This week's world news

26 September 2008 13:32  [Source: ICB]

CHINA’S MELAMINE SCANDAL SPREADS
The Chinese melamine scandal spread to Europe last Wednesday as leading UK grocer, Tesco, announced it would withdraw White Rabbit Creamy Candies as a result of reports they could contain melamine, a chemical that has contaminated baby formula and other dairy products in China, killing four infants and making 53,000 ill.

CHINESE EA DEMAND HIT BY TAINTED MILK
Ethyl acetate (etac) demand in East China could drop on the recent melamine contamination reports. “The melamine-tainted-milk scandal, which hit dairy organizations like Yili Group, will also hit ethyl acetate demand because up to 40% of the solvent is used in the printing ink on consumer goods packaging,” a Jiangsu-based major acetic acid producer said.

H.B. FULLER Q3 PROFIT FALLS BY 24%
US specialty chemical maker H.B. Fuller reported a sharper-than-expected 24% decline in its third-quarter (ended August) net profit to $21.7m (€14.81m), as higher costs offset revenue gains. Rising raw material costs and too few price gains pulled down the company’s net income from $28.4m a year earlier, despite a 2.8% increase in revenue to $362m.

ECHA CHANGES REACH RULES
The European Chemicals Agency (ECHA) is changing the rules on preregistration for Reach, the EU’s new Registration, Evaluation, Authorisation and Restriction of Chemicals law, to suit its own convenience, the UK’s Chemical Business Association (CBA) charged. The CBA reacted to a Reach rule change from the ECHA, which said it would restrict the number of substances that can be submitted to the agency electronically by bulk preregistration files to 10,000. “The advice from the European Commission and ECHA… has always been: ‘If in doubt, preregister,’” said CBA director Peter Newport. Two companies, one in the UK and one in Germany, had preregistered more than 100,000 substances, equivalent to the entire EU chemical directory.

WAVIN TO CUT 200 JOBS
Netherlands-based polyvinyl chloride (PVC) pipe producer Wavin plans to further streamline its European business with 200 job cuts, mainly in the UK. The restructuring, which would yield annual savings of some €6.5m ($9.5m), is expected to be completed in the fourth quarter. Wavin will take an €8.5m charge to account for the restructuring.

AIR PRODUCTS LOWERS Q4 EARNINGS ESTIMATES
US-based gases firm Air Products has lowered its earnings expectations for its fiscal fourth quarter (ending September) due to a fire in South Korea, hurricanes on the US Gulf Coast and a challenging economic environment. Earnings per share (EPS) from continuing operations are expected to be in the range of $1.24–1.26 (€0.85–0.86), down from its previous estimate of $1.37–1.42.

CITIGROUP TAKES AIR OUT OF GASES
US-based investment bank Citigroup has downgraded its ratings for US industrial gases majors Air Products and Praxair, prompted by Air Products’ profit warning and fears over weak US and European economies. Citigroup downgraded both stocks to “hold” from “buy” and also cut target prices and earnings per share estimates. “The slowdown is just beginning, with Air Products as the unusual first victim of the softening economy,” said Citigroup.

INEOS LIFTS COLOGNE FM
UK-based INEOS Olefins has lifted its butadiene (BD) force majeure at its Cologne, Germany, plant following a period of stable production rates. “BD supply remains extremely tight but we can confirm supplies, subject to mutually agreed timing, can return to our contractual monthly amounts,” the company said in a letter to its customers.

PPG Q3 PROFITS DOWN
Third-quarter earnings by US-based chemical and coatings producer PPG Industries will be $35m–40m (€24m–27m) lower than previously expected due to plant shutdowns and force majeure declarations following hurricanes Gustav and Ike, as well as weak US automotive markets. In addition, workers at US-based plane maker Boeing have begun work stoppages, resulting in delayed orders.

PPG TO RESTRUCTURE EUROPE COATINGS
US-based chemical and coatings producer PPG Industries plans to restructure its coatings business in Europe with the closure of a plant in Geldermalsen, the Netherlands, next year. Production from Geldermalsen, which employs 111 people, will be consolidated with PPG facilities in Amsterdam and Deurne-Borgerhout, Belgium, creating some 65 jobs at those sites.

