This week's world news

The week in brief

07 July 2008 00:00  [Source: ICB]

EC APPROVES HEXION/HUNSTMAN MERGER

The European Commission has approved the proposed acquisition of Huntsman by Hexion Specialty Chemicals on the condition that the latter divests its epoxy resins production and research and development (R&D) facilities in Germany and the US. After discussions with the Commission, Hexion offered to divest all facilities belonging to its own epoxy resin business at Duisburg and Stuttgart, both in Germany. It would also sell its US facility at Argo, Illinois, its high-performance resin unit at Norco, Louisiana, as well as R&D assets in Germany and Houston, Texas. Hexion has backed out of the deal, but Huntsman is seeking to force a merger.

POLAND STILL PLANS ITS CHEMICAL PRIVATISATION

Poland remains committed to the privatization of its chemical sector, despite the initial negative reaction to the stock market debut of nitrogen fertilizer producer Zaklady Azotowe Tarnow (ZAT), says treasury minister Aleksander Grad. Shares in ZAT dropped 11% to zlotys (Zl) 17.50 (€5.19, $8.19) from the IPO price of Zl19.50 when they became available on the Warsaw Stock Exchange. The ZAT IPO was the first move in the Polish government's plan to privatize its holdings in all 19 chemical companies still under state control, by 2011.

SOLUTIA INVSTIGATES SALE OF NYLON BUSINESS

US-based Solutia has hired HSBC Securities to explore the possible sale of its nylon business. The firm said the business operated at a loss in the first quarter (Q1) of 2008 and that it planned to focus on its higher margin specialties businesses. "Given the strength of our high-margin specialty chemical and performance materials businesses and the current industry dynamic in the nylon segment, it is an appropriate time to explore strategic alternatives available that would better position both the nylon business and the rest of Solutia for reaching their ultimate potential," said Solutia CEO Jeffry Quinn. It had sales of $1.89bn (€1.2bn) in Q1. Solutia said it was one of only two firms globally that own the complete range of technology to produce nylon 6,6.

OPPOSITION FORCARBON MONOXIDE PIPELINE

Germany's federal finance minister Peer Steinbruck has said he is opposed to Germany-based Bayer's carbon monoxide (CO) pipeline project to link two of the company's sites in the country's state of North-Rhine-Westphalia. In an interview with daily Rheinische Post, Steinbruck said he was concerned about safety in shipping CO, but rejected suggestions that his opposition was politically motivated. The pipeline, which links Bayer's chemical production sites in Dormagen and Krefeld, is about 90% complete but Bayer has yet to get permission to operate it.

LONZA EXPANDS CELL PRODUCTION

Switzerland's Lonza will build a US therapeutic cell production facility at its site in Walkersville, Maryland, US. The multimillion-dollar investment will include the first commercial-scale allogeneic current Good Manufacturing Practices (cGMP) manufacturing facility, capable of producing billions of cells/day, as well as additional capacity for the manufacture of cGMP-grade cell culture media.

DOW PRICE INCREASES ARE MERELY "SYMBOLIC"

Financial services firm JPMorgan has said US major Dow Chemical may find it hard to follow through with its across-the-board price hikes because it participates in many commodity and semicommodity businesses where it does not wield pricing power. Analysts suggested the announcements were "symbolic" and mean that Dow will aim to increase prices sharply and quickly where it can. To help offset soaring energy and feedstock costs, Dow announced a sweeping 20% price increase for all products in May, and followed with another 25% increase on June 24.

CHRYSLER SOON TO IDLE US MINIVAN FACILITY

US automobile manufacturer Chrysler aims to idle a minivan plant near St. Louis, Missouri, from October 31. US consumers are increasingly opting for fuel-efficient cars rather than trucks and other large vehicles. The firm also plans to remove a shift at its St. Louis North plant, which makes full-size trucks, on September 2. This will cut 2,400 hourly jobs.

