This week's world news

19 January 2009 00:00  [Source: ICB]

TRONOX FILES FOR CHAPTER 11, SEEKS FINANCING
US pigment producer Tronox last week filed for Chapter 11 bankruptcy protection for its US operations to seek cover against creditors amid the credit squeeze and sharp ­downturn in the global economy. "After careful evaluation of all strategic alternatives, we have concluded that a Chapter 11 filing is the best way to address the company's debt, in particular its legacy liabilities," said Dennis Wanlass, Tronox chairman and CEO. The company said the bankruptcy filing does not include its operations in Australia, Germany and the Netherlands. The amount of Tronox's "legacy liabilities," which include environmental remediation and litigation costs incurred when it was spun off in 2006 by US group Kerr-McGee, were not ­disclosed. Tronox will appear in a bankruptcy court on February 6, seeking final approval for the entire $125m (€95m) ­debtor-in-possession funding it needs to maintain daily operations.

DOW MISSES DEADLINE, OWES ROHM AND HAAS
US specialty group Rohm and Haas said last week that Dow Chemical would start paying fees of roughly $3.35m (€2.48m) a day after Dow failed to meet the deadline to close its $18.8bn merger. The fees were stipulated under the companies' merger agreement. Dow would not comment on the deal since it was still under US regulatory review. The cost structure of the merger became strained after Dow's deal to establish the K-Dow Petrochemicals joint venture (JV) with Petrochemical Industries Corp. (PIC) of Kuwait fell apart. Had the JV closed, Dow would have received $7.5bn in cash from PIC and a $1.5bn cash distribution from K-Dow.

KUWAIT LAWMAKERS TO PROBE STATE OVER K-DOW
Kuwaiti lawmakers plan to investigate the country's government over its handling of the K-Dow Petrochemicals joint venture (JV) deal with Dow Chemical, which was canceled in late December, media reports said last week. Twelve deputies of Kuwait's 50-member legislative assembly proposed to set up an investigative panel that would question the prime minister and his cabinet, the reports said. They quoted foreign minister sheikh Mohammad ­al-Sabah as saying the government would cooperate with the investigation. Dow said last week it would take legal action after Kuwait's withdrawal on December 29 from the K-Dow JV.

COMMISSION THREATENS ACTION OVER RUSSIAN GAS
The European Commission confirmed late last week that no gas was flowing from Russia into the EU via Ukraine and threatened legal action if supplies were not restored immediately. The Commission president, Jose Manuel Barroso, told the European Parliament that the situation was "unacceptable and incredible." He advised European companies to take the matter to the courts if Russia and Ukraine continued not to honor the recent agreement brokered by the EU to resume gas supplies. Hundreds of thousands of Europeans have been without gas since Russian state energy company Gazprom cut supplies nearly a week ago.

INEOS CHLORVINYLS TO CLOSE UK PLANTS
INEOS ChlorVinyls will close three plants at its Runcorn, UK, site due to shrinking demand caused by the global economic downturn. INEOS said it would close its trichloroethylene (TCE) and perchloroethylene (PCE) plant as well as its anhydrous caustic soda facility by the end of the first quarter at the latest. The company also plans to close one of its two remaining mercury chlorine plants at the site, while increasing output from its recently built membrane chlorine facility to balance output.

EU PESTICIDE PLAN DISAPPOINTS - GERMAN GROUP
The European Parliament's plan to update the European pesticides bill has opened the door to non-scientific decision-making in evaluating crop chemicals, German crop chemicals industry group Industrieverband Agrar (IVA) said last week, adding it was disappointed with the legislative package. The European Parliament voted overwhelmingly in favor of plans to update the European pesticides bill. Under the new bill, the EU will draw up a list of approved "active substances", which will be used to approve pesticides at a national level. Certain highly toxic chemicals, such as those that are genotoxic, carcinogenic or toxic to reproduction, will be banned unless their effect would in practice be negligible.

