In Thursday's UK papers

06 October 2005 08:05  [Source: ICIS news]

A summary of political, economic, trade, business and product news affecting the chemical and related industries.

 

International Economics and Politics

 

Hurricanes hit US service sector

The impact of Hurricane Katrina and a growing toll on consumer spending triggered an abrupt slowdown in the US services sector last month, according to the Institute of Supply Management survey.

Its headline reading suffered its sharpest fall since at least the mid-1990s, dropping from 65 in August to 53.3 in September, a two-and-a-half year low. The data also showed that high oil prices led to costs in the US services sector rising at their fastest for eight years.

Separately, higher energy costs triggered by the hurricanes could persist for several years, warned Samuel Bodman, the US energy secretary.

"Both oil and natural gas availability has been severely impaired, and the effects of this will reverberate through the economy of this country for some time," he said. Bodman predicted that conservation efforts would make a "major dent" in demand.

His call for conservation was taken as a strong signal that the US administration is rethinking an energy policy that had focused almost solely on expanding supplies of available domestic energy.

The Times page 50 (Need to Know), 52

Financial Times page 9, 10 (World Economy Watch)

 

Merkel tipped to be first woman Chancellor

Angela Merkel and Gerhard Schroder are expected to decide by the end of today (Thursday) which of them will lead a coalition to govern Germany.

The surprise breakthrough suggested Merkel, leader of the opposition Christian Democratic Union (CDU), was poised to become the first woman and east German to head the government.

After a third round of exploratory talks between the two parties, Chancellor Gerhard Schroder of the Social Democratic party and Merkel said they were optimistic their conflicting claims to the chancellery would be settled. The CDU had threatened to walk away from the talks if Schroder did not back down.

Financial Times page 6

The Guardian page 14

 

EU members accused of budget tricks

European governments are conniving with private banks to devise means to disguise their budget deficits, according to Joaquin Almunia, the European Union's (EU) monetary affairs commissioner.

Almunia said some banks recommend the same budgetary dodges to different governments, making it hard to police the EU's budgetary rules that underpin the single currency. He has assigned more EU staff to try to keep pace with the complex devices being used by member states to artificially reduce the size of their deficits.

Twelve out of 25 EU members are running official deficits at or above the community's limits of 3% of gross domestic product (GDP), including the four biggest economies - Britain, France, Germany and Italy. Almunia said he would apply the revised stability and growth pact in coming months to press countries into complying with the rules.

Financial Times page 6

 

Eurozone sales strengthen in August

Eurozone retail sales were stronger than expected during August, rising by 0.9% to stand 2% higher compared with last year, according to Eurostat.

Separately, activity in the eurozone services sector accelerated last month to its strongest in 14 months, the latest purchasing managers' sector showed. The survey's headline index rose to 54.7 for September, from 53.3 in August.

Germany's services companies enjoyed a buoyant month with their strongest expansion for five years, boosting hopes of a broader eurozone recovery. By contrast, the UK services sector slowed last month to its weakest pace of expansions for nine months, according to the latest CIPS/RBS purchasing managers' survey. Its September headline index edged down to 55, from 55.2 in August.

The Times page 50 (Need to Know), 52

The Independent page 65

Financial Times page 4 (News Digest), 10 (World Economy Watch)

 

EC sets out pro-market industry policy

The European Commission (EC) has rejected calls by French president Jacques Chirac for measures to protect European industry against international competition.

Gunter Verheugen, the industry commissioner, said there was "no way back to the old days of import quotas and protective tariffs" and signalled that the era when Brussels was tempted to intervene and tell industry what to do was over. "We want European industry to be exposed to competition. This is a clear rejection of protectionism and sheltering our markets," he said.

Verheugen, unveiling the EC's latest strategy paper on manufacturing competitiveness, argues that the European Union (EU) should use its leverage on trade policy to open up third country markets for exporters and should strengthen intellectual property rights to clamp down on counterfeiting of European designs and inventions.

The Times page 58

 

UK business sets up tax centre

More than 50 of Britain' s largest companies have joined forces to fund a £5m ($8.8m/Euro7.3m) business tax research centre based at Oxford University.

