This week's world news

11 October 2011 09:41  [Source: ICB]

EUROPE

STYRENICS JOINT VENTURE STYROLUTION OPERATING
Styrolution, a styrenics joint venture between BASF and INEOS, began operating independently on 1 October. The €6.4bn ($8.4bn) turnover company combines styrene monomer (SM) and styrenics polymer assets of the two companies - but not their expandable polystyrene (EPS) businesses. "From day one, Styrolution will be a global leader in its industry with an excellent competitive position," Martin Brudermuller, BASF board director responsible for plastics, said. "We are convinced that the decision to combine our styrenics activities in a joint venture is the right one," he added.

SHELL LIKELY TO RAISE PETCHEM CAPACITIES
Dutch giant Shell is likely to raise petrochemical capacities during the next few years by stretching and creeping current olefins capacities, Brian Davis, vice-president global base chemicals, said. "There is a lot of activity on investing in the core," he said on the sidelines of the EPCA meeting. The company is undertaking a number of incremental projects to debottleneck existing capacities and add new feedstock streams. Shell expects to get slightly more output from its 260,000 tonne/year nameplate capacity 2A cracker in Wesseling, Germany, Davis said.

EUROPE CHEMICALS SUFFER LOW GROWTH
The European chemical sector could be entering a period of low growth or possibly a recession in 2012, global bank HSBC said. It added that chemical prices could fall by 4% in 2012, with margins returning to mid-cycle levels. However, despite a bleak outlook for 2012, the bank said the sector is currently in a better position than in 2008-2009. "We do not expect another massive destocking as occurred after Lehman's collapse in 2008, when volumes fell by about 20% year on year in the first half of 2009," the bank said.

EUROPE LOGISTICS POSITIVE - BERTSCHI
Despite the current gloom which surrounds many economies across the globe, the outlook is positive for the European logistics sector, with untapped markets posing many opportunities in the next five years, the CEO and president of Swiss logistics company Bertschi said at the EPCA meeting. Eastern Europe, Turkey, Russia, and the ex-CIS countries are expected to see strong growth in the coming years, offering huge potential for European players, Hans Joerg Bertschi said. "We expect reasonable business development in 2012 at levels which are comparable to this year."

URALMETHANOLGROUP WINS APPROVAL
UralMethanolGroup has been given regulatory approval to build a 600,000 tonne/year methanol production facility in Russia. The oversight agency of the Russian Regional Development Ministry has approved the methanol project. The regulator concluded that the project met mandatory safety requirements applicable to chemical, petrochemical, gas processing and refinery production facilities, including environmental safety criteria, the company said. Uralkhimplast, based at Nizhny Tagil in the Sverdlovsk region in the Urals, is one of Russia's major producers of synthetic resins and plastic products.

SUTTONS GROUP SEEKS MIDDLE EAST EXPANSION
UK-headquartered logistics company Suttons Group has signed a memorandum of understanding for a joint venture in Saudi Arabia with a local partner, as it looks to grow its presence in the Middle East. "It's going to be important for us with all the development happening in Saudi Arabia," said Andrew Palmer, Suttons group managing director, at the EPCA meeting. He said Suttons Group had been looking at the move into Saudi Arabia for 18 months, with the joint venture process having been underway since May.

BAYER EXPECTS JAPAN SALES TO HIT €2.4BN
Germany-headquartered Bayer expects its sales from Japan to reach about €2.4bn ($3.2bn) by 2015, reflecting an annual average growth of about 6%. In 2010, its full-year sales from Japan totalled around €2bn. Pharmaceuticals account for the largest share of Bayer's business in Japan. "MaterialScience in Japan is also developing favorably in view of rising demand for high-performance construction and insulating mat­erials, especially following the earthquake, and the resumption of growth in automotive production," Bayer said.

SWISS CLARIANT SELLS POLYSILAZANE COATINGS
Switzerland-based specialty chemicals company Clariant has sold its polysilazane coatings business, including the production site, to India's AZ Electronic Materials for about €4m ($5.3m). Under the terms of the agreement, Clariant will retain the exclusive right to develop and use polysilazanes for composite materials and ceramics.

