This week's world news

13 June 2011 00:00  [Source: ICB]

SHELL DEVELOPING PLANS FOR US CRACKER
Anglo-Dutch energy and chemicals company Shell is developing plans for a worldscale ethylene plant with integrated derivative units in the Appalachian region of the US, to take advantage of the area's Marcellus shale gas reserves. A site for the plant has not been decided. "Building an ethane-fed cracker in Appalachia would unlock significant gas production in the Marcellus region by providing a local outlet for the ethane," said Ben van Beurden, Shell executive vice-president, chemicals. Shell is evaluating derivative choices, with polyethylene (PE) as the leading option.

ACC: US CHEMS IN BEST POSITION IN DECADES
Economic recovery and the competitive advantage from access to cheap shale-based natural gas have rescued the US chemical industry from the hole it was in two years ago, American Chemistry Council (ACC) president Cal Dooley said at the ACC annual meeting in Colorado Springs, Colorado, US. "Few of us would have anticipated that we would see the industry turn around and be in one of the strongest positions that it has been in decades," he said on the sidelines of the meeting.

ACCENTURE: US M&A ACTIVITY PICKING UP
US mergers and acquisitions (M&A) activity is picking up following a profitable first quarter that has left many companies flush with cash, said Kurt Eichhorn, an M&A specialist in US-based consultancy Accenture's chemical industry group. Some of that money is being invested in capacity expansions of a magnitude not seen in the US for years and some is going into outright purchases of assets. "Buyer and seller expectations have clearly narrowed," Eichhorn said on the sidelines of the annual American Chemistry Council meeting held in Colorado Springs, Colorado, US. Most M&A activity has been in small and mid-sized deals so far, he said, noting "a pretty strong rationale" is needed for a larger deal - not just in finding value, but reaping the benefits of integration.

DOW SEES SHALE GAS 'RENAISSANCE'
New and abundant supplies of shale gas have triggered the largest petrochemical investments seen in North America in a generation, said Seth Roberts, director of energy and climate change policy at US-based Dow Chemical. "What does the 'shale gale' and long-term competitive natural gas prices mean for the chemicals industry? We at Dow believe it means 'make it in North America'," Roberts said. The huge new resources represented in growing shale gas developments "could lead to what many are calling a renaissance in the American chemicals industry," he added.

ACC ADDS FOUR NEW MEMBERS TO ROLL
US trade group the American Chemistry Council (ACC) has approved four more companies for membership, taking the total to 147. They are Ascend Performance Materials, a Houston-based nylon 6,6 producer; Lion Copolymer, a synthetic butadiene rubber (SBR) producer based in Baton Rouge, Louisiana; A C & S, which makes epoxy curing agents and is based in Nitro, West Virginia; and ASK Chemicals, which makes phenolic resins and is based in Dublin, Ohio. The announcement coincided with the end of the ACC's annual meeting, in Colorado Springs, Colorado, US.

BASF'S LUDWISGHAFEN NO. 2 CRACKER HITS SNAG
Germany-based BASF's No. 2 cracker at Ludwigshafen, Germany, has encountered some technical problems while ramping up operating rates, resulting in a delay to the output of on-spec ethylene and propylene, a company source said. "It will take longer than expected to start the cracker properly. We hope to achieve on-spec production in the next week," said the company source, without disclosing the cause of the problems. The cracker, which has a nameplate ethylene capacity of 400,000 tonnes/year, was shut down for planned maintenance in late April and restarted on June 3.

BORSODCHEM TO DEBOTTLENECK MDI IN JULY
Hungary-based BorsodChem will start the debottlenecking and annual maintenance of its main methyl di-p-phenylene isocyanate (MDI) plant in Kazincbarcika on July 22, causing a shutdown lasting approximately seven weeks. The revamp will boost production capacity at the MDI M2 facility from 150,000 tonne/year to 240,000 tonne/year, giving the company an overall MDI capacity of 300,000 tonne/year.

