This week's world news

23 November 2009 00:00  [Source: ICB]

IPIC IN TALKS WITH BAYER MATERIALSCIENCE
International Petroleum Investment Company (IPIC) is in talks with five major petrochemical players in the US and Europe, including Bayer MaterialScience, and expects to close a European acquisition by the first quarter of 2010, the managing director of the Abu Dhabi-based company said last week. Khadem al Qubaisi said technology from the new company would be used to develop petrochemical projects in Abu Dhabi. The purchase would also continue IPIC's geographical expansion. "It's a big deal. We're looking to buy a very big petrochemical and specialties company in Europe. Bayer MaterialScience is one of the companies we've been talking to," Al Qubaisi said, adding that he is aiming to triple IPIC's size from 10m tonnes/year to 30m tonnes/year within five years.

CLARIANT PLANS SITE CLOSURES AND JOB CUTS
Clariant plans to close sites and cut jobs as part of a restructuring program to address overcapacities and reduce costs, the Switzerland-based specialty chemicals producer said last week. The move would affect 570 jobs worldwide, and consultation had begun with employee representatives and authorities, Clariant said. The company's sites at Huningue in France, Pontypridd in the UK and at CIVAC in Cuernavaca, Mexico, along with parts of two plants at sites in Gendorf and Frankfurt, Germany, are nominated for closure. The company said it would evaluate options for its site at Onsan, South Korea.

US EASTMAN FORECASTS 20%/YEAR PROFIT GROWTH
Eastman Chemical expects annual profit growth of 20% through 2012 as the economy comes out of the recession, chief executive Jim Rogers said last week. "Eastman is leveraged to the economy, when the volumes come back, utilization rates are going to go up," Rogers said during an investor presentation. Further growth would come from the operating cash flows generated by Eastman's core activities. "We got to be really savvy, we got to be disciplined in how we spend that cash" as the company invests in organic growth initiatives, joint ventures and acquisitions," Rogers said.

CIA SAYS UK CHEMICALS INDUSTRY IS AT RISK
The UK runs the risk of losing out to its international competitors if the government does not tackle fundamental issues such as regulation, energy and credit availability, the chief executive of the UK's Chemical Industries Association (CIA) said last week. "Chemical and pharmaceutical businesses supply the rest of manufacturing with their raw [materials] and our innovations are leading the way in the transition to a low carbon economy," said CIA CEO Steve Elliott. "I want to make sure we can maintain and enhance that position. With 70% of our businesses foreign headquartered and able to invest anywhere in the world, action now is critical for the UK to compete for investment," he added on the day of the association's annual dinner.

US CHEMICAL FIRMS WARN AGAINST NEW RULES
US manufacturing, energy and farming officials have warned that plans by the Environmental Protection Agency (EPA) to regulate greenhouse gas (GHG) emissions by major facilities could cripple the nation's industries. Rick Krause, director of congressional relations for the American Farm Bureau Federation (AFBF), told EPA officials that their plans to limit GHG emissions by major US utilities and factories will cause "catastrophic economic impacts" even to small farms and businesses. He warned that if EPA proceeds with its plan, it could bring a halt to construction of new facilities and improvement of existing factories or farms. The agency expects the new rules to take effect by the second quarter of next year.

CUBA INVESTMENT DOES NOT MAKE SENSE
Venezuela's $1.2bn (€804m) investment to build a petrochemical complex and fertilizer factory in Cuba does not make financial sense, an analyst said last week. Deteriorating global market conditions have substantially reduced ethylene demand, while Cuba's economic model combined with US sanctions has further stifled local demand, said Jorge Pinon, an energy fellow at the Center for Hemispheric Policy, in Miami, US. "We do not see how economically and/or strategically this type of investment makes sense," Pinon said, following a recent visit to Cuba. Pequiven plans to build a $1.2bn polymers and fertilizers plant.

