This week's world news

The world this week

27 April 2009 00:00  [Source: ICB]

BASF CEO HAMBRECHT SAYS WORST YET TO COME
The economic crisis will likely continue through the middle to end of 2010, with "the worst yet to come," BASF CEO Jurgen Hambrecht said in an interview with German business journal manager-magazin last week. "I am working on the assumption that we have not yet seen the worst," Hambrecht told the journal. "It's getting tighter and tighter, globally," Hambrecht said. In Germany, lower energy prices and relatively high collective wage agreements were supporting the economy, Hambrecht said. However, consumer sentiment would worsen with rising unemployment. Avoiding job losses was a top priority in the crisis, said the German chemical giant's CEO, but he would not rule out cuts, even at BASF's base in Ludwigshafen, Germany.

AKZONOBEL POSTS Q1 LOSS OF €7M; VOLUMES DROP
AkzoNobel has reported a first-quarter loss of €7m ($9.1m) as a result of "tough trading conditions" due to the severity of the global economic downturn, the Dutch paint and chemicals major said last week. The loss for the three months reverses a net profit of €105m in the first quarter of 2008. "Our first-quarter results across all areas of our business reflect the depth of the global economic slowdown," said AkzoNobel CEO Hans Wijers. "We still have limited forward visibility, but there were some early indications in March that conditions in a number of our markets may be stabilizing," he said. Revenue for the period dropped by 13% to €3.27bn, down from €3.77bn.

HUNTSMAN AGREES $650M CREDIT WAIVER TO 2010
Huntsman International, a subsidiary of US chemical producer Huntsman, has entered into a credit agreement waiver with the lenders of a $650m (€494m) credit facility. The waiver relaxes the company's debt covenant between 30 June this year and 30 June 2010.

TOO EARLY TO UNCORK THE CHAMPAGNE BOTTLES
Overall US chemical production fell by 0.9% in March on continued general economic weakness and declines in bulk petrochemicals, plastic resins and specialty chemicals, an American Chemistry Council report said. "After several weeks of balanced and even generally positive reports, the economic reports released this week were negative, making it clear that it is too early to uncork the champagne," the report said.

TEMPORARY SHUTDOWNS WILL BECOME PERMANENT
Up to one-third of the temporary capacity shutdowns in the US and Europe will be made permanent, a leading consultant said last week. However, concerns about the social impact and financial cost were preventing companies from making the decision to close plants permanently at present, Thorsten Ploss, partner at global consultancy Roland Berger Strategy Consultants, told ICIS. A swathe of temporary closures amounting - in some cases - to 20% or more of global capacities have been announced since the fourth quarter of 2008. As yet, very few companies have decided that idled plants should be mothballed - requiring significant work to restart - or permanently closed. According to Ploss, companies will eventually be forced to take tough decisions to close plants and deal with the social and financial consequences.

INVISTA TO MOTHBALL THREE UNITS IN CANADA
US producer INVISTA will mothball three nylon intermediate chemical units in Ontario, Canada, but will retain the equipment and continue existing amine operations. A fourth unit produces Dytek A amine or 2-methylpentamethylenediamine. The prolonged shutdown of three of the site's four production units will involve the loss of 240 jobs by late 2009, as the company continues to reduce its exposure to weak demand, said INVISTA public affairs officer Jodie Stutzman. The decision closely follows news that INVISTA has permanently shut down polyethylene terephthalate (PET) capacity near Millhaven, Ontario, and marks the sixth major change in INVISTA's global assets since the start of 2008.

MOODY'S LOWERS DOW CREDIT RATINGS
Moody's Investors Service lowered the senior unsecured credit ratings on US major Dow Chemical to Baa3 from Baa1 as a result of the company's debt-financed acquisition of Rohm and Haas. The downgrade reflects the "substantial increase in leverage" as a result of the Rohm and Haas deal and the significant integration risk with such a large transaction, Moody's said. "There is no silver bullet for Dow, they must successfully execute on numerous projects simultaneously to free up cash, while aggressively pursuing further cost reductions and quickly integrating their specialty businesses into Rohm and Haas," said John Rogers, senior vice president at Moody's. "This is a tall order, even for a company as large as Dow," he added.