MARUN RUNS CRACKER COMPLEX AT 80-90%
Iran's Marun Petrochemical is running its 1.1m tonne/year gas cracker and derivative facilities at Bandar Imam at 80-90% after a scheduled turnaround, said a source close to the company. Marun took the complex off line on April 23-24 restarted it in the middle of May, the source said. The complex includes a 300,000 tonne/year high density polyethylene (HDPE) plant, a 300,000 tonne/year polypropylene (PP) unit and a 400,000 tonne/year monoethylene glycol (MEG) facility.

ARYA SASOL CRACKER SHUT ON MECHANICAL ISSUES
Arya Sasol Petrochemical's 1m tonne/year cracker at Asaluyeh, Iran, was shut down last week because of mechanical issues, with the restart expected this week, a company official said. "The cracker was shut on June 6 to facilitate repairs on a crack at the seawater-transfer line," the official said. The cracker just completed a turnaround in late May. Arya Sasol's 300,000 tonne/year high density PE (HDPE) and 300,000 tonne/year low density PE (LDPE) facilities are running, but at reduced rates because of lack of feedstock, said another company source.

PTT ASAHI CHEMICAL TO START UP PROJECT IN JULY
Thailand's oil and gas major PTT confirmed that its joint-venture project with Japan's Asahi Kasei Chemicals in Map Ta Phut is set to start commercial production late next month. "It is in the commissioning phase. The commercial start-up will be within the third quarter, probably by the end of July," said Pirada Dokangkab, a spokesperson for PTT's downstream business. The project includes a 200,000 tonne/year acrylonitrile (ACN) plant and a 70,000 tonne/year methyl methacrylate (MMA) plant, to be operated by PTT Asahi Chemical - the joint venture firm.

JAPAN'S APRIL RESINS PRODUCTION FALLS BY 8.6%
Japan's production of plastic resins fell by 8.6% to 810,343 tonnes in April from the same period a year earlier, mainly because of the shutdown of the Kashima petrochemical complex in Ibaraki prefecture after the March 11 earthquake, said an official from the Japan Plastics Industry Federation (JPIF). Mitsubishi Chemical's naphtha crackers at Kashima were shut following the quake, forcing the downstream plants at the complex to halt production. "Because the [Kashima] complex was shut for the two-thirds of March and the whole month of April, this affected all of the resins," the official said. The total resin production in April also decreased, by 1.3% from March.

BRAZIL'S PLASTICS PRODUCTION TO GROW BY 6%
Brazil's plastics production is projected to grow around 6% year on year in 2011 because of higher demand, the country's plastics industry association Abiplast said. Plastics production in 2012 could grow by 5% year on year because of a stronger domestic economy. Production will likely rise because of growing demand for electric and electronic equipment, Abiplast said. Despite the higher production, Abiplast predicts there will be revenues of Brazilian reais (R) 35bn ($22bn, €15bn) in 2011, down by 14.6% year on year from the R41bn reported for the sector in 2010. In 2010, Brazil processed more than 5.9m tonnes of thermoplastic resins and reported year-on-year growth of 9%.

SINOPEC SABIC TO SHUT TIANJIN PP UNIT ON JUNE 15
China's Sinopec SABIC Tianjin Petrochemical plans to shut its 450,000 tonne/year polypropylene (PP) unit at Tianjin in north China on June 15 for five days, a company source said. The plant is expected to switch to homopolymer PP after the maintenance. The prices of homopolymer PP in the domestic market are expected to be stable in the second half of June because of the plant's conversion, some traders in north China said. This follows three months of losses, they added. The plant produced block copolymer PP for 92 days from February to May, according to statistics from Chemease, an ICIS service in China.

CHINA'S SHANGHAI SECCO TO SHUT CRACKER
China's Shanghai SECCO Petrochemical is planning to take its 1.2m tonne/year ethylene cracker in Shanghai off line on August 10 for 20 days of annual maintenance, a source close to the company said. The company will also shut its downstream 300,000 tonne/year high density polyethylene (HDPE) unit, 300,000 tonne/year linear low density polyethylene (LLDPE) unit and 250,000 tonne/year polypropylene (PP) unit during the same period, the source added.

