07 June 2010 00:01 [Source: ICB]
PETCHEM UPTURN MAY JUST BE TEMPORARY
The chemical industry's strong upturn during the first quarter of 2010 may be a temporary respite from a longer-term downtrend, rather than the start of a sustained recovery, an industry consultant said last week. Paul Hodges, chairman of International eChem, said in an update to his White Paper, Budgeting for a new normal, that supply-demand balances were still getting worse, rather than better, for the major petrochemical and polymer products. Hodges added that exchange rates and financial markets, including commodities such as oil, would continue to be volatile, making planning difficult for chemical companies.
EASTMAN RAISES Q2, FULL-YEAR EARNINGS GUIDANCE
US-based Eastman Chemical has raised its second-quarter (Q2) and 2010 full-year earnings per share (EPS) guidance, citing the global recovery in demand. "The higher earnings expectations are based on the global recovery in demand and expectations that this demand level continues in the second half of the year, along with less volatile raw material and energy costs," the US-based chemical major said. Eastman expects Q2 2010 earnings per share to be above $1.60 (€1.31) and full-year 2010 earnings per share to be between $5.25-5.50. Any charges related to restructuring actions were excluded from projections.
PRIVATE EQUITY TO REMAIN KEY IN DISTRIBUTION
Private equity firms will remain key players in the EU chemical distribution sector over the next 10 years, according to the managing director of investment bank Lazard UK. Speaking at the annual congress of the European Association of Chemical Distributors (FECC) in Barcelona, Spain, Alasdair Nisbet said the private equity industry was a major owner of chemical distribution companies and he did not expect the situation to change up until around 2020, because of the sector's attractive features. Nisbet said private equity firms liked investing in chemical distributors because it was a growing market with further opportunities for consolidation and had proved to be resilient during the economic crisis.
ECHA PUSHES FOR FEWER ANIMAL TESTS
The European Chemicals Agency (ECHA) is promoting alternative methods for assessing hazards to avoid unnecessary animal testing. ECHA has launched a practical guide that explains alternative and non-test methods of assessing the properties of chemical substances, in order to provide the information required by the Reach regulation, so that testing on vertebrate animals was only undertaken as a last resort. Many of the standard test methods chemical firms use to assess the hazards and risks of their substances use vertebrate animals to predict the effects of chemicals on humans and the environment. As part of the guide, ECHA said companies must share data with one another to avoid the need for duplicate testing.
CONSTRUCTION CHEMICAL PLANS FOR PANAMA
BASF plans to build a construction chemicals and system solutions plant in Panama to meet growing domestic construction demand. "The new facility will help our construction chemicals business meet the demand of the construction market in Panama," said John Salvatore, head of BASF construction chemicals, North America. The new location is expected to be fully operational by the fourth quarter of 2010, the German chemical major said. Capacity details were not disclosed. BASF noted that it would be the first company to establish a manufacturing plant for construction chemicals in Panama.
FRANCE'S AIR LIQUIDE TO BUILD CHINA AIR UNIT
French specialty gases company Air Liquide will install a new air separation unit for Dongbei Special Steel Group in Dalian, Liaoning. Air Liquide will invest €25m ($30.5m) in the new 800 tonne/day unit, which will supply oxygen and nitrogen to the China state-owned steelworks. The unit, which is scheduled to be commissioned in the third quarter of 2011, will be designed and manufactured by Air Liquide's engineering center in China.
DUPONT UPS INVESTMENTS IN RENEWABLE ENERGY
US chemicals major DuPont is increasing its investments to meet the growing demand of the renewable energy sector. The company wants to capitalize on "significant market opportunities" in the alternative energy sector through investments in manufacturing, as well as materials and technology development, DuPont's executive vice president and chief innovation officer Tom Connelly said. "We are investing in greater production capability to help keep pace with the fast rising global demand," he said, adding: "Generating and storing renewable sources of energy will be the fastest growing sector in the energy market for the next 20 years."
US GEORGIA GULF EXPECTS BETTER VINYL MARKETS
Georgia Gulf expects to see better domestic markets through the rest of this year, as the US housing market stabilizes and vinyl demand slowly improves, the chlorovinyl producer's CEO and president says. The Atlanta-headquartered producer expects to see continued economic recovery this year, Paul Carrico said at the Goldman Sachs Basic Materials Conference. He added: "We certainly have been in a trough related to the chemical side of the equation." North American vinyl demand is slowly improving, Carrico said.
