray also raised its forecast for its group operating profit for the full year to 31 March to Yen56bn from the Yen54bn that it had tipped last November.
Since introducing its restructuring programme in April 2002, Toray has focused on its fibres and plastics businesses, spinning off such non-core businesses as trading, housing, engineering and electronics.
The company has also expanded its advanced materials division, branching out into biotechnology and nanotechnology, and has achieved one of the programme’s major aims of increasing earnings from overseas operations.
3 February. LG Petrochemical’s 2003 operating profit increased 63% year-on-year to Won147bn (US$125.9bn), with the gain driven by improved margins caused by a tight supply-demand balance in Asia.
The company said its sales increased 23% year-on-year to Won1.29trn, helped by a price increase for its products and increased capacity.
Last year LG’s butadiene capacity was increased by 17 000 tonne/year to 135 000 tonne/year and its high-density polyethylene capacity was expanded by 20 000 tonne/year to 300 000 tonnne/year.
4 February. Rohm and Haas saw its 2003 earnings rise to US$280m from a 2002 loss of US$570m on a 12% increase in sales to US$6.4bn.
For the year ended 31 December, Philadelphia, Pennsylvania-based R&H posted earnings/share (eps) of US$1.26 versus a 2002 loss of US$2.58.
The company expects 2004 eps in the US$1.90-2.10 range.
4 February. A predictable panic gripped Asian stock markets last week as the fatalities from bird flu rose to 12 with the death of a 58-year-old Thai woman and teenage Vietnamese boy.
Investors were unnerved by the possibility of a repeat of an impact on the scale of Sars (severe acute respiratory syndrome). Stocks in Thailand led the retreat with the Stock Exchange of Thailand index falling by 4.4% in one day, its largest daily loss since September 2001. In Hong Kong, the Hang Seng index fell by 2.2% as investors sold tourism-related stocks.
An emergency summit was due to take place in Rome as ACN went to press as panicked Singapore residents began to avoid chicken meals, even though there was no rational basis for the belief that the cooked meat could still contain the virus.
Also, the World Health Organisation had not established whether two sisters who died from the virus in Vietnam had contracted the disease from their brother, meaning that there was no clear evidence of the much-feared first human-to-human transmission.
4 February. Dow Chemical is to close its styrene-butadiene rubber (SBR) plant at Pernis near Rotterdam in the Netherlands until the end of this year because of poor profitability.
Dow explained that as a result of the decision not to proceed with the maintenance turnaround, rubber operations at Pernis would be idled towards the end of March.
It said the plant will remain shut for the rest of 2004 and possibly even longer, until a final decision has been made on its longer term future.
The plant, which has a capacity of around 90 000 tonne/year, was built around 40 years ago.
4 February. Japan Energy is planning to absorb its wholly-owned subsidiary Nikko Petrochemical from 1 April 2004, the start of its next financial year, in order to boost efficiency.
The merged company will operate a 380 000 tonne/year paraxylene plant, 250 000 tonne/year of benzene capacity and 100 000 tonne/year of propylene at Mizushima.
5 February. Idemitsu Kosan, subsidiary Idemitsu Petrochemical and Mitsui Chemicals have signed a tripartite Letter of Intent (LoI) aimed at realising a co-operative setup in Chiba, the bayside industrial zone east of Tokyo.
As part of the LoI, the three companies have undertaken to conduct a comprehensive study on a broad spectrum of subjects ranging from feedstocks and hydrocarbon fractions to petrochemicals, in addition to the three companies’ operational platforms and work activities.
5 February. Diversified Japanese conglomerate and electronics giant Hitachi Ltd said that sales at its Hitachi Chemical Co unit had grown in the three months to 31 December 2003 due to better demand for materials for semiconductors and liquid crystal displays.
It said that combined sales for its high function materials and components division – which includes Hitachi Cable Ltd and Hitachi Metals Ltd as well as the chemicals unit – had risen 13% year-on-year to Yen329.84bn (US$3.1bn).
Operating profit for the division had increased 23% to Yen14.91bn during the same period.
For the nine months ended 31 December, the division’s sales were up 11% at Yen952.01bn while operating profit was up 24% at Yen24.14bn.
5 February. Methanol Australia has been granted an exploration permit in the heart of the Timor Sea gas province by the Federal government which is only 60 km west of the company’s proposed Tassie Shoal Methanol project.
Methanol Australia believes that the new permit could allow the company to recover up to an additional 1500bn cubic feet of liquefied natural gas which could be used as feedstock for its Tassie Shoal project.
Methanol Australia won environmental approval from the Federal government for the Tassie Shoal project in in early January last year.
The project is planned in two phases, with the first 1.75m tonne/year methanol unit sheduled to come onstream in late 2006 with stage two due to be commissioned around 2011.
5 February. Royal Dutch/Shell reported a 33% fall in 2003 fourth-quarter earnings over the same period in 2002,
Shell’s net profit for Q4 fell from US$2.78bn to US$1.86bn.
Its annual profit, however, was one of the largest in the company’s history. Its net profit for 2003 rose 27% over the previous year to US$11.7bn from US$9.2bn.
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