NEW US ENERGY CHIEF INCLUDES OIL AND GAS
US President-elect Barack Obama's choice to head the Energy Department promised last week to pursue a broad energy policy, including development of US domestic oil and natural gas resources. Steven Chu, a Nobel laureate in physics, told a Senate Energy Committee confirmation hearing that his primary goal was to advance multiple energy resources. He said he would not have accepted Obama's nomination as energy secretary "if I had not thought that it was essential to move ahead on this plan." He was referring to Obama's campaign promises to improve US energy efficiencies, independence and renewable sources.

US MULLS $1BN FUND FOR ADVANCED BIOFUELS
The US ethanol industry could get $1bn (€750m) to invest in new technologies under a massive stimulus package being considered by President-elect Barack Obama, the Renewable Fuels Association (RFA) said last week. "We are hearing that Capitol Hill is looking at about $1bn to go towards enhancing the existing programmes and accelerate the commercialization of new technologies," said RFA president Bob Dinneen. Among the new technologies, Dinneen cited the expansion of research into cellulosic ethanol. "Cellulosic ethanol is closer to reality than conventional wisdom suggests," he said.

MOSAIC TO LAY OFF 1,100, MAY SHUT DOWN PLANTS
Mosaic has issued layoff notices to more than 1,100 workers at two of its Canadian potassium chloride plants. The layoffs signal that Mosaic is following up on its plans to substantially scale back production as global demand wanes. The notices told union workers that the Esterhazy and Colonsay potash facilities in Canada's Saskatchewan province may halt production on February 15 and March 8, respectively. There are 360 workers with the United Steelworkers of America at the Colonsay unit and 744 employees with the Communication, Energy and Paperworkers Union of Canada in Esterhazy.

MOUTHWASH CANCER STUDY COULD MEAN SHIFT
A study claiming that mouthwash containing alcohol may have carcinogenic effects could prompt a shift from synthetic to agricultural ethanol in the oral hygiene industry. The research, led by Professor Michael McCullough, chair of the Australian Dental Association's therapeutics committee, found that alcohol in mouthwash increased the permeability of the mouth's mucous membrane to other carcinogens. "We see people with oral cancer who have no other risk factors than the use of mouthwash ­containing alcohol, so what we've done is review all the evidence," said Professor McCullough.

RHODIA AGREES TO BUY MCINTYRE
French specialty chemical company Rhodia has agreed to purchase US chemical manufacturer McIntyre Group for $100m (€74m), in a bid to expand its geographic reach and products portfolio. The privately held McIntyre, specializing in household and industrial surfactants, showed double-digit growth rates in the past three years and is estimated to have had $146m in sales for 2008 and around 10% recurring earnings before interest, tax, depreciation and amortization (EBITDA) margin, Rhodia said. McIntyre has sales networks in Singapore and Brazil and manufacturing plants in the UK and Illinois, US, where it also has its headquarters.

POLAND'S ZAT LOST NEARLY €4M ON HEDGING
Poland's Zaklady Azotowe Tarnow (ZAT) in 2008 lost up to zlotych (Zl) 20m (€4.97m, $6.7m) on currency hedging bets that turned sour amid the global economic crisis. Despite the loss, ZAT will still achieve its 2008 bottom-line target of Zl73.9m, CEO Jerzy Marciniak said last week. Some foreign exchange option contracts placed by ZAT are due to mature in July this year, so the company will probably book some currency-hedging losses for 2009, he added. The 2009 losses would be smaller than those suffered in the previous year, Marciniak said.

ECHA CONSULTS ON REACH AUTHORIZATION PLAN
The European Chemicals Agency (ECHA) has launched a public consultation on which substances should be subject to the Reach authorization process. The agency has ­recommended prioritizing seven substances, which could be withdrawn from sale after 2013, when the EU's Reach chemical legislation comes into full effect. Interested parties are invited to comment, in particular, on uses that should be exempted from authorization requirements before the deadline on April 14 this year.

