This week's world news

02 October 2008 17:09  [Source: ICB]

CHEMTURA TO EXPAND CANADA GREASE PLANT
US-based specialty chemical firm Chemtura plans to expand the calcium sulfonate grease capacity at its plant in West Hill, Ontario, Canada, by 60%. The expansion is expected come on stream by the autumn of 2009. Calcium sulfonate grease is used in high-load, high-temperature applications in the marine, steel, paper and food industries.

PPG BUYS CHINA AUTO COATINGS FIRM
US-based coatings and chemicals firm PPG Industries has bought the automotive refinish coatings business of China’s Bonny Coating-Made for an undisclosed sum. The deal includes the Guangzhou-based unit’s customer list, technology, brands, trademarks and working capital as well.

RECALLS ON CHINESE MILK PRODUCTS CONTINUE
Asian countries continued to take precautions against Chinese melamine-tainted milk products, which have killed four children and made more than 50,000 ill in China. The Indonesian Health Ministry has detected melamine in 12 food products from China. Hong Kong authorities said they will conduct tests on Cadbury’s products after the UK confectionery group recalled 11 chocolate products made at its Beijing plant from various countries in the region, including Australia.

ZIRAX POSTS H1 2008 LOSS ON HIGH COSTS
UK-based specialty chemical company Zirax has incurred a first-half net loss of $602,000 (€409,000) against a net profit of $1.4m in the same period a year ago, on high costs. The company’s full-year earnings could be disappointing, it added. Revenue for the period rose by 13% to $15.1m, largely driven by its oilfield process chemicals while sales of deicing products fell.

RELIANCE TO MOVE INTO LUBES, CARBON BLACK
India’s Reliance Industries is planning to diversify into the manufacture of carbon black and lube oils with new complexes, bringing output from zero to 3.5m tonnes/year, a government official associated with the project said. The company will set up a 1.5m tonne/year carbon black plant and a 2m tonne/year lube oil complex in Jamnagar, Gujarat state.

DAIKIN TO INCREASE ETFE OUTPUT IN US
Japan’s Daikin Industries plans to increase the capacity of copolymer of ethylene tetrafluoroethylene (ETFE) at its US subsidiary for yen (Y) 7bn ($66m), doubling the company’s total capacity. The company expects to increase the capacity of the Alabama-based unit by April 2010. Demand for ETFE is increasing, particularly in the US, which consumes 50% of the global production for use in auto fuel tubes, Daikin said. The producer aims to double its current sales of ETFE to Y10bn in 2010.

POLYMIRAE TO USE LYONDELLBASELL TECH
South Korea polypropylene (PP) producer PolyMirae plans to use Netherlands-based LyondellBasell’s metocene PP technology at one of its Spheripol lines at Yeosu in South Korea. The PP license covers the full range of homopolymers, random copolymers and heterophasic copolymers with significantly improved physical properties, the company said.

INEOS CEO SEES TROUGH IN 2010
Lengthening supply/demand balances, the high oil price and the credit crunch will combine to push the petrochemical industry into a downturn in 2010, said Tom Crotty, CEO of INEOS Olefins in Europe, at the European Petrochemical Association (EPCA) meeting in Monaco. “There is no doubt the industry has a tough couple of years ahead in 2009 and 2010. Our view is that we will slide down in 2009 and that the trough will be in 2010,” he said. The impact of new capacity in the Middle East will become an issue in 2009–2010, and the impact of the credit crunch on end-use production will also be felt, he added.

PRICE CONTROLS HURT ARGENTINE CHEMICALS
Price controls on Argentine petrochemical products are increasingly squeezing the margins of local producers, particularly those in downstream markets, a producer said at EPCA. “The closer you are to the consumer, the more pressure you feel from the government to keep your prices down,” the source said. Argentina is imposing price caps on the market due to concerns about the impact of rising inflation on its economy.