UNIPETROL PREDICTS OPERATING LOSS FOR Q1
Unipetrol is likely to report an operating loss for the first quarter on a drop in olefin margins. The Czech petrochemical and refining company predicted its model olefin margin had fallen to €142/tonne ($184/tonne) in the first quarter of this year from €345/tonne in the same period of 2008 and €557/tonne in the fourth quarter. The model polyolefin margin "recovered from the fourth quarter low but still remained under historical levels," Unipetrol added.

WATCHDOG PROBES OMV CEO'S SHARE PURCHASE
Austrian financial watchdog FMA is scrutinizing a purchase of shares made by the CEO of Austrian oil, gas and petrochemical group OMV. OMV confirmed that CEO Wolfgang Ruttenstorfer bought €620,000 ($805,200) worth of OMV stock on March 23, one week prior to OMV surprising the markets by selling its 21.2% stake in Hungarian oil, gas and petrochemical group MOL to Russia's OAO Surgutneftegaz. The FMA said it routinely had to review top managers' share purchases in and around significant company announcements. OMV said it was providing requested information to the FMA.

BASF PLANS TO BUILD PLANT IN POLAND
Germany's BASF plans to construct a polyurethanes (PUs) plant in Poland to capitalize on growth potential in the country's construction market. An investment of approximately zlotych (Zl) 17m ($5.04m, €3.88m) would be put into establishing a facility in the Walbrzych Special Economic Zone, in southwestern Poland, by the middle of 2010, it added. No details on the plant's capacity were yet available. BASF said it was the market leader for PU system solutions in Poland, for which it expects solid growth rates over the next few years, mainly in the construction, cooling appliances and automotive industries.

BAYER CROPSCIENCE DEFENDS PATENT RIGHTS
German producer Bayer CropScience has won a court order in China protecting patents for its crop protection additive Mefenpyr. A court in Wuxi ordered Chinese firm Jiangsu Tian Rong Group to stop selling Mefenpyr in breach of Bayer's patent rights and to pay compensation. "The court's decision sends a strong signal to Chinese companies, warning them against patent infringements of this kind," Ralf-Ruediger Jesse, head of patents and licensing at Bayer CropScience, said.

NOVOZYMES TO PRODUCE ETHANOL IN CHINA
Danish enzyme producer Novozymes has teamed up with China's COFCO and Sinopec to develop commercial-scale cellulosic ethanol production in China. "By converting agricultural residues into fuel ethanol, China can reduce its gasoline consumption by 31m tonnes in 2020, thereby reducing its dependence on imported petroleum by around 10%," said Novozymes CEO Steen Riisgaard.

SHERWIN-WILLIAMS Q1 PROFIT DOWN BY 52%
US paint producer Sherwin-Williams' first-quarter net income fell by 52% year on year to $37.3m (€28.3m), as sales fell by 13% to $1.55bn. Gross profit for the three months ended March 31 was $680.6m, down by 12.8%. "Global paint demand in the architectural, commercial, industrial and marine markets remained soft as the economic downturn... continued and expanded internationally during the first quarter of the year," CEO Christopher Connor said.

APRIL PE NEGOTIATIONS REMAIN AT A STANDSTILL
European polyethylene (PE) players are struggling to agree on April pricing as producers try to force increases onto the market. "We are leaving it to the very last minute this month," said one large PE buyer. Producers said that April had been a difficult month, but some still wanted a rise. "Given upstream costs, prices have to go up," said one. "There will be a whole new array of cutbacks that will have to happen if margins don't improve."

HEXION PROJECTS A 45% DROP IN Q1 SALES
US producer Hexion Specialty Chemicals expects operating income of $5m-15m (€4m-12m) for the first quarter of 2009, down about 90% from the $83m reported last year.

