This week's world news
02 June 2008 00:00 [Source: ICB]
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TWO-PHASE PLAN FOR FORMALYN FACILITY
?xml:namespace>Russia's OAO Uralchimplast, based in Nizhny Tagil in the Urals, is planning to build an 80,000 tonne/year formalin production plant. The first stage will include a 30,000 tonne/year formalin unit, costing around roubles 340m ($14.4m) by late 2009. This will be followed by a larger 50,000 tonne/year unit, as well as a 50,000 tonne/year facility to produce urea formaldehyde concentrate. Formalin is a saturated form of formaldehyde.
LONZA BUYS FIRM
Swiss firm Lonza has bought German transfection technologies company Amaxa for an undisclosed amount to enhance margins and growth rates of Lonza Bioscience. Amaxa will strengthen the cell discovery business of Lonza Bioscience, while also adding to its research and development capabilities. The acquisition will triple the size of its cell discovery research group.
FERTILIZER SELLERS ASK FOR ANTITERROR FUNDS
Canada's largest trade association for fertilizer retailers has asked parliament to subsidize security at stores that sell certain chemicals, citing similar federal support for antiterrorism efforts at ports. David MacKay, executive director of the Canadian Association of Agri-Retailers, has said that as much as C$50m ($50m) may be needed to equip plants and retailers with fencing, locks, lighting, signage and personnel training.
NEW CHINESE CAPACITY TO DELAY PVC DECISION
Qatar Vinyl Co. (QVC) may only consider expanding downstream into polyvinyl chloride (PVC) after 2012, said a company source. With more than 2m tonnes/year of PVC - most of it carbide-based - due to come on stream in China at the end of 2008, there are concerns that there could be oversupply. The source said that it therefore currently makes more economic sense to ship vinyl chloride monomer (VCM) and ethylene dichloride (EDC) to Asia, rather than go further downstream into PVC, especially as Qatar is a very small market for PVC.
CHEMICAL SAFETY CENTER COMPLETED IN GERMANY
A German federal agency, Bundesanstalt fur Materialforschung und prufung, responsible for researching and testing the safety of chemicals has completed a new €24m ($38m) state-of-the-art test center at Horstwalde, south of Berlin. The 12km2 (4.6 square mile) test site will focus on dangerous chemicals during processing, transport and storage, said spokeswoman Ulrike Rockland.
JOINT VENTURE DUE TO START UP AT END OF JUNE
Saudi Industrial Investment Group (SIIG) has said that its Saudi riyals 4.5bn ($1.2bn) cracker and styrene facility is expected to begin operations by the end of June. The Jubail Chevron Phillips joint venture, between SIIG and US major Chevron Phillips, will produce 750,000 tonnes/year of styrene and 150,000 tonnes/year of propylene. It will also produce 300,000 tonnes/year of ethylene. The project has reached mechanical completion and initial feedstock feeding has started.
INCINERATOR EXPLOSION AND FIRE KILLS TWO
Two people were killed in an explosion and subsequent fire on the site of an incinerator at Romanian producer Viromet Victoria last Monday, said a company source. The cause of the explosion and the resulting damage is unclear. Viromet, which is majority-owned by local company Interagro, produces methanol, formaldehyde, urea formaldehyde resins, nitrocellulose and plastic products.
TORAY SETTLES LAWSUIT WITH US GOVERNMENT
Japan's Toray Industries and its US subsidiary, Toray Composites (America), have agreed to pay the US government $15.25m (€9.75m) to settle a lawsuit for the alleged price fixing of carbon fiber, without admitting the charges. The lawsuit alleged that, at least between 1993 and 2001, Toray had conspired with other unnamed firms to fix prices on carbon fiber, according to the US Justice Department's website. Toray had denied the allegations but decided to settle considering future expenses that could be incurred by the lawsuit. The settlement was reached in January.
EFFICIENCY GAINS CAN OFFSET OIL PRICE PAINS
Consumers can counter high oil prices with energy efficiency gains, eventually driving down prices, said John Vautrain, senior vice president and director at oil and gas consultancy Purvin & Gertz at last week's Asia Petrochemical Industry Conference in Singapore. Consumers are already choosing more efficient vehicles, with manufacturer Ford estimating its truck sales will fall by 30% in 2008. A 9% gain in annual new vehicle efficiency could drive global gasoline demand down significantly.
OVERSUPPLY CONCERNS FOR PVC MEGA PROJECTS WILL BOOST GROWTH TREND
Singapore's petrochemical industry could see a growth spurt in the next five to seven years, following the completion of mega projects by Shell and ExxonMobil on Jurong Island. The Singapore Chemical Industry Council presented a report at the Asia Petrochemical Industry Conference (APIC) last week that pointed to a strong growth trend in the chemical sector, which forms a major portion of Singapore's manufacturing sector. It posted an estimated output of Singapore dollars (S$)83.1bn ($61.1bn) last year. The petrochemical sector saw a 21% year-on-year rise in output to S$26.8bn for 2007. Overall, the manufacturing sector in Singapore attracted S$16.1bn as investment in 2007, up by around 83% from S$8.8bn in 2006.
