This weeks world news

30 May 2011 00:00  [Source: ICB]

GERMANY'S BASF TO BUILD TDI PLANT IN EUROPE
German chemical major BASF plans to build the world's largest single-train toluene di-isocyanate (TDI) plant in Europe, with a nameplate capacity of 300,000 tonnes/year, and have it operational by 2014. "With this new plant, we will complement our strong global network of integrated worldscale TDI facilities, to serve our customers' growing demand," said Wayne Smith, president of BASF's polyurethanes (PU) division. The new plant will be located in either Antwerp, Belgium or Ludwigshafen, Germany, at one of the company's "Verbund" sites, which have interlinked production plants. Engineering is currently underway for the project.

APIC 2011: ASIA PETCHEMS TO GROW IN 2011-2012
Asia's petrochemicals segment is expected to grow steadily both this year and in 2012 because of strong regional demand, although environmental issues will pose a challenge. "In view of the economic fundamentals, steady growth [of the petrochemical industry] is expected for 2011 and 2012, owing to strong demand from the emerging economies," said the chairman of the Japan Petrochemical Industry Association, Kyohei Takahashi. "The most significant challenge is to secure sustainable growth with conserving energy and other natural resources, as well as protecting the environment," he said. He was speaking at the Asia Petrochemical Industry Conference (APIC) 2011, being held in Fukuoka, Japan.

APIC 2011: ASIA TO COUNT FOR TWO-THIRDS OF GROWTH
Asia could be responsible for two-thirds of global petrochemical growth as economies in the region expand, but political events in the Middle East will weigh on the pace of investment, a consultant says. "A severe run-up in oil prices [like in 2008] would cause a near-term recession in the US, but only a pullback in emerging countries such as China," said Gary Adams, president of US consultancy CMAI. Nevertheless, overall growth in demand for petrochemicals should remain strong, assuming economies continue to grow at their present rate, Adams added.

CHINA'S SINOPEC MAY REDUCE PE OUTPUT IN JUNE
Chinese petrochemical major Sinopec may cut its polyethylene (PE) output by about 80,000 tonnes in June, as its margins have been squeezed by lower domestic prices and high crude oil prices, a source close to the company said last week. This will translate to around a 25% drop in its monthly PE output, based on its average PE output of 300,000 tonnes/month in the first quarter of this year, according to Chemease, an ICIS service in China. Sinopec cut its PE output by about 30,000 tonnes in May for the same reason.

RISING COSTS, DEMAND, TO PUSH ASIA SODA HIGHER
Soda ash prices in Asia are expected to continue rising in the ­short-term, driven by soaring raw material costs - and with demand likely to pick up in the summer months amid decreasing supply, market players said last week. Spot prices rose by 20% from mid-April to around $300/tonne (€213/tonne) CFR (cost & freight) Asia on May 25, led by the Chinese market, according to ICIS data. Domestic Chinese prices for dense soda ash have gone up by around yuan (CNY) 200-300/tonne ($30.80-46.20/tonne) to CNY2,050-2,150/tonne DEL (delivered) over the same period.

APIC 2011: CRUDE SEEN AT $100-120/BBL INTO 2015
Crude oil prices will likely remain high, at around $100-120/bbl through 2015, on the back of growing demand for energy and supply concerns, an executive of energy consultancy Purvin & Gertz says. If oil production in the Middle East and Africa is not ­disrupted by political unrest, the high end of price range may be at $110/bbl, said Purvin & Gertz president Bill Sanderson. According to Purvin & Gertz, global economic growth has recovered from a recent downturn, thus pushing up demand for refined products, which now exceeds 2m bbl/day.

FORMOSA PLASTICS RUNS MMA UNIT AT 100% CAPACITY
Major Taiwanese petrochemical producer Formosa Plastics Corp. started running its 98,000 tonne/year methyl methacrylate (MMA) unit at full capacity on May 19-20, a company source said last week. The acetone cyanohydrin-based unit at Mailiao had been operating at a reduced rate after a small fire broke out at the Formosa group's petrochemical complex on May 12, the source said.

