This week's world news

19 September 2011 00:00  [Source: ICB]

AMERICAS
SASOL WEIGHS FEASIBILITY OF US GAS-TO-LIQUIDS
South African energy and chemicals firm Sasol plans to study the feasibility of a gas-to-liquids (GTL) project in Calcasieu Parish, Louisiana. Sasol's feasibility study will, over the next 18 months, consider two GTL project options for Calcasieu Parish one with output capacity of 2m tonnes/year and the other with 4m tonnes/year. If realized, the project will be the first of its kind in the US, Sasol said.

US PRODUCER PHILLIPS SUMIKA EXITS PP BUSINESS
US polypropylene (PP) producer Phillips Sumika will permanently shut down its PP units, joint-venture partner Chevron Phillips Chemical said last week. Chevron Phillips Chemical, which operated the company as a joint-venture partnership with Sumika Polymers America, did not specify when the units will shut down, but said the partners had reached an agreement for the "orderly wind-up of PSPC operations." The move is not a surprise to many in the industry.

GLOBAL ETHYLENE DEMAND TO OUTSTRIP SUPPLY
World demand for ethylene will outstrip supply, causing 2012 operating rates to increase even with 2% GDP growth, US-based Dow Chemical said last week. If GDP growth is less than 2%, older naphtha crackers in Asia and Europe will be the most vulnerable. In the US, Dow stands to benefit because it can rely on the country's cheaper ethane-based feedstock. In particular, the US should have excess ethane because of the development of its shale gas reserves, Dow said. Futures markets have already priced in the excess ethane supply.

CYBER SECURITY ISSUES GROW WITH CONTROL TECH
New automated plant control systems can lead to greater chemical output efficiencies, but can also increase the risk of cyber attacks if they come without adequate security bulwarks, speakers at an event said. Speaking at Cheminnovations 2011 in Houston, Texas, US, last week, Peter Zornio, chief strategic officer for global plant automation provider Emerson Process Management, said new technologies have led to "previously impossible applications" in automated control systems. But the use of nonproprietary computer technology can pose risks, he added.

MEXICO CYDSA TO INVEST IN NEW CHLOR-ALKALI
Mexico's Cydsa will invest in a new chlor-alkali plant and in the expansion of its salt plant. It also has another chlor-alkali plant in its long-range plans. The first chlor-alkali plant will require an investment with Cydsa subsidiary Industria Quimica del Istmo of $75m (€55m) and will be located in Garcia, sources said.

HUNTSMAN RESTRUCTURES TEXTILES IN SWITZERLAND
Huntsman will further restructure its textile chemicals businesses in Switzerland as the strong Swiss franc has made production in that country unattractive, a senior executive at the US-based chemicals major said. In addition to the currency effect - with "at least $50m [€37m] of annual headwind" for Huntsman - the textile chemicals business is faced with sluggish demand in some segments, said chief financial officer Kimo Esplin. "We would expect this business to get worse before it gets better," Esplin told analysts at a webcast investor conference in New York.

NATURAL GAS IDEAL FOR SYNTHETIC GASOLINE
The abundance and low cost of natural gas in the US makes it the ideal feedstock for the production of synthetic gasoline, the CEO of US-based synthetic fuel producer Accelergy said. Other feedstocks are cost-prohibitive or in short supply, said Tim Vail. For biomass to account for just 10% of the country's energy needs, all the arable land in the US will have to be converted to fuel production, Vail said. Natural gas, on the other hand, is abundant and cheap.

US-BASED CHEMTURA EXPECTS IMPROVED Q3
Chemtura expects to record a year-on-year improvement in third-quarter profits and sales, despite volatile financial markets, according to the US-based specialty chemical company's CEO, Craig Rogerson. Based on its performance in July and August and the outlook for September, Chemtura expects a year-on-year improvement in its sales and profitability in the third quarter, which ends on 30 September, Rogerson said. However, with the economic uncertainty, it is difficult to provide "a clear view of the fourth quarter."

