This week's world news

08 November 2010 00:00  [Source: ICB]

PETRONAS LAUNCHES $4BN IPO TO FUND EXPANSION
Petronas Chemicals Group (PCG)said it will raise around Malaysian ringgit (M$) 12.5bn ($4bn) from its initial public offering, partly to fund future expansion plans that may include acquisitions. The IPO comprises 22 petrochemical-related companies of state-owned oil and gas major Petronas. Retail offering of the IPO shares was launched last Monday and is scheduled to close on November 9. Institutional offering of the shares, meanwhile, will close on November 12, when the final IPO price will be fixed. PCG shares are scheduled to start trading on the Bursa Malaysia on November 26. PCG is planning to develop a refining and petrochemical complex in the western part of Malaysia.

SHENHUA AND DOW SUBMIT BID FOR YULIN COAL-CHEM
China's Shenhua Group and US-based Dow Chemical have submitted an application to the Chinese government for approval to build and operate a new integrated coal-chemical complex in Yulin city, Shaanxi province. "The [project application report] PAR submission for government approval marks another important milestone for the project, and we are truly excited at the progress that we've made so far," president of China Shenhua Coal to Liquid and Chemical Co. Wu Xiu-Zhang said. The $10bn (€7.1bn) coal-to-chemical complex is scheduled to start up in 2016 and includes 23 production units with a capacity to produce around 3.5m tonnes/year of fine chemicals and plastic products. For more on China coal-to-chemical projects see pages 33-34.

CEFIC ADDS 54 MEMBERS AS EUROPE LOSES SHARE
The European Chemical Industry Council (Cefic) has added 54 new members this year because of an increased need for companies to communicate a combined position as the region loses share in a growing global chemical market. Cefic represents about 29,000 firms, around 24% of global chemical production and €449bn ($632bn) in sales. Cefic said the European chemical industry needs to communicate a combined position on a number of issues as the region had lost share in a growing global chemical market. Europe lost its top ranking in terms of global sales for the first time in 2009, dropping to second place below Asia.

PCC GAINS LICENSE TO TRADE PE, PP IN YUAN
PCC Shanghai, a wholly owned subsidiary of Iran's Petrochemical Commercial Company (PCC), has obtained a license to sell polyethylene (PE) and polypropylene (PP) in yuan denomination in the Chinese domestic market, a source close to the company said last week. The facility to trade in the Chinese yuan would be used mainly for selling PE and PP to local plastic processors from its bonded warehouses in China, while it continues to sell in euros to local stockists on a CFR (cost and freight) China basis, he added. PCC Shanghai is waiting for internal approval to offer a door-to-door delivery service to local plastic processors from 2011.

WACKER Q3 NET PROFIT SURGES ON RECORD SALES
German producer Wacker Chemie has reported a sharp increase in third-quarter net profit to €155.8m ($219.4m) from €35.9m in the same period last year, as sales surged to a record high, thanks to "strong and sustained" demand. Sales for the three-month period rose 28.7% year on year to €1.27bn, while earnings before interests, taxes, depreciation and amortization (EBITDA) soared 85% to €340m. The increase was fuelled by higher sales volumes, the company said.

GERMANY'S PCC RESTATES INTEREST IN OLTCHIM
Activist shareholder, Germany's Petro Carbo Chem (PCC), has restated its interest in examining a bid for financially troubled company Oltchim. This follows pressure from the International Monetary Fund for the privatization of the Romanian state's 54.79% stake in the firm. "We yesterday sent a letter to the Ministry of the Economy reconfirming our interest in participating in the privatisation when it is started," PCC, a 12.16% shareholder in Oltchim, said. On November 1, Oltchim said it had been unable to raise the working capital to buy raw materials needed to restart its Arpechim petrochemical unit, the closure of which has led to severe shortages of feedstock at the firm.

GERMAN CHEM FIRMS AND UNION APPEAL LABOR RULING
Germany's chemical employers and chemical union IG BCE plan to launch a joint appeal to the country's government and parliament to legally enshrine an important labor law principle. The principle - tarifeinheit - stipulates that there is only one collective bargaining deal per plant. Earlier this year, Germany's top labor court said in a far-reaching ruling that it would no longer recognize the principle, thus opening the door to separate collective agreement for various groups of workers within a plant or facility. Chemical employers and unions said the principle was an "indispensable condition" for a functioning collective bargaining system in Europe's largest economy.

RHODIA Q3 NET PROFIT QUADRUPLES ON SALES
French specialty chemical maker Rhodia has posted a quadruple increase in its third-quarter net profit to €56m ($78.9m) on the back of strong sales, which jumped by 31% to €1.36bn, with sales volumes up 10%. Recurring earnings before interest, tax, depreciation and amortization (EBITDA) rose by 35.1% year on year to €235m, partly due to better prices. "For the full year 2010, we expect to post record profitability, providing a solid foundation for our growth ambition," said Rhodia chairman and CEO Jean-Pierre Clamadieu.

