Global roundup

20 December 2004 00:01  [Source: ACN]

Shell moved ahead with its plans for a cracker and MEG plant at Singapore while Yukos filed for bankruptcy in the US to avoid an asset auction by Russian authorities during the week 10-16 December. Also in the week, Opec decided to cut crude oil output and the Fed raised its key interest rate 

From stories supplied by the CNI and ACN teams.

EC fines cholin chloride cartel

10 December. The European Commission (EC) has imposed fines totalling Euro66.4m (US$88m) on three chemical companies that operated a price-fixing cartel for the animal feed vitamin cholin chloride during the 1990s.

Germany’s BASF was fined Euro35m, while Netherlands-based Akzo Nobel will have to pay Euro21m. UCB of Belgium was fined Euro10.4m.

Also implicated were US companies Bioproducts and DuCoa and Canada’s Chinook. While the three have already been fined by the US and Canadian authorities, they escaped the EC’s wrath because they withdrew from the European markets in April 1994, putting them outside the legal time limits for anti-competitive activities.

The cholin chloride cartel controlled 80% of the world market, said the EC. In 1997, the last full year of the cartel’s operations, the European Economic Area market for cholin chloride, also known as vitamin B4, was worth Euro50m out of a total world market of Euro180m.

Cabot in China carbon black jv

10 December. Cabot is forming a joint venture with Shanghai Coking and Chemical to invest in a US$28m world-class carbon black facility in China.

The joint venture, called Cabot Chemical Tianjin, plans to build the plant in the Tianjin Economic and Technological Development Area.

The 50 000 tonne/year plant will use advanced energy recovery and flue gas de-sulphurisation technologies to protect the environment, Cabot said. The plant is expected to begin production in early 2006.

Cabot and Shanghai Coking are seeking approval to expand the facility by 50 000 tonne/year. Pending requisite governmental approvals, the expansion could be completed in late 2006.

CPC to roll over C2 price formula

10 December. Chinese Petroleum Corp (CPC) is expected to roll over its existing domestic ethylene term pricing formula to 2005, said a source close to the company.

CPC was seeking to increase the spot price contribution in the formula to 30% from 10% to take advantage of higher spot prices.

In 2004, the US, European and South Korean term prices each contributed 30% to CPC’s formula, with the remaining 10% coming from Asian spot prices.

After the initial round of the discussion, domestic ethylene buyers refused to accept the proposed change because of the strong possibility of having to pay higher prices next year, said the source.

CPC’s customers include Grand Pacific Petrochemical Corp and Taiwan Styrene Monomer.

Toray to raise ABS capacity

10 December. Toray Plastics (Malaysia) plans to raise its acrylonitrile butadiene styrene (ABS) capacity by 20 000 tonne/year to 270 000 tonne/year by end-December.

The plant would also undergo a gradual debottlenecking process that would raise the capacity further to 270 000 tonne/year by mid-2005.

The company, a unit of Japan’s Toray Industries, raised its capacity to 220 000 tonne/year from 170 000 tonne/year in the middle of 2003.

Mitsui and Idemitsu sign jv

10 December. Mitsui Chemicals and Idemitsu Kosan have signed an agreement to form a joint venture for their polyolefins divisions in April 2005. The two companies received the Japanese Fair Trade Commission’s approval for the joint venture on 30 November.

The joint venture, called Prime Polymer, will be capitalised at Yen20bn (US$188.92bn) with Mitsui holding a 65% stake. The new company will manufacture, sell and conduct research and development in polypropylene and polyethylene.

Prime Polymer is expected to have annual sales of Yen240bn, based on the estimated 2004 polyolefins sales of both companies. Mitsui and Idemitsu have a combined polyolefins production capacity of 2.07m tonne/year.

Opec to trim production

10 December. Members of the Organisation of Oil Exporting Countries (Opec) agreed to cut production by 1m bbl/day from 1 January to bring output back in line with their 27m bbl/day formal ceiling set in September.

Overproduction by several Opec members has pushed output to more than 28m bbl/day in recent months and has helped send the price of the US benchmark crude down from a record US$55.67/bbl in October to around US$43/bbl.

In agreeing to curb overproduction, Opec oil ministers said they would meet again at the end of January to review progress and, if necessary, to discuss possible further cuts.

Ex Cabot chief as energy secretary

10 December. US president George W Bush has named former Cabot Corp chairman Samuel Bodman as the new secretary of energy, putting a chemical engineer and financier at the head of a key department whose policies are crucial to the US chemicals industry.

While announcing the nomination, Bush said Bodman has shown himself to be ‘a problem solver’ in academics, business and government.