SWITZERLAND'S SIKA ACQUIRES SPANISH COPSA
Swiss-based chemicals company Sika has fully acquired Spanish construction chemicals maker Comercial de Preresa (Copsa) for an undisclosed fee. Sika previously acquired a 34% stake in Copsa in 1999. The deal will enable Sika to strengthen its position and penetration in the Iberian market, a Sika statement said. Copsa operates three production sites in Spain and has annual sales of about Swiss francs (Swfr) 17m ($18.5m).

PKN ORLEN TO BOOK CURRENCY LOSSES
Polish oil and chemical group PKN Orlen expects to book third-quarter losses of "several hundred million" zlotych from a revaluation of euro-denominated loans. The losses stemmed from a considerable weakening of the Polish currency against the euro during the quarter, Orlen chief financial officer and vice-president of the management board Slawomir Jedrzejczyk said. The zloty has lost 11% of its value against the euro since June.

EUROPE GDP GROWTH TO SLOW TO 1.8% IN 2012
European GDP growth will slow from 2.3% in 2011 to 1.8% in 2012, according to the International Monetary Fund's latest regional economic outlook for Europe. Inflation is likely to decline from 4.2% in 2011 to 3.1% in 2012, amid "remaining economic slack and commodity prices that retreat from their peaks in early 2011", the report said. Downside risks to growth are significant and the projections are predicated on the assumption that strong action is taken to contain the current crisis, it added.

 

AMERICAS

NPRA IN NAME CHANGE TO REFLECT ECONOMY ROLE
The National Petrochemical & Refiners Association (NPRA) is to change its name in January to the American Fuel & Petrochemical Manufacturers to better reflect the group's role in the US economy. NPRA president Charles Drevna said the name change puts emphasis on the fact the nation's refiners and petrochemical producers are "American and manufacturers." "The new name better describes who we are, what we do and how we serve the American people," Drevna added.

NEW US NORTHEAST NATGAS CAUSES SHIFT
Midstream companies are building and reconfiguring infrastructure to meet the new demands of growing natural-gas production in the US northeast, company executives said at a summit. "Supply all came from Texas," said Mike Stice, CEO of Oklahoma City-headquartered Chesapeake Midstream Partners. "Now the supply sector is the east coast," he added. "The whole equation has to change so pipelines taking natural gas from the Gulf coast to the east coast could be stranded or reconfigured. What we're seeing is more of it reconfigured." Stice said he does not see any of those pipelines coming on stream for natural gas in the near-term.

US EASTMAN TO RAISE PLASTICISER CAPACITY
US-based specialty chemicals producer Eastman Chemical plans to add 6,000 tonnes/year of capacity to its non-phthalate plasticizers plant in Kingsport, Tennessee. The announcement comes less than a month after Eastman bought a plant in Texas to produce its non-phthalate plasticizer, Eastman 168, and less than a year after completing a debottlenecking process in Kingsport in February. The additional capacity is scheduled to be on line by the end of the year.

DOW STUDIES WORLD-SCALE EPDM PLANT
US-based specialty chemicals company Dow Chemical will conduct a feasibility study for the construction of a world-scale metallocene ethylene-propylene-diene monomer (EPDM) plant. The study will identify potential partners and locations for the facility. According to Dow Chemical, the automotive industry, which is a key market for EPDM, is projected to grow by 5% a year, with growth rates of approximately 10% a year in China and South Asia.

BID PROCESS UNDER WAY FOR DOW, SAUDI ARAMCO JV
Dow Chemical says about half the capital investment in Sadara Chemical, the company's massive joint venture with Saudi Aramco, has been put under contract, with an additional 20% out for bid. It expects all bids for the $20bn (€15.2bn) project - in Al-Jubail, Saudi Arabia - to be out by the end of the year. The complex will comprise 26 chemical plants that will produce more than 3m tonnes/year of performance plastics and chemicals.

