This week's world news

21 June 2010 00:00  [Source: ICB]

CITIGROUP PESSIMISTIC ON POLAND PRIVATIZATION
Global financial services company Citigroup is not optimistic that Poland will be able to privatize its two largest fertilizer producers, Zaklady Azotowe Pulawy and Zaklady Chemiczne Police. "Currently, the treasury ministry is looking for bidders for the two companies. However, with weak prospects for nonintegrated fertilizer producers and the ministry's high pricing expectations, we are not optimistic it will be successful," Citigroup said in a research report.

CONVERTERS NEED CONSOLIDATION - SABIC
Plastic converters in the Gulf Cooperation Council (GCC) region should consolidate to achieve economies of scale - a move that could benefit an industry already enjoying better margins than its counterparts in the US, EU and Asia, an executive from Saudi chemical giant SABIC says. "GCC converters have many advantages, such as proximity to feedstocks and relatively low energy and labour costs," said Khaled al-Mana, executive vice president, polymers, at SABIC, addressing delegates at the Gulf Petrochemicals and Chemicals Association Plastics Summit. Plastic processors in the GCC achieved 2009 margins of 10.5%, compared with 8.6% in the US, 6.8% in the EU and 3.3% in Asia. Al-Mana said there were 1,100 plastic converters in the GCC, but only 10% were reasonably sized.

GERMAN SENTIMENT PLUNGES ON EURO'S WOES
Germany's economic sentiment fell sharply in June amid a slowdown in the recovery, uncertainty over the eurozone debt crisis, as well as EU public sector budget cuts that could crimp demand, the country's Centre for European Economic Research (ZEW) says. The center's widely watched monthly economic sentiment indicator fell by 17.1 points in June to 28.7 - the sharpest decline since October 2008, when the US banking crisis emerged. The indicator is based on a survey of 279 analysts, who were asked about their expectations for the coming six months. The latest survey was conducted between 31 May and 14 June.

INDIA'S IFFCO PLANS EXPANSION OF DAP LINE
Fertilizer maker Indian Farmers Fertiliser Cooperative (IFFCO) plans to expand the capacity of its diammonium phosphate (DAP) facility at Paradeep, in Orissa state, to around 2.5m-3.0m tonnes/year. The expansion, which would be completed by 2014, would require an investment of around Indian rupees 5bn ($108m), the source said, adding that the funds would be raised through internal accruals. The Paradeep unit has three lines of DAP, with a total operating rate of 1.9m tonnes/year, the source said. "We plan to retrofit the existing DAP plant with pipe reactor technology and increase the output," the source added.

AIRGAS STANDS FIRM AGAINST AIR PRODUCTS
US industrial gases firm Airgas, reiterating its position against a buyout offer from compatriot rival Air Products, has described the price as "grossly inadequate." "This board has unanimously concluded that Air Products' unsolicited tender offer and proxy solicitation for its hand-picked nominees are an opportunistic attempt to advance Air Products' goal of transferring the value of Airgas to Air Products at a grossly inadequate price," the company said. Airgas's statement was in response to proxy materials filed by Air Products on 16 June to elect three nominees to the board of Airgas as it bids to take control of the company.

RHODIA TO ACQUIRE CHINA'S FEIXIANG
Paris-based chemical major Rhodia plans to acquire China fatty amines and specialty amines producer Feixiang Chemicals. Rhodia said the acquisition price was based on an enterprise value of $489m (€396m) for 100% of the company. Feixiang's current majority owner would retain 12.5% of the capital over the next two years. Rhodia chairman and CEO Jean-Pierre Clamadieu said the acquisition of Zhangjiagang City-based Feixiang, in Jiangsu province, would strengthen the company's position in the surfactant business for home and personal care, agrochemicals, oilfield and industrial markets.