POLAND'S ZAP SEEKS CHEAPER GAS TO COMPETE
Zaklady Azotowe Pulawy (ZAP) is to step up its efforts to secure cheaper gas supplies in the wake of disappointing financial results, Poland's largest fertilizer producer said last week. ZAP, which reported that it sank to a net loss of zloty (Zl) 31m ($7.6m, €11.3m) in the first quarter of its 2009-2010 fiscal year, said it was unable to compete against many imported nitrogen fertilizers because of the cost of gas from state-controlled Polish natural gas monopoly PGNiG. The quarter saw ZAP pay $329 per 1,000cbm of gas, while prices paid by west European competitors averaged just $268 per 1,000cbm.

BIOPESTICIDES MARKET GROWTH IN US, EUROPE
The biopesticides market in Western Europe and North America is growing strongly as a result of increasing demand for chemical-free crops and the expansion of organic farming land, research and consultancy firm Frost & Sullivan says. Frost & Sullivan analysis found that the North American and western European biopesticides market earned revenues of $594.2m (€398.1m) in 2008 and estimated this to reach $1.02bn in 2015. "The major growth factor for the biopesticides market is the escalating demand for chemical-free crops by end users and supermarkets," said Frost & Sullivan research analyst Yeshwanth Kumar Desikamani.

LANXESS BUILDS NEW IRON OXIDE PIGMENT PLANT
German specialty chemical firm LANXESS plans to have a new 10,000 tonne/year black iron oxide pigment plant up and running in Shanghai, China in the fourth quarter of next year. LANXESS held a groundbreaking ceremony at the plant site in Jinshan last Wednesday. Financial details of the project were not disclosed. The plant will be under the company's inorganic pigments (IPG) business, and complements the group's 30,000 tonne/year yellow iron oxide pigment plant in Jinshan. The two pigments plant supply the raw material for the company's blending facility in Taopu, Shanghai.

CHEMTURA ADDS TO SAUDI ANTIOXIDANT CAPACITY
US specialty group Chemtura is adding 4,000 tonnes/year of antioxidant capacity at its joint venture facility in Al Jubail, Saudi Arabia. It will raise annual capacity at the Gulf Stabilizer Industries (GSI) joint venture - partnered with global investment company Al-Zamil Group - to 21,000 tonnes. The new capacity is expected to come on stream in 2010. "We now need to invest in further capacity to keep ahead of the growing demand for our products in the region," said Fahad al Zamil, director of the Al-Zamil Group. Chemtura owns a 51% stake in the joint venture.

NATGAS SHORTAGES HOBBLE ARGENTINA
Natural gas supply shortfalls and other issues will discourage Dow Chemical's Argentina operations from making new petrochemical investments next year, an industry executive said last week. Rolando Meninato, president of Dow Cono Sur, said: "The scenario for business in Argentina in 2010 will be complicated. Natural gas cutbacks, union conflicts, possible limits for exports to Brazil, among other causes, create a context of uncertainty for the petrochemical business in Argentina. In addition, in 2010 the general economic growth in Argentina will be of 2% or 3%, which means it will be smaller than in the rest of the world", he added.

LAWSUIT FILED AGAINST FORMER VERASUN BOSSES
An investor has filed a class-action lawsuit against some of the former executives of VeraSun, accusing them of hiding key information about the bankrupt ethanol producer. The lawsuit was filed in the US district court for the southern district of New York, according to the Shareholders Foundation, an investor advocacy group. The lawsuit accuses VeraSun of failing to reveal its participation in risky derivatives transactions, including commodities trading.

MEGA CRACKERS CHALLENGE CONTRACTORS
The execution of mega-cracker projects is one of the most challenging and costly undertakings that the contracting industry faces today, said an industry executive last week. "The capital expenditure and operating expenditure of mega cracker projects [with ethylene capacities of over 1m tonnes/year] achieve tremendously high monetary figures," said Roland Walzl, Linde's vice president of sales for olefin plants. He said that the challenges to the construction company were enormous, as 15,000 tonnes of piping, 12,000 tonnes of structural steel and 17,000 tonnes of equipment were often required.

