This week's world news

12 July 2010 00:43  [Source: ICB]

FORMOSA MULLS DELAY IN TURNAROUND AFTER BLAST
Taiwan's Formosa Petrochemical is considering pushing back the scheduled August turnaround at its 1.03m tonne/year No. 2 cracker in Mailiao, after an explosion on July 7 shut down its 700,000 tonne/year No. 1 cracker at the site, according to a company official. No one was injured at the explosion which occurred last Wednesday. The explosion occurred at the facility's benzene, toluene, xylene (BTX) hydrogen compressor and the fire spread to the No. 1 cracker, market sources said.

LYONDELLBASELL RESTARTS ILLINOIS OLEFINS PLANT
Netherlands-based LyondellBasell has restarted its Morris cracker in Illinois, US, which was offline for maintenance in May, market sources said. According to sources, the 549,000 tonne/year unit restarted operations during the weekend ended July 4. The cracker was taken off line on May 1 for a 60-day turnaround.

OBAMA TAPS CHEM CEOS FOR EXPORT COUNCIL
US president Barack Obama appointed the CEOs of Dow Chemical, Dow Corning and Archer Daniels Midland (ADM), all US, to the President's Export Council, the White House said. Andrew Liveris (Dow Chemical), Stephanie Burns (Dow Corning) and Patricia Woertz (ADM) were among 18 appointments to the council. The council is a public/private sector committee that advises the president on international trade. Dow Corning said the council, which reports to the Department of Commerce, would play a key role in the president's National Export Initiative to double US exports over the next five years.

VCI WARNS AGAINST CUTTING TAX RELIEF
Germany's chemical industry voiced opposition to a government move to reduce breaks on energy taxes for the country's manufacturing sector. The government plans to reduce the breaks as part of its €80bn ($101bn) savings package announced last month. The breaks, enacted in 1999 as part of an "eco tax," are linked to the industry meeting greenhouse gas emission reduction targets. Without the breaks, the chemical industry could face an additional €1bn/year in energy taxes, further adding to its already high energy costs, said the Federation of the German Chemical Industry (VCI).

BRAZIL REGULATOR APPROVES PIPELINE
A Brazilian environmental regulator granted a licence for state energy company Petrobras to build an ethanol pipeline system in the country. The $1.1bn (€869m) project is a partnership of Petrobras, Japanese trading company Mitsui and Brazilian conglomerate Camargo Correa. The 542 km (337 mile) pipeline system will have the capacity to transport up to 12.9m m³/year of ethanol. Petrobras plans to start up pipeline operations in the second half of 2011.

INDIA DELEGATION PITCHES TO GERMAN CHEMS
German chemical companies should see tremendous opportunities to invest in India's emerging petroleum, chemicals and petrochemical investment regions (PCPIR), Indian Minister for Chemicals and Fertilizers Srikant Jena said during a presentation in Berlin. The government of India anticipates that investors will pour some $100bn (€790m) into establishing plants in three states - Gujarat, Andrha Pradesh and Orissa by the Bay of Bengal - while the state would provide $10bn for brownfield infrastructure development. Jena addressed a meeting organised by the Federation of the German Chemical Industry (VCI).

RUSSIA'S SIBUR COMPLETES BIAXPLEN TAKEOVER
Russian petrochemical holding company Sibur has finalized a deal to acquire a 50% stake in Biaxplen, a Russian producer of biaxially oriented polypropylene (BOPP) film. Sibur said it reached an out-of-court settlement with Biaxplen's former owner, Vladimir Borodavkin, that allowed a downward revision of the takeover price, which was not disclosed. Biaxplen operates three BOPP plants with total capacity of 87,000 tonnes/year, and combined annual sales of about €90m ($114m).

BASF-YPC RESTARTS NANJING CRACKER
BASF-YPC, a joint venture between German chemical company BASF and its Chinese counterpart Sinopec, said its 600,000 tonne/year steam cracker at Nanjing, China, resumed operations on June 16 following a maintenance turnaround which started on April 15. BASF-YPC's nine downstream plants at the site are also back in operation following maintenance shutdowns during parts of this period, it said. During the shutdown of the cracker, BASF-YPC continued to work on expanding its ethylene capacity from 600,000 tonnes/year to 740,000 tonnes/year. The expansion is expected to be completed in the second half of 2011.

SINOPEC SHIJIAZHUANG SHUTS CAPRO LINE
China's Sinopec Shijiazhuang Refining & Chemical shut its 90,000 tonne/year caprolactam (capro) line in Shijiazhuang, Hubei province, on July 5 because of technical problems, a company source said. The line would be shut for 10 days to fix the problems and is scheduled to restart on July 15, the source said. The company also has a 70,000 tonne/year line at the same site that is operating normally, the source added.