SINGAPORE'S MAY PETCHEM EXPORTS RISE TO TOP 10
Singapore has recorded a rise in its petrochemical export volumes to all of its top 10 trade partners in May, according to statistics released by International Enterprise (IE) Singapore. "On a year-on-year basis, non-electronic, non-oil domestic exports [NODX] grew by 16% in May 2010, after the 35% in the previous month," said IE Singapore, the Ministry of Trade and Industry's lead agency. "The increase in non-electronic, NODX was led by higher domestic exports of petrochemicals, disk media products and specialized machinery," the agency added. Singapore's top 10 trading partners and export destinations are the 27 member countries of the EU, plus the US, China, Malaysia, Indonesia, Hong Kong, Japan, South Korea, Thailand and Taiwan.

KAZAKHSTAN EYES POLYMER MODIFIED BITUMENS
Kazakhstan's state-owned oil and gas company, KazMunaiGaz (KMG), plans to build a new polymer modified bitumens facility. The unit was due on stream in 2012, and would produce 400,000 tonnes/year of polymer modified road bitumens, KMG said. The new facility would be built at the premises of the Aktau Plastics Plant by a consortium of Kazakhstan's KazStroyService and China's CITIC Construction, said Daniar Tiyesov, KMG's head of processing and marketing.

AIR PRODUCTS TO RECEIVE $253M FOR TEXAS CARBON
US group Air Products was picked to receive $253m (€205m) from the US Department of Energy (DOE) for a carbon capture and sequestration project in Port Arthur, Texas. Air Products said the money would be used for final engineering, design, construction and operation of the project through September 2015. It will operate the project to capture carbon dioxide from its two steam methane reformers (SMRs) within the Valero Port Arthur refinery. The SMRs produce hydrogen to help make cleaner burning transportation fuels by refinery customers on Air Products' Gulf Coast hydrogen pipeline network.

CANADA NEEDS TO ACT ON BOMB SCARE – GROUPS
Canada needs to further improve its precautions against the misuse of ammonium nitrate (AN) in the runup to the G20 summit in Toronto later this month, industry groups said last week. The calls came after a fertilizer dealer in southern Ontario made an undocumented sale of 1,500kg of AN, prompting fears that terrorists may have obtained the product to make bombs. The buyer later contacted police, who determined that the incident did not pose a security threat. The Canadian Association of Agri-Retailers warned that an overall public threat still existed, and that essential crop inputs such as fertilizers remained vulnerable to criminal and terrorist misuse.

OPPENHEIMER REITERATES 'OUTPERFORM' ON US TPC
US-based investment bank Oppenheimer has reiterated its "outperform" rating on shares of US butadiene (BD) producer TPC Group, based on a meeting with the company's new chief financial officer, Miguel Desdin, and solid prospects for profit growth. Oppenheimer analyst Edward Yang said in a research note that Desdin had 20 years of experience in the chemical industry, and "appears well-versed in interacting with investors and intently focused on generating shareholder value." Desdin was previously controller at US specialty and intermediate chemical producer Celanese and vice president and treasurer at Great Lakes Chemical, also US. He was most recently chief financial officer of US technical service company Furmanite.

RECYCLING PROGRAMS SHOULD FOCUS ON PROFITS
A good recycling program must address not only possible issues during the process of recycling, but should also provide recyclers with sufficient profits to maintain a sustainable business, a company executive said last week. "Sustainability and profitability are very important to the recyclers, without which it is very difficult to promote recycling of plastic products," said Laurence Jones, vice president of corporate support at Borouge, a joint venture (JV) between Abu Dhabi National Oil Co and Borealis, the latter in turn a JV of Abu Dhabi-based International Petroleum Investment Co. and Austrian oil company OMV. The image of plastics is directly related to littering and waste issues, and responsible disposal of waste is one solution to the environmental problem, he added.

BANKRUPTCY BETTER THAN IDLING US ETHANOL
US ethanol producers in financial distress should try to keep their plants going, even if it means entering bankruptcy, rather than shut down the plants and see their resale value fall because of the halt, a legal expert says. "You will get a better price if you keep operating," said Janet Jacobs, an attorney at law firm Stoel Rives, which operates across the US and has renewable energy and agribusiness practices. "Even if the inevitable happens and you go into Chapter 11 [bankruptcy protection], you will be in a better position to negotiate with creditors," Jacobs told the annual Fuel Ethanol Workshop in St Louis, Missouri.