BAYER BLAST RESULT OF "SIGNIFICANT LAPSES"
A series of process safety management deficiencies by workers at a Bayer CropScience plant near Charleston, West Virginia, led to the explosion that killed two workers last August, US Chemical Safety Board chairman John Bresland told the US House Energy and Commerce Committee. Bresland said workers were not adequately trained on a new computer control system, while deficient infrastructure required operators to bypass critical safety interlocks. Committee chairman US Representative Henry Waxman accused Bayer CropScience officials of "a campaign of secrecy" that withheld critical information from emergency responders and restricted the use of information provided to federal investigators.

CF SHAREHOLDERS REJECT AGRIUM TAKEOVER BID
US fertilizer major CF Industries said on Tuesday that a shareholders' vote showed resistance to a hostile takeover from rival Agrium. "Our stockholders have voted and the message is clear - our board of directors has received overwhelming support," CF CEO Stephen Wilson said. Canadian fertilizer retailer Agrium, which has mounted a hostile takeover effort, campaigned for CF shareholders to withhold votes for the directors to show their support for a merger.

INDIA MULLS OVER DUTIES ON ACRYLIC FIBER
India's Directorate General of Safeguards has advised the government to levy a provisional safeguard duty of 20% on acrylic fiber imports from China, South Korea and Thailand. The Directorate General of Anti-dumping and Allied Duties has recommended an anti-dumping duty of $33/tonne on thionyl chloride produced by LANXESS, and an $84/tonne duty for all other EU manufacturers and exporters.

SUNOCO SELLS OKLAHOMA REFINERY TO HOLLY
Sunoco has agreed to sell its 85,000 bbl/day refinery in Tulsa, Oklahoma, US, to Holly for $65m (€49m), the US refiner and petrochemicals producer said. As part of the deal, Holly will invest in several upgrades to ensure the refinery's long-term viability.

CONSORTIUM COMPLETES JAPAN GTL DEMO FACILITY
Japan's Nippon GTL Technology Research Association, a consortium of six companies, has completed its 500 bbl/day gas-to-liquid (GTL) demonstration plant in Niigata. It comprises a synthesis gas (syngas) production facility, a Fischer-Tropsch synthesis unit and a hydrocracker, which will produce naphtha, kerosene and diesel oil.

VOPAK Q1 OPERATING PROFIT RISES 15%
Dutch logistics company Vopak reported a 15% increase in its first-quarter (Q1) operating profits to €91.2m ($118.4m) over the same period last year, helped by strong commercial occupancy rates at its storage terminals.

DUPONT REVISES '09 AFTER 59% INCOME SHORTFALL
US chemical giant DuPont's first-quarter net profits slumped by 59% year on year to $488m (€376m) as most of its businesses continued to be badly hurt by the global recession, the company said. Quarterly sales fell by 20% to $6.9bn. Sales volumes were down by 19% across the group and 30% in segments other than agriculture and nutrition.

BASF TO SELL PLANT IN CHINA TO SUD-CHEMIE
German chemical giant BASF will sell its catalysts manufacturing facility in Nanjing, China, to compatriot producer Sud-Chemie for an undisclosed amount. The Nanjing plant produces more than 30 types of synthesis gas (syngas) catalysts, including products for manufacturing ammonia and methanol. "This catalysts site did not represent a strong fit with BASF's other operations in China," said Wilfried Seyfert, BASF group vice president for process catalysts and technologies.

MITSUI PREDICTS RECORD FULL-YEAR LOSS OF $970M
Japan's Mitsui Chemicals expects to incur a record net loss of yen (Y) 95bn ($970m) for the year ended 31 March, on a decline in operating income and the reversal of deferred tax assets. The chemical producer revised a January 30 prediction of a net loss of Y13bn, citing the decline of the global economy.

SABIC INCURS $260M Q1 NET LOSS ON CHARGE
Petrochemical giant SABIC reported a net loss of Saudi Riyals (SR) 974m ($260m) for its first quarter ended 31 March 2009 due to a huge impairment charge. This was a reversal of SR6.92bn net profit recorded in the previous corresponding period. SABIC said a goodwill impairment of SR1.18bn was incurred during the period, but provided no further details.

 

By: Joseph Chang
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly