This week's world news

06 June 2011 00:00  [Source: ICB]

ASHLAND TO ACQUIRE ISP FOR $3.2BN IN CASH
US chemical firm Ashland has agreed to acquire US-based privately-owned specialty chemical manufacturer International Specialty Products (ISP) for $3.2bn (€2.2bn) in cash, or 8.9 times earnings before interest, tax, depreciation and amortization (EBITDA). The acquisition, which is expected to close before the end of the September quarter, will expand Ashland's position in high-growth markets such as personal care, food and beverage, pharmaceutical and oilfield chemicals. "This defining transaction enables us to significantly expand our market positions in higher margin, higher growth and less cyclical global markets like personal care and pharmaceuticals," said Ashland chairman and CEO James O'Brien. Shares in the chemical firm rose 11.6% after the announcement last Wednesday.

ASHLAND EYES DEBT PAYDOWN, MORE CHANGES
US chemical player Ashland plans to pay down debt while continuing to change into a high-margin, high-growth specialty chemicals company, after its planned acquisition of US-based International Specialty Products (ISP). "This has been a transformational story for Ashland. [The Hercules acquisition] was our first choice to upgrade our ­position in specialty chemicals, and ISP will define us - but the story is not fully written," said chairman and CEO James O'Brien, in an interview with ICIS. "We will focus on paying down debt," he added.

US MANUFACTURING GROWTH FALLS IN MAY
Growth in the US manufacturing sector in May fell nearly seven percentage points from April - the third consecutive month of slow performance - said the Institute for Supply Management (ISM). The institute said its ­purchasing managers index (PMI) for May showed continued ­expansion in US manufacturing industries, but the pace of growth has slowed sharply. May's PMI of 53.5 - the lowest in the past 12 months - is 6.9 points below the April reading of 60.4, and is the first reading below 60 in 2011. A PMI reading above 50% shows the US manufacturing sector is expanding, while an index measure below 50% means production is contracting.

BASF AND INEOS SIGN STYROLUTION JV CONTRACT
Germany chemical giant BASF and Switzerland-headquartered INEOS have signed a joint venture contract to regulate the formation of a new styrenics business, called Styrolution. A letter of intent was signed in November 2010. The 50:50 Styrolution joint venture, which will be headquartered in Frankfurt, Germany, will see the firms combining their global businesses in styrene monomers (SM), polystyrene (PS), acrylonitrile-butadiene-styrene (ABS), styrene-butadiene block copolymers and other styrene-based copolymers, as well as ­copolymer blends. BASF and INEOS will continue to independently operate their styrene businesses until the completion of the deal, which is expected later this year.

LANXESS EYES €1BN DEAL FOR BELGIUM'S TAMINCO
Germany-based chemical major LANXESS is in talks to acquire Belgium amines producer Taminco in a €1bn ($1.4bn) deal, ­according to Financial Times Deutschland, which cited unnamed financial market sources. It said LANXESS is in negotiations with Taminco's owner, UK-based private equity firm CVC Capital Partners. Officials at LANXESS' headquarters in Leverkusen did not immediately respond to a request for comment. Taminco had sales of €715m last year, and was acquired by CVC for €800m in 2007.

FRACKING SUSPENDED IN UK FOLLOWING TREMORS
Shale gas drilling near Blackpool, in the northwest of the UK, has been suspended following fears that it may have triggered a small earthquake in the area, UK-based energy company Cuadrilla Resources said. The company, which operates the sole hydraulic fracturing (fracking) operation in the UK, said it would postpone fracking operations at its site at Weeton, near Poulton in Lancashire, while it interprets seismic information from monitoring equipment at the site. A "small seismic event" was recorded in the Blackpool area at approximately 00:48am UK time on May 27, the company said, adding that it had been planning to halt ­fracking operations over the holiday weekend, but did so following discussions with the British Geological Survey.

ITALY MULLS SEPARATE SALES FOR VINYLS ITALIA
Troubled Italian polyvinyl ­chloride (PVC) and vinyl chloride monomer (VCM) producer Vinyls Italia could be broken up for sale, as potential investors have only made bids for parts of the company and its mothballed plants, the Italian Ministry of Economic Development said. Italian officials have been trying to come up with a plan for Vinyls Italia since April, when Russian-Swiss investment fund Gita missed final deadlines to proceed with the purchase of the PVC producer.

GEORGIA GULF LIFTS ACETONE ALLOCATION
US chemical producer Georgia Gulf has lifted its sales allocation on acetone, a source close to the company said. The company expects to remain on sales allocation for phenol through to the end of June, the source said. The company went on to sales allocation for phenol and acetone in May, because shipments of feedstock cumene were affected by the recent flooding along the Mississippi river. Georgia Gulf has a 680,000 tonne/year cumene plant in Pasadena, Texas, and a phenol and acetone plant in Plaquemine, Louisiana. The Plaquemine plant has phenol capacity of 227,000 tonnes/year and acetone capacity of 140,000 tonnes/year.

FIVE US HURRICANES EXPECTED THIS SEASON
The 2011 hurricane season began last Wednesday, with forecasters continuing to predict an above-normal season for the US Atlantic and Gulf waters. The Colorado State University (CSU) hurricane forecast team maintained its earlier season forecast, calling for 16 named storms, nine hurricanes and five major hurricanes of category three, four or five, and winds of 111 miles/hour (179 km/hour) or greater. "We continue to anticipate an above-average probability of US and Caribbean major hurricane landfall," said chief forecaster William Gray. The 2011 Atlantic hurricane season will last from June 1 to November 30.