US AUTO SALES RISE BY 18% AS DEMAND ROCKETS
US auto sales climbed by 18% year on year in May, according to data released last week. The data indicated increased demand and a possible boon for the petrochemical industry. "Through the financial crisis and bankruptcy process, the auto companies have prepared themselves to be profitable at lower volumes, and we are seeing this in quarterly reports," said Bruce Belzowski, assistant research scientist and automotive analyst at the University of Michigan.
BP OIL CLEAN UP BILL IS HEADING TOWARDS $1BN
UK-based energy major BP has so far spent almost $1bn (€810m) cleaning up the oil spill in the Gulf of Mexico after its Deepwater Horizon rig exploded and sank on April 20. The $990m spent to date includes the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid and federal costs.
ASAHI KASEI, MITSUBISHI MERGE OPERATIONS
Japan's Asahi Kasei and Mitsubishi Chemical have signed a memorandum of understanding for a 50:50 joint venture that would unify their basic petrochemical operations at the Mizushima industrial zone in Okayama, Japan. The agreement was signed after an extensive study on the integration of their naphtha cracker facilities, which was scheduled to start up on April 1 next year, the statement said. The Mizushima industrial zone houses Asahi Kasei's 500,000 tonne/year naphtha cracker and Mitsubishi Chemical's 450,000 tonne/year ethylene facility.
BIODIESEL TAX CREDIT PASSED BY US HOUSE
The US House voted on May 28 to reinstate the $1/gal biodiesel blending tax credit after a contentious battle over costs, potentially bringing the industry back toward profitability. The credit, which the House estimated to cost $868m (€707m) over 10 years, was part of a $112bn bill addressing unemployment benefits that must now pass the Senate and be signed by President Barack Obama before becoming law.
NEW BIODIESEL PLANT PLANNED IN CHINA
China's Shandong Yangxin Yihai Bioenergy Technology Co. plans to invest yuan (CNY) 200m ($29.28m) to build a 200,000 tonne/year biodiesel plant at Yangxin Economic Development Zone in eastern Shandong province. Construction would take place in two phases, with the initial 100,000 tonne/year unit to start soon, an official said. The second-phase 100,000 tonne/year plant would be built after the first unit was up and running smoothly.
MOTHBALLED METHANOL PLANT LIKELY TO RESTART
Methanex is likely to restart its offline 470,000 tonne/year methanol plant at Medicine Hat in Canada's Alberta province in early 2011 because of favorable feedstock natural gas prices, according to a report by John Cummings, a Toronto-based petrochemicals analyst. North American gas prices are around $4/MMBtu so Methanex should be able to strike a deal on medium-term gas prices to run the plant profitably, Cummings said. The plant was mothballed in 2001.
AKER SOLUTIONS WINS CHLORINE DIOXIDE DEAL
Norway-based Aker Solutions has signed an $18m (€15m) contract to service an integrated chlorine dioxide plant for Ilim Group's pulp mill project in Russia. Aker Solutions will supply technology, engineering, equipment, site and commissioning services to the Russian producer of pulp and paper products, Aker said in a statement. The 15 tonne/day plant is scheduled for commissioning in 2012 and will complement Ilim's $700m project to build a new 720,000 tonne/year pulp line at the firm's mill in Bratsk, Russia.
RHODIA EYES A 40% INCREASE IN POLYMER CAPACITY
French specialty chemical company Rhodia will increase its global plastics capacity by 40% within the next four years to satisfy expected growth in customer demand. Vice president for engineering plastics Francois Hincker said Rhodia would make the necessary investment to fund sufficient growth in polyamide 6, polyamide 6,6 and other thermoplastics.
SPAIN'S DISTRIBUTION SECTOR SHRINKS
The number of Spanish chemical distributors is expected to fall in 2010 as the global economic crisis continues to bite, said Pascual Carneado, president of the Spanish Distributors Association at the European Association of Chemical Distributors congress in Barcelona, Spain. Spain's consumer market dropped by 25-30% last year, with chemical production capacity down by 11.4% from 2008.