APIC 2011: MALAYSIA POLYOLEFINS DEMAND RISES
Malaysia's demand for polyolefins is expected to grow further this year, supported by stronger economic growth, the Malaysian Petrochemicals Association says. The stronger GDP growth rate of 4-5% projected for the Malaysian economy is expected to lead to strong demand for polypropylene (PP), linear low density polyethylene (LLDPE) and high density polyethylene (HDPE), the report said. Domestic demand for PP is expected to increase by 2.89% year on year to 355,000 tonnes in 2011, while domestic demand for LLDPE is forecast to grow by 5.6% to 380,000 tonnes, it said.

APIC 2011: 'SHALE GALE' SET TO BOOST US INDUSTRY
The higher margins on cracking ethane in the US, boosted by the increased availability of shale gas, will allow the country to maintain its current low-cost producer role in the long term, analysts said last week. "The 'shale gale' has resulted in a significant long-term change in the relationship between oil and natural gas prices," said Russell Heinen, director at US consultancy, IHS.

APIC 2011: THAI POLYMERS DEMAND TO GROW
Thailand's domestic consumption of major polymers is expected to increase this year, spurred by ­soaring demand amid start-ups and an expanding economy, a report by the Petrochemical Industry Club of the Federation of Thai Industries says. Thailand's consumption of major polymers rose by 13% year on year to 3.21m tonnes in 2010, as a result of stronger demand from the domestic end-user market - especially for polypropylene (PP) and acrylonitrile-butadiene-styrene (ABS) and styrene acrylonitrile.

APIC 2011: ASIA PETCHEM FIRMS SEEK TO ADD VALUE
The Asian petrochemicals industry is moving towards value-added products in both petrochemical and non-petrochemical chains, such as polysilicon and biomass-based material, to avoid soaring feedstock costs, an industry analyst says. "Asian companies will be challenged by high feedstock costs and will need to add value to their product offerings," said John Pearson, senior director at US consultancy IHS. "Even China will be forced to consider whether it should invest overseas in olefins production," he said.

ARKEMA RESTARTS NEWLY EXPANDED S KOREA PMMA
France's major chemicals producer Arkema restarted its recently debottlenecked 50,000 tonne/year polymethyl methacrylate (PMMA) plant at Jinhae, in South Korea, on May 25. The plant's capacity was expanded by 10,000 tonnes/year after a debottlenecking exercise carried out during the turnaround. Arkema shut the plant on 7-8 May, and is gradually ramping up the operating rate, which is now 80-85%. The plant's shutdown had a minimal effect on the Asian market, as PMMA demand is soft to stable, market players said.

CHINA'S BEFAR TO RAISE FUNDS FOR RELOCATION
China's Befar Group is planning to sell shares to raise yuan (CNY) 1.8bn ($277.3m) to relocate and upgrade its chemical plants and a brick-making plant. The propylene oxide (PO) and caustic soda producer will issue fewer than 100m shares, according to its ­statement to the Shanghai Stock Exchange. "We will move our plants to a chemical industrial zone far from the city's residential area. We will [carry out upgrading] work and build [more plants]," a company source said.

JAPAN'S PRIME POLYMER TO RAISE PP CAPACITY
Japan's Prime Polymer is planning to raise its global polypropylene (PP) compounding capacity by about 17% by the end of this year - raising it to 700,000 tonnes/year - a company source said last week. Prime Polymer has PP ­compounding plants in Japan, China, Thailand, India, Mexico and the US, which have a combined capacity of 600,000 tonnes/year. The expansion will be carried out at a number of its plants, including those in China and Mexico, he said.

APIC 2011: CHINA COAL-TO-CHEMICALS TO SURGE
China's coal-to-chemicals capacity is set to surge in 2013-2016, as a wave of new projects come on stream, an industry analyst claims. "Given that China has limited crude oil and natural gas supply, the country has to look at alternatives," said Paul Pang, managing director of US consultancy CMAI. Coal-to-chemicals capacity of an estimated 5.83m tonnes/year is expected to come on stream by 2016, with more coal-to-­chemicals to be commercialized, Pang said.

