This week's world news

16 April 2009 15:28  [Source: ICB]

BASF TO CUT HOURS FOR UP TO 3,000 GERMAN STAFF
German chemical major BASF is preparing short-time working for up to 3,000 employees at its Ludwigshafen, Germany, production hub as a response to weak demand. "Capacity utilization rates at many plants have remained very low since the beginning of the year, and there are no signs of a sustained improvement in orders from key customer industries in the foreseeable future," said the head of human resources at the site, Harald Schwager. The situation is being assessed unit-by-unit to determine which plants would be affected. The move would take effect on June 1. "At the moment, around 600 employees in Ludwigshafen are working temporarily in other plants. Unfortunately, we are now reaching the limits of what is possible," he added.

ROCKWOOD TO HOLD OFF ON ACQUISITIONS - CEO
US-based specialty chemical firm Rockwood Holdings will not make acquisitions in the short term as it focuses on cash generation, chairman and CEO Seifi Ghasemi said last week. "Despite our history of making 22 successful acquisitions in the past eight years, we are not looking at making any today. We had $430m [€323m] in cash at the end of 2008, and we are hoarding it," said Ghasemi at a joint meeting of the Societe de Chimie Industrielle and the American Chemistry Council. "Although valuations are down and there are attractive acquisition opportunities, we have to be conservative and sit on cash until we see what is going to happen with the economy," he added.

PETRO RABIGH CRACKER OUTAGE DELAYS START-UPS
An unscheduled shutdown at Rabigh Refining and Petrochemical (Petro Rabigh's) new cracker in Saudi Arabia could push back the start-up deadlines of its derivative plants. "The entire cracker complex was shut down three days ago due to a technical problem, and is expected to restart today," a source said. The cracker, which started up on 8 April, feeds into a slew of downstream plants located at the same site. The complex houses a 300,000 tonne/year high density polyethylene (HDPE) line, a 250,000 tonne/year easy processing polyethylene unit and a 700,000 tonne/year polypropylene (PP) plant.

KEMIRA'S TIKKURILA TO REDUCE 163 POSITIONS
Finnish specialty chemical company Kemira's paints and coatings subsidiary Tikkurila will reduce personnel at its site in Vantaa, Finland, by 163, with 13 employees being made redundant. Kemira said it had concluded its co-determination negotiations in the country and that the majority of reductions would be achieved by the non-renewal of temporary employment contracts and by means of pension arrangements and a voluntary package.

US STATS LEAVE WAL-MART CEO PESSIMISTIC
The CEO of US-based Wal-Mart, the world's largest retailer, said last week that he did not expect a near-term economic recovery after another batch of disappointing retail indicators. "There is still a lot of stress," CEO Mike Duke said on NBC's Today show. "It's not a 'V' recession, where we're just going to bounce out and come back. This is one that is going to take a sustained change in the way that families live." March same-store sales for Wal-Mart, a key end-market for packaging materials and plastics, increased by only 1.4% year on year, far below the average 3.2% estimate.

BARENTZ REVEALS PLANS TO EXPAND TO THE EAST
Dutch distributor Barentz Europe is planning to expand its presence in Eastern Europe by opening offices in Belarus and Ukraine. "I would expect that in three years from now, we will have offices there," said CEO Hidde van der Wal. Barentz already operates in Moscow, Russia, and Riga, Latvia, and wants to expand its presence to the former Commonwealth of Independent States countries, where it sees good growth prospects. The distributor is also planning to open a research and development center in the Netherlands to serve chemical applications.

POLAND'S ZCHP NEEDS CAPITAL TO SURVIVE - CEO
A capital injection is needed to guarantee the survival of Zaklady Chemiczne Police (ZChP), the Polish chemical company's CEO said last week. Ryszard Siwiec outlined how the fertilizer and titanium dioxide (TiO₂) producer needed to borrow a figure in excess of zlotych 50m ($15.7m, €11.8m) to address liquidity issues. In seeking other ways to relieve its financial difficulties at its annual general meeting on 11 May, ZChP would consider the establishment of mortgages and a registered lien from the Industrial Development Agency, which holds an 8% stake in the company, Siwiec said.

BRAZIL'S BRASKEM PLANS TRIUNFO MERGER
Braskem's board of directors has approved a proposal to merge with Brazilian polyethylene (PE) producer Petroquimica Triunfo. Bernardo Gradin, Braskem's CEO, said that the merger would represent the final step in the integration of several of Petrobras' petrochemicals assets into Braskem, as agreed in November 2007. Following the mergers, state-owned energy group Petrobras will increase its stake in Braskem, Latin America's largest polyolefins producer, to 25.3%. Petrobras will maintain 31% of Braskem's voting capital.

TERRA FENDS OFF CF BY MOVING ANNUAL MEETING
US fertilizer producer Terra Industries attempted to defend itself last week against a takeover by rival CF Industries by delaying a required annual meeting of its shareholders. In a letter sent to shareholders this week, Terra said its board passed a bylaw allowing it to delay the annual meeting, originally to be held by May 15, to a later date during the 2009 calendar year. Terra said the "flexibility... will help to ensure that the company's shareholders will have the relevant information" when the annual meeting is held.

