This week's world news

09 May 2011 00:00  [Source: ICB]

DANISCO'S BOARD BACKS RAISED BID FROM DUPONT
Danish food ingredients and enzyme firm Danisco's board has unanimously backed a raised bid from US chemicals major ­DuPont. DuPont increased its bid for ­Danisco to Danish kroner (Dkr) 700/share ($139/share, €94/share), from Dkr665/share, and extended the tender offer to 13 May - its best and final offer. "The board has unanimously decided to recommend the shareholders to accept the offer," ­Danisco said in a statement on the Nordic Stock Exchange. DuPont also said it had reduced the minimum number of shares ­required to be tendered from 90% to 80% in order to close the transaction.

POLAND PRIVATIZATION TO RELAUNCH IN SEPTEMBER
Investors should prepare for a September relaunch of Poland's chemical industry privatization process, according to the country's treasury ministry. Since 2007, Poland has twice abandoned efforts at completing the sell-off of substantial state-held assets in its chemical industry, citing unsatisfactory bids. The privatization's flagship offers will be majority stakes in Poland's largest chemical group, Ciech, and Poland's largest fertilizer maker and melamine and caprolactam (capro) producer, Zaklady Azotowe Pulawy.

THERMOPLASTICS MARKET TO GROW 3-8% - SABIC
The market for engineering thermoplastics (ETPs) is projected to expand at a compound annual growth rate (CAGR) of 3-8% globally to 2015, driven by several large trends, a SABIC Innovative Plastics (IP) executive said last week. "ETPs will continue to grow. Many megatrends will need material innovation," said Nitin Apte, general manager of global marketing and technology for SABIC IP. Automotive, consumer electronics and infrastructure will be primary drivers.

CHINA, INDIA SELF-SUFFICIENT IN 10 YEARS
SABIC Innovative Plastics (IP's) global outlook includes the forecast that China and India will stop importing plastic in less than 10 years, a company executive said. "By 2020, India and China will become resin self-sufficient," with both nations' "many greenfield" projects putting extra pressure on US and European plastics exporters, said Nitin Apte, SABIC IP's general manager, global marketing and technology.

HIGH PROPYLENE COSTS PROMPT SUBSTITUTION
High US prices for propylene may encourage some processors to abandon polypropylene (PP) in favour of polystyrene (PS) or high density polyethylene (HDPE). During an earnings conference call, LyondellBasell CEO Jim Gallogly said this trend had appeared during the first quarter of 2011, as sales volumes for less sophisticated applications of PP had fallen. In the US, some injection molders can switch between PP and HDPE, said Bob Bauman, president of Polymer Consulting International, a US consultancy. Producers could also crack larger amounts of propane and butane.

RUSSIA'S SIBUR DIVESTS NON-CORE PETCHEM FIRM
Russian petrochemical major SIBUR has agreed to sell a 100% stake in the Novokuibyshevsk Petrochemical Company to a group of Russian investors. The company does not fit SIBUR's production structure because of its remote location from sources of feedstock supplies in western Siberia, SIBUR said. The sale, to a group of investors that controls acetone and phenol producer Samaraorgsintez, is part of SIBUR's strategy to divest non-core assets and reduce the number of production facilities.

LANXESS COMPLETES DSM ELASTOMERS PURCHASE
German polymers major LANXESS has acquired Netherlands-based DSM's elastomers business, which produces the synthetic rubber ethylene-­propylene-diene monomer (EPDM) brand name Keltan, for €310m ($463m). DSM ­Elastomers operates a 160,000 tonne/year EPDM facility at Sittard-Geleen, the Netherlands, where it is based, and a 40,000 tonne/year EPDM facility in Triunfo, Brazil. After the acquisition, LANXESS plans to transfer the combined EPDM business headquarters from Marl, Germany, to Sittard-Geleen.

DOW CORNING ELECTS ROBERT HANSEN AS CEO
US-based silica materials maker Dow Corning's board of directors has elected Robert Hansen as CEO, effective immediately. Hansen, who will retain his current role as president, succeeds Stephanie Burns, who remains chairman. Midland, Michigan-headquartered Dow Corning is a joint venture between US-basedDow Chemical and US glass-maker Corning.