CHEMCHINA COUNTS THE COST OF EARTHQUAKE
State-owned China National Chemical (ChemChina) may have to spend yuan (CNY) 2.28bn ($329m) to rebuild its facilities, following the earthquake in Sichuan province. Eleven of ChemChina's subsidiaries suffered major damage, making it one of the worst hit state-owned companies, said company manager Ren Jianxin. Qingping Phosphate Mine, which suffered maximum damage, saw losses of around CNY300m, he said. However, the company does not plan to relocate upcoming projects in the area and will build a CNY880m 240,000 tonne/year ammonium phosphate plant in Sichuan's Deyang city. Construction will be complete in two years.
GROWTH MARKETS TO IMPACT TAIWAN IN 2008
After phenomenal growth in 2007, Taiwan's petrochemical industry could face a downturn in 2008 due to increasing competition from the Middle East, China and India. According to a report from the Petrochemical Industry Association of Taiwan (PIAT), expanding petrochemical capacities in the Middle East, China and India could act as a barrier to Taiwan's continued growth. The passing of the amendment to the Energy Management Act last year, aimed at improving energy saving and efficiency, could create more uncertainty over the implementation of petrochemical projects in the future, adds PIAT. Taiwanese petrochemical producers could expect a further squeezing of margins due to the continuing surge in crude prices.
DOW HIKES PRICES ACROSS THE BOARD
US-based Dow Chemical raised the prices of all of its products by up to 20% on June 1, in response to surging energy costs, CEO Andrew Liveris announced, blaming failed US energy policies. The sweeping price increases were essential as the company attempts to mitigate the extraordinary rise in energy and related raw material costs, he said. The exact increases depend on products' exposure to rising energy, feedstock and transportation costs, he said, adding that all terms to all customers would be reviewed. "Our first quarter feedstock and energy bill leapt a staggering 42% year over year, and that trajectory has continued," explained Liveris.
GLOBAL CAP-AND-TRADE DEBATE HEATS UP
A global cap-and-trade system could help drive innovation in the chemical industry, or put an unmanageable burden on costs, said executives at last week's Asia Petrochemical Industry Conference in Singapore. "We have to deal with the hard truth that more energy demand means more carbon dioxide at a time when climate change looms as a critical global issue," said Ben van Beurden, executive vice president at petrochemical giant Shell Chemicals. But Hiromasa Yonekura, president of Japan-based Sumitomo Chemical, said: "I don't believe in cap-and trade. The task of setting the cap in a fair and transparent manner is difficult and can take years to negotiate across nations and industries and then to companies."
TOUGH TIMES AHEAD FOR ASIAN PETCHEMS
The Asian petrochemical industry could face tough times in the coming three to five years, the Petrochemical Club of the Federation of Thai Industries said. "We will be heading towards tougher challenges, where only lower-cost producers will manage to stay on course," said club chairman Supachai Watanangura, at the Asia Petrochemical Industry Conference in Singapore. Prices of products had been "exceptionally healthy" for years, due to strong demand as China prepared for the Olympics this August, he said. "With the passing of the grand event, who knows what will happen to the petrochemical price cycles?"
MANUFACTURING MAY SHIFT OUT OF CHINA
China is becoming less competitive for petrochemical and downstream manufacturing plants because of rising labor costs, an appreciating yuan and the increasing cost of living, a consultant said at the Asia Petrochemical Industry Conference in Singapore. China is experiencing an 18%/year loss in its competitive position against the US, allowing countries such as Indonesia, Vietnam and the Philippines to move up and fill its shoes, said Fred Peterson, president of Probe Economics, a US chemical consultancy. As per capita income increases, manufacturing plays a smaller role in the nation's overall economy, he said. Therefore, as China becomes more developed, it should diversify away from agriculture and manufacturing.
UK PLANT SHUTDOWN TO COST SOLUTIA
US rubber chemical producer Solutia expects to take pretax charges of $45m-60m (€28m-38m) over the next four years, due to the closure of its plant in Ruabon, UK. The costs include $17m-22m for severance and employee benefits $15m-22m for cleanup and demolition and $13m-16m due to contract obligations to continue providing third-party operations at the site. The shutdown will reduce Solutia's annual revenue by about $50m, the company said.