TRONOX REORGANIZATION PLAN GETS SUPPORT
US-based pigment producer Tronox has won the support of a credit group in a step that brings the firm closer to emerging from Chapter 11 bankruptcy protection. Under the settlement, a group representing shareholders will support Tronox's reorganization plan. The settlement removed the group's planned objections to the court confirming the plan. Tronox needs the court to confirm its reorganization plan before it can emerge from bankruptcy protection. The confirmation hearing is scheduled to begin on November 17.

AGROFERT LOSES €795M CLAIM AGAINST PKN ORLEN
Czech agrochemical and foodstuffs group Agrofert has lost its koruny 19.5bn ($1.1bn, €795m) compensation claim against Poland's PKN Orlen over the acquisition of Czech petrochemical producer Unipetrol. "Today's decision of the court means that Agrofert Holding's claims were wholly dismissed and Agrofert Holding is obliged to cover the court fees incurred by PKN Orlen," Orlen said. The law firm that represented Agrofert in the case, Pokorny, Wagner & spol, said its client might seek a nullification of the verdict on the grounds that certain legal processes had been infringed.

NPRA DISAPPOINTED OVER CALIFORNIA CLIMATE VOTE
The National Petrochemical & Refiners Association (NPRA) has expressed concern about the failure of a ballot initiative in California that, if passed, would have delayed the state's ambitious climate-change regulatory plan. In 2006, California passed its Global Warming Solutions Act, which requires the state to cut its greenhouse gases emissions to 1990 levels by 2020. Californians last week turned down a measure that would have delayed implementation until the state's 12.4% unemployment rate fell to 5%. NPRA president Charles Drevna said the defeat will mean that the costs of gasoline, diesel fuel and electricity will climb.

US CHEMICALS WELCOME REPUBLICAN VICTORIES
US chemical producers and other manufacturers have welcomed the broad Republican gains in last Tuesday's national elections, saying they expect the new Congress in 2011 to improve regulatory and tax environments for manufacturing. "The next Congress must govern with steadfast attention to improving the nation's high unemployment rate and make manufacturing a priority again," said the Society of Chemical ­Manufacturers and Affiliates (SOCMA). The specialty and batch chemical trade association added that the next Congress must work more closely with large and small manufacturers "to reduce or remove regulatory burdens that impose barriers to chemical manufacturing and job growth in our industry."

AZELIS BUYS DISTRIBUTOR YDS CHEMICALS
European chemical distributor Azelis has bought Belgian-based specialty ingredients distributor YDS Chemicals to reinforce its business in Belgium, the Netherlands and Luxembourg (Benelux). Azelis said the purchase would strengthen its business lines in the personal care, food and health, and chemical industries sectors in Benelux. "The combined organizations will ensure a leading position in the Benelux market and give greater synergies, creating new business and operational opportunities for our customers in the three main business areas," said Azelis CEO Joris Coppye.

ASIAN NAPHTHA CRACKERS TO BE HIT BY MIDDLE EAST
Asian naphtha cracker operators could be forced to slow their run rates, which may bottom out in 2011 or 2012 as new facilities in the Middle East increase production. However, the shortage of ethane feedstock in the Middle East would ensure that the trough would not last for long, according to Stan Park, deputy managing director of Petrochemical Corp. of Singapore. Most cracker operators in Asia have been running at 95-100% this year because of surging demand from the region, as many facilities in the Middle East were not running at their nameplate capacity, Park added.

MEXICHEM'S Q3 PROFITS SOAR ON INEOS FLUOR DEAL
Mexichem's INEOS Fluor acquisition has helped the Mexican producer beat sales expectations and increase its profits by 104.1% to Mexican pesos (Ps) 1.27bn ($103m) in the third quarter (Q3). Sales for Q3 rose by 28.6% to Ps10.1bn, the result of a 13.2% increase in prices and a 5.5% improvement in sales volumes.

SABIC TO OPEN INNOVATIVE PLASTIC BUSINESS UNIT
Saudi-Arabian major SABIC will open an innovative plastic strategic business unit in Riyadh. It will provide customers in the Middle Eastern and African markets with access to more than 40,000 high-performance resins, including engineering thermoplastic materials which are used in applications such as automotive, building, construction and alternative energy. "[The unit] will enable us to establish and grow new customer relationships as well as create greater market demand in this growing region," said Richard Crosby, who will head the new division.