LANXESS’ LARA TO CUT EMISSIONS BY 1.5M TONNES
LANXESS’ thermal reduction plant for nitrous oxide, LARA, based at its Krefeld-Uerdingen adipic acid plant, is expected to reduce carbon dioxide (CO₂) emissions by 1.5m tonnes/year by 2012 compared with 2007 levels. The move will result in LARA’s reduction of 5,000 tonnes of laughing gas, which is the equivalent of about 1.5m tonnes of CO₂/year by 2012 compared with 2007. This means the elimination of up to 80% of the company’s direct output of greenhouse gases in Germany.

EU NOVEMBER CHEMICAL OUTPUT DROPS BY 7.4%
Industrial output in the EU decreased by 7.7% in November year on year, while production of chemicals and man-made fibers dropped by 7.4%, official statistics agency Eurostat said last week. In the 15-member eurozone, industrial production also fell by 7.7%, while chemical output dropped by 7%. Month on month, the production of chemicals was down by 2.4% in the 27-member EU and by 2% in the eurozone. Total industrial production declined by 1.6% in both the EU and eurozone compared with October.

FCFC SHUTS MAILIAO PHENOL-ACETONE UNITS
Taiwan’s Formosa Chemicals & Fibre Corp. (FCFC) has shut down its No. 1 and No. 2 phenol-acetone units in Mailiao for an unspecified period due to weak market conditions. FCFC operates two phenol-acetone units, with a combined capacity of 400,000 tonnes/year of phenol and 250,000 tonnes/year of acetone. Both had been running at reduced rates for several months. The restart date has not been confirmed. FCFC is the largest phenol-acetone producer in Taiwan and one of the major suppliers to the China mainland market.

TURKISH CHEMICAL TANKER FREED BY SOMALI PIRATES
Somali pirates have freed the chemical tanker Karagol, which was seized in mid-November in the Gulf of Aden, the Associated Press (AP) reported last week. The ship’s owner, Servet Yardimci of the Turkish Yardimci Group, said the pirates freed the 6,000 deadweight tonne (dwt) vessel and 14 crew on board, according to AP. The tanker was seized in November off the coast of Yemen as it headed to India with 4,500 tonnes of chemicals on board. In another media report, Yardimci said the ship’s chemical cargo was intact. Yardimci did not say whether a ransom had been paid.

US SUNOCO TO CLOSE TEXAS PP PLANT IN APRIL
Sunoco will permanently close its 400m lb/year (181,437 tonne/year) polypropylene (PP) plant in Bayport, Texas, US, by April 30. “The decision to close the facility was made after an extensive review, which demonstrated that the plant is no longer financially viable,” Bruce Rubin, vice president of Sunoco’s chemical business, said. Sunoco’s other PP plants in La Porte, Texas; Marcus Hook, Pennsylvania; and Neal, West Virginia, would assume a portion of the Bayport plant’s production.

INDIA’S IFFCO TO REDUCE STAKE IN EGYPT JV
The Indian Farmers Fertiliser Cooperative (IFFCO) is planning to reduce its 75.95% equity stake in the ­phosphoric acid joint venture (JV) Indo Egyptian Fertiliser Co. (IEFC) to 4–5% due to a stalemate in implementing the project. Negotiations over equity dilution were ongoing with IFFCO’s Egyptian counterparts. The $350m (€266m) phosphoric acid complex at Edfu, in the Aswan governorate, has remained on hold, primarily due to Egypt’s reluctance to grant the IEFC project special economic status and underlying tax ­benefits. Environmental concerns have added to the project’s uncertainty.

LANXESS SIGNS FOR INDIA ION EXCHANGE PLANT
German chemical group LANXESS has signed a memorandum of understanding (MoU) with the Gujarat state government for its planned ion exchange resin plant in Gujarat, India. “The MoU is part of the approval process for the new site, which was originally announced at the start of 2008,” LANXESS said. The new site, costing €50m ($67m), will include an ion exchange resin plant, which will supply products for the generation of ultra-pure water for the semiconductor and pharmaceutical industries and for industrial water treatment.