TESSENDERLO EYES US ACQUISITIONS
The global economic downturn is softening demand for key products but also opening up expansion opportunities for Belgian chemical producer Tessenderlo, director of chemicals Frank Coenen said at EPCA. “You will see much less activity from private equity people, because they have a hard time financing. I expect the EBITDA [earnings before interest, tax, depreciation and amortization] multiples of acquisitions to go down, creating opportunities for strategic buys,” said Coenen. He added that Tessenderlo was actively looking for acquisitions in the US, and has a couple in the pipeline, with values of between $20m (€14m) and a few hundred million dollars.

LYONDELLBASELL: IKE FMS TO STAY IN PLACE
Force majeure (FM) declarations are likely to remain during October on some LyondellBasell products in the wake of Hurricane Ike, the Netherlands-based chemical company said. David Balderston, senior vice president of intermediate chemicals, said that limitations on supply would probably continue for ethylene and some other streams while the company ramps back up to full supply. “FMs will remain in place until we sort out our ability to get truly back to normal,” Balderston said at EPCA. LyondellBasell shut down 12 of its 13 US Gulf coast plants and declared a wide-ranging FM prior to the storm’s arrival.

EVONIK NEARS CHINESE METHACRYLATE START-UP
The first plants at Evonik Industries’ new methacrylates complex in Shanghai, China, will start up in the next four to six weeks, Gregor Hetzke, head of the German producer’s performance polymers business unit, said at EPCA. The plants that will start operation include a 40,000 tonne/year polymethyl methacrylate (PMMA) unit and a multiproduct specialty monomers plant. A 100,000 tonne/year methyl methacrylate (MMA) plant under construction for start-up in the second phase will be commissioned in the third quarter of 2009, added Hetzke.

EUROPE DIVERTS MEG TO AID US DUE TO IKE
Monoethylene glycol (MEG) is being diverted to the US from Europe to help fill the gap due to supply and production disruptions caused by Hurricane Ike, players said at EPCA. “The hot potato has [been] passed to the US,” one trader said. An estimated 6,000 tonnes of the 18,000 tonnes due into Europe at the end of September/first half of October is now destined for the US, he said.

SABIC TO EXPAND FURTHER IN EUROPE
Saudi Arabian chemical giant SABIC will seek to broaden its geographical footprint into Central and Eastern Europe and push further downstream, but only up to three steps from the cracker, SABIC Europe CEO Boy Litjens said at EPCA. “We are not interested in acquiring products for which we don’t have feedstock.”

EVONIK DEVELOPS NEW MMA PROCESS
German chemical company Evonik Industries has developed a new methyl methacrylate (MMA) process based on the classic acetone cyanohydrin (ACH) route but which avoids the production of ammonium bisulfate by-product, said Gregor Hetzke, head of Evonik’s performance polymers business unit, at EPCA. “The new technology achieves cost leadership production for the future,” he said. “The key to the process, called Aveneer, is a new catalyst, which replaces the sulfuric acid used in conventional ACH technology along with the need to recover the acid,” he said. “We feel we are very competitive to Lucite’s new process.”

GPCA: INVEST IN THE GULF TO PROSPER
European petrochemical players must invest in the Middle East or face feedstock shortages in years to come, the Gulf Petrochemicals and Chemicals Association (GPCA) said at EPCA. GPCA secretary general Abdullah S. bin Zaid al-Hagbani said the Gulf region would refine an increasing proportion of its own oil, meaning there would be less product available for export to Western refiners and downstream consumers.

CREDIT CRUNCH WILL CAUSE DEMAND DESTRUCTION
The global financial crisis will cause a reversal in polymer demand, said Paul Hodges, chairman of UK-based consultancy International eChem, at the European Petrochemical Association (EPCA) conference in Monaco. “The slogan for credit cards was: ‘Take the waiting out of wanting.’ Now you are going to put the waiting back into the wanting. There is overcapacity in the polymer industry – worse than we have ever seen before,” he said.