DOW LIFTS FORCE MAJEURE ON BD
US-based Dow Chemical has lifted force majeure on butadiene (BD) from its Terneuzen unit, in the Netherlands. “Both Terneuzen BD plants are operating,” said a company source. Force majeure had been in place since late June, following some technical problems that affected production rates at the site. Dow’s Terneuzen BD capacity is rated at 180,000 tonnes/year, according to ICIS plants and projects.

DOW DECLARES FM ON MEA AND TEA IN EUROPE
US-based Dow Chemical has declared force majeure on deliveries of monoethanolamine (MEA) and triethanolamine (TEA) to Europe on logistical difficulties. The force majeure, declared last Tuesday, was as a result of logistical problems at its US terminal, said a company source, adding that it was  not known how long the declaration would remain in place. Dow’s terminal in Seadrift, Texas, US, suffered damage from Hurricane Ike.

JAPAN’S ITOCHU INVESTS IN BRAZIL ETHANOL
Japanese trading house Itochu has signed an agreement to partner with Brazil’s Agroindustrial Santa Juliana in producing and selling bioethanol from sugarcane at a plant in Minas Gerais state. Itochu will have a 20% stake in the joint venture with the Brazilian company, a subsidiary of Brazilian agrigiant Bunge. Itochu also signed a separate contract with Bunge to purchase another 20% share in a different bioethanol project in Brazil. The estimate for the total cost of the two projects is $800m (€546m). The first venture will produce 260,000 kiloliters/year of bioethanol.

PHOSGENE LEAK INJURES 40
Around 40 people were hospitalized following a phosgene leak at a Chongqing Changfeng Chemical plant in China’s Chongqing city last Monday, said local media reports.

ADM, POLYONE TO MAKE BIO-BASED PLASTICIZERS
US agriculture giant Archer Daniels Midland and US polymer firm PolyOne will collaborate on the development of plasticizers derived from corn and oilseeds for polymers. 

KEMIRA PLANS R&D CENTER AT GEORGIA TECH
Finnish chemical producer Kemira will start up a research and development (R&D) center at the Georgia Tech campus in Atlanta, Georgia, US, next summer. The center, which will employ 85 R&D professionals, is part of Kemira’s effort to consolidate 17 existing R&D sites into five global facilities next year.

ADITYA BIRLA STARTS CARBON BLACK PROJECTS
India’s Aditya Birla is implementing two projects to ramp up its global capacity of carbon black from 790,000 tonnes/year to 1m tonnes/year. Aditya’s subsidiary, Thai Carbon Black, could expand capacity by 80,000 tonnes/year to 300,000 tonnes/year by early 2009. An Indian subsidiary, Aditya Birla Nuvo, plans to build a 150,000 tonne/year carbon black plant in two phases in Maharashtra state. The company will invest Indian rupees 3.35bn ($72.6m) on this project and efficiency improvements to existing plants.

BASF TO CUT PS BY 25% IN EUROPE
BASF will cut back its polystyrene (PS) output in Europe by 25% from October 1, because of reduced demand. “The market for polystyrene has shrunk in almost all customer sectors this year,” said Jaroslaw Michniuk, who is head of BASF’s European styrenics business unit at Ludwigshafen, Germany.

CZECH MPS OVERRIDE PRESIDENT’S REACH VETO
Czech Republic parliamentarians have overridden President Vaclav Klaus’s August veto of the EU’s Registration, Evaluation, Authorization and Restriction of Chemicals. Klaus had argued that it would be too expensive.

CHEMICAL SHIPPERS URGE ACTION OVER SOMALIA PIRACY
International chemical shipping organization INTERTANKO has urged governments and global bodies to address the escalating number of violent attacks by pirates on tankers off Somalia. “Some of the major shipping companies are already refusing to transit in the Gulf of Aden, while others are understandably considering similar steps, with of course the potential for significant impact on world trade,” said INTERTANKO in a statement.

