Global roundup

03 May 2004 00:01  [Source: ACN]

In the week 23-29 April, BP made the surprise announcement that it is to sell a stake in a new olefins and derivatives business division because of poor returns (the division will include its China C2 joint venture). But strong financial results from Asian producers indicated that good money can be made from petrochemicals

From stories supplied by the ACN and CNI teams

BASF outlines ten-year Asia plan

23 April. BASF has outlined a ten-year strategy to develop its position in the Asian market, with China and India the main growth engines.

The German major expects the total Asian chemical market to grow at an average of 3.7% a year over the next decade, taking it from the 2002 total of Euro374bn (US$445bn) to Euro598bn by 2015, said Dietmar Nissen, president of BASF’s East Asia regional headquarters.

Japan is currently the largest market, four points ahead of China. But while China is booming, Japan’s chemicals market is virtually stagnant, and likely to grow at only about 0.5% a year, behind average GDP (gross domestic product).

Last year BASF obtained 14% of its global turnover from Asia, recording sales to the region of Euro4.5bn.

Arak to boost PE and PP

23 April. Arak Petrochemical plans to increase the capacity of two of its polyolefin plants using manufacturing technology licensed from Basell.

Both plants are located in Arak, about 300 km (187 miles) south of Tehran.

Arak, which is owned by Iran’s National Petrochemical Company (NPC), was the first company in Iran to license Basell technologies, when in 2001 it used Hostalen technology to construct a 70 000 tonne/year high-density polyethylene (hdPE) pilot plant. At the same time, the two companies signed a six-year contract to jointly plan and build polyolefins projects.

The HDPE plant’s capacity will be increased by 40%. Uhde will design the upgrade, and Uhde’s local Iranian partner Sazeh will carry out the work

Arak’s 50 000 tonne/year polypropylene plants, which employs Basell’s Spheripol process, will be expanded by 50%. Italy’s Tecnimont and its Iranian partner Nargan Engineering will carry out this project.

Kraton plans China SBT plant

23 April. Kraton Polymers wants to construct a 100 000 tonne/year styrene block copolymer (SBT) plant in China with the targeted start-up in the next three to five years. The US major is to make a final decision on the project in 2005.

The location and cost of the project have yet to be determined.

Kashima blaze continues

23 April. A fire at the Kashima Oil refinery in Ibaraki prefecture, Japan, had not been extinguished on Friday more than 48 hours after  it broke out in the refinery’s 30 000 bbl/day fuel oil desulphurisation unit. Industry sources said Kashima Oil was unlikely to restart its 190 000 bbl/day refinery for at least two weeks.

The blaze, which caused the shutdown of the entire refinery complex, was likely to burn out some time later in the day, said a company spokesman. He added that it was still too early to say when other units at the refinery would be able be restarted, which include a 150 000 tonne/year paraxylene facility and a 77 000 tonne/year mixed xylenes plant.

Ube raises 2003-04 forecasts

23 April. Ube Industries has revised upwards its forecasts for its full financial year to 31 March 2004 on better than expected sales and higher product prices.

Sales are now forecast to hit Yen227.0bn (US$2.07bn) from an earlier estimate of Yen224.0bn. Speciality chemical, fine chemical, pharmaceutical and coal business sales have all been strong.

Operating profit, which is now tipped to reach Yen13bn from an earlier forecast of Yen11bn, has been boosted by a good performance from Ube’s speciality chemicals, pharmaceutical and petrochemical businesses, particularly its butadiene rubber and polyethylene operations.

However, the company still expects to make a net loss in 2003-04 largely as a result of a one-time write-down of Yen10bn, or impairment loss, on fixed assets. This will be booked as an extraordinary loss. The company’s net loss is now forecast to be Yen9.1bn as against Yen11.0bn forecast earlier.

India lifts oxo-alcohol duties

26 April. The Indian government has removed antidumping duties on oxo-alcohol imports from Indonesia and South Korea that were levied in 2000.