DUTCH CHEMICALS SALES SEE 22% GROWTH IN Q1
Sales in the Dutch chemicals industry in the first quarter of 2011 grew by 22% compared with the same period last year, reflecting an increase in production and higher selling prices. Citing figures from data processing firm Statistics Netherlands, the Netherlands Chemical Industry Association (VNCI) said first-quarter output in the Dutch chemicals industry grew by almost 3% year on year. VNCI added that companies in the Dutch chemicals industry intend to invest 73% more in 2011 compared with 2010, when investments dropped from €1.4bn ($2.0bn) in 2009 to €900m.

BASF-YPC ON TRACK WITH INVESTMENTS IN CHINA
BASF and Beijing-based China ­Petroleum and Chemical Co. (Sinopec) are on track with plans for their BASF-YPC joint venture, to invest $1bn (€710m) in plants in China. The German chemical major said it will expand its "Verbund" - interlinked production plants - site in Nanjing with Sinopec, as well as the speciality chemicals business in Kuantan, Malaysia, with Malaysian national oil firm Petronas. "We have a couple of projects we are looking at: the acrylic acid facility, hydrogen peroxide/propylene oxide (PO) facility and a capacity increase of the two propyl-heptanol and styrene monomer (SM) [units]," said Albert Heuser, president of BASF Asia-Pacific.

ROMANIA'S OLTCHIM TO START ARPECHIM COMPLEX
Romania-based Oltchim will restart the first installation at the mothballed Arpechim petrochemical complex by the end of May. Arpechim's 56,000 tonne/year propane and propylene unit is ready for restart, after a €3.8m ($5.4m) investment by Oltchim in a revamp and the purchase of raw materials. The propylene output will be used in Oltchim's propenoxide and oxo-alcohols production. Romanian group Petrom closed the Arpechim complex in late 2008, causing Oltchim to lose much of its feedstock supply and reduce its production rate by around two thirds.

AKZONOBEL OPENS A NEW RESEARCH LABORATORY
Dutch chemicals and coatings producer AkzoNobel has opened a new research laboratory in Deventer, the Netherlands. The laboratory, one of six of its global research and development (R&D) centers, will be home to more than 200 researchers, it said. AkzoNobel aims to raise the contribution made by "bigger and bolder innovations" from about 9% of annual revenue to 15-20% by 2015, it said.

EU CLEARS SINOCHEM-DSM JOINT VENTURE PLANS
The European Commission has cleared a planned pharmaceuticals joint venture between China's state-owned Sinochem conglomerate and Dutch chemicals and pharmaceuticals firm DSM. The joint venture, which is primarily focused on upstream active pharmaceutical ingredients in the antibiotics and anti-infective sector, does not pose competition concerns, the Commission said. As part of its investigation, the Commission assessed that Sinochem is state-controlled.

CHINA NEEDS 10M-13M TONNES/YEAR OF IMPORTS
China will need 10m-13m tonnes/year of ethylene-equivalent imports from 2011-2015, to satisfy demand from its petrochemical markets, in addition to its expanding domestic capacity. Data compiled by Japanese consultancy Mitsubishi Chemical Techno-Research showed that China had added the equivalent of three 1m tonne/year naphtha crackers each year from 2009-2011, said executive consultant Masaru Kani - who was speaking in Cologne, Germany, at the Global Petrochemicals annual meeting, organized by the World Refining Association.

DOW PLASTICS RECYCLING FROM INCINERATION
US producer Dow Chemical has generated energy from used plastics, pioneering an alternative and more sustainable end-of-life use for plastics than landfill. Dow ­conducted tests using linear low density polyethylene (LLDPE) at its manufacturing site in Midland, Michigan. These showed that 96% of the available energy could be recovered from incinerating 578lb (262kg) of the recycled plastic - an amount equivalent to approximately 11.1m Btu of natural gas.