STYRON ANNOUNCES MANAGEMENT TEAMUS-based Styron, the former Dow Chemical division launched as a standalone company in May, has announced its management team. In addition to former NOVA Chemicals CEO Chris Pappas, the team includes Curtis Shaw, former executive vice president of Celanese, as well as a number of former Dow executives. Shaw takes over as executive vice president and general counsel. Celso Goncalves will serve as vice president and chief financial officer. Jeff Denton will be vice president, feedstocks and corporate service. Marco Levi will be vice president and general manager of emulsion polymers.

WESTLAKE RAISES $100M TO EXPAND FACILITIES
US-based chemical producer Westlake Chemical has raised $100m (€80m) in tax-exempt bonds to expand and refurbish its plants in Louisiana. Westlake produces olefins at Lake Charles and vinyl choride monomer (VCM) and polyvinyl chloride (PVC) at Geismar. The 6.5% bonds, which are due in August 2029, were issued through the Louisiana Local Government Environmental Facilities and Community Development Authority under the US Gulf Opportunity Zone Act of 2005, which was passed to help Louisiana and other US Gulf coast states after the 2005 hurricanes.

WACKER'S DISPERSIONS PLANT STARTS IN CHINA
Germany's WACKER Chemie has started supplying vinyl acetate ethylene (VAE) copolymer dispersions from its plant at the Nanjing Chemical Industrial Park in China. The Nanjing site, which was officially opened in November 2009, has capacity of about 50,000 tonnes/year of VAE copolymer dispersions and 30,000 tonnes/year of dispersible powder.

GANSU YINGUANG EYES TDI TURNAROUND IN AUGUST
China's Gansu Yinguang plans a 20-day maintenance shutdown in early August at its two toluene di-isocyanate (TDI) lines at Baiyin, in northwestern Gansu province, a company source said. The lines, with a combined nameplate capacity of 100,000 tonnes/year, are operating at 80-90% of capacity, the source added. "This is good news to the market to ease the oversupply," a trader based in South China said.

PEMEX BOOSTS PETCHEM PRODUCTION BY 11%
PEMEX Petroquimica, the petrochemical subsidiary of Mexico's state-run oil company Petroleos Mexicanos (PEMEX), reported an 11% year-on-year increase in production during the first five months to 5.67m tonnes. In May alone, the company produced 1.18m tonnes, up by 25% year on year. Specifically, the company produced 104,000 tonnes of vinyl chloride monomer (VCM) and 170,000 tonnes of ethylene dichloride (EDC) through May - respective hikes of 81% and 79%. Production of ethylene oxide (EO) rose by 27% to 164,000 tonnes. Ethylene saw a modest 4% rise in production through May to 498,000 tonnes.

US DRILLING BAN TO CUT 31,000 BBL/DAY OF OIL
The US administration's ban on deepwater drilling will remove 31,000 bbl/day of crude oil production from the US Gulf in the fourth quarter (Q4) and 82,000/day in 2011, the US Energy Information Administration (EIA) said. The EIA, in its July short-term energy outlook, increased its prediction on production loss from 26,000 bbl/day in its last monthly report. The figures are only a fraction of the 5.42m bbl/day produced in the US in Q2, noted the agency.

GERMAN CHEMICAL SECTOR COPED WELL IN CRISIS
Germany's chemical industry has coped remarkably well in the economic crisis, largely because of the country's "social partnership" between employers and unions that helped to maintain employment, BASF CEO Jurgen Hambrecht said last week. "The crisis has clearly shown that the chemical industry is a reliable and indispensable pillar of the German economy. As a key industry, chemicals are also providing important impulses for innovation in other sectors," Hambrecht said.

RUSSIAN PETCHEM FACILITY TO BE BUILT AT TOMSK
A new Russian refinery and petrochemical plant is to be built at Tomsk, in western Siberia, regional authorities said last week. The new facility will be built near the existing Tomskneftekhim petrochemical plant at a cost of $850-900m (€680-720m), with construction expected to start in late 2011. It will process 1.5m tonnes/year of crude oil and supply naphtha to Tomskneftekhim.

COMPETITION SETTLEMENT FORCES SASOL TO SELL
Sasol Nitro, a division of Sasol Chemical Industries, will need to restructure its fertilizer business and cut jobs, following a settlement agreement with South Africa's Competition Commission over price fixing. The settlement finalized two cases against the South African firm that were being investigated by the commission, which were filed in November 2003 and August 2004. The investigation concluded that the group had contravened the Competition Act, specifically through "collusion and abuse of dominance." Sasol will now need to divest five of its fertilizer blending facilities.

