This week's world news
15 December 2008 00:00 [Source: ICB]
Dow cuts jobs, closes plants?xml:namespace>
?xml:namespace>US producer Dow Chemical has announced plans to cut 5,000 full-time jobs, close 20 of its plants and sell businesses because of the economic downturn. Plants will be closed in high-cost locations, with the company looking to save $700m (€553m) in operational costs by 2010. The job cuts represent a reduction of approximately 11% of its global workforce, Dow said. In addition, the company said in a statement that it would temporarily idle 180 plants and reduce its contractors worldwide by approximately 6,000, as predicated by reduced operations. The $700m cost savings are expected to be made in addition to a projected $800m in savings from the integration of specialty chemicals firm Rohm and Haas (see page 14).
INEOS negotiates debt covenant waivers
UK chemicals group INEOS has successfully negotiated debt covenant waiver discussions with its major banks. The UK's Barclays Bank, as agent for the lenders, confirmed that over 90% of the bank syndicate by amount voted and 100% of these voted in favor. "Lenders have given their support in the company showing confidence in the management team and the underlying business," INEOS said in a statement. "We are pleased that senior debt-holders have endorsed our proactive steps to address the exceptional trading conditions," INEOS chief financial officer John Reece said.
Akzo to cut 350 jobs, close sites in Germany
AkzoNobel is closing parts of its decorative paints production in Germany, which will eliminate 350 jobs, the Dutch paints and chemicals major said last week. The company will in the coming months close a production site in Rheinberg and a distribution centre in Wunstorf, as well as parts of its production at Cologne. Akzo said the closures in Germany were part of a global program to improve performance, which the company announced earlier in September.
Serbia talks to Gazprom on HIP Petrohemija, NIS
Serbia is in talks with Gazprom to stress how the Russian major would benefit from buying petrochemical producer HIP Petrohemija and national oil company NIS. Gazprom CEO Alexei Miller said a deal for its oil subsidiary Gazpromneft to buy NIS should be concluded by the end of the year. Miller, speaking after talks in Belgrade with government officials, declined to say on if its petrochemical subsidiary Sibur intended to acquire HIP Petrohemija, a source at Serbia's Ministry of the Economy said.
Makhteshim Agan to buy central Europe firms
Israel's Makhteshim Agan has signed deals to buy 90% of Polish Rokita Agro and the business of Serbian agrochemical distributor Magan Yu. Makhteshim Agan said it would pay a consideration of approximately $20m (€15m) for both transactions, which are expected to be accretive to the company's earnings immediately. The proposed acquisitions are subject to customary regulatory approvals and are expected to be completed in early 2009.
SABIC plastics to cut 1,000 jobs
SABIC Innovative Plastics will cut about 1,000 jobs - 10% of its global workforce - through 2009 as part of a restructuring plan. SABIC spokeswoman Jodi Kennedy said the company would eliminate the jobs through attrition and layoffs. SABIC plastics employs about 10,500 people worldwide. Kennedy declined to give specifics on the restructuring plan other than to say it would "intensify focus on our diverse customer base."
Arab funds interested in Poland's ZAP
Polish chemical group Zaklady Azotowe Pulawy (ZAP) has welcomed an announcement from Poland's investment agency that two Gulf Arab sovereign wealth funds are considering acquiring passive ZAP shareholdings.The interest of the Kuwait Investment Authority and Qatar Investment Authority was a vote of confidence in the ongoing transformation of ZAP, said Hubert Kamola, the managing director of the company's chemical division.
Saudi's PetroRabigh delays MEG start-up
Saudi Arabia's PetroRabigh will start up its 600,000 tonne/year monoethylene glycol (MEG) line in February 2009 instead of October 2008, as previously reported, a source close to the company said last week. "The line is undergoing test runs and we are currently using third-party ethylene to produce MEG," said the source. The source did not reveal the reason for the revised start-up of the facility, which is located on the Red Sea coast of Saudi Arabia. PetroRabigh is a joint venture of Saudi Aramco and Japan's Sumitomo Chemical.
Synthos ditches plan for S-SBR expansion
Poland's Synthos has abandoned a bid for a solution styrene-butadiene rubber (S-SBR) production facility in Western Europe due to poor economic conditions in the synthetic rubber market, the company said last Monday. Synthos declined to disclose which facility it had been pursuing but said it might use the funds that were to be spent on the acquisition for a share buyback. The Erste banking and financial services group said that the facility was most likely a 40,000 tonne/year unit operated by Michelin in Bassens, France. Alternatively, said Erste, Synthos could have been looking for a 60,000 tonne/year Dow Chemical unit in Schkopau, Germany.