YIHUA CHEM TO BUILD CAUSTIC SODA PLANT
China-based Inner Mongolia Yihua Chemical Industry, a wholly owned subsidiary of Hubei Yihua Chemical Industry, plans to build a 300,000 tonne/year caustic soda plant in northern Inner Mongolia, Hubei Yihua said in a filing to Shenzhen Stock Exchange. Hubei Yihua will invest yuan (CNY) 1.16bn ($169.8m) in the plant, to be located at Wuda Industry Park in Wuhai city. Construction will take one year.

LANXESS TO STRENGTHEN ITS TIES WITH CPCIA
German specialty chemical company LANXESS has signed a letter of intent with the China Petroleum and Chemical Industry Association (CPCIA) to strengthen existing ties. Speaking at the signing ceremony, which took place on November 16, LANXESS management board member Rainier van Roessel said: "LANXESS believes in using its international experience, innovative technologies and principles of sustainable development to help meet the most serious challenges affecting water, energy and the environment in China." LANXESS said both parties would cooperate on policies, development planning, environmental protection legislation and trend analysis.

PERSTORP TO BOOST ISOCYANATES CAPACITY
Swedish specialty chemical company Perstorp plans to start building an aliphatic polyisocyanates plant in China in 2011 to increase production capacity there. The firm said it has been looking for the best location and plans to be operational by 2012. Once completed, the plant will have production capacity of 12,000 tonnes/year. It also plans to increase output of its existing plant to support growth outside Asia. "We are wholly committed to strengthening our worldwide manufacturing and channel network," said Martin Lundin, Perstorp's president and CEO.

SINTEZ STARTS FIRST-STAGE ETHANOLAMINES UPGRADE
Russia's Sintez has shut its newer 21,500 tonne/year ethanolamine unit at Dzerzhinsk to carry out the first of its planned two-stage upgrading work. "We have stopped the main unit for two months," a company source said. The first stage, due to last until the end of January, is expected to improve the quality of its monoethanolamine (MEA) and diethanolamine (DEA) output by reducing water content and improving color, as well as expanding nameplate capacity by 3,000 tonnes/year. The second stage, to enable the unit to produce colorless triethanolamine (TEA) from 85% to 99%, is scheduled for April.

US EPA SEEKS TO TOUGHEN SULFUR DIOXIDE AIR LIMIT
Newly proposed air quality standards for sulfur dioxide (SO2) will require sulfur producers, power companies and many other industrial facilities to spend millions of dollars in upgrades. The Environmental Protection Agency (EPA) is taking comments on a proposal to establish a new national one-hour SO2 standard, between 50 and 100 parts per billion. "The new standard will result in a big-time investment in scrubbers and other pollution control equipment for sulfur and sulfuric acid producers, and we are happy to comply," said Dick Wilkinson, spokesman for sulfur producer Martin Midstream Partners.

EVONIK STARTS MMA PRODUCTION IN CHINA
German chemical producer Evonik Industries has started operation at its huge integrated methyl methacrylate (MMA) facility in Shanghai, China. The Shanghai facility - with a production capacity of 100,000 tonnes/year - is the largest integrated MMA production base in Asia, where Evonik has invested €250m ($373m). The facility will also churn out methacrylic acid, butyl methacrylate, hydroxyl esters and other products.

COCA-COLA BETS ON PLANT-BASED PLASTIC
Coca-Cola is betting its new plant-based polyethylene terephthalate (PET) bottle will attract sufficient market share to outweigh its higher manufacturing costs, a company source says. The container is called the PlantBottle, and uses PET feedstock monoethylene glycol (MEG) made from sugarcane and molasses, which is processed into ethanol.

NEW US HOME BUILDING PLUMMETS IN OCTOBER
US new home construction fell sharply in October, with a 10.6% decline from September levels. Building permits - a key measure of near-term residential building plans - dropped by 4%, the Commerce Department says. It marks the sharpest decline in housing construction since the beginning of this year, and undermines what many thought was a developing recovery for the sector. Housing starts for single-family homes were down by 6.8% in October compared with September, and construction of apartment buildings plummeting by more than 33%.

