Global roundup

15 November 2004 00:01  [Source: ACN]

Iraq declared a 60-day state of emergency and Sovereign Asset Management sought legal action against SK Corp’s board of directors in the week 5–11 November. Japan’s navy went on a rare alert after an unidentified submarine was seen in the country’s waters, and the Fed raised its key interest rate

From stories supplied by the CNI and ACN teams.

Dow Chemical to end Texas EDC

5 November. Dow Chemical said it planned to cease production of ethylene dichloride (EDC) at its Oyster Creek, Texas, US, Unit 1 facility by the end of 2005 in a move affecting ten to 20 jobs.

The company also said it planned to reduce vinyl chloride monomer (VCM) production at Unit 1 by 78% to 90 744 tonne/year, also by end-2005.

Dow said its Unit 1 VCM reduction accounted for about 4% of North American VCM industry capacity.  

It said the remaining chlor-alkali, Oxy EDC, and VCM plants in Unit 5 at Oyster Creek would continue to operate.

It added that it would supply its customers from other VCM plants and via commercial agreements.

Titan names advisers ahead of IPO

5 November. Titan Petrochemicals & Polymers has appointed Commerce International Merchant Bankers Berhad (CIMB) and Goldman Sachs (Singapore) as financial advisers for its potential listing on Bursa Malaysia, the country’s stock exchange.

Titan is seeking to sell a stake of at least 25% in the company to outside investors in its initial public offering, which is the minimum required for a listing on the exchange. The company has not yet provided full details on what it plans to do with the cash raised by the offer, although it has said that it would be used mainly to pay down debt.

CMMFC: MEG in Saudi only if…

5 November. China Man-Made Fiber Corp (CMMFC) would consider building a monoethylene glycol plant in Saudi Arabia only if Chinese Petroleum Corp (CPC) decided on an overseas ethane-cracker project in the same country, a senior CMMFC official said.

CPC is conducting a preliminary feasibility study on building a 50:50 joint-venture 1.2m tonne/year ethane cracker with Sabic in Saudi Arabia. The cracker is expected to come onstream after 2010 if CPC decides to push ahead with the plan.

SK board rejects call for EGM

5 November. The board of directors of SK Corp has rejected Sovereign Asset Management’s request for an extraordinary general meeting of shareholders. The Monaco-based investment fund wants shareholders in SK Corp to amend the company’s articles of incorporation to prevent convicted felons from serving as directors – in effect, it is seeking the dismissal of the company’s chairman.

Sasol may shut some Euro terminals

5 November. Sasol is considering shutting some of its European chemical terminals.

Industry speculation has centred on Sasol shutting down some of its terminal capacity in Antwerp, Belgium, although the company declined to give details on specific sites it might close. Sasol has European coastal plant operations in Hamburg, Germany; Heerhugowaard and de Meern in The Netherlands; Porto Torres, Sarroch, Napoli, Augusta, Crotone, and Terranova dei Passerini in Italy; and Bratislava in Slovakia.

Iraq in state of emergency

7 November. Iraq’s government has declared a 60-day state of emergency in response to the escalation of violence by militants.

Official spokesman Thaer Naqib said the emergency would cover the whole of Iraq except Kurdish-run areas in the north.

He said the move came in response to mass killings and the destruction of the country’s infrastructure carried out by ‘criminals and terrorists’.

He said the violence was part of a plot to derail the interim Iraq government’s progress towards January’s elections.

In the latest violence, Iraqi insurgents stormed a police station in the western province of al-Anbar, disarmed 21 officers and shot them dead.

Sovereign seeks legal action

8 November. Sovereign Asset Management plans to seek legal action through the South Korean courts against SK Corp after SK Corp’s board of directors rejected the investment fund’s request for an extraordinary general meeting (EGM) of shareholders to be convened.

Sovereign was seeking an EGM so shareholders could vote on amendments to SK Corp’s articles of incorporation that would bar convicted felons or people facing criminal charges from serving on the company’s board of directors.