Bodman is now deputy secretary at the US Treasury Department and he served previously as a deputy secretary at the Department of Commerce. If confirmed by the Senate, Bodman would replace outgoing Secretary of Energy Spencer Abraham.

Ineos plans EOA in Belgium

10 December. Ineos Oxide plans to build new worldscale ethanolamine (EOA) and alkoxylation plants at Antwerp, Belgium. A 160 000 tonne/year EOA plant is due onstream in early 2007 and an alkoxylation unit of at least 50 000 tonne/year will be commissioned around the same time, said Ineos Oxide chief executive Bill Reid.

Reid said global demand for ethanolamine was now around 1.3m tonne/year and growing at between 5% and 10% a year. The market is very tight and there is no new capacity about to come onstream, he added.

ExxonMobil to debottleneck Sing unit

13 December. ExxonMobil plans to debottleneck its 480 000 tonne/year linear low-density polyethylene (lldPE) unit in Singapore by 10% to about 525 000 tonne/year in the second quarter of 2005, according to industry sources.

The lldPE expansion project will be carried out during a cracker turnaround, which is scheduled to begin on 19 May. Besides the lldPE capacity increase, the 800 000 tonne/year cracker will be expanded by about 60 000-70 000 tonne during the shutdown period.

Korea FTC caps PET price

13 December. Honam Petrochemical and KP Chemical have been ordered by South Korea’s Fair Trade Commission (FTC) to cap their domestic polyethylene terephthalate (PET) chip prices, said a FTC source.

This move comes after Honam bought a 53.8% stake in KP on 9 November, giving the companies a 45.2% combined share in the local PET market.

The FTC believed that this could lead to an unfair advantage in the market. It therefore ordered the companies to keep PET chip prices lower than what they would otherwise have charged, with effect from 1 January 2005.

‘With their dominance, they can easily raise the domestic price of PET; we want to make sure that the domestic market is protected. The companies have accepted the price cap, which will last for at least three years,’ the official said

Samsung picks SK Corp stake

13 December. Samsung Electronics has bought a 1.39% stake in SK Corp, prompting talk that the country’s chaebol were joining forces against foreign investors.

News reports said that Samsung’s intention might be to fend off a possible hostile takeover by foreign investors. SK Corp is fighting an attempt by Monaco-based Sovereign Asset Management to oust the its chairman Chey Tae-won, who was convicted last year for an accounting fraud involving SK Networks.

Sovereign, which holds a 14.9% share in SK Corp, is the largest shareholder of the South Korean conglomerate. An SK Corp spokeswoman said that the shareholding of foreign firms in SK Corp totals slightly more than 58%.

The spokeswoman confirmed that the Won117bn (US$110m) share purchase by Samsung Electronics had taken place but added that the rest of the talk was speculative.

Samsung Electronics was said to be considering buying more shares in SK Corp because the share purchase would be beneficial to its telecommunications business

NPC awards contract

13 December. National Petrochemical Co (NPC) has awarded a contract to Sembcorp Simon-Carves and Energy Industries Engineering & Design (EIED) for its 250 000 tonne/year polystyrene (PS) plant at the Pars Special Economic/Energy zone in Iran.

The project, due to be completed in the next 36 months, will be implemented by NPC’s subsidiary Pars Petrochemical Co (PPC)

NPC claims the plant will be one of the world’s largest, comprising 100 000 tonne/year of general purpose PS, 100 000 tonne/year high impact PS and 50 000 tonne/year of expandable PS.

Commercialisation of mPP begins

13 December. Novolen Technology Holdings (NTH) said it has begun commercialisation of its advanced metallocene polypropylene (PP) technology, which can be incorporated into all PP process platforms.

An 80:20 joint venture between ABB and Equistar, NTH said license agreements have been executed with ExxonMobil Chemical and Fina Technology, which grant NTH licensing rights under certain portions of ExxonMobil’s and Fina´s metallocene PP patents.

Shell moves ahead with Sing cracker

14 December. Shell Chemicals will go ahead with its plan to build a worldscale cracker and a monoethylene glycol (MEG) unit in Singapore, said the company’s spokeswoman.

The next phase will involve development of a detailed design and engineering package for the project. Construction is likely to begin in 2006 with start-up in the first half of 2009 (see p21).

To accommodate the cracker project, modifications and additions will be carried at Shell Eastern Petroleum’s refinery in Bukom, Singapore.

Shell is going ahead with the project without Sumitomo Chemical, which had earlier shown interest in the project. The two companies run a joint venture, Petrochemical Corp of Singapore, which operates two crackers.

Shell’s Singapore cracker project is ‘planned to be a collaboration between Shell and Singapore’s Economic Development Board (EDB),’ said the spokeswoman but she declined to reveal more details on the deal with the EDB.