US TIO₂ PRICES WILL KEEP RISING - KRONOS
Global pigment maker Kronos's North American titanium dioxide (TiO₂) selling prices will "continue to increase significantly" in 2011, because of ongoing supply constraints and pressure from tight raw materials. The company, which reported a 41% increase in its first-quarter net income, offered no hint of how much higher prices could rise this year. Some buyers said they have heard producers will announce another quarterly price-hike initiative of at least 10 cents/lb ($220/tonne, €147/tonne) after current 15 cent/lb proposals are implemented on July 1.

BAYER PLANS UPGRADES AT TEXAS MDI, TDI SITE
Germany-based chemicals firm Bayer MaterialScience plans to invest $120m (€80m) to upgrade methylene diphenyl di-isocyanate (MDI), toluene di-isocyanate (TDI) and polycarbonate (PC) production at its site in Baytown, Texas. Bayer MaterialScience will invest in MDI environmental upgrades, ­reliability improvements and minor debottlenecking. For TDI, Bayer will invest in improved process technology, environmental upgrades and energy efficiency and reliability improvements that will increase productivity.

OUTSOURCING PLAN MAY CUT 700 JOBS - UNION
Plans by Bayer to outsource parts of its Bayer Business Services (BBS) subsidiary could affect some 700 jobs in Germany, the country's chemical union, IG Bergbau, Chemie, Energie (IG BCE), says. The head of the union's collective bargaining, Peter Hausmann, said Bayer's plan to shift part of BBS's information technology activities in Germany to a third-party provider would, if ­realized, jeopardize the "social partnership" between the union and the company. Hausmann called on Bayer to reconsider the plan. BBS spokesman Oliver Gunther told ICIS the plan would affect significantly fewer than 700 workers.

SWISS INDUSTRY WARNS ON RETREAT FROM NUCLEAR
Switzerland's chemical and pharmaceutical industry fears a hasty exit from nuclear power after the Japanese disaster will harm the country's chemicals and other exporting sectors. Industry trade group Chemie Pharma Schweiz (SGCI) said electricity is a "core production factor" for Switzerland's thriving export industry. The country relies on nuclear power for 40% of its electricity generation, it added.

CEREPLAST PLANS 100,000 TONNE/YEAR BIOPLASTICS
US-based plastics firm Cereplast plans to establish a 100,000 tonne/year bioplastics plant in Assisi, Italy. The plant will start manufacturing 50,000 tonnes/year in late 2012 under the first phase, and an additional 50,000 tonnes/year in mid-2013 under the second phase, based on market demand. Cereplast said it would develop the plant on the site of a former industrial facility, currently permitted as a chemical site. The estimated initial investment will be €10m-12m ($15m-18m).

PERSTORP TO INCREASE POLYOL CAPACITY IN CHINA
Swedish specialty chemicals company Perstorp plans to expand its polyalcohol neopentyl glycol capacity by establishing production at its manufacturing site in Zibo, eastern China. The new capacity, which should come on stream in the second half of 2012, will be established via Perstorp's joint venture, Shandong Fufeng Perstorp Chemical. The investment is driven by the increased demand for neopentyl glycol in China.

BIOAMBER RAISES $45M FOR BIOSUCCINIC ACID UNIT
US-based renewable chemicals company BioAmber has raised $45m (€30m) to help commercialize its biosuccinic acid and modified polybutylene succinate, as well as build a large-scale plant in North America. The funds will also support BioAmber's development work to convert succinic acid to 1,4-butanediol (BDO) and to use non-food feedstocks to produce bio-based succinic acid.

WEAK CHINA PVC DEMAND IN DRIVES OFFERS TO LATAM
Weak polyvinyl chloride (PVC) demand in China is driving suppliers there to make lower-priced offers to customers in Latin America, an industry participant says. North Africa and the Middle East are also receiving offers from China, the source added. Already, the weak demand has lowered prices in China, with PVC export offers hovering under $1,200/tonne (€816/tonne) FOB (free on board) China, the source said.