PETROCHINA TO INVEST $1.19BN IN NINGXIA PROJECT
PetroChina’s subsidiary Ningxia Refining and Chemicals will invest yuan 8.2bn ($1.19bn) on a refinery project in Yinchuan, the capital of Ningxia province. A 5m tonne/year refinery, a 100,000 tonne/year polypropylene (PP) unit and some other facilities will be built at the site.

EXXONMOBIL READIES LNG TERMINAL OFF ITALIAN COAST
US oil major ExxonMobil’s Adriatic liquefied natural gas (LNG) terminal – the world’s first offshore LNG terminal – has arrived at Porto Levante, Italy. The project will supply 10% of Italy’s natural gas needs.

SIBUR BUYOUT IS SUSPENDED
Gazprombank and the management team of Russia’s major petrochemical holding, Sibur, have suspended their preliminary management buyout (MBO) agreement, as the current situation in global stock and financial markets affected the chances of finalizing the MBO on the previously agreed terms. Both sides said they would not rule out a restart of talks as soon as the market improves.

REPORT FROM CSB CONCLUDES A HOSE CAUSED BARTON BLAST
The US Chemical Safety and Hazard Investigation Board (CSB) has attributed a 2007 blast at Barton Solvents in Iowa to a hose and nozzle used to fill a portable storage tank with ethyl acetate, a flammable liquid. The equipment had never been intended for use with flammable liquids.

MOODY’S DOWNGRADES INEOS OUTLOOK TO NEGATIVE
Moody’s has downgraded INEOS’s credit to negative due to weak operating trends in the company’s portfolio. “The rating action reflects Moody’s expectation that the weak current operating trends may persist in the near future, leading to a sustained weakness in the cash flow generation of the group as the polyolefins cycle enters into a downturn,” the US credit rating agency said.

YONGYE BIOTECH TO BOOST SALES
China-based Yongye Biotechnology plans to boost sales to $44m (€30m) in 2008, up from $13m in 2007, said Larry Gilmore, vice president of corporate strategy. Yongye’s product combines nutrients with fulvic acid to boost crop yields. The company is building an yuan 25m ($3.7m), 8,000 tonne/year facility in Inner Mongolia, which is expected to be completed by July 2009. The plant will quadruple its fulvic acid capacity to 10,000 tonnes/year.

MARUBENI SECURES PETROVIETNAM PP
Japanese trading house Marubeni has signed a contract with PetroVietnam to purchase 150,000 tonnes/year of propylene from Vietnam’s first refinery, Dung Quat, starting in February. Marubeni will off-take all the propylene produced from the residual fluid catalytic cracking at the refinery until the 150,000 tonne/year polypropylene (PP) facility at the same site is completed. “There’s no fixed ending date for the contract, but we are expecting the facility would probably be completed around 2010,” said a Marubeni spokesman.

HONEYWELL DEVELOPS SAFER AN FERTILIZER
US conglomerate Honeywell has developed a new, patented technology to produce a highly effective, safer ammonium nitrate (AN)-based fertilizer with significantly lower explosive potential, the US technology and chemicals firm said. The new composition, which fuses ammonium sulfate with ammonium nitrate, has already received a safety designation from the US Department of Homeland Security.

OXEA GETS APPROVAL FOR CHINESE AMINES
German chemical firm OXEA has won local government approval to build a new amines plant in eastern China. A joint venture with Jianyin-based Chengxing Group, the plant will mostly serve customers in Asia.

CELLULOSIC ETHANOL PLANT TO OPEN IN US
US ethanol producer POET plans to start producing cellulosic ethanol from a small pilot-scale facility later this year in South Dakota. POET plans to use corn cobs as the feedstock because they have greater bulk density than other biomass and generate a higher ethanol yield than stover and other corn debris.

LINDE, VATTENFALL WORK ON CO₂ PROJECT
German industrial gases company Linde has entered a partnership with Sweden’s Vattenfall to develop carbon dioxide (CO₂) separation technology for coal-fired power plants. Linde has built air separation and CO₂ liquefaction units at Vattenfall’s 30MW pilot plant at Schwarze Pumpe in Brandenburg, Germany.

By: Joseph Chang
+1 713 525 2653

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