REGULATOR PROPOSES EXXONMOBIL PENALTY
US major ExxonMobil said it plans to meet a US workplace regulator that proposed $126,600 (€92,400) in penalties at the firm's refinery in Baton Rouge, Louisiana. The Occupational Safety and Health Administration (OSHA) proposed the penalties after citing the refinery for 22 violations, which it alleged exposed workers to possible fires and explosions. OSHA proposed the penalties after a March 14 refinery inspection.

US FORMALDEHYDE DEMAND WEAKENS
The decline of the US housing market has weakened demand for formaldehyde, an executive from Momentive Specialty Chemicals said. The lack of demand for formaldehyde, which is a key derivative of methanol, has prompted further consolidation of North American formaldehyde assets, said Dale Plante, the president of Momentive's forest products division. While a weak housing market dampens formaldehyde demand, Plante said regulation is the top threat to the industry.

METHANOL, AMMONIA WILL BOOST NATURAL GAS
Long-term US demand growth for natural gas will be supported, in part, by the restart of ammonia and methanol capacity, a consultant said. Additionally, many petrochemical companies have lightened their feedstocks, which will also bolster US demand for natural gas, Ed Kelly, vice president of North American gas and power for UK consultancy Wood Mackenzie, said during the 9th Annual Methanol Forum.

US BIOAMBER CHOSEN TO BUILD BIOSUCCINIC
US-based renewable chemicals company BioAmber has been selected as a partner to build a 65,000 tonne/year bio-based succinic acid plant in Thailand. It will be built next to PTT MCC Biochem's polybutylene succinate (PBS) plant at Map Ta Phut, in Rayonthe, Thailand. BioAmber will supply PTT with succinic acid, the principal feedstock for the production of PBS, along with 1,4-butanediol (BDO), on an exclusive basis. Construction will begin in 2012 and both plants are expected to come on stream in 2014.

SHALE OIL, ASIAN DEMAND CAUSES HUGE SPREAD
The spread between West Texas Intermediate (WTI) and Brent crude has widened to more than $20/bbl because of Asian demand for the latter, shale oil plays in the US, and refineries using heavier grades of crude, a US consultant said last week. For years, WTI crude stayed about $11.50/bbl below Brent, said Jim Peters, head of downstream consulting Americas for UK-based Wood Mackenzie Consulting. "That differential is now almost $25/bbl," he said.

EUROPE
EUROPE PE SELLERS' HOPES OF SEPT HIKES FADE
Polyethylene (PE) producers in Europe are beginning to lose hope of achieving higher prices in September, as demand remains lackluster, but they do expect to be able to roll prices over by the end of the month, market sources said last week. "The outlook for the months to come is not rosy," said one major producer, which also hinted that production cutbacks will have to be implemented if the European market is not to be oversupplied. The level of demand in the market concerns producers most this month. September started slowly and continues to be cautious, but volumes are picking up.

INVESTORS SEEK RESILIENT CHEMICAL COMPANIES
Analysts at US-based consultancy Bernstein Research say that investors are looking for segments in the chemicals industry that are relatively resilient in case the uncertain economic environment deteriorates further. "The segments that were 'strong during deflation' or 'defensive' are typically characterized by good market structure and include, for example, paints and coatings, adhesives, and industrial gases," Bernstein said. The analysts added that when considering pricing power and volume resilience, it found that margins for commodity chemicals such as petrochemicals and fertilizers fared the worst during input cost deflation and volume declines.

SOLVAY TO SQUEEZE OUT RHODIA STAKEHOLDERS
Belgian chemical producer Solvay has decided to "squeeze out" remaining stakeholders that did not tender shares or convertible bonds as part of its takeover of Rhodia. Solvay said respective Rhodia shareholders will receive a cash payment of €31.60/share, corresponding to the price Solvay paid for shares that were tendered. On August 31, Solvay announced that Rhodia shareholders and bondholders had overwhelmingly ­accepted its €3.4bn ($4.6bn) offer from April for the French specialties firm.

IEA CUTS 2011 OIL DEMAND FORECAST ON ECONOMY
The International Energy Agency (IEA) has revised down its global oil demand forecast for 2011 by 200,000 bbl/day to 89.3m bbl/day on reduced economic growth expectations, particularly in North America and Europe. The Paris-headquartered international agency said that amid recent negative economic developments, it has lowered its global GDP growth assumptions for 2011 and 2012 to 3.9% and 4.2%, respectively, down from 4.2% and 4.4%.