FRANCE'S RHODIA Q1 NET PROFIT SOARS TO €151M
French polyamide and specialty chemical producer Rhodia's first-quarter 2011 net profit more than doubled to €151m ($225m) from €69m on strong demand and higher prices. First-quarter net sales jumped 28% to €1.5bn. "Our pricing power, differentiated geographic positions and recent acquisitions all contributed effectively to the quarter's strong momentum," Jean-Pierre Clamadieu, Rhodia chairman and CEO said.

FRANCE'S ARKEMA Q1 NET PROFIT QUADRUPLES
French specialty chemicals company Arkema's net profit nearly quadrupled to €151m ($225m) in the first quarter of 2011, from €40m in the same period last year, thanks to strong demand and higher prices. Sales rose by 33% to €1.73bn, while earnings before interest, tax, depreciation and amortization (EBITDA) more than doubled, to €287m, from €137m. Sales volumes grew by 7%, sustained by strong demand in Asia, which now accounts for 20% of the group's sales.

CHINA'S ANHUI HUAIHUA TO BUILD COAL-TO-CHEMICALS
China's Anhui Huaihua Group plans to invest yuan (CNY) 15bn ($2bn) to build coal-based chemical plants in Zhongwei city, in the Ningxia Hui Autonomous Region, according to a company source. In the first phase, the group will invest CNY 300m to build a 150,000 tonne/year nitric acid plant, followed by a CNY 3bn investment on a 300,000 tonne/year ammonia plant in the second phase. Next it will invest CNY 11.7bn to build a 1m tonne/year monoethylene ­glycol plant.

POLYONE Q1 NET INCOME SURGES TO $110.2M
US-based polymer firm PolyOne's first-quarter net income surged to $110.2m (€73.8m), from $21m in the first quarter of 2010, on a 14% increase in sales and on a gain from a divestment. PolyOne's sales for the three months ending March 31 were $718.5m, up from $630.4m in the first quarter of 2010. Included in the results for the first quarter of 2011 are pretax special items of $79.8m after tax, primarily related to PolyOne's $128.2m gain on the sale of its investment in the SunBelt chlor-alkali joint venture to North America-based chlor-alkali firm Olin.

UNIPETROL'S INTEGRATED PETCHEM MARGIN FALLS
Unipetrol's integrated petrochemical margin in April fell to €615/tonne ($918/tonne), down 4.7% from March, the Czech ­Republic-based producer said last week. The margin's month-on-month decline was driven mostly by a narrow margin for monomers, which fell to €315/tonne in April, down from €357/tonne in March.

WACKER CHEMIE'S Q1 POLYMER EARNINGS SURGE
German chemical company Wacker Chemie's polymers division posted a 29% increase in its core earnings in the first quarter of 2011, on the back of higher prices. Earnings before interest, tax, depreciation and amortization at Wacker's polymers division surged to €26m ($39m) in the first quarter of 2010. Sales from the polymers division rose by 20%, to €205.4m. "Earnings were held back by ethylene prices being much higher than a year ago. Ethylene cost almost 27% more than in the first quarter of 2010," a spokesman said.

CHINA'S XINJIANG SNXON BUILDS PVC, CALCIUM
China's Xinjiang Snxon Energy Development has started building a 500,000 tonne/year polyvinyl chloride (PVC) plant and a 400,000 tonne/year calcium ­carbide plant in Xinjiang, a ­company source said last week. Construction of the plants at Tuokexun county, in Turpan ­prefecture, began at the end of April. The company has invested yuan (CNY) 3.9bn ($600m) in the plants, which will be ­completed by August 2012, the source added.

LINDE'S Q1 PROFIT RISES 42.3% ON HIGHER MARGINS
German industrial gases company Linde's profit after tax in the first quarter of 2011 rose by 42% to €303m ($452m) because of higher sales and operating margins. Group sales in the first quarter rose 15% to €3.33bn, while operating profit increased by 19% to €761m. "We expect to achieve higher levels of group sales and group operating profits in the 2011 financial year thanin 2010," said Linde CEO Wolfgang Reitzle.