BRENNTAG BUYS EAC INDUSTRIAL FOR €160M
German chemical distributor Brenntag has acquired Thailand-based chemical distributor EAC Industrial Ingredients (EAC II)for €160m ($200m) in a bid to further expand its presence in East Asia. Brenntag bought EAC II from The East Asiatic Company, listed in Denmark, on a cash and debt-free basis. The deal is expected to close this month. EAC II has local presences in Thailand, Vietnam, Indonesia, Philippines, Malaysia, Singapore, Cambodia, India and Bangladesh.

BUT PULLS OUT OF DEAL WITH POLAND'S CHEMAN
Brenntag has opted not to pursue its interest in acquiring the chemical distributor subsidiary Cheman from Polish chemical group Ciech, after performing due diligence. Not enough value was seen in the deal, said Brenntag. Ciech is seeking to sell its noncore subsidiaries such as Cheman, to pay down debt and prepare for a possible relaunch of its so-far unsuccessful privatization attempts. The Polish company remains open to fresh bids for Cheman, which has the capacity to distribute more than 1,000 chemical products, including soda ash and toluene diisocyanate (TDI).

BP'S GULF OIL SPILL CLEAN-UP COSTS HIT $3.12BN
BP has so far spent $3.12bn (€2.5bn) in its efforts to clean up the massive Gulf of Mexico oil spill, and was attempting to put its third containment system into operation by the end of last week. Oil has been gushing out from the undersea well off the coast of Louisiana for more than two months now, since an explosion sank the BP-operated Deepwater Horizon offshore rig on April 20.

PETRONAS ON TRACK TO LIST PETCHEM BUSINESS
Malaysia's state-owned energy firm PETRONAS is on track to list its petrochemical business on the country's bourse by the end of 2010. "A date has not been fixed, but we are aiming to complete the listing by the end of this year," according to a company source. All assets related to the firm's petrochemical business would most likely be placed under "one holding company" for the initial public offering, the source added, without elaborating further.

COLAS BUYS REFINERY FROM EXXON, TOTAL
French road builder Colas has acquired specialty refinery Societe de la Raffinerie de Dunkerque (SRD) from oil majors ExxonMobil of the US and Frace's Total. SRD has a 300,000 tonne/year specialty refinery unit at Dunkirk in northern France, producing base oils, paraffin and bitumen. It employs 250 people. As part of the acquisition, ExxonMobil will provide the refinery with technical assistance for three years. The refinery will also have a processing contract with Total that will cover 40% of its production until the end of 2012.

UBS UPGRADES AKZONOBEL SHARES TO "BUY"
Global investment bank UBS has upgraded its rating for AkzoNobel to "buy" from "neutral," as it expects the Dutch coatings, paints and specialty chemical producer to become a global leader in growing markets. AkzoNobel's price target was also raised to €52 ($66) from €45 after UBS said the group had witnessed a late-cyclical recovery in the aftermath of the decline of paint and coating volumes which continued until the first quarter of 2010.

WHILE AKZO PLANS TO DOUBLE CHINA SALES
AkzoNobel plans to double its revenues from China to $3bn (€2.4bn) by 2015, bullish on the country's growth prospects as a leading economy in Asia. The company derived $1.5bn of revenues from its China operations in 2009. "We are committed to expanding in the region, as recent investments have shown," said AkzoNobel CEO Hans Wijers. "Not only is China an important growth engine, but it is also rapidly establishing itself as a great center of innovation."

CHEMS SHED JOBS IN JUNE AS US PLASTICS GAIN
The US chemical sector shed 1,700 jobs in June from May alongside a drop in overall US employment, while the plastic and rubber products industry added 2,700 positions, the US Department of Labor said last week. In its monthly report, the department noted that chemical jobs fell by 0.2% to a seasonally adjusted 779,900 jobs. June employment in the chemical sector was off by 2.7% from the workforce total of 801,500 in June 2009. In plastics, however, jobs pushed ahead by 0.4% to 636,500.

IMF REVISES GLOBAL GROWTH FORECAST UPWARD
The International Monetary Fund (IMF) has raised its forecast for global growth this year after a "stronger than expected" first half, but warns that Europe's debt crisis has increased financial risks to the recovery. According to the IMF's latest quarterly report, the forecast for the world economy in 2010 was revised upward to 4.6%, from 4.2% in April, while next year's growth was unchanged at 4.3%. Global economic indicators stabilized at a high level in May, with industrial output and trade posting double-digit growth, the US-based fund said. However, the IMF said that the ongoing eurozone debt crisis had caused financial risks to rise sharply, and that European governments urgently needed to restore confidence in their banks and rebuild public confidence.

CHINA REVISES ITS 2009 GDP HIGHER TO 9.1%
China has revised its GDP expansion in 2009 upwards to 9.1% from 8.7% after industrial production and service output were assessed higher than previously thought, according to the National Bureau of Statistics (NBS) of China. After the revision, the GDP value for 2009 was yuan (CNY) 34.05 trillion ($5.02 trillion), CNY515.4bn higher than the earlier figure. The 2009 growth rates of industrial production and service output were put 0.4 percentage points higher.