FITCH AGAIN SLASHES BP'S RATINGS AS RISKS RISE
US-based Fitch Ratings has once again cut its assessment for BP, citing much higher short-term financial risks for the company from the US Gulf coast oil spill than previously expected, as well as increasing pressure from the government. The main drivers included the indication from government scientists of a much higher spill rate than previously thought by all parties.

KAZPHOSPHATE BEGINS SULFURIC ACID PROJECT
Kazakh chemical company Kazphosphate has started building a new 650,000 tonne/year sulfuric acid unit in the Jambyl region. The new unit, costing tenge 12bn ($80m), will allow the company to substitute sizeable import volumes for its own sulfuric acid production. Kazphosphate, which employs about 6,000 workers and produces phosphorous and mineral fertilizers, has announced plans to increase its annual sales up to $1bn (€812m) by 2012.

NEW-CAR REGISTRATIONS FALL IN EUROPE
Registrations for new passenger vehicles in the 27-member EU dropped for the second consecutive month, with a 9.3% year-on-year fall in May, as governments started to wind down scrappage programs. According to data from the European Automobile Manufacturers' Association, a total of 1.1m passenger vehicles were registered in May, following a 7.4% decrease in April, as various government incentive programs ended. While Germany registered the most cars in May, it also recorded the biggest decrease (-35.1%) in registrations of all major markets, followed by Italy (-13.8%) and France (-11.5%). The UK (+13.5%) and Spain (+44.6%) increased registrations compared with the low levels observed last year.

EU CHEMICAL TRADE SURPLUS RISES IN Q1
The EU's chemical products trade surplus for the first quarter (Q1) rose significantly year on year, as imports and exports all grew. Figures released by Eurostat, the statistical office of the EU, show that the trade surplus for chemicals in the EU's 27 countries rose to €23.3bn ($28.1bn) for the period, from €17.5bn, as exports increased by 18% and imports by 9%.

DOW WINS $61.7M VERDICT IN NOVA PE LAWSUIT
US major Dow Chemical won a $61.7m (€50.6m) verdict last week in a lawsuit alleging that Canadian petrochemical producer NOVA Chemicals infringed two of its patents for polyethylene (PE). A jury at the US District Court in Delaware awarded Dow $4.32m in royalties and $57.4m in lost profits. Dow spokesman Greg Baldwin said: "The jury's verdict is a critical step in establishing that Dow's patents are valid and enforceable. And that NOVA has been infringing on Dow's rights. Dow will continue to pursue all legal remedies available to protect this valuable intellectual property." NOVA spokesman Greg Wilkinson said his company expected to prevail on appeal.

HUNTSMAN TO CUT 130 JOBS IN SWITZERLAND
US speciality chemical group Huntsman plans to cut 130 jobs at textile chemicals sites in Switzerland by the end of next year, according to a Swiss union. Angestellte Schweiz said the cuts would affect the company's textile effects business at Basel and Schweitzerhalle. The union is concerned about the affected staff's future and called on Huntsman's management to look at all options to avoid the cuts. It is also worried about the broader prospects for chemical industry jobs in the Basel region.

US EPA TO REVIEW RISK ASSESSMENTS
The US Environmental Protection Agency (EPA) has placed its risk assessments on methanol and five other chemicals on further review as it examines the validity of studies used in the assessments. In January, the EPA proposed to classify methanol, methyl tertiary butyl ether (MTBE), ethyl tertiary butyl ether (ETBE) and acrylonitrile (ACN) as likely human carcinogens, based partly on data from Italy's Ramazzini Institute. Two completed risk assessments - on vinyl chloride and 1,1-dichloroethylene - also relied substantially on cancer study findings by the institute. Those assessments will also be reviewed. The reviews came after a team of pathologists from the US National Toxicology Program recently visited Italy and examined a research study from the group on methanol.

