This week's world news

26 April 2010 00:01  [Source: ICB]

RELIANCE REVIVES CRACKER PROJECT
Indian petrochemical major Reliance Industries has revived its Jamnagar cracker and derivatives project and hopes to complete it in 2014, a source close to the company said. "The project is progressing - discussions are taking place for selection of technologies. A firm start-up date will be set once contracts are awarded," said the source. "The cracker would have the capacity to produce 1.4m-1.6m tonnes/year of ethylene and some small volumes of propylene," he added.

LYONDELLBASELL: PP TO AVOID MAJOR SHAKE-UP
The global polypropylene (PP) industry will avoid major consolidation in the near future, although it is grappling with rapid capacity additions amid the global economic downturn, said Anton de Vries, senior vice president for Europe, Asia and international olefins and polyolefins at Dutch chemical producer LyondellBasell Industries. "I personally don't expect to see major consolidation in the PP sector. I may be wrong, but I think it's going to be limited - more limited than what we saw in the downturn [in the early 2000s]," said de Vries at the Chinaplas 2010 exhibition in Shanghai.

BOROUGE II SET FOR FULL OPS BY EARLY 2011
The Borouge II cracker and downstream project at Ruwais, in Abu Dhabi, the United Arab Emirates, is expected to achieve full production by early 2011, said William Yau, CEO of Borouge's marketing arm. "The complex is scheduled to start up by the middle of this year, but production will be ramped up in stages, with full capacity of close to 2m tonnes/year of polyolefins likely to be achieved by the end of this year or early next year," Yau said on the sidelines of Chinaplas 2010. Borouge is a joint venture (JV) between Abu Dhabi National Oil Co. and Borealis, the latter a JV between Abu Dhabi-based International Petroleum Investment Co. and Austrian oil company OMV. Borouge II consists of a 1.5m tonne/year ethane cracker, with capacity of 540,000 tonnes/year of polyethylene (PE) and 800,000,000 tonnes/year of polypropylene (PP). The company already operates a 600,000 tonne/year PE plant at Ruwais.

EUROPE AIRLINES CANCEL JET FUEL ORDERS
Major European airlines Air France-KLM and Lufthansa last week terminated some of their jet fuel orders because of force majeure, after an ash cloud from an Icelandic volcano disrupted European air traffic. European jet fuel prices had fallen by more than $20/tonne (€14.80/tonne) last week to the lowest levels recorded in April, as excess supply built up following the effects of Iceland's volcanic ash clouds, industry sources said. Jet fuel barge prices were assessed by ICIS pricing last Wednesday at $720.75-724.75/tonne free on board (FOB) Amsterdam Rotterdam Antwerp (ARA). This represented a drop of $23.75 at the lower end of the range and $21.75/tonne at the upper end from April 16 prices.

ALFA SWINGS TO $88M FIRST-QUARTER PROFIT
Mexican industrial conglomerate Alfa reported a profit of $88m (€65m) in the first quarter (Q1) versus a $99m loss in the same period a year ago. Q1 revenue for Alfa's petrochemicals and synthetic fiber division, Alpek, rose by 35% year on year to $1.16bn, as it reported strong sales to recovering markets with exports of caprolactam (capro) to China countered by lower polyethylene terephthalate (PET) margins on increased competition.

SHIYOU GETS CRACKING ON PHENOL/ACETONE PLANT
Chinese petrochemical company Shiyou Chemical, a subsidiary of Kingboard Chemical Holdings, began building a 300,000 tonne/year phenol/acetone plant at Yangzhou, in China's eastern province of Jiangsu, on April 19. "The construction would take around one year to complete," a company source said, but did not reveal the investment amount.

WORK GETS UNDER WAY ON BAVARIA BRIDGE
German rail carrier Deutsche Bahn has started work on a new 160m (525ft) bridge to improve rail access to chemical production sites in Southeast Bavaria. The €12m ($16m) bridge across the river Inn, at Muhldorf, near Munich, would remove a bottleneck in rail transport to Bavaria's "Chemical Delta," which includes production sites at Burghausen, Gendorf and Trostberg. It would support increased chemical railcar shipments from those sites when completed in 2012.