The oxo-alcohols subject to the duties were normal butanol, iso butanol, iso decanol, iso octanol, 2-ethyl hexanol and normal hexanol.

Tosoh cuts earnings forecast

26 April. Tosoh Corp has reduced its net earnings forecast by 46% to Yen7bn (US$64.2m) in its full financial year to 31 March 2004 after taking a one-off charge of Yen10.8bn on fixed assets. The write-off is required to comply with revised Japanese accounting standards.

The accounting standards change is being introduced by the Japanese government to help boost transparency in corporate financial reporting. Companies must comply with the new rules before the end of the fiscal year starting 1 April 2005. Tosoh has decided to pre-empt the new requirement by taking the one-time hit before they are compelled to do so.

While reducing its outlook for net earnings, Tosoh has increased its forecast for ordinary income by 4.2% to Yen25bn, citing strong demand in China, the improving Japanese economy and increased earnings from its speciality products.

Ammonium nitrate causes N Korea blast

26 April. North Korea’s Central News Agency has confirmed that the blast at Ryongchon Railway Station on 22 April, which claimed an unknown number of lives, led to thousands of injuries and flattened most of the town, was the result of an electrical charge detonating ammonium nitrate fertiliser carried by one of the two trains involved. There were earlier reports that one of the trains involved in the crash had been carrying liquefied petroleum gas.

LG Chem’s record results

27 April. LG Chem recorded its strongest quarterly result on record in the first three months of 2004 due to higher prices for its petrochemical products, recovering demand for industrial materials and a surge in sales by its information and electronic materials business.

The company’s sales jumped 17.3% year-on-year to Won1610bn (US$1.4bn). Its operating profit rose by 9.9% to Won169bn. Recurring profit increased by 48.5% to Won210bn and its net profit rose 48.9% to Won153bn.

Samsung to boost PTA capacity

27 April. Samsung Petrochemical plans to increase its purified terephthalic acid (PTA) capacity by 200 000 tonne/year to 1.6m tonne/year by expanding production at its plant at Daesan. The new capacity will be brought onstream by end-2004.

The planned expansion will raise the capacity of the Daesan plant to 600 000 tonne/year from the current 400 000 tonne/year. The company’s other plant, at Ulsan, has a capacity of 1m tonne/year.

BP’s petchems suffer Q1 loss

27 April. BP’s petrochemicals business slumped to a US$25m first quarter loss before interest and tax as an overall margin improvement was swamped by exceptional losses associated with the sale of its speciality intermediates business and the closure of its Baglan Bay site.

In announcing its results for the three months to 31 March on Tuesday, BP also blamed adverse foreign exchange movements for its poor chemicals performance.

The Q1 deficit, which reflected extraordinary losses of US$154m, compared with a US$137m replacement cost profit before interest and tax in January to March last year when BP’s chemicals business recorded a US$7m exceptional gain.

SPC’s profit more than doubles

28 April. Shanghai Petrochemical Co’s (SPC) net profit more than doubled in the first quarter to Rmb736.4m (US$88.9m) on a group basis, up from Rmb308.5 in the same period of the previous year, with the increase attributed to higher output and stronger prices.

The company said its operating income in the three months ended 31 March 2004 had risen by 21.9% year-on-year to Rmb8.37bn.

BP to include Asian assets in IPO

28 April. BP will include its stakes in three Asian companies as part of a newly formed olefins & derivatives (O&D) division, a company spokesman told CNI on Wednesday. A stake in the O&D division is expected to be sold through an initial public offering (IPO) next year.

The companies affected are Shanghai Secco Petrochemical Co (Secco), Polyethylene (Malaysia) and Ethylene Malaysia.

The spokesman added that BP would keep its stakes in other companies in Asia which produce the three products the company has identified as ‘advantaged’ – paraxylene (PX), purified terephthalic acid (PTA) and acetyls.

News broke on Tuesday about BP’s decision to sell its O&D businesses due to continuing poor returns from its petrochemicals segment.

