Week in brief

31 October 2011 00:00 [Source: ICB]

AMERICAS

EXXONMOBIL PUTS HDPE CUSTOMERS ON ALLOCATION
US polyethylene (PE) producer ExxonMobil told customers it will begin allocating sales of its high molecular weight high density polyethylene (HDPE) products produced at its Mont Belvieu plastics plant in Texas, US, sources said. The customer allocation is a result of "unexpected operational difficulties" according to a copy of a customer letter obtained by ICIS. "We are currently assessing the full impact to our polyethylene supply capability, but have determined it is necessary to allocate quantities of product," the letter states. "The quantity of each product that will be allocated to you is still being determined and will be communicated to you as soon as possible." ExxonMobil has a 240,000 tonne/year capacity HDPE unit at its Mont Belvieu facility, according to ICIS data.

DUPONT Q3 PROFIT SURGES, Q4 DESTOCKING EXPECTED
US-based DuPont's third-quarter net income increased by 23% year on year to $452m (€325m) on the back of higher prices and sales volumes. Sales in the quarter rose by 32% year on year to $9.2bn. DuPont said it experienced demand growth for its agricultural products and that further expansion into food ingredient and enzyme markets offset destocking in photovoltaics and specialty polymers. Based on the strong performance, the company raised its 2011 earnings per share guidance to a range of $3.97-$4.05/share, the lower end being raised from previous guidance of $3.90. However, it expects slowing global growth and some destocking in the fourth quarter.

DUPONT SEES RECOVERY, CHINA SOFT LANDING
US-based DuPont sees a slow recovery continuing in North America, despite high unemployment and weak consumer confidence, CEO Ellen Kullman said on the company's third-quarter conference call. "While there are issues of unemployment and weak consumer confidence, there are also some positive signs, such as rising retail and automotive sales," she said. Kullman remains positive on Asia. "We expect a soft landing in China, with GDP growth [in 2012] around 8.0%," she said. Meanwhile, expectations for Europe are mixed. Overall, the recovery in Europe is slow, with parts of the region "in or near recession," she said, noting the exception of Germany, which witnessed a strong export-led recovery.

CELANESE CEO HINTS AT NEW ACETIC ACID PLANT
US-based chemical firm Celanese's CEO hinted that the company is considering building a new acetic acid plant, although he offered no specifics. In a third-quarter earnings conference call that focused frequently on acetic acid, CEO David Weidman said there had been no new plants built since 2008 or early 2009. "At some point you shouldn't be surprised if we announced a new acetic acid plant that was economically attractive relative to debottlenecking or any other option that we had," he said at the end of the call.

LYONDELLBASELL RESTARTS TEXAS CRACKERS
Netherlands-based LyondellBasell has restarted its Channelview crackers in Texas, US, that went down on October 21 as a result of power outage, market sources said last Wednesday. The company has two crackers at the site with a combined 1.75m tonnes/year of ethylene capacity. A spokesperson declined to comment on the restart.

PETROBRAS, PETROPERU MULL PETCHEM COMPLEX
Brazil-based Petrobras and Peru-based Petroperu are considering the development of a petrochemical complex in the city of Ilo in southern Peru. The companies did not say what products the complex would produce. The companies are also considering supplying natural gas to southern Peru through the Gasoduto Sul-Andino pipeline. A working group to be established by the two companies will study the projects. The plans were announced after the presidents of the two companies met at Petrobras headquarters in Rio de Janeiro, Brazil.

SHERWIN-WILLIAMS Q3 NET INCOME UP BY 2.6%
US-based paints and coatings firm Sherwin-Williams' third-quarter net income rose by 2.6% year on year to $179.9m (€129.5m) on 14,4% higher sales of $2.48bn. Sales rose on selling price increases, acquisitions and strong organic growth. "We are encouraged by our improving sales results across most domestic architectural segments generated by our Paint Stores group in the quarter," said CEO Christopher Connor. "Our operating segments continue to control costs and implement price increases in an effort to keep pace with rising raw material costs." Connor said that for the fourth quarter of 2011, he expects sales to increase 6-10% year on year.

CELANESE Q3 NET EARNINGS UP 15% AS SALES RISE 20%
US-based chemical company Celanese's third-quarter net earnings grew 15% year on year to $167m (€120m) on 20% higher sales of $1.81bn, primarily driven by higher pricing across all operating segments and favorable currency impacts. The company increased its 2011 earnings per share guidance by $0.10/share, to $4.67/share. "For the remainder of the year, we expect to see year-over-year earnings growth and typical fourth-quarter seasonality. The temporarily expanded third-quarter margins in acetyls should moderate to more normal levels in the fourth quarter of 2011," said CEO David Weidman.