NKNKhK cuts 1,000 jobs, halts isoprene
Russia's Novokuibyshevsk Petrochemical (NKNKhK) has halted output at its isoprene unit and axed 1,000 jobs due to falling demand. The company has laid off about 1,000 of its employees who work at the isoprene unit and associated facilities. NKNKhK, a subsidiary of Russia's Sibur that is based in central Russia's Samara region, produces isoprene, liquefied petroleum gas (LPG - propane, isobutene, butane and hexane) and catalysts.
Praxair to cut 1,600 jobs on weak demand
US industrial gas producer Praxair is cutting 1,600 jobs and closing product lines and businesses as it expects a substantial slowdown in fourth-quarter demand. Already, Praxair has seen demand fall in November. In December, it expects more customers to close plants "The slowdown in commodity production and manufacturing has been unprecedented, and we believe customers are reducing inventory down the supply chain," according to a statement by Praxair CEO Steve Angel.
petrobras to now focus on petrochemicals
The president of Brazil's oil giant Petrobras has said the company will focus more on petrochemicals and plastics in the coming years. "We don't want to be seen only as feedstock producers, but we do intend to extend our operations involving polypropylene (PP) and polyethylene (PE), especially PP," said Jose Sergio Gabrielli. Petrobras's revised investment plans through 2012 will include total expenditures of $20bn/year (€15bn/year). The government-controlled oil giant will prioritize the expansion of Brazil's petrochemical industry, Gabrielli said.
Liaoyang, Novasol take over Evonik's Sulfolane
China's Liaoyang Guangua Chemical and Belgium-based chemical distributor Novasol have agreed to take over the customer portfolio of Evonik's sulfolane solvent business, Evonik Degussa Stanlow. The sulfolane plant in Stanlow, UK, was closed by Evonik in October. Liaoyang Guangua and Novasol also acquired the exclusive rights to the toxicological and environmental studies commissioned by Evonik Degussa Stanlow.
Spectrum offers US hybrid auto incentive
Spectrum Chemicals & Laboratory Products, a US-based manufacturer and distributor of fine chemicals, is giving its employees a $1,000 (€754) cashback reward for those that buy a new American-made GM, Ford or Chrysler hybrid vehicle, between now and March 31, 2009. This incentive is being offered immediately by Spectrum senior management.
Liuzhou buys stake in fertilizer producer
China's Liuzhou Chemical Industry has acquired a 60% stake in Liuzhou Shengqiang Chemical Industry. Liuzhou Chemical - one of the largest fertilizer and chemical producers in Guangxi province - spent yuan (CNY) 54m ($7.8m) for the stake. Liuzhou Shengqiang Chemical, located in Liuzhou, mainly produces hydrogen peroxide. The company operates a 120,000 tonne/year hydrogen peroxide complex and has another facility with the same capacity under construction.
NPSP HALTS METHANOL PLANT CONSTRUCTION
A project to build a new methanol production facility at Russia's Novocherkassk Plant of Synthetic Products (NPSP) has been suspended due to adverse market conditions, regional authorities said last Monday. The company, based in Novocherkassk, in the southern Rostov region, currently operates a 220,000 tonne/year methanol plant. Earlier this year NPSP was taken over by Russia's Agro-Invest company, which pledged to build the now-suspended 450,000 tonne/year methanol unit.
Monsanto invests in sugarcane technology
US agricultural group Monsanto has announced the $290m (€229m) acquisition of Brazilian firms CanaVialis and Alellyx. CanaVialis is a sugarcane breeding company, while Alellyx focuses on developing biotech traits for sugarcane.
nacd warns on regulations
The US National Association of Chemical Distributors (NACD) wants to keep the contradictory regulations produced by the array of federal agencies that oversee the safety and security of the chemical industry from getting worse. "We can expect more regulations that could be difficult for the industry to swallow," said James Boldt, chair of the NACD's government affairs committee at the NACD meeting in Scottsdale, Arizona, US.
Ashland to boost cash THROUGH DIVESTITURES
US specialty chemical firm Ashland is looking to divest noncore assets to generate cash, CEO Jim O'Brien told analysts in New York. The measures would come on top of the cost savings, synergies and improved asset utilization that follow the acquisition of US firm Hercules.
REXING downgrades "earthquake" chemical sector
Noting the sharp fall in demand and weakening macro-economic environment, global financial firm ING has lowered recommendations for several European chemical stocks, likening the uncertain sector to an "earthquake zone." ING downgraded shares of BASF, Solvay and DSM to "sell" from "hold," while AkzoNobel was dropped to "hold" from "buy." Satchell said the sector is significantly at risk of further corrections during the next six months as end-markets show little signs of recovery.