JV PARTNERS WANTED FOR SHELL'S SM/PO SITE

Global firm Shell Chemicals is seeking potential joint venture partners for a new styrene monomer (SM) and propylene oxide (PO) facility. The company has yet to confirm the size and location of the plant, which would cost at least $500m (€316m) to build. A spokesman said it was studying several locations in the Middle East and Southeast Asia.

NIPPON OIL HAS AUGUST SUBSIDIARY PLANS

Japan's largest refiner Nippon Oil plans to make Kyushu Oil a wholly-owned subsidiary by late August. The firms' shareholders have signed the agreement for the transfer and acquisition of Kyushu Oil shares. A joint statement says the two companies are scheduled to sign contracts in late July, which includes a merger agreement. This would see the companies buy back all the shares from Kyushu Oil stakeholders at yen 650/share ($6.13/share) and the merger would be completed by October 1. Nippon Oil holds a 10% share in Kyushu Oil. Its primary shareholder Nippon Steel has a 35.97% share.

INDIA'S HIKAL IN SUPPLY AGREEMENT WITH BAYER

India's Hikal will supply pesticide active ingredients to Germany's Bayer CropScience from a new plant in the second half of 2008. It has announced the commissioning of the multiproduct plant at its existing site at Taloja in Maharashtra state.

CALCIUM CARBIDE CARTEL IS INVESTIGATED BY EC

The European Commission is investigating Germany's Evonik over the alleged participation in a cartel in the calcium carbide and magnesium powder sector. The EC sent a statement of objections to a list of chemical companies, including Akzo Nobel, but has not named the companies involved. Evonik said it was being held liable as a former parent company of SKW Stahl Metallurgie, due to the subsidiary's activities in 2004. "This liability is limited to only a few months up to the sale of SKW in 2004. Evonik Degussa is not being accused of having a part in the wrongdoing," the company said.

NET PROFITS PLUNGE FOR INDORAMA SYNTHETICS

Indorama Synthetics India has reported an 84% drop in full-year net profit to Indian rupees (Rs) 30.2m ($700,000) for the year ending March 31, 2008. Last year's total was Rs206.4m. However, the synthetic manufacturer's operating profit rose by 34.6% to Rs2.4bn from Rs1.8bn, while its net sales rose by 26.5% to Rs25.4bn from Rs20.1bn, the firm said.

CHEMICAL OUTPUT IN EUROPE SLOW, FOR NOW

Industry association Cefic expects chemical industry output in Europe to slow in 2008 but to show a slight improvement next year. Output in the chemical industry, excluding pharmaceuticals, is expected to grow by 1.4% this year compared with 2.1% in 2007. Growth in 2009 is expected to be at 1.5%.

UREA OUTPUT TO RISE AFTER CO₂ AGREEMENT

Japanese engineering major Mitsubishi Heavy Industries has signed a license agreement for its carbon dioxide (CO2) recovery technology with Engro Chemical Pakistan - the second-largest producer of urea fertilizer in Pakistan. It plans to use the technology to recover CO2 from flue gas emitted from its petrochemical plant to increase urea production. The recovery units, which could capture 340 tonnes/day of CO2, are slated for completion in July 2010, said Mitsubishi.

UK'S ZOTEFOAMS EYES STONG GROWTH PERIOD

UK polyolefin foam block maker Zotefoams expects strong growth in sales and profit for the six months ending June 30, 2008. The company said its polyolefin foams segment experienced strong overall sales growth, which was enhanced by the strength of the euro over the period. However, sales of high-performance polymers were lower than in the year-ago period.

GERMAN METHANOL UNIT RESTARTS AFTER DELAYS

European methanol producer Mider Helm has restarted its 660,000 tonne/year plant at Leuna, Germany, following delays to start-up. The unit went down for planned maintenance on May 3 and was originally scheduled to restart on June 19.