GAIL RESTARTS ITS FIRE-HIT HDPE FACILITY
India-based GAIL has restarted its fire-hit 100,000 tonne/year high density polyethylene (HDPE) unit in Pata, Uttar Pradesh state, after getting the go-ahead from the Indian government. The rest of GAIL's cracker complex had restarted on October 12, following an 18-day maintenance shutdown. A fire broke out at the HDPE plant on September 11, killing one person and injuring three. It remained shut pending safety checks. The outage tightened the supply of PE pipe grade in the Indian market, but the impact was minimized because of lackluster demand last month, one trader said.

CHEMICAL PROFITS DROP FOR MITSUBISHI CORP.
The chemical segment of Japanese trading firm Mitsubishi Corp. reported a 32% year-on-year drop in first-half net profit to yen (Y) 19.5bn ($241m) in the absence of the one-off gains that padded results in the previous corresponding period. Operating transactions in the segment for the six months to September 30 totaled Y981.3bn, up by 17% year on year, it said. The company's overall first-half net profit surged by 95% to Y267.8bn, while its operating profit more than doubled to Y197.7bn, the company said. Overall operating transactions during the six months grew by 18% to Y9,540.4bn, it added.

KUWAIT PLANS TO RAISE SULFUR PRODUCTION
Kuwaiti sulfur production is expected to rise to around 2m tonnes/year in the next five years as a result of several projects that will improve supply, a source at Kuwait Petroleum said last week. Speaking on the sidelines of the Sulphur 2010 conference in Prague, Czech Republic, the source said the company has three projects under way that will boost its sulfur production levels over the next five years. A new 650,000 bbl/day refinery is expected to be completed in 2014.

TOSOH SWINGS TO $30M H1 NET PROFIT ON HIGH PRICES
Japan-based Tosoh posted a first-half net profit of yen (Y) 2.44bn, reversing a net loss of Y2.24bn year on year because of increased prices of its products in overseas markets. Prices of products including polyvinyl chloride (PVC), polyurethane (PU) feedstocks and ethylene amine had risen during the quarter, Tosoh said in a statement. Operating profit in the six months to September 30 soared to Y10.1bn from Y2.49bn in the same period a year earlier, while sales were up by 8.2%, to Y322.1bn from Y297.7bn.

INEOS BEGINS LAVERA RESTART AS STRIKE ENDS
Switzerland-headquartered INEOS is offloading crude and is expected to restart the crude distillation unit at its Lavera refinery in southern France on November 1. It has also begun restarting its 775,000 tonne/year ethylene cracker at the site. The shutdown of the cracker, which can produce 540,000 tonnes/year propylene, led to a force majeure declaration on all ethylene and propylene derivatives at the site. The refinery was closed after strike action, which began on September 27, blocked Marseille's Fos-Lavera port and closed oil terminals. The strike was called over guarantees of job security in a new port reform.

WESTLAKE Q3 NET INCOME MORE THAN DOUBLES
US-based olefin, polyolefin and vinyl producer Westlake Chemical's net income more than doubled in the third quarter (Q3) to $62.7m (€44.5m) from $29.8m last year thanks to a rise in sales. Sales rose by 23% to $779.7m. The increase was driven primarily by higher sales prices for all of the company's major products and higher sales volumes for most of those products, except caustic and polyvinyl chloride (PVC) pipe. Income from operations surged to $107.3m for the third quarter from $49m as a result of improved olefins-segment integrated product margins, due to a 17.5% increase in product prices, higher polyethylene (PE) sales volume and relatively flat ethane costs.

GUODIAN YOUNGLIGHT CONSTRUCTS ACETIC ACID
China's Guodian Younglight Energy and Chemical started construction of a 300,000 tonne/year acetic acid plant on October 22. The plant being built at Ningxia Ningdong Energy and Chemical Base in northwestern China is expected to start up in June 2013. The acetic acid output of the plant will be for captive use - as feedstock for the company's downstream vinyl acetate monomer (VAM) plant. Guodian Younglight Energy and Chemical Group is a Ningxia-based conglomerate with exposure the in chemical, power and real estate sectors.

UZBEKISTAN'S NAVOIAZOT TO BUILD PVC AND CAUSTIC
Uzbeki fertilizer producer Navoiazot will start building PVC and caustic soda production facilities in 2011 using its own funds. The units are expected to be completed by 2013 and will produce 50,000 tonnes/year of polyvinyl chloride (PVC) and 32,000 tonnes/year of caustic soda. Navoiazot's mid-term development program also includes adding a new methanol production facility with a capacity of up to 500,000 tonnes/year, although the company has not released a timeframe for this.