DSM SELLS NUTRITION UNIT TO VIOCARE
Dutch chemicals and pharmaceuticals company DSM has sold its personalized nutrition business to US-based health solutions firm Viocare for an undisclosed fee. DSM will remain involved in the business as a minority shareholder in Viocare. The company said in September last year that all activities of DSM Personalized Nutrition were to be partnered, exited or transferred to other parts of the firm.

VOPAK, ENAGAS ACQUIRE MEXICO LNG
Dutch logistics company Vopak and Spanish firm Enagas have completed the acquisition of a liquefied natural gas (LNG) import and regasification terminal at Altamira in Mexico for $408m (€297.8m). Vopak and Enagas formed a 60:40 joint-venture firm for the acquisition. The deal was announced on 2 June this year. Anglo-Dutch oil major Shell had a 50% share in the Mexican LNG terminal, while the balance was equally held by French oil major Total and Japanese firm Mitsui.

PRIVATE MANAGERS PLANNED FOR OLTCHIM
Private-sector managers could be deployed at strategic Romanian state companies, including troubled chemical producer Oltchim, the country's trade and economic ministry commented. Consultancies have started filing bids to find managers for the companies before privatization under a plan agreed by the government and International Monetary Fund. An invitation for bids in the sell-off of the state's 55% stake in Oltchim is to be issued in the first half of 2012, said the privatisation timetable.

BRENT CRUDE TO HIT $130/BBL IN 12 MONTHS
Brent crude prices may hit $130/bbl (€95/bbl) in the next 12 months, pressured by tight supply, even as demand in developed countries is likely to be weak, an analyst at investment bank Goldman Sachs said last week. "While [the] demand condition is at the forefront now, supply-side issues are also important," said Allison Nathan, a senior commodities economist at Goldman Sachs. Fears of another round of global recession, the eurozone debt crisis and the weak US economy have been hounding equities and commodities markets. But Nathan said: "We need a more recessionary event to meaningfully derail this commodities view [of continued increase in oil prices]."

SLOVNAFT TO INVEST IN HUNGARY OIL LINK
Slovakian refining and petrochemical company Slovnaft is set to invest €80m ($108m) in upgrading an oil pipeline link to Hungary that will end its dependency on crude oil sourced from Russia. The upgrade will enable Slovnaft to process oil flowing from the Adria pipeline that runs from Croatia's Adriatic coast to Hungary. Up to 6m tonne/year of Adria crude could be transported to Slovnaft's refinery in Bratislava, a figure that nearly exactly matched the unit's processing capacity, the company commented.

SIBUR RENAMES EUROPEAN TRADING ARM
Russian petrochemical holding SIBUR has renamed its Austria-based, European trading arm to SIBUR International from CITCO Waren-Handelsgesellschaft. The name change was implemented "to facilitate further integration into the Sibur system," the company comfirmed in a statement. SIBUR International will continue acting as SIBUR's exports division, supplying the company's products to Europe and Asia. It will continue to honour all contractual obligations.

ASIA
SECCO CRACKER MAY STAY SHUT FOR TWO WEEKS
China's Shanghai SECCO Petrochemical could keep its 1.2m tonne/year naphtha cracker and several downstream plants shut for around two weeks following a blast at an olefins pipeline late on September 8, market sources said. "The cracker and downstream units are expected to be shut for two weeks, but it will ultimately depend on approval from the local government authorities to restart the plants," one source maintained in Mandarin. Company officials were not available for comment (see page 16).

CHINA ETHYLENE CAPACITY 'TO REACH 27M TONNES'
China is on track to expand its ethylene capacity to 27m tonnes/year by 2015, said the China Petroleum and Chemical Industry Federation (CPCIF). Chinese producers are expanding their ethylene capacities, while the government is planning to boost the development of its methanol-to-olefins (MTO) industry to increase the country's self-sufficiency of ethylene supply, according CPCIF. China's self-sufficiency ratio is expected to increase from 48% to 70% by 2015, the statement added

SUMITOMO CHEMICAL TO EXPAND EVA CAPACITY
Japanese chemical producer Sumitomo Chemical is planning to raise its ethylene vinyl acetate (EVA) capacity in Chiba to 27,000 tonnes/year to meet the increasing domestic demand for solar cell panels, a company source said last week. The producer will increase its EVA production by debottlenecking its facility, which produces 15,000 tonnes/year of EVA and 172,000 tonnes/year of low density polyethylene (LDPE).