CHINA'S KEYUAN SUSPENDED FROM NASDAQ
China's Keyuan Petrochemicals will be suspended from the US NASDAQ stock market with effect from 6 October this year, following the company's "determination to withdraw" its securities from the listing, NASDAQ said in a statement. "As a result, the company's shares may be eligible to resume trading in the over-the-counter market," the statement said. Trading in Keyuan's stock on the NASDAQ has been subject to a trading halt since 1 April this year, after the company failed to complete and publish a report on its full-year financial results for 2010.

LATIN AMERICAN PLASTICS HAVE ROOM TO GROW
Latin American plastic markets have much room to grow, a regional trade association spokesperson said on the sidelines of the 17th annual PLASTIMAGEN International Plastics Exposition and Conference in Mexico. Caterina Costa de Garcia, president of the Latin American Association of the Plastics Industry, said per capita consumption of plastics in Mexico stands at 55 kg/year, in comparison with 150-200 kg/year in developed countries. In other Latin American countries, consumption can be as low as 16-18 kg/year.

PRICES RISE FOR RECYCLED ENGINEERING PLASTICS
Prices for reprocessed engineering plastics are high because of tight supply and strong demand, a US-based recycler said last week. As plastics transformers increase in-house recycling, less resin is available for global trading, H Sattler Plastics said. Expensive virgin material lent additional price support for recycled resins earlier in 2011, it added. However, the company is projecting lower prices for recycled plastics into the fourth quarter of 2011 and in early 2012, because virgin resin prices are weakening.

PROPYLENE STOCKS RISE 5% DESPITE REFINERIES
US propylene inventories rose by 5% in the last week of September despite slightly lower refinery operating rates, the Energy Information Administration said. Propylene stockpiles stood at 3.354m bbl in the week ending 30 September, up from 3.196m bbl a week earlier. The figure is the highest reported by the government since 3.365m bbl in the week ending 2 July 2010. The increase in inventories last week came despite a small drop in operating rates at US refineries.

TOM CASEY TAKES OVER AS CEO OF US TRONOX
Tronox board chairman Tom Casey has taken over as CEO at the US pigment producer. Tronox said Casey succeeds Dennis Wanlass, who stepped down from his position and from the company's board of directors. However, Wanless will stay with the company to help close a recent deal under which Tronox will acquire the mineral sands operation of South Africa-based miner Exxaro.

LANXESS TO BUILD PLANTS AT PORTO FELIZ, BRAZIL
Germany's LANXESS plans to build two plants at Porto Feliz in Brazil's Sao Paulo state to strengthen its position in the Brazilian automotive sector. The plants - for engineering plastics and rubber additives - are part of a €30m ($40m) investment in Brazil that includes spending on a project to use bio-based raw materials to produce synthetic rubber. The 20,000 tonnes/year engineering plastics plant is scheduled to start up in 2013. The 2,000 tonnes/year rubber additives plant is planned for startup in 2012.

CHEMTURA SETS UP R&D CENTER IN WEST VIRGINIA
US-based specialty chemicals company Chemtura has set up a new research and development (R&D) center for polymer modifiers in Morgantown, West Virginia, US. Chemtura said that the facility will become the company's "center of excellence" for R&D of new polymer modifiers, as well as for improving existing products and formulations to meet customers' needs.

 

ASIA

SHELL LOOKS TO SOURCE FEEDSTOCK FOR CRACKER
Shell is looking to source feedstock to bring its Pulau Bukom cracker in Singapore back to full operating rates, Brian Davis, the head of the energy company's base chemicals business, said at the EPCA meeting. Industry sources had earlier indicated that the mixed-feed cracker was running at a reduced rate of 50-60% after the Shell refinery fire on the island. Shell was forced to shut its 500,000 bbl/day refinery following a blaze on 28 September. The fire was put out on the evening of 29 September.