EC FINES “PARAFFIN MAFIA” CARTEL €676M
The European Commission has fined nine petrochemical companies a total of €676m ($950m) for taking part in an industry-wide paraffin wax trading cartel. Italy’s ENI, US-based energy and chemical giant ExxonMobil, German oils firms Hansen & Rosenthal and Tudapetrol, Hungary’s MOL, Spain’s oil and gas firm Repsol, South Africa’s Sasol, German power firm RWE, and French petrochemical giant Total were all found guilty of price fixing between 1992 and 2005. Sasol’s fine was increased by 50% for leading the cartel, while ENI was ordered to pay 60% more for previous activities in similar cartels. The Commission said that in the Shell group, the cartel was called “paraffin mafia,” and in the Sasol group, “Blauer Salon” (blue saloon), after a hotel bar in Germany where the first meetings of the cartel took place.

WAX PRODUCERS CLAIM INNOCENCE
Paraffin wax producers said they were in the dark on the exact reasons why they have been fined by the European Commission for price fixing, with some considering court appeals. Germany’s Hansen & Rosenthal, which was fined a total of €36m ($51m), said it would look to appeal and that it “continues to rule the fine as unjustified.” South Africa-based Sasol, which received the largest fine of €318m, said it was surprised by, and “does not understand the reasons for the magnitude of this fine and will be studying the reasons for the finding with a view to lodge an appeal against it.”

DELAWARE COURT RULES IN FAVOR OF HUNTSMAN
A Delaware, US, state court has ruled in favor of US-based chemical firm Huntsman by ordering a speedy completion of its merger with US-based rival Hexion Specialty Chemicals. “We are gratified that Apollo’s [Hexion’s parent company] allegations and tactics have failed to persuade the Chancery Court,” said Peter Huntsman, president and CEO of Huntsman. “We are disappointed by the Court’s decision. We are reviewing the decision and our options,” Hexion said in a statement.

HUNTSMAN SUES BANKS
US-based chemical firm Huntsman is suing the two banks that are financing its $10.6bn (€7.3bn) merger with Hexion Specialty Chemicals. In the suit, Huntsman accused global bank Credit Suisse and Germany’s Deutsche Bank of conspiring with Hexion’s parent firm – Apollo Management – to interfere with the merger. Huntsman has received a temporary restraining order against the banks, which stops them from ending their commitments to finance the merger with Hexion.

AKZONOBEL UPS SYNERGY
Netherlands-based specialties firm AkzoNobel is planning a raft of measures to achieve additional cost savings and improve performance. Leif Darner, AkzoNobel board member and head of performance coatings, said that part of the company’s plans included accelerating efforts to integrate the UK-based ICI businesses acquired earlier this year as well as focusing on organic growth. In addition to the €340m ($490m) saved through the ICI integration, AkzoNobel will aim for additional net savings of €100m. The combined effect of this will be around 3,500 job losses by 2011.

PRESSURE GROUPS ATTACK BMS EXPANSION GERMAN PRESSURE GROUPS
have challenged chemical company Bayer MaterialScience’s plans for a €300m ($423m) upgrade of isocyanates production in Germany. The Coordination Against Bayer Dangers, and the German Friends of the Earth Affiliate, BUND, called on BMS not to proceed with the consolidation and expansion of production at Brunsbuttel and Dormagen/Uerdingen up to 2013. They are also protesting against the use of phosgene-based technology in the new projects.

SAFC DOUBLES OUTPUT AT ARKLOW UNIT
Changing attitudes among major pharmaceutical companies toward quality and cost issues have played a key role in doubling the output of US-based SAFC Pharma’s manufacturing facility in Arklow, Ireland, since its acquisition from US industrial supplies manufacturer Honeywell two years ago, said Mike Harris, vice president of sales and manufacturing at SAFC Pharma. “We are seeing with many of the compounds that Arklow are making a real resurgence in volume,” he said at the CPhI ’08 trade show in Frankfurt, Germany.

GERMAN INDUSTRIES UNITE AGAINST ETS
Germany’s energy-intensive industrial producers warned of a €7.2bn ($10.1bn) cost burden by 2020 if the European Union’s Emission Trading Scheme (ETS) goes into law as is proposed. “If the European Commission’s ETS proposal passes without changes, the deindustrialization of Germany will be inevitable,” said Ulrich Lehner, president of Germany’s Chemical Industry Association (VCI).