The planned world-scale MEG plant will utilise Shell’s proprietary technology but the technology for the new cracker has not been decided yet.

Singpu secures loan

14 December. Singpu Chemicals, China’s third largest chlor-alkali producer, has secured a US$70m five-year syndicated transferable loan facility from a consortium of nine banks.

The money will help fund the company’s US$216m investment programme, which includes a vinyl chloride monomer (VCM) plant, an expansion of chlor-alkali capacity, and a new co-generation power plant.

The construction of the new 60MW co-generation plant started in 2003 is due to be completed in December 2005. Capacity will be increased to 120MW by December 2006.

Singpu also plans to double its chloralkali capacity to 300 000 tonne/year of caustic soda and 264 000 tonne/year of chlorine.

NPC targets 2005-06 for PET startup

14 December. National Petrochemical Co aims to start up its two polyethylene terephthalate (PET) projects in the Petrochemical Special Economic Zone, Mahshahr, Iran, in 2005-2006, said a source close to the project

Shahid Tondgouyan Petrochemical Co, a subsidiary of NPC, owns and operates both the projects. The first plant, which will have the capacity to produce 177 000 tonne/year of PET bottle grade resin and 235 000 tonne/year of PET fibre chips, is due onstream by the first quarter of 2005.

The second PET project will have a capacity of 132 000 tonne/year of PET bottle grade resin and 132 000 tonne/year of PET fibre chips, with the operational date set for the first quarter of 2006. This plant will supply PET resin to the company’s 66 000 tonne/year partially oriented yarn (POY) and 66 000 tonne/year polyester staple fibre (PSF) plants.

MGC mulls China derivatives

14 December. Mitsubishi Gas Chemical will look into the possibility of producing derivatives downstream of its proposed gas-based methanol plant in Chongqing, southwestern China, in the second stage of its investment plan, according to a company source.

The source declined to elaborate what derivatives will be considered.

MGC is currently conducting a detailed feasibility study on an 850 000 tonne/year methanol project, which would be jointly pursued with local company Chongqing Chemical & Pharmaceutical Holdings. The project has been approved by the central government.

MGC expects to make an investment decision next year.

China to review SBR dumping duties

14 December. China’s Ministry of Commerce (MoC) has decided to review the antidumping duties currently imposed on styrene butadiene rubber (SBR) imports from Japan, South Korea and Russia.

A petition submitted by South Korea’s Hyundai Petrochemical prompted the review.

The duties, ranging from 9-38%, were imposed on 9 September 2003.

The MoC will now collect information by sending out questionnaires and visiting the affected companies.

US Fed raises interest rate

14 December. In a widely anticipated move, the US Federal Reserve raised its key federal funds interest rate by 25 basis points to 2.25%. It was the Fed’s fifth quarter-point rate hike this year.

The Fed said in a statement that the ‘monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity.

‘Output appears to be growing at a moderate pace despite the earlier rise in energy prices, and labour market conditions continue to improve gradually.’

The Fed indicated that it likely will continue to make moderate and measured increases in the federal funds rate.

IMC slow to finalise project

15 December. International Methanol Co (IMC) is taking more time than it expected to finalise its second 1.05m tonne/year methanol project at Al-Jubail in Saudi Arabia due to feedstock supply problems and high project costs, according to industry sources.

The company was expected to finalise its plan to build the second plant shortly after the commissioning of its first 1.05m tonne/year plant at the same site in early December.

IMC was said to be attempting to secure feedstock for the second plant, but according to an industry source, ‘it is worried it may not secure enough due to limited gas availability.’

Also, the project’s cost has risen significantly over the initial cost predicted in 2002 due to rising raw material prices, he said. The company is considering using public funding for the second methanol project, he added.

‘Chemical Ali’ to be tried first

15 December. One of Saddam’s top deputies Ali Hassan al-Majib, also known as ‘Chemical Ali’ will be the first to be tried, said Iraq’s Defence Minister Hazim al-Shalaan.

‘Chemical Ali’ is accused of some of the worst crimes committed during Saddam’s regime.

The trial is likely to start next week or by mid-January. Shalaan said he did not expect the trial to be a long one as all the evidence and witnesses were in place.

China for textile export tariffs

15 December. China will impose export tariffs on textile products to curb volumes and encourage exports of value added products, the Ministry of Commerce (MoC) said in a statement.

But the MoC did not provide details on the extent of tariffs and the products that would be subject to duties.

The MoC only said the move would be a fair and transparent tool that would take into consideration exporters’ ability to absorb higher costs.

The initiative by the MoC is aimed at assuaging China’s competitors who are concerned that China will dominate world trade once quotas on textiles and clothing come to an end on 31 December 2004.