RUSSIA'S EUROCHEM TO START GRANULAR UREA
Russian nitrogen producer Eurochem will commence granular urea production at Novomoskovsk in the second half of November. The news follows the decision by another urea producer, Stirol, to convert one of its urea units at Gorlovka, Ukraine, last year in response to rising demand for premium granular product. Eurochem has converted one of its prilled urea units to granular and will have 720,000 tonnes/year of granular capacity at the site.

RUSSIA'S CAUSTIC INCREASES PVC CAPACITY
Russia's Caustic Sterlitamak has completed a plan to increase production capacity at its polyvinyl chloride (PVC) plant in Bashkortostan, Russia. The roubles (Rb) 2.6bn ($90.3m, €60.7m) project has allowed Caustic to expand its PVC capacity from 120,000 tonnes/year up to 200,000 tonnes/year. The company said it would now aim to raise PVC capacity up to 400,000 tonnes/year by 2012. Based in Russia's internal republic of Bashkortostan, Caustic is the country's major caustic soda, vinyl chloride (monomer) (VCM) and PVC producer.

CHINA'S EAST HOPE BUILDING PVC COMPLEX
China's East Hope Group has started construction of a polyvinyl chloride (PVC) integrated complex at Zhengyang Industry Park in southwestern Chongqing last week. The complex, which includes a 600,000 tonne/year calcium carbide plant, a 360,000 tonne/year PVC unit and a 300,000 tonne/year caustic soda facility, will be built with a total investment of around yuan (CNY)10bn ($1.46bn). "We have formed a joint-venture company with Chongqing Wujiang Industry Group to build and operate the complex," a source said in Mandarin.

GERMANY'S CURRENTA PARTNERS WITH NANJING
Currenta, the operator of three large German chemical parks, has formed a partnership with China's Nanjing Chemical Industry Park. Under the deal - which Currenta described as the first of its kind between two chemical parks - the two agreed to cooperate on a number of fronts, including the sharing of know-how and practices, as well as training and staff exchanges. Currenta said its agreement with one of China's largest chemical parks opened up opportunities to attract Chinese and other producers to its chemical sites at Leverkusen, Dormagen and Krefeld in Germany's North-Rhine Westphalia state. Currenta is a joint venture between Bayer and LANXESS.

KIDNAPPED CAPTAIN OF CHEMICAL TANKER DIES
The captain of a chemical tanker that was hijacked by pirates in the south Somali basin of the Indian Ocean on November 16 has died from the injuries he sustained during the attack, the International Maritime Bureau (IMB) said last week. The captain of the chemical tanker MV Theresa VIII died on the night of November 17 from gunshot wounds suffered during the attack by Somali pirates. The tanker was expected to arrive in Haradheere, Somalia, with the captain's body onboard, according to reports that quoted one of the pirates. "We have heard these reports and it highlights the dangers that can be involved when encountering pirates off the coast of Somalia," said IMB spokesperson Pottengal Mukundan.

LINDE AND US ALGENOL TO WORK ON ALGAE BIOFUELS
German international industrial gases major Linde has agreed to cooperate with US firm Algenol Biofuels on managing carbon dioxide (CO₂) supplies for Algenol's algae-based photobioreactor technology. Under their agreement, the companies will develop technologies to capture, store, transport and supply CO₂ for Algenol's process to make third-generation biofuels from CO₂, salt water, algae and sunlight.

HONEYWELL TO SET UP INDIA CHEMICALS CENTER
US industrial group Honeywell will invest $34m (€23m) to set up a chemicals technology center in India. The 400,000-square-foot (121,920 square metre) center at Gurgaon, near New Delhi, will focus on technology development for petrochemicals and refining, as well as nylons and fluorines. It will house pilot plants for developing and demonstrating refining and petrochemical-process technology. The new centre will be managed by Honeywell's petrochemicals-engineering subsidiary, UOP.

By: Joseph Chang
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