US AUTO COMPANIES FACE BANKRUPTCY - S&P
Standard & Poor's (S&P) has lowered the credit ratings for US auto majors General Motors (GM) and Chrysler due to lower vehicle demand and said both companies are likely to default through either a bankruptcy or a distressed debt exchange. While the US credit rating agency said lenders to GM could expect a 90-100% recovery in the event of a payment default, Chrysler lenders would likely receive only 30-50% recovery.

SOUTH KOREA'S PETCHEMS DREAD RESTRUCTURING
South Korea intends to weed out weak companies in its petrochemical industry through a proposed sector-wide restructuring, which is making a number of players apprehensive, market sources said last week. The Ministry of Knowledge Economy initiated discussions on the plan in January in view of the difficult operating environment since late last year. No concrete plan on the timing of the implementation has yet emerged. "The redevelopment process will mainly involve the three major petrochemical complexes located in Ulsan, Daesan and Yeosu," said a source from the Korea Petrochemical Industry Association.

BASF MERGES NORTH AMERICAN UNITS
BASF will combine its North American personal care, home care and industrial and institutional businesses as part of a plan to better share technology and to boost synergies in marketing, sales and research and development. "By combining joint technology and innovation platforms, BASF can allow a free flow of concepts, ideas and creativity that will lead to new developments," said Gary Dee, business director of personal care ingredients in North America.

CHINA'S GROWTH AT RECORD LOW IN Q1
China has recorded slow annual economic expansion of 6.1% in the first quarter, based on data from the National Bureau of Statistics. This represented a fourth consecutive quarter of slowing growth following tumbling exports as the global recession continued to hit demand from end-consumer markets. Total shipments of goods out of China declined 17.1% year-on-year in March following a 25.7% plunge in the previous month.

AUSTRALIA'S NATIONAL FUEL TO RESTRUCTURE
Australian biodiesel producer Natural Fuel Limited (NFL) has gone into administration for restructuring and improvement of its financial situation, the Australian Stock Exchange announced. The company, which operates a 600,000 tonne/year biodiesel production plant on Jurong Island, Singapore - the largest in the world - has suffered from poor demand.

ROMANIAN GOVERNMENT TO PURCHASE ARPECHIM
The Romanian government has issued a draft ordinance under which the Finance Ministry is to acquire Arpechim's petrochemical operations. Following the acquisition, the Romanian state would set up a new petrochemical company, which would be "interconnected" with chemical producer Oltchim, the draft ordinance says. It was not clear when the ordinance would be approved by the Romanian government. Arpechim is owned by Romania's oil major Petrom.

BALTIC SEA GAS PIPELINE BEACHED FOR LACK OF SUPPLY GUARANTEES
The construction of a Baltic Sea pipeline that would end Poland’s near total reliance on Russian gas is going to be indefinitely delayed, owing to insufficient supply guarantees from Norway’s Statoil, according to the Polish Oil and Gas Company (PGNiG). Construction of the pipeline, which is intended to bring 2.5bn m³/year of Norwegian natural gas to Poland starting in 2013, had been expected to begin shortly.

GREENHUNTER TO MISS ANNUAL REPORT FILING
GreenHunter Energy, the US’s largest biodiesel refiner, said “staffing and financial limitations” prevented it from filing its 2008 annual report, according to a filing with the Securities and Exchange Commission.

THERMAX PLANS TWO UNITS AT JHAGADIA
India’s Thermax plans to set up two specialty chemical units at Jhagadia, in Gujarat state, at a total cost of Indian rupees 1.05bn ($21m). One, an ion exchange resins plant, will have a capacity of 1,170 m3/month. The other will produce 1,880 tonnes/
month of various specialties, officials said.

SULFURIC ACID TANKER SINKS OFF SRI LANKA
A Turkish-flagged chemical tanker carrying 6,250 tonnes of sulfuric acid sank 90 nautical miles (167 km) off eastern Sri Lanka’s after being towed to sea. The MT Granba was abandoned because its cargo was leaking into its ballast.

LYONDELLBASELL PLANS 14 CLOSURES, 4,800 JOB CUTS
LyondellBasell Industries’ plan to lift current cost savings by $700m (€525m) includes closing 14 plants and cutting 4,800 employees and contractors by the end of 2010. Through March, seven of the 14 plants had been closed and approximately 2,200 jobs cut. Some 600 more are expected in the second quarter. “We are acting aggressively,” the global polyolefins producer’s chief operating officer, Ed Dineen said. “None of this is easy, but it is necessary.”

CELANESE TO END ACETIC AND VAM IN FRANCE
US-based chemical producer Celanese plans to close its acetic acid and vinyl acetate monomer (VAM) production in Pardies, France, due to high operating costs and weak demand. The facility, operated by Celanese subsidiary Acetex Chimie, has nameplate capacities of 450,000 tonnes/year of acetic acid and 150,000 tonnes/year of VAM, officials noted.

US GREENS EXPECT CO₂ ENDANGERMENT FINDING
US environmental groups Sierra Club, National Wildlife Federation, National Resources Defense Council and Environment America said they expect the US Environment Protection Agency (EPA) soon to declare carbon dioxide (CO₂) and other greenhouse gases a danger to public health and welfare. An EPA official could not confirm that an “endangerment finding,” which would subject greenhouse gases to regulation, is imminent.

By: Joseph Chang
+1 713 525 2653

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