Export tariffs are one of several initiatives designed to better integrate the Chinese textiles sector with global trade, upgrade the structure of the industry and control exports.

Yukos files for Chapter 11…

15 December. Troubled Russian oil and petrochemicals company Yukos has filed a voluntary petition for reorganisation under Chapter 11 of the US bankruptcy code

It has also asked the US court for an emergency hearing on a temporary restraining order and for a preliminary injunction to halt the planned auction of its core business, Yuganskneftegaz, on 19 December.

The company said that US bankruptcy law has worldwide jurisdiction over property of the debtor and that Yukos ‘is seeking a judiciary that will protect the value of all shareholders’ investment in Yukos.’

The Russian government plans to auction a 76.79% stake in Yuganskneftegaz as part of plans to recover tax arrears from Yukos. Gazpromneft, a subsidiary of Russian state-owned gas giant Gazprom, has said it would bid for a controlling stake in Yuganskneftegaz.

…but Russian officials unmoved

15 December. Russian officials shrugged off Yukos’s move to file for US Chapter 11 bankruptcy protection.

Yukos’s filing in a US court is ‘a purely political action, it’s not a legal or economic move,’ Sergei Mironov, chairman of the Federation Council, the upper house of parliament, told journalists.

Russia’s Federal Property Fund said that the 19 December auction could only be cancelled by a decision of the Russian court bailiffs, who had initially ordered the sale to recover tax arrears from Yukos.

However, Arkady Volsky, head of the Russian Union of Industrialists and Entrepreneurs, an influential business lobby, said Yukos’s move could cast doubt on the legality of the auction.

Teijin and Bayer ink deal

15 December. Teijin Chemicals and Bayer MaterialScience have signed a letter of intent to supply each other polycarbonate (PC) resins on a regional basis.

Teijin produces PC in Japan and Singapore while Bayer has plants in Germany, Belgium, US and Thailand.

Both companies have projects in China, where they have agreed to supply each other with PC for specific applications.

Vinnolit to raise vinyls capacity

15 December. Vinnolit plans to raise capacities for polyvinyl chloride (PVC), chlorine, ethylene dichloride (EDC) and vinyl chloride monomer (VCM) in Germany

Investment at the two sites of Knapsack and Burghausen will total Euro30m (US$40m), with all plant extensions due to be completed in late 2006 or early 2007.

At Knapsack, the start-up of an additional electrolysis unit using membrane technology will lift chlorine output to 310 000 tonne/year. Capacity for EDC and VCM will be increased to 370 000 tonne/year each, Vinnolit said without giving details of existing capacities.

This would reduce the need to buy in EDC and also will feed a downstream expansion of paste grade PVC to 71 000 tonne/year from 50 000 tonne/year at Burghausen. Vinnolit will also invest in its suspension PVC production technology at Knapsack.

Falling dollar good for US chems

16 December. The falling dollar is good news for US chemical companies that have been hard hit this year by rising energy and feedstock prices.

Kevin Swift, chief economist and senior director at the American Chemistry Council, said the decline of the US dollar against the euro is a good thing for the US chemical industry.

A 10% fall in the value of the US dollar against the euro would increase US chemical exports to Europe by 1% and decrease chemical imports to the US from Europe by 4.3%, Swift said.

Since its peak in 2002, the value of the dollar has declined nearly 35% against the euro and nearly 25% against the yen.

But Swift cautioned that the benefits of the declining dollar to the US chemical industry are still outweighed by higher energy and feedstock costs.

S&P downplays Reliance feud impact

16 December. Global credit rating agency Standard & Poors (S&P) has downplayed the impact of the ongoing Ambani family feud (see p7) at India’s Reliance Industries on the group’s core oil and petrochemical businesses.

S&P expects the differences between Mukesh Ambani, the chairman of Reliance, and Anil Ambani, the vice-chairman, to have a potential to weaken the company’s other businesses, rather than its core oil refining and petrochemicals businesses, particularly in the day-to-day operations.

The differences, however, could affect Reliance’s strategic direction and a substantial change in its business plans or group structure will require a review of its credit ratings, the agency said.

It also said that the company’s liquidity is weak, and it had cash and equivalents of Rs2bn (US$45.3m) and credit lines of Rs40bn from a consortium of Indian and foreign banks.

FCFC still stabilising new PP unit

16 December. Formosa Chemicals and Fibre Corp (FCFC) is still stabilising operations at its new 180 000 tonne/year No 3 polypropylene (PP) unit at Mailiao despite commissioning the unit more than two months ago, said sources close to the company.

‘The new unit is running below 100% of capacity, maybe about 70%. FCFC is still working to solve the problems, but it is optimistic of achieving the target of 100% operating rate in January 2005,’ a source said.

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