HUNTSMAN PROPOSES $33M TO SETTLE SUIT
US-based chemical producer Huntsman had no comment regarding its proposal to pay $33m (€23m) to settle a US class-action lawsuit, which accused the company of fixing prices on isocyanates and other feedstock for polyurethane (PU) foam. In proposing the settlement, Huntsman denied the allegations made in the lawsuit, the isocyanate customers said in court documents. Instead, Huntsman chose to settle the lawsuit to avoid the expense of fighting the case in court. The lawsuit was filed in 2004, and it accused Huntsman, Germany's Bayer and BASF, US-based Dow Chemical and Netherlands-based LyondellBasell of fixing prices.

LYONDELLBASELL TO BUY BP PIPELINE SYSTEM
Netherlands-based petrochemical firm LyondellBasell, through its US subsidiary Equistar, has signed an agreement to purchase around 200 miles (322km) of pipeline near Houston, Texas, from UK energy major BP. Equi-star will acquire pipelines and metering stations that comprise an olefins distribution system. The system transports ethylene and propylene production from Channelview, Texas, to Equistar's storage terminal at Mont Belvieu and facilities in Deer Park, La Porte and the Bayport industrial district in Pasadena, all in Texas. The purchase also includes a natural gas liquids feedstock supply line into Channelview.

CHEVRON PHILLIPS HAS PE POWER OUTAGES
Chevron Phillips Chemical lost power to two polyethylene (PE) units at its Cedar Bayou plant in Texas, US. Chevron Phillips said that a lightning strike resulted in the loss of power to the two units, resulting in both shutting down. Both flares experienced visible emissions during the event, according to the filing with the Texas Commission on Environmental Quality. The company has a 350,000 tonne/year capacity linear low density polyethylene (LLDPE) unit and a 280,000 tonne/year capacity low density polyethylene (LDPE) unit at the site, according to ICIS plants and projects.

PVC INDUSTRY SUPPORTS EPA'S PROPOSED RULE
US polyvinyl chloride (PVC) industry representatives voiced support for a proposed rule regulating emissions from plants, but asked the Environmental Protection Agency (EPA) to consider flexible options for the numerous varieties of the resin. The EPA proposed a rule on April 15 to update the emission limits from PVC producers in the US. The proposed rule would limit emissions from a range of production sources, such as PVC process vents, wastewater and storage vessels. The rule would also set standards for equipment leaks.

BOEING TO PUSH FOR 1% ALTERNATIVE JET FUEL USE
US aircraft maker Boeing plans to have 600m gal of alternative fuels being used by airlines in 2015, or 1% of total consumption by the sector for that year. The company is considering all kinds of alternative fuels, including fermented fuels, biologically modified ones as well as pyrolysis, said Boeing senior fuel engineer Jim Kinder during a presentation at the 2011 Ethanol Summit in Sao Paulo, Brazil. But Kinder said all fuels would have to be "drop-in" options, which do not require changes to engine designs.

RFA: US MAY ELIMINATE ETHANOL TARIFF BY 2011
The US tariff on ethanol imports could be removed at the end of 2011 if the US stops subsidizing the product, the Renewable Fuels Association (RFA) said. US policy on ethanol could change dramatically at the end of the year and existing incentives for the product may no longer be there, said RFA president Bob Dinneen during a presentation at the 2011 Ethanol Summit in Sao Paulo, Brazil. Dinneen said the US industry recognizes that the level of support it has may not be needed. The US gives a 54 cent/gal tax credit for refiners to blend ethanol in gasoline, while imposing a 45 cent/gal tariff on imports of the biofuel.

EUROPE PERC SUPPLY TO IMPROVE AFTER RESTARTS
Availability in the European perchloroethylene (perc) market is expected to improve as two major manufacturers restart operations, market sources said. Several distributors and traders said supply and demand are expected to stabilize in the next few weeks as US-based Dow Chemical and Czech Republic-based Spolchemie resume production. The Dow and Spolchemie shutdowns led to a serious shortfall in the European perc market that other suppliers have been unable to offset. Dow Chemical was set to restart its 100,000 tonne/year perc unit at Stade in Germany last week after a six-week maintenance shutdown, a company source. Spolchemie restarted its 15,000 tonne/year perc plant at Usti nad Labem in the north of the Czech Republic on June 6, a company source said.