POLYONE Q3 NET SOARS
US-based plastics compounder PolyOne's third-quarter net income soared to $21.6m (€15.6m) from $3.6m in the same period last year, as sales grew by 8% to $735.8m. "I am pleased that we expanded year-over-year earnings per share despite a number of headwinds," CEO Stephen Newlin said. "During the third quarter, we observed slower global economic growth, a weaker euro, increased competitive pressure in our Performance Products and Solutions segment, and higher taxes."

US CONSUMER CONFIDENCE FALLS IN OCTOBER
US consumer confidence fell in October to levels not seen since the recession, according to results of a key survey issued last Tuesday, with consumers increasingly worried about business conditions, jobs and incomes. The Conference Board said that its monthly survey of consumers showed a sharp decline in October from September, with the consumer confidence index (CCI) falling to 39.8 versus last month's measure of 46.4 - a 14% drop. "Consumer confidence is now back to levels last seen during the 2008-2009 recession," said Lynn Franco, director of the board's consumer research center.

US NEW HOME SALES UP BY 5.7% IN SEPTEMBER
US sales of new single-family homes rose by 5.7% in September, the Commerce Department said last Wednesday, ending a four-month run of declining performance. In its monthly report, the department said that these sales were at a seasonally adjusted annual pace of 313,000, up from the upwardly revised August rate of 296,000. At 313,000, the September pace of new-home sales is at its highest since April this year, when the seasonally adjusted annual rate was 316,000 units. However, the department noted that September's new-home sales were slightly below the pace seen in September last year. New-home sales have struggled for more than a year to hold near, at, or slightly above the 300,000 mark.

CONOCOPHILLIPS' Q3 CHEM EARNINGS RISE BY 49%
US energy producer ConocoPhillips' third-quarter chemical segment earnings rose 49% year on year to $197m (€142m), primarily because of higher ethylene margins. Third-quarter ethylene industry cash margins more than doubled to 23.3 cents/lb, compared with 11.2 cents/lb in the year-ago period. ConocoPhillips' 2011 second-quarter chemical earnings were $199m, on ethylene industry cash margins of 26.9 cents/lb. The company participates in the petrochemical market through its 50% stake in Chevron Phillips Chemical.

ARCHWAY SALES HIRES PETERSON AS SALES REP
US-based chemical distributor Archway Sales has hired Kip Peterson as a technical sales representative for the Northeast region. Kip has over 12 years of experience in sales and will be responsible for growing sales in southern New England and eastern New York state. Archway serves the CASE, polyurethane, graphic arts and Consumer Care markets east of the Rocky Mountains.

EUROPE

INEOS Q3 EBITDA DOWN BY 20% ON SOFT DEMAND
Switzerland-headquartered INEOS's third-quarter earnings before interest, tax, depreciation and amortization (EBITDA) fell by 20% year on year to €371m ($515m), partly because of a softening in demand from the weakening economy. INEOS also noted that results reflected its recent divestiture of 50% of its European refining business to PetroChina. "Global economic and political turbulence has created hesitancy in many markets, leading to a softening in demand in a number of sectors towards the end of the third quarter," INEOS said.

BERNSTEIN: AKZONOBEL SLOWLY TURNING A CORNER
Dutch specialty chemical producer AkzoNobel is "slowly turning a corner" on some key issues global investment research firm Bernstein Research said. "AkzoNobel's paints and coatings businesses have managed raw materials inflation before and can do it again. Specialty chemicals will continue to be a steady contributor to earnings," Bernstein said. Although raw material cost inflation is still an issue in the third quarter of 2011, it is now stabilizing sequentially, said Bernstein. On October 20, AkzoNobel announced a plan to deliver €500m ($700m) in earnings before interest, tax, depreciation and amortization (EBITDA) improvements by 2014. €200m is expected to be delivered in 2012. "If successful, this program could increase 2012 adjusted earnings per share by another 16% to €4.38 and increase EBITDA margins to 13.5%," Bernstein said.

STYROLUTION DECLARES FM FOR ABS AND SAN GRADES
Germany-based styrenics producer Styrolution has declared force majeure for certain high-heat and high-end grades of acrylonitrile-butadiene-styrene (ABS) and styrene acrylonitrile (SAN), including Luran and Terluran HH, after a fire occurred at its plant in Ludwigshafen, Germany, on October 23, a company source said. It is uncertain when the facility will be fully operational again, as the INEOS and BASF joint venture is currently investigating the cause of the fire and working on repairs, the source said. The facility has ABS production capacity of 80,000 tonnes/year, according to ICIS data.