US JUNE AUTO SALES JUMP AS INDUSTRY REBOUNDS
June auto sales in the US were up by 13% compared with the same month last year, underscoring the sector's rebound out of the 2009 trough and a downstream boost for the petrochemical industry. The top six car companies in the US moved 777,558 vehicles last month, compared with 690,435 vehicles during the same period in 2009. Each of the major manufacturers posted year-on-year gains for the third straight month.

COLOMBIA'S ECOPETROL TAKES OVER FIELDS
Colombia oil company Ecopetrol assumed direct operation of the Cupiagua and Cupiagua Sur petroleum fields on Thursday, Ecopetrol said last week following the takeover. Ecopetrol assumed sole operation of the fields at the midnight expiration of a 28-year multiparty arrangement under a contract in which Ecopetrol had held 50% of the production interest. BP Exploration Company-Colombia and BP Santiago Oil Company had held 31%, while the local Tepma had held the remaining 19% of the expired contract.

US WEEKLY CHEMICAL RAILCAR TRAFFIC RISES
Chemical shipments on US railroads rose by 8.5% in the week ended June 26 from the same period in 2009, marking the 33rd weekly increase in a row and the 25th gain this year. Chemical railcar loadings for the week were 28,548, up by 2,231 carloads from 26,317 in the same week last year, according to the Association of American Railroads (AAR). The increase compared with a 10.7% increase in the previous week, ended June 19.

GERMANY NEEDS TO BOOST COMPETITIVENESS
Germany needs to strengthen its chemical sector because the economic crisis has accelerated the shift of power from "classical industrial countries" to emerging economies in Asia and elsewhere, a regional chemical producers' group said last week. "We can only remain competitive if we retain a global lead," said Herbert Stein, head of Chemieverbande Rheinland-Pfalz, a regional chemical producers' group in BASF's home state of Rhineland-Palatine.

BASF DITCHES FORMER CIBA JV PLANS FOR MIDDLE EAST
German chemical giant BASF will discontinue a planned joint venture (JV) between Astra Polymer and the plastic additives business of the former Ciba Specialty Chemicals to produce customer-specific antioxidant blends (CSBs) of polymer stabilizing additives in the Middle East. The termination of the plans will not affect the existing tolling agreement between the companies to produce the specialty products for the region, it said. BASF is now looking for opportunities to expand its polymer business in the Middle East. "We are convinced of the strategic importance of the Middle East region and the need for a local production unit for customer specific blends," said John Frijns, senior vice president of BASF'S Plastic Additives Europe/EAWA unit.

TOTAL WELCOMES GREEN LIGHT TO BUY POLIMERI'S PS
France's Total Petrochemicals has welcomed the European Commission's green light to the proposed sale of Polimeri's polystyrene (PS) business at Feluy, Belgium. In February, Total Petrochemicals said it intended to buy the PS production lines of Polimeri Europa, with the exception of the expandable PS (EPS) unit reactors. This followed a decision by the Italian petrochemical firm in October 2009 to bring its PS and EPS service contract with Total to an end and cease activities at the Feluy facility. But before any deal could take place, the European Competition Authorities had to approve the deal under EU merger regulation.

DOW AND MITSUI FORM JV TO BUILD US CHLOR-ALKALI
Dow Chemical and Japan's Mitsui have signed a definitive agreement for a 50:50 joint venture (JV) to build a new 800,000 tonne/year membrane-based chlor-alkali plant at Dow's chemical production complex in Freeport, Texas, US. Construction will start in the fourth quarter of 2010, with completion and start-up of production expected by mid-2013. Dow will operate and maintain the chlor-alkali facility.

POLAND TO CONTINUE PRIVATIZATION EFFORTS
Privatization remains the only option for the development of Poland's chemical industry, despite the failed efforts this year to sell off companies, said Deputy Treasury Minister Adam Leszkiewicz. "Privatization is still the only alternative for the Polish chemical sector and we are determined to continue. Let me emphasize that privatization is our priority, because it gives real opportunities for growth."

OLTCHIM LIFTS POLYETHER POLYOLS FORCE MAJEURE
Romanian chemical producer Oltchim lifted its force majeure on flexible polyether polyols production in Romania last Thursday as planned due to renewed ethylene oxide (EO) feedstock supply, a company source said.

CORRECTION
In the New Projects and Permanent Plant Shutdowns section of the June 28 issue, we incorrectly listed LANXESS' butyl rubber plant as being planned for start-up in Q3 2011. The correct planned start-up date is Q1 2013.

By: Joseph Chang
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