GNFC TDI EXPANSION
India's Gujarat Narmada Valley Fertilizers Co. (GNFC) aims to expand the capacity of its 15,000 tonne/year toluene di-isocyanate (TDI) plant at Dahej by 50,000 tonnes/year. The project will cost Indian rupees 16.55bn ($357m) and is scheduled for completion in December 2011. After the expansion, GNFC would have the capacity to produce 65,000 tonnes/year of TDI.
DSM CONCLUDES DEAL FOR POLYAMIDE BUSINESS
Dutch producer DSM Engineering Plastics has completed its takeover of Japan's Mitsubishi Chemical's polyamide business. The acquisition was part of an agreement enabling DSM to acquire Mitsubishi Chemical's polyamide business in exchange for its polycarbonate (PC) business. The deal also enables DSM to expand its position in Japan. Some key DSM employees were transferred to Mitsubishi Chemical.
SINOPEC AND NPC SET TO AGREE A NEW JV DEAL
China major Sinopec and Iran's National Petrochemical Co. (NPC) are to sign a memorandum of understanding (MoU) to explore joint venture (JV) opportunities in petrochemical and related businesses in the two countries. "The MoU should be signed within the next one to two months," an industry source said.
BASF BEGINS ETHYLENE OXIDE OUTAGE IN EUROPE
Germany's BASF has started maintenance at its 345,000 tonne/year ethylene oxide (EO) facility at Ludwigshafen, as planned - the first of several EO turnarounds in Northwest Europe the firm has scheduled for June. The unit went down at the end of May, with the turnaround expected to last for around three weeks. June will be a tough month, with three of the main EO production plants in Northwest Europe down.
LARGEST SINGLE-LINE PROPYLENE UNIT STARTING
China's Bohai Chemical Industry Group started building the world's largest single-line propylene facility in Tianjin, north China, during May. The 600,000 tonne/year unit will be China's first plant to use propane as feedstock. The yuan 3.48bn ($510m) project is expected to begin operating in September 2012.
BOROUGE PLANS NEW PLANT BUILD IN CHINA
Borouge, a joint venture between Abu Dhabi National Oil Co. and Austria-headquartered plastics producer Borealis, will build a second manufacturing plant in China. Borouge Marketing Company CEO William Yau said: "It is our intention to be a reliable supplier to the rapidly growing automotive and appliance industries in China. We have decided to invest in a second compounding plant that produces tailor-made resins in close proximity to our customers." The plant, with a capacity of 105,000 tonnes/year of compounded polypropylene (PP) resins, is expected to be completed by the middle of 2012.
PVC SUBSIDIARY BUYOUT
China's Ningxia Younglite Chemical will buy out the 15.53% stake of Shanghai Chlor-Alkali Chemical in Ningxia Western PVC for up to yuan 98m ($14.4m). After the deal, Ningxia Younglite would own 100% of the Shizuishan-based PVC producer.
EUROPE APPROVES DOW'S POWDER COATINGS SALE
Dutch chemical major AkzoNobel has completed its acquisition of US-based Dow Chemical's powder coatings business. The companies announced the deal in November last year and the European Commission approved the acquisition last month. The financial details of the transaction were not disclosed. Dow, which supplies raw materials to the coatings industry, told ICIS news it was selling the business as part of a strategic decision to avoid a conflict of interest that could have seen the company competing against some of its own customers.
POLAND'S ZAT MAY BUY MAJORITY OF RIVAL ZAK
Zaklady Azotowe Tarnow (ZAT) is considering purchasing a substantial minority or majority stake in fellow Polish chemical and fertilizer company Zaklady Azotowe Kedzierzyn (ZAK). Both companies are considering their options following the cancelation of the privatization of Poland's chemical group II - which comprised ZAT, ZAK and the country's largest chemical group, Ciech - and the purchase of ZAK could release very useful synergies, said ZAT CEO Jerzy Marciniak. ZAT may pick up an initial ZAK stake through a planned initial public offering.
AIRGAS REJECTS NEW AIR PRODUCTS' TENDER OFFER
US industrial gases firm Airgas has again rejected a takeover bid by compatriot rival Air Products as it responded to Air Products' second tender offer extension, to August 13, from June 4. "The Airgas board of directors remains unanimous in its belief that Air Products' unsolicited tender offer is an opportunistic attempt to transfer the value of Airgas to Air Products at a grossly inadequate price," Airgas said.
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