ORIENTAL ENERGY PLANS PROPANE-TO-PROPYLENE
China's Oriental Energy plans to build a 1.2m tonne/year propane dehydrogenation (PDH) plant to produce propylene at Zhangjiagang in Jiangsu province. Oriental Energy will form a joint venture with Jiangsu Huachang Chemical and Feixiang Chemical to operate the yuan (CNY) 4bn ($626m) plant. The plant will be built in two phases, each with a capacity of 600,000 tonnes/year. Construction is expected to start in the first half of 2012 and the plant is target to start operating by early 2015.

THAILAND TO BOOST ETHANOL CAPACITY
Thailand's overall capacity of ethanol is set to increase to 2.93m liters/day by the end of 2012, from 2.22m liters/day currently, with seven new plants scheduled to come on stream between now and the end of 2012, an industry executive commented last week. Impress Ethanol is expected to start up a 200,000 litres/day ethanol unit in the fourth quarter of this year, while Double A Ethanol will bring on stream a 250,000 liter/day ethanol plant during the same period, commented Pipat Suttiwisedsak, manager at Singapore ethanol group Ekarat Pattana.

FORMOSA PETROCHEMICAL NAMES NEW CHAIRMAN
Taiwanese petrochemical major Formosa Petrochemical Corp (FPCC) has appointed Chen Bao Lang as its new chairman with immediate effect. Chen, the former president of another Taiwanese petrochemical firm, CPC Corp, will assume the role that was vacated by Wilfred Wang, who resigned in late July this year. Wang and former FPCC president, Su Chi-yi, stepped down from their respective offices to take responsibility for the series of incidents that hit the company's complex in Mailiao.

SHAANXI WEIHE STARTS UP METHANOL PLANT
China's Shaanxi Weihe Coal Chemical Group has started up its new 400,000 tonne/year methanol plant, a source close to the company confirmed. The plant is located at Weinan city in the province of Shaanxi. "Construction was completed in the first quarter of this year. It started a test run in April," the source maintained.

CHINA'S FREP TO COMPLETE CRACKER EXPANSION
China's Fujian Refining & Petrochemical (FREP) is planning to complete the expansion of its 240,000 bbl/day refinery and 800,000 tonne/year naphtha cracker at Quanzhou in Fujian by late 2013, a company source said. The refinery and cracker would have a capacity of 280,000 bbl/day and 1.1m tonnes/year respectively after debottlenecking works that are expected to begin in the first half of 2012, said the source.

MIDDLE EAST & AFRICA
SAUDI POLYMERS TO START UP HDPE, PP UNITS BY 2011
Saudi Polymers is planning to start up its high density polyethylene (HDPE) and polypropylene (PP) units at Al-Jubail by the end of 2011, a source close to the company said. The petrochemical site will house two HDPE facilities with a capacity of 550,000 tonnes/year each and a 400,000 tonne/year PP unit, the source said. The initial plan was to start up the polyolefins facilities in September.

MIDDLE EAST, AFRICA ISOCYANATE PRICES FALL
Spot prices of isocyanates in the Middle East and Africa moved down last week in line with weaker China and European markets. Prices are expected to decline further in the Middle East in the next few weeks, however, Africa prices should stabilize because of upcoming seasonal downstream demand. Poor market fundamentals in Chinese and European markets have led some producers from these regions to seek outlets in the Middle East and Africa to relieve their high inventory levels, regional market participants commented.

CORRECTION
The Europe methyl methacrylate (MMA) chemical profile in the 12-18 September 2011 issue of ICIS Chemical Business incorrectly referred to tertiary butanol alcohol (TBA). The chemical is in fact known as tertiary butyl alcohol, or tertiary butanol. We regret the error.

 
By: Will Beacham
+44 20 8652 3214

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