REPORTS OF BLAST AND FIRE AT IRAN REFINERY
Reuters news agency has reported that six people were injured last Tuesday, in an explosion that set an oil refinery on fire in southwestern Iran during a plant visit by President Mahmoud Ahmadinejad. Reuters, quoting Fars news agency, said Ahmadinejad was at the site for the inauguration of a new phase of the refinery in Abadan, but was unhurt.

NEW ORDERS CLIMB FOR CHEMICALS IN THE EU
New orders for chemicals in the EU rose by 0.9% in March from the previous month, according to statistical office Eurostat. March orders for chemicals in the 17-member eurozone saw an even higher rise of 1.0% from February. Year-on-year growth in new orders for chemicals in March for the 27 EU member states was 15.9%, while across the eurozone it was 18.8%.

BRAZIL'S COPERSUCAR TO SELL SHARES IN AN IPO
Brazil's largest sugar and ethanol trader, Copersucar, plans to sell shares in an initial public offering (IPO). Copersucar has already filed with Brazil's securities regulator, the Comissao de Valores Mobiliarios. The company said it plans to expand its sugar and ethanol supplies as well as invest in new technologies, mainly renewable plastic. Copersucar has hired financial firms Merrill Lynch, Credit Suisse, Goldman Sachs and Itau BBA to manage the transaction.

BRAZIL AUTHORITIES PROBE BRASKEM CHLORINE LEAK
Brazilian federal justice officials said last Monday that a chemical leak and a possible explosion ­occurred at a Braskem chlor-alkali facility. It had given the Brazil-based producer five days to explain what happened. On May 23, five contract workers at the plant were injured after a plant pipeline burst, according to a public relations firm for Braskem. The incident occurred after more than 130 people in the area of the city of ­Maceio, in the northeast Brazilian state of Alagoas, went to a local hospital on May 21, after reports of a chlorine leak at the plant.

BLAZE DESTROYS TRITECH LUBRICANTS FACILITY
TriTech Lubricants's blending plant near Melbourne, Australia, has been destroyed in a fire. TriTech, an Austrailia-based lubricants toll blender, will be unable to continue production indefinitely. The company will contact customers and suppliers as soon as possible.

MISSISSIPPI RE-OPENS AT BATON ROUGE
A nine-mile (14km) stretch of the Mississippi river at Baton Rouge has been re-opened, after being closed over the weekend of May 21 because of a barge accident. However, there are still restrictions in place. Three grain barges sank in the river at Baton Rouge on Friday after colliding with a dock. The 195-foot (59 meter) vessel Crimson Gem was pushing 20 barges of grain, according to the US Coast Guard.

APIC '11: INDIA'S PETCHEM DEMAND TO GROW 13.8%
India's aggregate demand for petrochemicals is expected to grow by 13.8% this year to 35m tonnes, backed by the country's strong economic expansion, its Chemicals and Petrochemicals Association (CPMA) said in a report at the Asia Petrochemicals Industry Conference (APIC). Growth will be spurred by local demand from the automobile, packaging, agriculture and infrastructure sectors, which are important end-markets.

APIC '11: US ECONOMY TO STALL IF WTI HITS $135/BBL
The US economy will continue to grow in the coming years providing crude oil prices remain under $135/bbl (€96/bbl), an industry consultant said last week. A surge in West Texas Intermediate (WTI) to $135/bbl will cause growth to stop in the US, and perhaps trigger a mild recession in Europe, President Gary Adams, of industry analysis firm CMAI said. CMAI expects the Chinese economy to grow by 8% in 2011, reaching 12% by 2015, while the global economy is expected to grow on an annual average of 3-4%.

UK PLASTICS WARY OF RECYCLING TARGETS
Plastics producers, processors and recyclers want to prevent used plastics going to landfill by 2020, but are wary of unrealistic government recycling targets, according to Peter Davis, director general of the British Plastics Federation (BPF). A British government review of waste disposal and reduction is expected to be published on June 14, but the BPF and other stakeholders have warned of the potential negative impact of ­unrealistic recycling targets.


By: Will Beacham
+44 20 8652 3214



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