THREE CHEMICAL PLANTS TO BE BUILT IN TIANJIN

China-based Tianjin Taishen Chemicals plans to build three new facilities in Binhai's new district in the Northern Chinese city of Tianjin. This will include the construction of a 150,000 tonne/year phthalic anhydride (PA) unit, a 200,000 tonne/year dioctyl phthalate (DOP) plant and a 120,000 tonne/year solvent acetate unit from 2008-2012. The company projects production value per year at yuan (CNY)5.5bn ($802m) with total chemicals output of 470,000 tonnes/year when the project is complete.

DIPOL'S SILVER EPS EXPANDS INTO NEW MARKETS

Dipol is introducing INEOS Nova's new Silver expandable polystyrene (EPS) to markets in the former Soviet Union. Two construction companies in Ukraine - one in Crimea, the other in Zaporozhje - plan to use it in local projects. Foams made with Silver EPS have better thermal insulation properties than standard EPS. Construction firms are starting to replace common EPS with the Silver grade as it cuts energy consumption by 20%.

FOUR-WHEEL VEHICLE SALES BOOM N JAPAN

Japan produced 6.8% more four-wheel vehicles in May compared with the same period a year earlier, marking a tenth successive month of increases. Figures from the Japan Automobile Manufacturers Association (JAMA) show that the country produced 924,897 in May, up from 866,196 units in May 2007. Meanwhile, the country's exports of four-wheel vehicles climbed for the 34th consecutive month, with May at 528,617 units, up by 9.5% from the year before. This amounted to yen 10.3bn ($96.5m) - up by 18.5% on the same period last year.

AMWAL RAISES EQUITY FOR QUATAR HCL UNIT

Qatar-based investment banking and asset management firm Amwal is raising equity for nearly 30% of the total cost of Qatar Chlorine's hydrochloric acid (HCl) project in Mesaieed. Media reports suggest that the plant is expected to start production in the third quarter of 2009 and would also produce caustic soda and bleaching products. The HCl unit will meet rising local oil field and industrial demand, while reducing the country's reliance on exports.

CRACKER IS ONLINE

The force majeure on ethylene and propylene remains in place at Dow Chemical's Tarragona cracker in Spain. It has, however, come back online and is running at 50% capacity, said a company source. The cracker tripped on June 11 after a power cut, and had originally been due to restart on June 19.

SIBUR PUMPS UP ITS TIRE STAKE

Sibur Holding has taken a 70% stake in Russian-Dutch tire manufacturer Amtel-Vredestein after combining the firm with subsidiary Sibur Russian Tyres in a reverse takeover. The deal would form one the world's top 10 tire producers. Sibur funded the takeover of Sibur Russian Tyres by Amtel-Vredestein for $319m (€202m), using the equity in its subsidiary to take control of the combined company. The takeover requires the agreement of Amtel-Vredestein's shareholders but is expected to be complete in the second half of the year.

PLANNED PAINTS PLANT WILL COVER DEMAND

Japan's Nippon Paints is planning a greenfield coil coating and auto paint facility at Pune in Maharashtra state, India, due to increased demand. The plant, worth over rupees 1bn ($23.5m), will produce 300,000 liters/month of coil coatings, said a company source. Construction will be complete in two to three years.

EU RECEIVES NEW SEALS SANDS ACN APPLICATION

INEOS Nitriles resubmitted an application for the proposed takeover of BASF's acrylonitrile (ACN) plant at Seal Sands in the UK on June 25. This follows the EU's request for further information. Sources at INEOS remained confident that the acquisition will go ahead. Once the resubmission was made, the sources said it was likely that the EU would take a further five to six weeks to respond.

ORLEN FACES CREDIT RISK WITHOUT RUSSIAN OIL

Credit rating agency Fitch Ratings has said that Poland's PKN Orlen could increase its credit risk if it pursues plans to end the reliance of its refining and petrochemical businesses on Russian oil. Orlen is under strong Polish government pressure to look for oil exploration and production (E&P) opportunities around the world. Fitch concluded that, with elevated crude oil prices, any substantial E&P investment commitments made by state-controlled Orlen could push up its credit risk unless it cut capital expenditures in other segments.