BRENNTAG BUYS RHODIA’S ASIAN ARM
German chemical distributor Brenntag has purchased Rhodia’s Asia-Pacific specialty chemical distribution business. The deal gives Brenntag access to fast-growing distribution markets in Australia, India, Thailand, Indonesia, the Philippines, Singapore, and Vietnam, the company said at the European Petrochemical Association (EPCA) meeting in Monaco. Rhodia’s Asia-Pacific distribution network achieved total sales of $400m (€290m) in 2007.

SUMITOMO HALVES H1 EARNINGS ESTIMATE
Japan’s Sumitomo Chemical has halved its forecast for consolidated net income for the first half of the year to yen (Y) 5bn ($47.5m) due to the worsening climate in the petrochemical and basic chemical segments. For the full year ending March 2009, Sumitomo expects net income to be Y15bn, down by 72.7% from the previously forecast Y55bn.

HOLLIDAY TO GET PALLADIUM MEDAL
The Societe de Chimie Indus-trielle – American Section, announced that the 2009 International Palladium Medal will be awarded to Chad Holliday, chairman and CEO of US-based chemical giant DuPont. The award is in recognition of Holliday’s contributions to the industry, and thereby to the enhancement of the international aims and objectives of the trade organization. He will receive the medal at a dinner in his honor on May 5.

LANXESS STARTS UP NEW EPDM PLANT
Germany’s LANXESS has started production at a new pelletizing plant for ethylene-propylene-diene monomer (EPDM) rubber in Marl, Germany. The new facility has capacity to produce 3–5 tonnes/hour of pellets, opening up new market opportunities in the cable industry and for thermoplastic olefins.

YANSAB DELAYS SAUDI MEG START-UP TO 2009
The start-up of monoethylene glycol (MEG) operations at Yanbu National Petrochemical (Yansab) will be delayed to early 2009 from the fourth quarter of 2008, said a source from parent company SABIC. The 700,000 tonne/year MEG plant is located at Yanbu in Saudi Arabia.

SHARQ MEG DELAYED
Saudi Arabia-based Eastern Petrochemical’s (Sharq) No. 4 monoethylene glycol (MEG) line in Al-Jubail, with 700,000 tonnes/year of capacity, will be delayed beyond October, but will start up before the end of the year, said a source at Saudi chemical giant SABIC. Sharq is a joint venture of Japanese companies, led by Mitsubishi Chemical, and SABIC.

FORTIS WOES COULD HURT PETCHEM TRADING
The near-collapse in European bank and insurer Fortis could squeeze credit lines for petrochemical traders. Two sources from an international trading house said at EPCA that they had used Fortis for credit on a variety of projects and that they were not alone. “Fortis are lenders big time. Everyone has business with them,” said one trader. Fortis’s financial problems “are really slowing things down.”

CEFIC AIMS FOR 100% PLASTICS RECYCLING
The EU, US and Japan should be recycling 100% of plastics waste by 2030, European Chemical Industry Council (Cefic) president Francois Cornelis said. The global production of plastics is set to double to 350m tonnes/year by 2030, and the issue of disposal should be placed high on the agenda, said Cornelis, also president of chemicals at French oil and chemical giant Total. “I can’t understand how in Europe we still put plastics into landfills. I think burning plastics instead of coal should be easy and we need to get to the solution much faster…. Why can’t we substitute 10% of the coal burned in power plants for plastics?” he said.

AZELIS PREREGISTERS
European distributor Azelis has revealed that it was one of two companies to have preregistered all 100,000 chemicals listed in the EU inventory with the European Chemicals Agency for Reach.

CORRECTION
In the ICIS Top 100 listing in September 15 issue of ICIS Chemical Business, we missed US-based Rockwood Holdings, which had $3.14bn (€2.26bn) in sales in 2007, and Russia-based EuroChem, which also had about $3.14bn in sales in 2007. Our apologies for the oversights.

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