However, BP Petrochemicals’ chief executive Iain Conn stressed that the company would remain the majority shareholder of O&D for many years to come due to the massive scale of the business. The O&D segment is expected to be worth US$3bn-5bn, which may present difficulties when it comes to finding a single buyer.

Although details of the IPO have yet to be decided, Conn had said that ‘typically 20-30% would be sold initially, with further tranches of shares being sold beyond that.’

The revelation that BP would include its 50% stake in Secco in the O&D entity took industry observers by surprise, considering the amount of work already completed by the joint venture and the growth potential of the Chinese market. Secco’s complex in Caojing, Shanghai, China, is centred on a 900 000 tonne/year cracker which is due to come onstream in Q1 2005. Construction work is already more than 50% complete.

The joint-venture company was set up in December 2001 following the granting of a business licence by the Chinese government. The other shareholders in Secco are Chinese majors Sinopec (30%) and its subsidiary Shanghai Petrochemical Co (20%).

The BP spokesman said the company would continue to be involved in Secco until the IPO has been completed.

‘The decision to move Secco to the stand-alone O&D entity does not reflect our very positive view of China’s economic growth and importance,’ the spokesman said. ‘It’s just that our olefins portfolio is dominated by Europe and the US, where growth is not as strong.’

BP expects demand growth in Southeast Asia for PX, PTA and acetyls to grow by three to four times more than GDP (gross domestic product) growth.

The spokesman added that BP would continue to license its technologies, which have been committed to Secco. BP is licensing its Innovene gas-phase technology to Secco’s two polyethylene (PE) plants, with a combined capacity of 600 000 tonne/year. BP’s stakes in two companies in Malaysia will also be moved to the O&D entity.

 The company holds a 15% stake in Ethylene Malaysia, which is a 400 000 tonne/year cracker operator, and a 60% stake in Polyethylene (Malaysia), which produces 250 000 tonne/year of high-density polyethylene/linear-low density PE. Both plants are located at Kerteh in Malaysia.

Analysis of the BP decision – see page seven.

Siam Cement sees 20% profit rise

28 April. Siam Cement’s operating profit for its petrochemicals business increased by 20% year-on-year in the first quarter to Baht3.23bn (US$81m), reflecting a strong performance by its subsidiaries in the olefins and polyolefins businesses.

The company said that the three months ended 31 March were exceptionally profitable for its chemicals business as a result of strong global and regional demand.

Gail reveals HPL expansion plans

April 29. Gail (India) Ltd is planning to help Haldia Petrochemicals Ltd (HPL) transform its naphtha cracker into a multi-feed facility, and expand its ethylene capacity to 900 000 tonne/year in the long term.

The proposal requires approval from HPL’s lenders as stipulated in the company’s final restructuring scheme. The scheme also stipulates that Gail should be a strategic investor in HPL.

HPL received the lenders’ nod to expand the nameplate capacity of its naphtha cracker at Haldia in West Bengal to 520 000 tonne/year from the present 466 000 tonne/year in January this year. The expanded capacity is expected to come onstream in the second quarter of 2005.

Gail has now applied for the Indian government’s permission to acquire a 16.6% stake in HPL by investing Rs3.2bn (US$72.5m) in the company’s expanded share capital. The government is expected to consider the proposal in the next few months

Methanex could join Saudi methanol

April 28. Canadian acetic acid and vinyl acetate monomer (VAM) maker Acetex said its planned US$1bn methanol, acetic acid and VAM joint venture in Saudi Arabia could include methanol producer Methanex.

Acetex top executive Brooke Wade told analysts here today the project – announced earlier this month – still needs a methanol partner.

He said there is ‘potential for a third party to participate’ in the methanol side of the project.

Wade added there is a ‘hypothetical possibility’ Canadian methanol major Methanex could become that partner.

The joint venture, currently between Acetex and Saudi Arabia’s National Petrochemical Industrialization (Tasnee Petrochemicals), will have capacities of 500 000 tonne/year of acetic acid, 275 000 tonne/year of VAM and 1.8m tonne/year of methanol when completed in 2007.

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