DSM sells filtration products business
Netherlands-based life and material sciences company DSM has agreed to sell its Solutech filtration products business to US-based Lydall for an undisclosed sum. Solutech, which operates two production facilities in the Netherlands, contributed about €3m ($3.8m) to DSM's net sales in 2007.
Jiangsu Yanhai starts building caustic unit
China-based Jiangsu Yanhai Chemical has started construction at its yuan 1.2bn ($174m) Yancheng project, which will include a 300,000 tonne/year caustic soda plant. The caustic soda plant is expected to come on stream by the end of 2009.
Total's Vietnam JV buys local LPG distributor
French oil major Total, through its 86%-owned joint venture, Elf Gas Saigon, has acquired Saigon Gas Holdings, an liquefied petroleum gas (LPG) distributor, boosting Total's gas market share in Vietnam to about 15%. "Vietnam is one of our key countries for development [in Asia-Pacific] and this opportunity for growth fits well with our strategy in the region," Thierry Pflimlin, senior vice president of Total Oil Asia-Pacific said.
recession to slam US chemical output - ACC
US chemical output is expected to decline by 1.5% in 2009, as the global recession hits key end-markets such as automotive and construction, American Chemistry Council chief economist Kevin Swift said in a meeting of the New York Society of Security Analysts. "We're in a global recession with both mature and emerging markets being impacted by the credit crisis," he said. "Leading indicators suggest that this will continue for at least another six months." The outlook for 2009 is "more severe" than other downturns, he said.
US manufacturing falls in November
US manufacturing industries fell further into decline in November, dropping to a 26-year low, as new orders for manufactured goods dropped by 24%, according to the Institute for Supply Management (ISM). The institute said its closely watched purchasing managers index (PMI) fell to 36.2 in November, down 2.7 points from the 38.9 reading in October. A PMI reading of 50 or higher indicates that manufacturing industries are experiencing growth, while below 50 indicates contraction.
Borouge breaks ground on Shanghai hub
United Arab Emirates-based chemical firm Borouge, and Kuwait-based logistics company Agility, have broken ground on a new polyolefins logistics hub in Shanghai, China. Due to be fully operational by May 2010, the Fengxian facility will be capable of receiving more than 600,000 tonnes/year of polypropylene (PP) and polyethylene (PE). Borouge is also building a 50,000 tonne/year compounding facility at the Shanghai site that will serve automotive, domestic appliance, power tool and electrical applications.
Ciech halts TDA project, mulls TDI cutback
Poland's Ciech has postponed construction of a toluene diamine (TDA) feedstock installation, and the company is considering cutting toluene di-isocyanate (TDI) production on falling prices. The TDA investment, costing up to zlotych (Zl) 500m ($168m, €131m) and scheduled to be completed in 2013, was to have been its flagship expansion project in 2009 but will now not begin until at least the end of next year.
Lintec starts solar cell backsheet output
Lintec, a leading Japanese producer of film and adhesives, has started production of its own brand of backsheet for solar cell modules, targeting sales from local solar cell manufacturers. The backsheet is made by layering polyethylene terephthalate (PET) resin with electrical insulating properties, special coatings and ethylene vinyl acetate (EVA). Lintec is producing the solar cell backsheet for the Japanese market under the Liprea brand.
JPMorgan lowers profit forecast for Rockwood
JPMorgan has lowered its earnings forecasts for US specialty chemical company Rockwood, reflecting slowing demand in end-user markets. Rockwood's full year 2008 earnings per share (EPS) estimate was reduced to $1.95 (€1.54) from $2.10, while its 2009 forecast was cut to $1.40 from $2.20. The earnings revision reflected slowing global demand, increased customer inventory reductions, and lower expected earnings from its titanium dioxide joint venture.
Equate starts up Olefins II cracker
Kuwait's Equate Petrochemical has begun commercial production at its 850,000 tonne/year Olefins II cracker at Shuaiba. The cracker, owned by Kuwait Olefins and operated by Equate, will provide ethylene to Equate's benzene-styrene monomer unit and expanded polyethylene (PE) and monoethylene glycol (MEG) plants. Equate is a joint venture that includes Kuwait's Petrochemical Industries Co. and US-based Dow Chemical, with each owning a 42.5% stake.
Shell, Shanxi explore coal gasification
Shell Global Solutions International and Shanxi Institute of Coal Chemistry have signed a research and development agreement to enhance the process of turning coal-based synthetic gas (syngas) into higher alcohols. "It has the potential to become an attractive route to realize the clean use of coal and reduce petroleum dependence for cleaner fuels and fuel additives," Shell said.By: Will Beacham+44 20 8652 3214
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