US SENATORS PROPOSE ETHANOL BILL
Two US senators introduced a bill that would extend US government support for ethanol, saying the biofuel still deserves help because it offers an alternative to foreign oil and stimulates the economy. The bill, sponsored by Republican Senator Chuck Grassley of Iowa and Democratic Senator Kent Conrad of North Dakota, would extend through 2015 both a 45 cent/gal (€0.09/liter) credit given to US fuel blenders for mixing ethanol into gasoline and a 54 cent/gal tariff that the US levies on imported ethanol.

MITSUI TO BUILD NEW MLLDPE PLANT
Japan's Mitsui Chemicals plans to build a new metallocene linear low density polyethylene (mLLDPE) plant outside Japan by 2015, a company source said. "We're conducting a feasibility study on where to build this new plant. If everything goes smoothly, we target to start up the plant in 2014 or 2015," the source said on the sidelines of Chinaplas 2010. The firm plans to build the new plant in Asia.

EXXONMOBIL MLLDPE PLANT TO START UP IN 2011
US major ExxonMobil will produce metallocene linear low density polyethylene (mLLDPE) in Singapore next year to cater for the important Chinese market, said William Handy, the company's polyethylene (PE) market development manager for Asia-Pacific, at Chinaplas 2010. The custom-designed mLLDPE ­product used in packaging would primarily be supplied to China.

CHINA PLASTICS AND ­RUBBER DEMAND TO RISE
China's plastics and rubber demand growth will exceed 10% this year amid a strong economic recovery, particularly driven by the automotive market, industry sources said. "China's domestic consumption has endless potential, so I am very confident for this year's growth. A 10% growth target has no difficulty basically," said Liao Zhengpin, chairman of the China Plastics Processing Industry Association at Chinaplas 2010. Packaging and construction materials are still the main forces driving plastics consumption, while plastics usage in medical equipment is burgeoning, he said.

HONAM UNFAZED BY MIDDLE EAST COMPETITION
South Korea's major Honam Petrochemical is unfazed by competition from lower-cost polyolefins from the Middle East, its CEO said at Chinaplas 2010. "We don't focus much on competing with producers in the Middle East. We give more weight to increasing our specialty products through consistent product development," said Chong Bum Shick. "Despite the aggressive expansion, the Middle East accounts for only 20% of the world's polyolefin capacity. For Honam Petrochemical, it's more important to compete with the other 80%."

BMS SEES PC DEMAND GROWTH IN ASIA
Having enough polycarbonate (PC) supply quickly to cope with the strong demand growth in countries such as China will be a challenge for the industry, said Rainer Rettig, senior vice president of German chemical company Bayer MaterialScience's PC division. "We are just coming out of the biggest and most severe financial crisis, and we are now seeing a surge in demand for [PC] in China and some other Asian countries," he said at Chinaplas 2010.

DOW DECLARES FM ON TARRAGONA ETHYLENE
US-based group Dow Chemical declared force majeure (FM) on ethylene from its Tarragona site in Spain on the delayed arrival of a feedstock shipment, a company source said. The FM was declared on April 16, said the source, who suggested that the supply constraints were likely to be a temporary measure.

MCC AND SINOPEC TO START UP PC PLANT IN 2011
Japan's Mitsubishi Chemical Corp. (MCC) expects its new polycarbonate (PC) plant in Beijing, China, to come on stream in the second quarter of 2011, said Naoaki Ishiwatari, deputy general manager for the overseas business planning group of MCC, at Chinaplas 2010. The new plant is a 50:50 joint venture between MCC and Chinese producer Sinopec.

IDEMITSU TO BUILD ­FLEXIBLE PP PLANT
Japanese refiner Idemitsu Kosan plans to build a 40,000 tonne/year plant that will produce its newly developed flexible polypropylene (PP) product in Chiba. Construction of the unit is scheduled to start by December 2010 and should be completed by November 2011.

TDI CLOSURE IS IMMINENT
US-based Dow Chemical plans to close its Freeport toluene di-isocyanate (TDI) plant in Texas "in the coming weeks." Dow had earlier said it would remain a key global TDI and polyurethane (PU) products supplier, even after it permanently shuts its Freeport TDI unit in the second quarter. To do that, the company entered into a long-term supply agreement with a major producer to cover customers' TDI requirements.

PVC CAPACITY TO CLIMB
China is expected to raise its polyvinyl chloride (PVC) capacity by 2m tonnes this year despite demand growing at a slower pace. "China is already the largest producer of PVC globally with a total capacity of 16.63m tonnes at the end of 2009. Capacity would grow by about 10% this year," said Lynn Du, manager of PVC and Inorganics at chemical price reporting service CBI China. Five plants with a capacity of 1.2m tonnes/year had already been commissioned in the first quarter, Du said.