CHINA Q4 PETROCHEMICAL SALES TO RISE 17.8%
China's petrochemical industry will likely post a 17.8% year-on-year increase in fourth-quarter (Q4) revenues to yuan (CNY) 2,280bn ($341.3bn), according to an industry report quoted by producer Sinopec. But compared with the previous quarter, the past three months of the year may see a more moderate increase in product prices, based on the report of China Petroleum and Chemical Industry Federation (CPCIF). Meanwhile, uncertainties in the global economic recovery would continue to weigh on exports. CPCIF, formerly known as the China Petroleum and Chemical Industry Association (CPCIA), expects the Chinese petrochemical sector to post a 29.5% surge in full-year sales to CNY8,600bn.

JAPAN'S GINGA TO LAUNCH BASE OILS E-TRADING
Japanese commodity broker Ginga Petroleum is expected to launch an electronic-based physical trading platform for base oils by the first quarter of 2011 amid high demand for such services, a company source said last week. Dubbed the Singapore Base Oil Exchange, or S-box, the service would enable both buyers and sellers to trade in a single platform for various base oil specifications, said Machiko Kawata, a broker at Ginga Petroleum. S-Box would generate real-time access of physical base oil trading in Singapore to subscribers, while Ex-tank Singapore-based trading would also be available for small lots trade, she said.

GEORGIA GULF Q3 PROFIT RISES 39% ON REVENUES
US chlorovinyls producer Georgia Gulf's third-quarter operating income rose by 39% to $53.23m (€38.33m) on the strength of higher sales revenue. Georgia Gulf reported a 36% boost to net sales of $758m for the third quarter ended 30 September, Higher sales prices in vinyl resins and caustic soda, as well as higher volumes in aromatics products, resulted in the increase.

ASIA ABS EXTENDS GAINS ON BUOYANT FEEDSTOCK
Spot prices of acrylonitrile-butadiene-styrene (ABS) resin prices gained further ground, rising around $30/tonne (€21/tonne) last week, riding on the continued surge in feedstock costs, industry sources said last week. Demand in the key Chinese market, however, was softer as the manufacturing season for exports is at its tail end. ABS prices were at $2,150-2,180, up from around $2,120-2,150 last week. Traders reported smaller volumes being traded in recent weeks as end-users were buying on a need basis.

SINGAPORE SETS UP CHEMICAL MEASUREMENT
Singapore has set up infrastructure that will allow the accurate measurement of chemicals used in various industries, and to ensure it complies with international standards, according to the city-state's Agency for Science, Technology and Research (A*STAR). The new infrastructure, called Metrology in Chemistry, should provide local enterprises "the critical advantage" to access international markets for chemicals, food, pharmaceutical, medical and health-care products and services, according to a statement.

SINOPEC SHIJIAZHUANG TO EXPAND CAPROLACTAM
China's Sinopec Shijiazhuang Refining & Chemical plans to expand its 160,000 tonne/year caprolactam (capro) plant to 200,000 tonnes/year by 2015, a company source said last week. The plant, located in Hebei, is operating at 70% of its nameplate capacity, he added. "Caprolactam supply is tight in China at this juncture," said a market player, in Mandarin. Demand for capro is strong because of the nylon manufacturing season, and a slew of turnarounds have driven up prices to $2,730-2,740/tonne (€1,966-1,973/tonne) CFR (cost and freight) NE (northeast) Asia last week from $2,680-2,720/tonne.

CLARIANT'S Q3 NET PROFIT RISES TO SWFR109M
Switzerland-based specialty chemical firm Clariant's third-quarter net profit surged to Swiss francs (Swfr) 109m ($110.6m, €79.6m) from Swfr25m last year, partly on the back of a one-off tax gain of Swfr45m. Sales for the three months to September totalled Swfr1.71bn, up from Swfr1.69bn in the year-ago period, with operating income before exceptional items increasing 70% to Swfr182m. In its outlook, the company said that it expected trading conditions to remain stable for the remainder of the year, with raw material costs likely to rise further at a lower pace as compared to the first nine months of the year.

DOW TO BUILD ELECTRONIC MATERIALS PLANT IN CHINA
US-based Dow Chemical plans to build an electronic materials plant at its Zhangjiagang site near Shanghai. Construction will start later this year, and operations should start near the end of 2011. The plant will produce materials for the electronic-finishing, industrial-finishing, photovoltaic and printed-circuitboard markets. Dow has a similar plant in Dongguan, Guangdong, which serves customers in southern and western China.

BREAKS GROUND ON VIETNAM ACRYLICS PLANT
Dow Chemical has broken ground on an acrylic and styrene-acrylic polymers plant in Dong Nai province in southern Vietnam. The plant, expected to start production in September 2011, will help Dow meet growing demand from Vietnam-based paint and coatings manufacturers. More than 90% of the plant's capacity will be sold to Vietnam-based customers, the majority of which were multinational companies, said Yoke Loon Lim, general manager for Southeast Asia with the company's Dow Advanced Materials unit.


By: Will Beacham
+44 20 8652 3214



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