In a statement, Sovereign’s chief executive, James Fitter, said: ‘This is not a complex issue – it is simple common sense. It is the responsibility of the directors to protect the company’s shareholders. Sovereign will now ask the [South] Korean courts to perform the fiduciary and stewardship responsibilities which SK Corp’s directors are unwilling to undertake.’

CPDC eyes China petchem projects

8 November. Chinese Petrochemical Development Corp is looking at the possibility of expanding its business outside Taiwan, especially in China, a company official said.

The company agreed that downstream petrochemical markets in Taiwan had reached saturation point, and many Taiwan companies were planning to or had already built plants in China, he said.

Hyundai Petchem to be split into 3

8 November. Hyundai Petrochemical is to be divided into three separate companies between its acquiring companies, LG Chem and Honam Petrochemicals, with each operating one of its two Daesan-based complexes while jointly holding stakes in a separate utilities company.

A spokesman for LG Chem said his company would own LG Daesan Petrochemical, which would operate one complex. Honam would own Lotte Daesan Petrochemical, which would operate the second complex. LG Chem and Honam would hold stakes in Seetec, the utilities firm that would service the two complexes.

He said full details of the final asset split were still being negotiated and would be revealed later.

Joint naphtha shipping for two firms

9 November. Mitsui Chemicals and Idemitsu Kosan have agreed on joint shipping allocation for imported naphtha, as part of the overall cooperation arrangement they had entered into in February this year, the companies said in a statement.

The companies intend to reduce transportation costs by making joint use of large naphtha tankers for shipping naphtha from the Middle East.

This should allow them to make more use of large naphtha tankers, which used to be difficult for either company to do separately because of the limited quantity of naphtha shipped from the Middle East, as well as the restricted capacity of naphtha tanks in the Chiba area, they said.The first shipment will be carried out by a 75 000 tonne naphtha tanker and is scheduled to arrive at Chiba in the middle of November.

Court approves debt-plan changes

9 November. Thailand’s Central Bankruptcy Court has approved amendments to TPI Polene’s debt-re­struc­turing plan, a court official said. The amendments extend the company’s debt-restructuring process by one year to 31 December 2005.

The amendments also mean TPI Polene’s debt may be settled in cash payments instead of debt-to-equity conversions. The interest rate on TPI Polene’s debt covered under the plan, which totalled around US$680m, is to be increased by one percentage point on both its dollar- and Thai baht-denominated debts.

LGI, OOC, NPC in Oman EDC jv

9 November. LG International (LGI), Oman Oil Co (OOC) and National Petrochemical Co (NPC) of Iran have signed an agreement to form a joint venture for a 300 000 tonne/year ethylene dichloride (EDC) project in Sohar, Oman.

A source close to the project said all three companies would take an equal share in the project and that a joint-venture company would be set up at the end of next month. A detailed feasibility study would be done on the project, which would also include a 240 000 tonne/year chlor-alkali unit.

Equity capital would be used to fund 30% of the US$300m project, while the balance would be financed through loans from local and international banks, the source said.

The engineering, procurement, and construction (EPC) contract would be signed once financing for the project was finalised in December next year. LGI has been appointed the project’s EPC contractor.

The source said mechanical completion of the project had been scheduled for end-2007 and commercial production would start in Q2 2008.

He added that ethylene feedstock would be sourced from NPC, which had a surplus. Salt feedstock would initially be imported from Australia, while OOC was also studying producing salt in Oman.

Shinkong power struggle

10 November. The power struggle for the top executive position at Shinkong Synthetic Fibers is not expected to end until early next year, a company official said.

The official said the family-run company had been embroiled in a tussle between two sons over the chairman’s position since August. At a recent board meeting, incumbent chairman Thomas Wu and his younger brother, Alex Wu, were elected as chairman.

The company now has two boards of directors made up of family members and long-time friends of the family. Each board supports one brother.