ASIA NAPHTHA TO STAGGER ON WEAKENING MARGINS
Asia's naphtha prices are likely to be in the doldrums because of receding demand for key downstream petrochemicals, falling margins on products and continued volatility in crude values, traders said last week. Naphtha prices in Asia closed on Wednesday October 5 at $860-861/tonne (€645-646/tonne) CFR (cost & freight) Japan. This is the weakest level since 27 June, with the naphtha crack spread versus November Brent crude futures narrowing to a two-month low of $97.60/tonne, as assessed by ICIS.

SOLVAY COMMISSIONS WORLD'S LARGEST UNIT
Brussels-headquartered Solvay has commissioned a 330,000 tonne/year hydrogen peroxide joint-venture plant at Map Ta Phut in Thailand. The plant, which is a joint venture between Solvay and US group Dow Chemical, is the biggest hydrogen peroxide facility in the world, Solvay said. The plant will primarily serve as a captive raw material source for the production of propylene oxide (PO) by Dow Chemical and Thai-based Siam Cement Group.

MITSUI CHEMICALS BUYS 11.89% OF IHARABRAS
Japanese producer Mitsui Chemicals has acquired an 11.89% stake in Brazilian agrochemicals company Iharabras for an undisclosed fee. The transaction was completed on 26 September. The share purchase will help Mitsui Chemicals expand into the strategically important Brazilian market, a Mitsui statement said.

PVC MALAYSIA TO SHUT PLANT AS DEMAND SLOWS
PVC Malaysia was considering shutting its 150,000 tonne/year polyvinyl chloride (PVC) plant at Kerteh in Terrenganu state last week, a source close to the company said. The producer is facing mounting inventory pressure on the back of lackluster PVC demand, the source added. The PVC unit is currently operating at low rates of 20-30%. If the shutdown plan pushes through, the facility will be kept off line until the market situation improves. PVC Malaysia is a subsidiary of Malaysia's state-owned company, PETRONAS.

MEXICO PVC PRICES FALL ON CURRENCY, SOFT US
Mexico's polyvinyl chloride (PVC) prices are softer in October, driven by a weakening US market and depreciating Mexican peso, industry sources said last week. The depreciation of the local currency against the US dollar in the past two months has dampened downstream demand for finished goods as sales are transacted in devalued Mexican pesos. As a result, the demand for PVC resins has been declining since August, although a large volume of transactions is finalised in US dollars at the resins level in Mexico.

 

MIDDLE EAST & AFRICA

ABU DHABI'S IPIC RAISES STAKE IN AUSTRIA'S OMV
Abu Dhabi's International Petroleum Investment Co (IPIC) has raised its stake in Austria's energy and petrochemicals major OMV by 4.5 percentage points to 24.9%. In a regulatory filing, OMV said that IPIC now holds almost 81.5m OMV shares. IPIC's portfolio companies include, among others, Canada's NOVA Chemicals and Spain's energy and petrochemicals company CEPSA, as well as a stake in Austria-based petrochemicals and plastics firm Borealis, which is partly-owned by OMV.

ISRAEL'S ICL ACQUIRES US COATINGS COMPANY HALOX
Fertilizer and specialty chemicals company Israel Chemicals Limited (ICL) has acquired Halox, a producer of phosphate-based, corrosion-resistant products for the paints and coatings industry, for an undisclosed fee. Halox was a division of US-based specialty chemicals producer Hammond Group. The acquisition closed on 1 October. "This acquisition will extend our technical phosphate specialties offerings for the paints and coatings sector, while expanding our operations in the Americas," said James Moffatt, president of ICL Performance Products Americas.

QATAR SOLAR TO BUILD POLYSILICON PLANT
Doha-headquartered Qatar Solar Technologies (QSTec) is planning to build an 8,000 tonne/year polysilicon plant at Ras Laffan in northeast Qatar, according to a local news report. The producer will start operating the $1bn (€740m) plant in the second half of 2013. Spot polysilicon prices were assessed at $42-44/tonne FOB (free on board) NE Asia (Northeast Asia) in the week ended 28 September, down by $3-4/tonne from a week earlier amid current soft demand, as assessed by ICIS.


By: Will Beacham
+44 20 8652 3214



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