CANADA NEEDS NO HELP UNDER RENEWABLE RULES

Canada should be self-sufficient under a new renewable fuels mandate, and will probably not provide a market for US biodiesel producers. The Canadian Senate has voted to implement a 5% renewable content in gasoline by 2010 and 2% renewable content in diesel fuel and heating oil by 2012. With plenty of farmland available for growing biodiesel feedstock crops and a relatively small driving population of only around 20m vehicles compared with 238m in the US, the country should not need much help from abroad, suggest analysts. Canada currently produces 223m gals/year (844m liters/year) of ethanol and 25m gals/year of biodiesel, according to the Canadian Renewable Fuels Association. This total is expected to grow in the coming years.

CHLOR-ALKALI FACILITY IS PLANNED IN CHINA

China-based Yaan Haosen Chemical and Industry is planning to build a chlor-alkali facility in Yaan, Sichuan province, for yuan 980m ($142.8m). As well as a 200,000 tonne/year polyvinyl chloride (PVC) unit, the company will also build a 160,000 tonne/year caustic soda facility, according to a source close to the company. It hopes to complete construction within 16 months so that it can take advantage of increased PVC demand for reconstruction in areas affected by the Sichuan earthquake.

RUSSIAN SELLER REPORTS AN 80% PROFIT INCREASE

Major Russian petrochemical producer Salavatnefteorgsintez has posted an 80% increase in first-quarter net profits year-on-year, at roubles (Rb) 1.8bn ($76m, €50m). The company's sales rose 20% to Rb29.1bn from January to March. Last month, it reported full-year sales for 2007 up 28% year-on-year, at Rb96.9bn.

INNOVATIVE PLASTIC FILM TO BE LAUNCHED BY MITSUBISHI PLASTICS

From July 1, Japanese chemical producer Mitsubishi Plastics plans to sell a new, high-function plastic film that blocks water vapor, oxygen and CO2. It is said to be resistant to high temperatures and humidity. The producer expects to generate yen 5bn ($46.88m) from X-Barrier sales within the next three years, with potential markets including the medical, pharmaceutical and industrial sectors.

JOB LOSSES STEM FROM SLUMP IN CONSUMPTION AND ECOMOMIC WOE

Paper pigment producer Imerys will cut around 50 jobs and reduce capacity at its kaolin operations in the US state of Georgia. The move follows lower demand because of overcapacity for graphic papers in North America and the economic slowdown.

NEW CHINESE PX CAPACITY WILL BE SWALLOWED BY PTA DEMAND

Although new paraxylene (PX) projects in China will add considerably to supply by 2010, demand from downstream purified terephthalic acid (PTA) is likely to outstrip the capacity, said senior engineer Yu Jing of China International Chemical Consulting Corporation. At the 4th ICIS Asian Aromatics and Derivatives conference, Jing said PX capacity would rise to 9.9m tonnes/year by the end of the decade, with the expected output reaching 8.2m tonnes/year. Meanwhile, demand is forecast to reach 10.1m tonnes/year in 2010, 1.9m tonnes/year above the expected output.

FRENCH CRACKER OUTAGE IMPACTS PE/PP OUTPUT AT AUBETTE PLANT

An unplanned outage at LyondellBasell's cracker at Berre, France, on June 26 stopped polyethylene (PE) and polypropylene (PP) production at its nearby Aubette site. The company said it expected production to restart last Tuesday. The cracker has a capacity of 530,000 tonnes/year of ethylene and 255,000 tonnes/year of propylene.

WELLMAN OUTLINES PLAN TO FREE ITSELF FROM BANKRUPTCY

US producer Wellman has filed a reorganization plan in US bankruptcy court, which could be confirmed before September 16. This would see Wellman emerge from bankruptcy protection as a stand-alone company. The plan is a reversal of Wellman's initial strategy, in which it hoped to be sold while in bankruptcy protection. Wellman changed its plans after it received bids that were considered too low.

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