CHINA OVERTAKES US AS ENERGY CONSUMER - BP
China overtook the US as the world's largest energy consumer in 2010, as a rebound in the global economy drove consumption higher at a rate not seen since the aftermath of the 1973 oil price shocks, energy giant BP said last week. In its 2011 Statistical Review of World Energy, BP said that demand for all forms of energy and in all regions grew strongly in 2010, adding that increases in fossil fuel consumption suggest that global carbon dioxide (CO2) emissions from energy use rose at their fastest rate since 1969.

SCANIA: ETHANOL FITS BEST FOR HEAVY VEHICLES
Sweden-based truck maker Scania said ethanol is the best alternative to fossil fuels for heavy vehicles because the biofuel can easily replace diesel and significantly cut emissions from trucks and buses. Bio-ethanol is the most effective way to replace diesel in heavy transport, said Scania's sustainable systems director Jonas Stromberg during a presentation at the 2011 Ethanol Summit in Sao Paulo, Brazil. Stromberg said biofuels can reduce CO2 emissions by up to 90% in heavy vehicles, compared with fossil fuel.

HENAN KAIXIANG TO START UP BDO PLANT AT YIMA
China's Henan Kaixiang Chemical plans to start up its 45,000 tonne/year 1,4-butanediol (BDO) plant at Yima in Henan province by July or August, a company source said. A second plant with the same capacity is being built and expected to come on stream about a year later, the source added. The BDO output at the upcoming plants will be sold primarily in China's domestic market, the source said.

PETRONAS TO FINALIZE COMPLEX PLANS
Malaysian oil and gas major PETRONAS will finalize the investment plan for its new $20bn (€13.8bn) integrated refinery and petrochemical complex at Pengerang in southern Johor by the second half of next year or early 2013. The new complex, dubbed RAPID (Refinery and Petrochemicals Integrated Development), is now at the detailed feasibility study stage. Upon completion, RAPID will consist of a crude oil refinery with a 300,000 bbl/day capacity, a naphtha cracker that will produce about 3m tonnes of ethylene, propylene, C4 and C5 olefins per year, and a petrochemical and polymer complex that will produce differentiated and highly specialized chemicals.

NAN YA CONFIRMS MAILIAO MEG SHUTDOWN BY JUNE 20
Taiwan's Nan Ya Plastics confirms that it will shut its No. 3 and No. 4 monoethylene glycol (MEG) plants at Hai Fong in Mailiao by June 20, for safety checks, in compliance with an order from the Yunlin County government, said company spokesperson David Tsou. The company's 360,000 tonne/year No. 3 MEG plant will be shut on June 15, while its 820,000 tonne/year No. 4 MEG plant will be taken off line on June 20. The Yunlin County government ordered the shutdown of five of Nan Ya's plants, including the two MEG units, in connection with a fire at the Mailiao petrochemical complex of the Formosa group. Nan Ya is part of the Formosa group, Taiwan's largest petrochemical player.

EU COURT CUTS ARKEMA CARTEL FINE BY €106M
The EU General Court has cut Arkema's fine in a 2006 methacrylates cartel case by €105.8m ($153.3m). The court said the European Commission had miscalculated the fine and went on to reduce the penalty for the France-based international chemical producer from €219.1m to €113.3m. The Commission, in its decision from May 2006, had imposed a 200% increase on Arkema's fine as a deterrent.

GHCL TO SHUT SODA ASH PLANT FOR MAINTENANCE
India's Gujarat Heavy Chemicals Limited (GHCL) will shut its 850,000 tonne/year soda ash unit located along the coastline of Saurashtra in Gujarat in September for scheduled maintenance, a company source said. The turnaround will take 10-15 days, according to the source. GHCL usually operates the plant at around 85-90% and its production is evenly divided between light and dense soda ash, the source added.

By: Joseph Chang
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