DOW ASIA EXPLORES ALTERNATIVE FEEDSTOCK
US-based Dow Chemical will look toward using alternative feedstocks as it grows in Asia. "Asia is not very energy-rich. Nearly all growth is based on imported energy," said Jim McIlvenny, president of Dow Asia Pacific, at the Asia Petrochemical Industry Conference in Singapore. "This gets us to look at alternative feedstocks like coal-to-chemicals, cassava, sugarcane and cellulose," he added. "Coal will be an important part of our future." Dow is still conducting feasibility studies for a coal-to-chemicals plant in China, said McIlvenny.
AKZONOBEL RELOCATES CHELATES TO SHANGHAI
AkzoNobel Functional Chemicals is relocating its chelates business from the Netherlands to Shanghai to focus on customers in Asia. "It is extremely important for us to be in close proximity to our customers in China and the Asia Pacific Region," said functional chemicals general manager Bob Margevich. The business will move its head office during the summer, with chelates general manager Geert Hofman taking on the additional role of functional chemicals administrative representative for Asia Pacific.
CHINA PROBES DIMETHYL CYCLOSILOXANE
China has started an antidumping investigation on dimethyl cyclosiloxane from Korea and Thailand. The inquiry will focus on dumping profit margins and influence on the Chinese dimethyl cyclosiloxane industry. The Ministry of Commerce received a petition from domestic producers China National Blue Star New Materials and Zhejiang Xinan Chemical Group on April 22. The two companies were responsible for 72% of China's dimethyl cyclosiloxane total output in 2007.
GLOBAL ENERGY USE TO GROW BY 40%
Global energy consumption is estimated to grow by 40% from 2005-2030 as a result of population growth and improving living standards, and 80% of this need will be met by hydrocarbon resources, a senior ExxonMobil executive said last week. "Our assessment is that global energy demand will reach close to 325m bbl/day on an oil-equivalent basis," Matt Aguiar, global vice-president of basic chemicals at ExxonMobil, said at the Asia Petrochemical Industry Conference in Singapore. "[And] about 25% of this growth will come in the transportation sector, mostly from cars and trucks."
POLES REVIEWPRIVATIZATION PLANS
Poland will review its chemical sector privatization program in order to ensure the state maintains strategic control of gas monopoly PGNiG. The move could see stakes in melamine, caprolactam (capro) and nitrogen fertilizer producer ZA Pulawy and nitrogen fertilizer and titanium dioxide producer Zaklady Chemiczne Police transferred to PGNiG. Transferring the holdings will allow the government to maintain the 75% share it needs to keep control of PGNiG.
LANXESS RUBBER MAY CUT 93 JOBS IN BELGIUM
Rubber maker LANXESS may shed 93 jobs at a subsidiary in Zwijndrecht, Belgium, to reduce costs. "The aim is to improve the competitiveness of butyl rubber production there," the company said. Employees at LANXESS Rubber would be offered early retirement on a voluntary basis, LANXESS said.
CARBON CAPTURE NEEDS PUSH - SHELL
Carbon capture and storage (CCS) projects to reduce greenhouse gases need a push from governments to be economically viable, a senior executive at Shell Chemicals says. "Carbon capture needs to be part of the solution on climate change," Ben van Beurden, executive vice president of Shell Chemicals, said at the Asia Petrochemical Industry Conference in Singapore. "By 2050, global energy demand could double, and with this comes more carbon dioxide." And while CCS technology would continue to improve and become more efficient, "we need incentives from governments to move ahead on the learning curve," he said.
YARA ACQUIRES 25% STAKE IN AGRICO CANADA
Norway-based Yara International has acquired a 25% stake in Agrico Canada in order to improve its fertilizer import position and to enhance operational efficiency. Agrico's nationwide distribution system consists of four company-owned retail outlets, 10 joint ventures and a number of independent dealers. Agrico Canada owns five storage terminals and another five terminals with a storage capacity of 235,000 tonnes, which are located across the country to supply key markets with primary nutrients, micronutrients and specialty fertilizers.
PAKISTAN PETCHEMS OPPOSE CREDIT RULE
Pakistan's polymer producers, traders and converters are seeking to forestall a regulation that will hit imports. Market players have already petitioned the government to exempt petrochemicals from the regulation, which would impose a 35% cash payment on letters of credit (LCs) for imports of all items except food, a producer said at the Asia Petrochemical Industry Conference in Singapore.
VINYTHAI'S PVC EXPANSION ON SCHEDULE
Thailand chlor-alkali maker Vinythai's planned expansion of polyvinyl chloride (PVC) plant capacity to 280,000 tonnes/year from its current 210,000 tonnes/year is on schedule to come on stream in June. "Our VCM and caustic soda plants have finished their expansions, and we have no plans to further [ramp] up production capacities at our site," a source said at the Asia Petrochemical Industry Conference in Singapore.
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