BASF TO CLOSE US PAINT PLANT IN 2010
Germany-based chemical major BASF is to close its automotive refinish paint plant in Belvidere, New Jersey, US, by the end of 2010, phasing out 112 jobs at the site. “We wanted employees to be aware of this decision as soon as it was made,” Juan Carlos Ordonez, group vice president of BASF’s coatings regional business unit, said. BASF, which started producing paint at Belvidere in 1985, decided to close the site as it was an ageing facility that would require significant infrastructure investment to continue operations, it said.

CHINA TO HAVE FIRST MTP PROJECT BY H2 2009
Datang International Power plans is to start up China’s first methanol-to-propylene (MTP) project in the northern province of Inner Mongolia in the second half of 2009. Construction of the 470,000 tonne/year polypropylene (PP) plant started in 2007, with investment in the project ­totalling around yuan 14bn ($2bn). The project has adopted MTP technology to produce feedstock propylene, which is used for PP production. According to a source, the cost of propylene made from methanol is more competitive than that made from crude oil, if crude oil prices are above $35/bbl.

SIKA 2008 NET SALES UP 7.3% DESPITE CURRENCIES
Sika has posted net sales of just over Swiss francs 4.6bn ($4.1bn, €3.1bn) for 2008. This is up by 7.3% from the previous year in local currencies, despite negative currency effects, the Swiss specialty chemicals company said last week. The negative currency exchange effect was -6.2%, said the company, adding that in Swiss franc terms, net sales were 1.1% higher than in 2007. Sales grew at the fastest rate in India, the Middle East and Africa, at 30%, compared with the previous year. Growth in the construction division was satisfactory in the reporting year, despite industry effects from the financial crisis.

CHINA APPROVES DRAGON’S PX PROJECT
China’s Environmental Protection Ministry has approved the relocation of The Dragon Group’s planned yuan 13.78bn ($2bn) petrochemical project in Xiamen, to Zhangzhou in Fujian province, the government agency has said. The ministry said the project would officially relocate to Zhangzhou city, on the Gulei peninsula, about 100km (62 miles) from Xiamen. The new complex will include an 800,000 tonne/year paraxylene (PX) plant by The Dragon Group and a 1.5m tonne/year purified terephthalic acid (PTA) line to be run by Dragon’s sister company, Xiang Lu Petrochemical.

NEW US HAZARDOUS TANK CAR STANDARDS APPROVED
A federal rule to improve the crashworthiness of US hazardous material rail tank cars will take effect on March 16, according to the US Department of Transportation. The final rule requires poisonous inhalation hazard material tank cars to have better puncture resistance from a side impact with a combination of thicker inner shells and/or thicker outer jackets.

WEAK BUTADIENE DEMAND PLAGUES TEXAS
Weak demand for butadiene (BD) has continued to plague US-based Texas Petro-chemicals, causing it to temporarily idle plants and consider further cost cuts. "The severe decline in general economic conditions has negatively impacted both supply and demand for our businesses, especially in the butadiene marketplace," said Russ Crockett, senior vice president, commercial. "Because of the flexibility in our asset portfolio, we have been working to optimize our physical assets and to reduce our operating costs by temporarily idling production units at both our Houston and Port Neches [Texas] facilities", he said.

US MAY NEED ANANOMATERIALS PLAN
Federal regulators say that a voluntary research effort with the US chemical industry to gather data on nanomaterials has been successful, but that a mandatory reporting requirement may be necessary. The Environmental Protection Agency (EPA) said that as of December 8, 29 companies or associations had submitted information covering 123 nanoscale materials and that seven other firms have committed to providing detailed data on their nanomaterials processes and products.

UNIPETROL COMBINES TRADE OFFICES
Czech petrochemical producer Unipetrol has completed consolidating its foreign trade offices. Under the last step in the process, Unipetrol France merged with Unipetrol Trade. All the business activities of Unipetrol Trade's foreign branches and offices now fall under the company's petrochemical subsidiary, Unipetrol RPA. The restructuring should mean annual administrative savings of €2.5m ($3.4m), Unipetrol said.

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