The centre is being set up to address concerns among multinationals about the competitiveness of the British tax system, at a time when many countries are reducing tax rates to attract investment. It has received funding for an initial five years. It will research issues such as the influence of the tax system on investment, how the government should respond to future European Court of Justice (ECJ) rulings concerning corporate tax laws and why corporate tax revenues differ so markedly between countries.

"There is a general view that the competitiveness of the UK is slipping and there is a desire on the part of UK-based multinationals to stimulate research into what creates a competitive UK economy from a tax perspective," explained Jon Symonds, chief financial officer of AstraZeneca, the Anglo-Swedish pharmaceutical company supporting the initiative.

Financial Times page 5

 

South Korea needs a shake-up, says OECD

South Korea needs to increase labour market flexibility and overhaul research and development (R&D) to ensure it does not stagnate, the Organisation for Economic Co-operation and Development (OECD) said on Wednesday.

Although South Korea has developed rapidly in the last two decades, with incomes per head doubling to two-thirds of the average of the OECD's 30 member countries, the think-tank urged the country to make boosting productivity a major priority. The OECD has cut its growth forecast for Asia's third-largest economy from 4.3% to 3.7% for this year. In its annual survey the OECD said a recovery in demand was not fast enough to offset cooling exports.

Financial Times page 8

 

Research and Development

 

Nobel chemistry prize for 'molecular dance'

A Frenchman and two Americans shared the Nobel Prize in chemistry for choreographing a "molecular dance" - a metathesis reaction - that enables drugs and plastics to be made more efficiently.

Yves Chauvin, of the Institut Francais du Petrole (IFP), Robert Grubbs, of the California Institute of Technology, and Richard Schrock, of the Massachusetts Institute of Technology (MIT), were honoured by the Royal Swedish Academy of Sciences.

The Daily Telegraph page 16

 

Environment

 

UK emissions policy 'unrealistic'

The UK government's environmental policies have come under attack from the country's major business lobby for being "unrealistic".

John Sutherland, president of the Confederation of British Industry (CBI), said that while the near-term target for lowering emissions was not attainable, the longer-term goal was set too far ahead at 2050.

"In the UK we have a 2010 target. This will be very difficult to meet and risks distorting policy through a focus on quick fixes that won't help the long term trend," Sutherland said.

The government is committed to reducing the country's carbon emissions to 20% below 1990 levels by 2010. It has set a target of a 60% fall by 2050. These goals are separate from commitments in the Kyoto Protocol, which require a 12.5% cut in greenhouse gas emissions by 2012. While ministers say the UK is on target under Kyoto, they admit the 2010 target is more challenging.

The Independent page 62

Financial Times page 2

 

Pharmaceuticals

 

New broom at the FDA

The US Food and Drug Administration (FDA) is set to undergo a radical shake-up following the appointment of Andrew von Eschenbach as acting commissioner, reports the Financial Times.

Currently director of the National Cancer Institute he is taking over at a time when the FDA has come under criticism for not addressing safety concerns in the pharmaceuticals sector. There were also concerns expressed about the delay in a decision to approve a "morning after" contraceptive pill as well as conflict-of-interest questions in relation to the agency and its experts.

Eschenbach is described as "industry friendly" by one analyst. PhRMA, the pharmaceutical industry lobby group, said the FDA had been placed in "good hands".

Financial Times page 9

 

UK allows unlicensed drug prescription

The UK's health minister has ordered a cancer drug to be used even before it has been given a licence.

Patricia Hewitt has told the National Health Service (NHS) to start testing all women in early stages of the disease to establish their suitability for treatment with Herceptin, a drug manufactured by Swiss group Roche and used for advanced cases.

The move follows a randomly controlled trial that shows the drug almost halves the risk of recurrence in the type of early breast disease for which it is suitable.

Financial Times page 2

The Daily Telegraph page 1, 2

 

UK police charge animal rights activist

British police have brought charges for the first time under laws introduced this year with the aim of stopping animal rights activists intimidating companies linked to animal research.

The action against the individual follows protests at companies believed to be suppliers to Huntingdon Life Sciences (HLS). The contract research group, which serves the pharmaceuticals ansd chemicals industry, has been the focus of pressure from animal rights extremists over several years.

Financial Times page 2

 

Wyeth invests in UK medical research

Wyeth, the US pharmaceuticals group, is preparing to invest millions of pounds in British university medical research.