CANADIAN CHEMICAL ­CAPACITY USE RISES
Capacity utilization at Canadian-based chemical plants rose to 82% in the first quarter, driven by increased production in pharmaceuticals, as well as petrochemicals, a government statistics agency said last week. Year on year, plant capacity utilization rose by 12 percentage points from 70% in the first quarter of 2009. Overall capacity utilization in Canada's manufacturing sector was 75% in the first quarter - up from 67% in 2009.

AZOMURES MUST CUT AMMONIA POLLUTION
Romanian fertilizer producer Azomures has been told it will lose its environmental permission to operate if it does not stick to plans to curb ammonia pollution, the Romanian Ministry Of Environment said last week. The company's environmental authorization will not be renewed in 2015 unless it makes good on pledges to improve air quality. Azomures is in talks to obtain loans to help implement pollution curbing investments worth around $138m (€113.2m) from 2011 to 2015.

INDIANOIL TO BEGIN WORK ON GUJARAT PX-PTA
State-run refiner Indian Oil Corp (IndianOil) expects to begin construction on its para-xylene-purified terephthalic acid (PX-PTA) plant at Vadodara, in Gujarat state in "a month or two," according to a company source. IndianOil completed a feasibility study for the project in March this year. The plants are to be located near the company's refinery at Koyali and should produce 370,000 tonnes/year of PX and 560,000 tonnes/year of PTA. The company is in the process of obtaining necessary approvals and financing for the project. It expects to complete work on the plant by the end of 2012 or in the first quarter of 2013.

PTT DELAYS MERGER UNTIL Q4 2011, SAY ANALYSTS
Thai energy company PTT's plan to merge two subsidiaries - PTT Aromatics and Refinery (PTTAR) and Integrated Refinery and Petrochemical Complex (IRPC) - is likely to be postponed until the last quarter (Q4) of the year or early 2011, say analysts. A merger between the four PTT affiliates - IRPC, PTTAR, PTT Chemical and Thai Oil - to create synergies and maximize benefits from combining facilities and capital, was first mooted last year. The plan was later rejected as too complicated by PTT, following the Mab Ta Phut environmental crisis and the Thai Supreme Administrative Court's ruling last December suspending 76 projects.

OBAMA CITES BP GULF SPILL FOR CLIMATE BILL
The US must accelerate its transition to a clean-energy environment, said President Barack Obama last week, saying the BP oil spill in the Gulf of Mexico shows how oil dependence is menacing the nation's economy.Obama said the Gulf spill illustrates why the US cannot delay a move away from carbon-based energy resources. "The consequences of our inaction are now in plain sight," the president said, referring to the Gulf spill. "As we look to the Gulf, we see an entire way of life being threatened by a menacing cloud of black crude. For decades, we have talked and talked about the need to end America's century-long addiction to fossil fuels," he said.

NOVOZYMES: NEW ENZYME INCREASES ETHANOL YIELD
Danish biotech firm Novozymes has launched an enzyme that helps produce more ethanol from the same amount of corn, it claims. The enzyme converts more corn starch into sugars, which can be fermented into ethanol. The technology allows corn ethanol producers to increase yields by more than 1%. An average acre of corn in the US today would yield roughly 440 gal (1,666 liters) of ethanol, according to the company. Novozymes said US corn yields had improved by 70% per acre since 1977, adding that ethanol plants could get 50% more ethanol out of corn in that period.

LYONDELLBASELL SEEKS SPECIALTY POLYMERS
Netherlands-headquartered LyondellBasell Industries' desire to improve its cost structure and efficiency will include an emphasis on the development of specialty polymers, a senior company executive said last week. "We are in a better position to implement the strategy now we have emerged from [US] Chapter 11 bankruptcy," said Massino Covezzi, senior vice president of research and development. It is looking at producing metallocene PE, in addition to metocene PP, which is already in the market.

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