POLYAMIDE DEMAND RISES
French producer Rhodia expects China's demand for polyamide to grow by 20% this year and very strongly in the longer term because of a robust automobile market. Edmund Yap, vice president of Rhodia's Asia-Pacific polyamide operations said: "There is a strong automobile market - China is definitely a major market for nylon 6,6, especially for engineering plastics." By 2015, Asia would become the largest nylon 6,6 market in the world, accounting for more than half of the global market share, Yap said. Rhodia plans to expand its Asia polyamide capacity by 40-60% in the next few years.

MTO PROJECT TO START UP
Zhongyuan Petrochemical, a subsidiary of China's Sinopec, plans to start up its 600,000 tonne/year methanol-to-olefin (MTO) project at Puyang, in the central province of Henan by late 2011. The yuan 1.5bn ($220m) project includes new construction, which began on April 16, as well as expansion works. The new facilities that are being built include an MTO plant and a 100,000 tonne/year polypropylene (PP) plant.

ZAP EYES ANWIL PURCHASE
Poland's largest fertilizer producer, Zaklady Azotowe Pulawy (ZAP), will be able to cut its reliance on nitrogen fertilizers as a part of its business if it successfully acquires fellow Polish producer Anwil. ZAP could reduce the contribution nitrogen fertilizers make to its annual sales from 60% to around 45% upon successful completion of the acquisition, said Czech investment bank Wood & Company. PKN Orlen granted ZAP an exclusive right to negotiate the acquisition of its subsidiary, Anwil, until June 30.

INDIAN PP CONSUMPTION SET TO GAIN 12-15%
Demand for polypropylene (PP) in India is expected to grow by 12-15% year on year in the financial year 2010-2011. "Copolymers and fibers are the segments that will lead this demand growth," said an Indian producer at ChinaPlas 2010 in Shanghai. Indian consumption of PP grew by 21.2% in the year ended March 31 from the previous year to 2.2m tonnes. Domestic production of PP in 2009-2010 was around 2.5m tonnes/year, of which exports constituted 700,000 tonnes.

GROWTH EXPECTED FOR CHEMICAL TANKER FLEET
The global chemical tanker fleet should grow by 3% in 2010, says Martin Korsvold, analyst at Pareto Securities in Norway. The global chemical fleet that now totals 1,060 vessels (weighing 10,000-60,000 deadweight tonnes) should add another 32 ships this year, even with higher scrapping levels and greater delays to deliveries.

EUROPEAN CHEMICAL SECTOR IS RECOVERING
The European chemical industry is on the road to recovery, with rising production seen across the sector. "The situation has gradually improved since December 2008, and production registered in January 2010 was 14.8% higher than that of January 2009," said, the European Chemical Industry Council (Cefic). Eurostat data shows that petrochemical production was 29.5% higher year-on-year in January.

BRAZILIAN ETHANOL DIPS
Ethanol shipped from Brazil's ports plunged by 76% to 40,737 tonnes in March, as the South American country's high-priced material continued to be too expensive for major markets.

BOROUGE INAUGURATES RESINS PLANT
Borealis's joint venture, Borouge, has inaugurated its 50,000 tonne/year compounded resins manufacturing facility in Shanghai, China, according to the global plastics producer. Borealis said the plant would be used to supply the rapidly growing automotive and household appliances industries in China. Base resins for the plant would be supplied from Borouge's polyolefins complex in Abu Dhabi, where the group is tripling its polyolefins capacity to 2m tonnes/year by mid-2010.

NEW REFINERY DUE TO START UP IN LATE 2012
China-based Sinopec subsidiary Jiujiang Petrochemical is expected to start a new 4m tonne/year refinery at Jiujiang, Jiangxi province, by the second half of 2012. The project has been submitted to the central government for final approval. Construction may start this year. The new refinery would expand the company's capacity to 9m tonnes/year, from the present 5m tonnes/year.

CORRECTION
In the article titled "Handle with care" in the March 29 issue of ICIS Chemical Business, ­bisphenol A (BPA) was incorrectly described as a plasticizer. In fact, it is a monomer used mainly in the production of polycarbonate (PC) and epoxy resins. We regret the error.

By: Joseph Chang
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