Sovereign takes SK board to court

10 November. Sovereign Asset Management has filed an application with the Seoul District Court to challenge a refusal by the board of directors of SK Corp to hold an extraordinary general meeting (EGM).

The board rejected Sovereign’s request for an EGM on 5 November.

Yes to TPI debt-plan changes

10 November. Thailand’s Central Bankruptcy court has approved amendments to Thai Petrochemical Industry’s (TPI’s) debt-restructuring plan, paving the way for the sale of the company.

An official close to TPI’s debt-plan administrator said the court had approved all of the proposed amendments to the plan. It did, however, reject a petition that would have allowed the immediate dismissal of TPI’s board of directors.

The board is chaired by TPI founder Prachai Leophairatana, and its members include his family members and business associates. The business is being run by the debt-plan administrator while it is under court-ordered rehabilitation.

Total triples Q3 chem op profit

10 November. Higher margins, increased volumes, and productivity improvements helped Total triple adjusted third-quarter operating profit from its chemicals business to Euro315m (US$407m).

Net income before special items more than quadrupled to Euro197m from Euro42m in July to September last year on sales up 25% to Euro5.23bn. Cash flow from operating activities (including Euro65m of disbursements related to the AZF fertiliser subsidiary in Toulouse, France) rose by 3% to Euro289m. This compared with Euro281m in Q3 2003, when AZF disbursements totalled Euro302m.

The dramatic improvement in earnings stemmed mainly from basic chemicals and polymers. Operating income adjusted for special items in this sector rocketed from Euro20m to Euro180m on a 48% rise to Euro2.82bn in sales.

Fed ups key interest rate

10 November. The US Federal Reserve raised its key federal funds interest rate by 25 basis points to 2%, saying US economic output continued to grow at a moderate pace despite the rise in energy prices.

The Fed’s rate-setting Federal Open Market Committee said in a statement: ‘The committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity.’

Sub spotted, Japan navy on alert

10 November. Japan’s navy went on alert after an unidentified submarine was spotted inside the country’s waters.

Surveillance aircraft detected the submarine near the southern island of Okinawa, and it left soon afterwards.

Officials said the government was trying to establish the vessel’s country of origin, although Japanese media said it was possibly Chinese.

The last time Japan ordered such a high alert was in 1999, when suspected North Korean ships entered its waters.

Japan’s defence chief Yoshinori Ono issued the maritime alert, a very rare event in Japan, which is bound by a post-World War II constitution that restricts its forces to self-defence.

‘We want to resolve this issue peacefully,’ he said.

Vinythai to double VCM capacity

11 November. Solvay said the management of affiliate Vinythai had approved plans to double vinyl chloride monomer (VCM) capacity at its plant in Mab Ta Phut, Thailand.

The project, based on Solvay technology, is expected to cost about Baht2.3bn (US$56m) and will boost capacity to 400 000 tonne/year.

Construction is due to begin next year, with production scheduled to start in September 2006.

Solvay, which has a 46.4% stake in Vinythai, said 150 000 tonne/year of the extra VCM capacity would be sold under a long-term contract to local polyvinyl chloride (PVC) producer Apex Petrochemical. Apex currently imports VCM for its PVC production. The remaining 50 000 tonne/year would be exported or sold on the Thai market.

FCFC’s PTA plant fine despite quake

11 November. Formosa Chemicals & Fibre Corp (FCFC) continues to operate its 500 000 tonne/year purified terephthalic acid (PTA) line in Ilan, Loong-der, Taiwan, normally despite an earthquake late yesterday near the plant site, a company official said.

A moderate earthquake measuring 5.5 on the Richter scale hit the northern part of Taiwan, with the quake’s epicentre in the Pacific Ocean, 80 km east of Ilan. The tremor could be felt in Taipei, about 50 km northwest of Ilan.

Yoshinori Ono issued a maritime alert after an unidentified submarine was detected

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