TAIZHOU UNION CHEMICAL ACHIEVES ON-SPEC
China's phthalic anhydride (PA) producer Taizhou Union Chemical Industry, a subsidiary of UPC Group, has achieved on-spec production at its new 60,000 tonne/year PA plant at Taizhou, in Jiangsu, a company source said. The plant started up in late March. The producer has another 60,000 tonne/year PA plant at the same site. Both plants are operating at nearly full rates, with all output supplied to the spot ­market, the source added.

THAI INDORAMA TO BOOST TOTAL CAPACITY BY 81%
Thailand-based Indorama Ventures is expected to boost its group-wide global production capacity by 81% to 5.8m tonnes/year by the end of 2011, DBS Vickers Securities said in a research note. The polyethylene terephthalate (PET) major will expand its 190,000 tonne/year PET facility in Rotterdam, the Netherlands, and the acquisition of 120,000 tonnes/year worth of polyester fiber assets in ­Germany, the Bangkok-based brokerage said. Indorama's investor relations department could not be immediately reached for comment.

INSOLVENCY PROCEEDINGS AGAINST WP MANNHEIM
A court in Mannheim, Germany, has opened insolvency proceedings against WP Mannheim, but the fine chemicals firm is continuing normal production, according to an administrator. WP Mannheim's insolvency administrator, Tobias Hoefer, said the proceedings would not affect the company's customers. WP was renamed last year from its previous name, ­WeylChem. Hoefer added he is negotiating with a number of ­potential investors to buy WP Mannheim. He did not disclose the names of the investors.

WESTLAKE'S Q1 EARNINGS LIFTED BY STRONGER PE
US polyethylene (PE) and vinyls producer Westlake Chemical has credited the continuing US ethylene advantage for its first-quarter 2011 performance. The abundant supply of shale gas production makes US ethylene derivatives globally competitive, especially compared with European and Asian material, according to Westlake CEO and president Albert Chao. "The outlook for the industry is positive, as we continue to see strong demand for polyethylene and strong export demand for PVC [polyvinyl chloride]," Chao said.

FMC SEES HIGHER SODA ASH PROFIT DESPITE CHINA
US soda ash and specialty chemical producer FMC expects profits to grow significantly for its soda ash sector, despite an anticipated ­decline in export prices caused by competition from China. The company expects earnings in its industrial chemical segment, which includes soda ash, to be up by about 30%, driven by high selling prices, said Pierre Brondeau, FMC chief executive.

CHINA'S KEYUAN PETCHEM COMPLETES EXPANSION
China's Keyuan Petrochemicals has completed an expansion, increasing production capacity by 30% from 550,000 tonnes/year to about 720,000 tonnes/year, a company source says. The company started the expansion project on March 19, and had completed all equipment installation and testing by the end of April.

GEORGIA GULF Q1 INCOME RISES ON CHLOROVINYLS
Despite a weak housing market, US-based vinyls producer Georgia Gulf has attributed its first-quarter profit of $12.1m (€8.1m) to strong prices and sales in chlorovinyls and aromatics. In the same quarter a year earlier the company saw a net loss of $19m. In its earnings statement, Georgia Gulf executives cited the US energy advantage as a competitive edge in global petrochemical markets.

SHELL STARTS UP CANADA OIL SANDS UPGRADER
Anglo-Dutch energy major Shell has started up a 100,000 bbl/day expansion at its oil sands upgrader site in Scotford, Canada. Shell Canada's expansion brings the company's upgrading capacity at Scotford, Alberta, to 255,000 bbl/day. Canada's chemical industry uses olefins-rich off-gases from the oil sands upgrading process as a ­feedstock for chemical plants. In March, Canada's NOVA ­Chemicals sealed a feedstock supply deal for a mix of ethane and ethylene to be extracted from off-gas produced by an Alberta-based oil sands upgrader.

By: Will Beacham
+44 20 8652 3214

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