MOMENTIVE COMPLETES ASSET SALE TO PCCR USA
US-based Momentive Specialty Chemicals has completed the sale of its North American composites and coating resins business to PCCR USA. The buyer is a subsidiary of Investindustrial, a European group with operations in specialty chemicals, resins and intermediates. The composites and coatings business has annual sales of about $230m (€159m).

PPG INDUSTRIES ACQUIRES DUCOL COATINGS
US-based coatings maker PPG Industries has acquired distributor Ducol Coatings South Africa, for an undisclosed sum. Ducol Coatings has been the distributor of PPG's automotive refinish products in South Africa since 2003.

PTT CHEMICAL CUTS CRACKER OPERATING RATE
Thailand's PTT Chemical has reduced the operating rate of its I-4 No 1 cracker at Mab Ta Phut to 80% this month because of poor economics, a source close to the company said. The cracker mainly uses naphtha as a feedstock, but due to its high cost PTT Chemical is using more gas feeds this month, such as liquefied petroleum gas (LPG), the source said. The I-4 No 1 cracker, which has the capacity to produce 515,000 tonnes/year of ethylene, was running at 100% in May.

BASF DECLARES FORCE MAJEURE ON BDO
German chemical giant BASF has declared force majeure on supplies of butanediol (BDO) from its site at Ludwigshafen, Germany, following a fire on May 30 in a precursor plant, a company source said. BASF, which produces 190,000 tonnes/year of BDO at Ludwigshafen, declared force majeure on May 31, after the fire disrupted the production of feedstock acetylene. Supplies of tetrahydrofuran and n-methylpyrrolidone have also been affected.

THAI POLYACETAL TO ALMOST DOUBLE CAPACITY
Thailand-based chemical producer Thai Polyacetal Co. (TPAC) plans to increase its polyacetal (POM) capacity in Thailand by 45,000 tonnes/year to 100,000 tonnes/year, its Japanese parent company Mitsubishi Gas Chemical said. TPAC will expand its existing 55,000 tonnes/year POM facility in Bangkok by 5,000 tonnes/year by debottlenecking. It also plans to build a new 40,000 tonne/year unit at the same site. Construction of the new unit is scheduled to begin by the end of 2011, and is expected to be completed in the first quarter of 2013. POM is primarily used for automotive and electronic applications, and demand for these applications is steadily growing, MGC said.

US HOME PRICES FALL TO RECORD LOW IN Q1 2011
US home prices plunged to new record lows in the first quarter of 2011, US-based credit ratings agency Standard & Poor's (S&P) said on Tuesday. Prices fell beyond the previous low point of April 2009. In its monthly report, S&P said that its national home price index fell by 4.2% in the first quarter - a pace that exceeded the 3.6% fall-off seen in the fourth quarter of 2010. "The national index hit a new recession low with the first quarter's data," S&P said, noting that on a national level, home prices are back to their mid-2002 levels. "This month's report is marked by the confirmation of a double-dip in home prices across much of the nation," said David Blitzer, chairman of the S&P indexes division. "Home prices continue on their downward spiral with no relief in sight. Since December 2010, we have found an increasing number of [housing] markets posting new lows."

SABIC RESTARTS INDIANA PHENOL/ACETONE UNIT
US-based SABIC Innovative Plastics restarted its phenol/acetone unit in Mount Vernon, Indiana, US. The company shut down the plant during the weekend of May 15 because of difficulty in sourcing feedstock cumene as a result of high water levels along the Ohio river. The SABIC plant has a phenol capacity of 350,000 tonnes/year and an acetone capacity of 208,000 tonnes/year, according to the ICIS plants & projects database.

TRINIDAD UREA/MELAMINE TURNAROUND DELAYED
Methanol Holdings (Trinidad) Ltd (MHTL) has rescheduled the maintenance shutdown of the urea/melamine portion of its ­ammonia/urea/melamine (AUM) complex in Trinidad to July 4 ­because of a delay in the arrival of critical spare parts, a source said. The shutdown was originally scheduled to begin on June 1 and to last for the rest of the month. MHTL's AUM complex has two urea/melamine production trains that together have a capacity of 60,000 tonnes/year. Urea/melamine production will now be shut down for nearly all of July and will result in the loss of about 5,000 tonnes of melamine production.

VALERO INVESTS IN BIOFUELS FIRM ENERKEM
US refiner Valero has become a strategic investor in Canada-based waste-to-biofuels company Enerkem. Valero joined US-based Waste Management and others in a Canadian dollar (C$) 59m ($60m) equity financing round to support current and future projects. "With Valero joining Waste Management as a strategic investor, Enerkem becomes one of the very few renewable products companies that is aligned with industry leaders from both upstream and downstream parts of the business," said Enerkem CEO Vincent Chornet.

SHIN-ETSU ACHIEVES FULL OUTPUT FOR KASHIMA PVC
Japan's Shin-Etsu Chemical has achieved full output at its 550,000 tonne/year polyvinyl chloride (PVC) plant in Kashima, Japan. Following the March 11 earthquake and tsunami in Japan, Mitsubishi Chemical restarted its ethylene (C2) plant at Kashima on May 20. The plant supplies ethylene to the vinyl chloride monomer (VCM) plant operated by Kashima Vinyl Chloride Monomer, a subsidiary of Shin-Etsu Chemical. On 21 May, Kashima Vinyl Chloride Monomer restarted VCM production, which allowed for full production at Shin-Etsu's PVC resin factory at the site, the company said. Shin-Etsu had restarted part of the PVC plant on April 28.

By: Joseph Chang
+1 713 525 2653

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