Frank Walsh, executive vice-president and head of the group's discovery research division, told a London conference that there would be "major investments in academic medical centres" in the UK.

The announcement comes at a time of growing concern that drug companies are shying away from the UK because of concerns over cost, the red-tape associated with ethical approvals, and lack of interest by doctors diverting from research by National Health Service (NHS) performance targets.

Walsh made his announcement after Sir David Cooksey, the chairman of Advent Partners, who has helped to raise government awareness of the UK's declining role as a centre for clinical research, warned that the number of large pharmaceutical companies carrying out trials was "far too low".

Financial Times page 5

 

Energy

 

UK gas supplies hit 10-year low

UK gas supplies for the winter are at their lowest for ten years, according to Ofgem, the energy markets regulator.

Britain is approaching a "bottleneck" of tight gas supply, according to the regulator, as its own North Sea resources dry up and before new pipelines and storage facilities, necessary for importing gas, are completed.

National Grid Transco, which monitors the amount of energy for Ofgem, said on Wednesday that only 476m cubic metres of gas would be available this winter, compared with 488m cubic metres last winter. That leaves only a 6% margin over the record highest gas demand, 449m cubic metres.

Large consumers of gas are bracing themselves for shutdowns in the event of a very cold winter. Ofgem and National Grid Transco tried to play down the problem on Wednesday, saying that demand could be met "with only a small amount of demand reduction for large gas users".

Alan Eastwood, head of competition and utilities at the Chemical Industries Association (CIA), said that the statement from Ofgem and National Grid Transco confirmed his members' fears.

"It's not hard to see that we might have to face some response from the demand side. We might well get a price effect [which would cause big users to stop production voluntarily] before we are required to switch off," he said.

Last winter, several members of the association were forced to stop production for about a week in February because of extremely high power prices.

The Financial Times devotes a page of analysis to Britain's energy problems, in particular how it addresses long-term demand while cutting greenhouse gas emissions.

The Times page 50 (Need to Know), 54

Financial Times page 17

The Guardian page 25

 

Company News and Results

 

Degussa to take Euro830m charge

Degussa, the German specialty chemicals group, revealed that it is to take an Euro830m ($996m) impairment charge on its fine chemicals activities because of reduced prospects.

The Times page 50 (Need to Know)

The Guardian page 25

 

Gas Natural sweetens Endesa offer

Gas Natural, the Spanish utility, promised that it would match the generous dividend payouts outlined by Endesa, its takeover target, if its Euro22bn ($26.4bn) bid succeeds.

For its part, Endesa said it expected news soon on whether the European Commission (EC) would investigate the hostile bid. Spain's largest electricity group was in London promoting its defence strategy against Gas Natural's bid.

The Times page 50 (Need to Know)

Financial Times page 28

 

Lukoil in legal bid to block CNPC sale

Lukoil has gone to international arbitration to block the sale of a 50% stake in its Kazakh joint venture to Chinese National Petroleum Corporation (CNPC).

The lawsuit, claiming Lukoil enjoys pre-emptive rights to shares in Petrokazakhstan, a Toronto-listed oil company with assets in Kazakhstan, was filed in a Stockholm court on Wednesday. It represents a second setback this week for CNPC's plans to expand in the country.

In August, CNPC offered US$4.18bn (Euro3.5bn) for Petrokaz. But on Tuesday, the government said KazMunaigaz, the Kazakh state oil company, should have a share in Petrokaz.

Financial Times page 26 (News Digest)

 

Yukos raided in $7bn fraud probe

Yukos offices in Amsterdam and Moscow have been raided by the authorities in connection with a $7bn (Euro5.8bn) money laundering probe that could bring fresh charges against Mikhail Khodorkovsky, the jailed Russian tycoon.

The raids come just two weeks after Khodorkovsky lost an appeal against an eight-year prison sentence. A source close to Yukos said the raids related to an ongoing investigation into Fargoil, a wholly owned trading subsidiary of Yukos, which was named by prosecutors in a multibillion dollar money laundering investigation two years ago. Prosecutors have claimed that Yukos executives illegally transferred billions of dollars from oil sales out of the country through Fargoil and Ratibor, two trading companies registered in tax haven zones in Russia.

Financial Times page 7

 

(Some of the stories may not appear in all editions of the relevant newspapers.)

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