BASF SIGNALS SLOWER GROWTH IN Q4
German chemical giant BASF expects slower growth in the fourth quarter and has a cautious outlook as turbulence in the international capital markets leads to fears for economic development. CEO Kurt Bock said that compared with the first half of the year, third-quarter growth slowed as market uncertainty forced customers to reduce inventories and partially delay orders in expectation of possible falling prices. Adjusted third-quarter operating profits rose 6% year on year to about €2bn ($2.8bn) on 12% higher sales of €17.6bn. Volumes in almost all segments were flat versus the year-ago period.

ASIA

LG CHEM TO START ACRYLIC ACID TEST RUNS IN 2012
South Korea's LG Chem is planning to start test runs at its new 160,000 tonne/year crude acrylic acid (AA) plant in Yeosu in June 2012, a company source said. The company is expected to start producing on-spec crude AA at the unit by July 2012. In addition, LG Chem will build a glacial acrylic acid (GAA) plant, a butyl-A and a super absorbent polymer plant at the same site. A source familiar with the project said capacities of the plants will be 120,000 tonnes/year, 30,000 tonnes/year and 70,000 tonnes/year of GAA, butyl-A and super absorbent polymers, respectively.

JILIN PETROCHEMICAL TO RESTART ACN LINE
China's Jilin Petrochemical, a subsidiary of PetroChina, is planning to restart one of its two 106,000 tonne/year acrylonitrile (ACN) lines at Jilin on October 31, a source close to the firm said. The producer shut the line on October 8.

YANKUANG CATHAY TO SHUT ACETIC ACID PLANT IN OCT
China's Yankuang Cathay Coal Chemicals is scheduled to shut its 600,000 tonne/year acetic acid plant at Tengzhou city in Shandong province on October 28 for maintenance, a source close to the company said. "The plant may be shut for around 10 to 15 days for maintenance," the source said.

JAPAN CHEMICAL EXPORTS DROP IN SEPTEMBER
Japan's chemical exports dropped by 1.3% year on year to yen (Y) 542.7bn ($7.1bn) in September as the country's overseas shipments of plastics fell, said the country's Ministry of Finance (MOF). The exports of plastic materials fell by 7.7% year on year to Y176.9bn in September as volumes shipped abroad dropped by 10.2% to 513,775 tonnes. Japan's overseas shipments of organic chemicals rose by 2.5% year on year to Y147.9bn.

KOREA PETCHEM EXPORTS GROW 31% IN SEPTEMBER
South Korea's petrochemical exports in September grew 30.9% year on year to $3.8bn (€2.7bn), thanks to a weak won and crude oil-led spikes in product prices, analysts said. Strong crude oil futures boosted the prices of the country's chemical and refined products, according to Hong Chanyang, a petrochemical industry analyst at Korea-based investment bank Shinhan Investment. Exporters also benefited from the depreciation of the won, as the South Korean currency tumbled by more than 9 % against the US dollar in September, Hong said. Exports of ethylene surged by 39% year on year to 67,067 tonnes in September, while overseas shipments of propylene jumped 91% to 93,016 tonnes, according to the Korea International Trade Association (KITA).

HUAFENG COAL CHEMICAL STARTS UP METHANOL
China's Huafeng Coal Chemical started up its 60,000 tonne/year coke oven gas-based methanol plant on October 20, a source close to the company said. The company invested yuan 190m ($29.8m) in the plant, which is located at Shuangyashan city in Heilongjiang province. Construction of the plant started in May 2010. The plant is the first methanol facility to use coke oven gas as a feedstock in Shuangyashan, the source said.

TOSOH TO BUILD ETHYLENE AMINE PLANT AT NANYO
Japanese chemical producer Tosoh plans to build a 10,000 tonne/year ethylene amine (EA) plant at Nanyo in Yamaguchi prefecture to respond to the growth in global demand, a company source said. The new plant will boost Tosoh's EA capacity to 89,000 tonnes/year. Construction is expected to be completed in March 2012 and the company hopes to start up the unit soon after, the source said. The producer started up a 26,000 tonne/year facility at the same site in March 2011. The size of the global EA market is about 390,000 tonnes/year and demand is growing at 4%/year, said the source.

LUOYANG PETROCHEMICAL RESTARTS PP UNIT
China's Luoyang Petrochemical, a Sinopec subsidiary, restarted its 80,000 tonne/year polypropylene (PP) plant at Henan province last Monday after completing maintenance at the unit, a company source said. The plant, which produces mainly fiber-grade PP and occasionally makes film-grade PP, was shut on August 30.

NAN YA PLASTICS RAMPS UP ITS BDO NO. 2 UNIT
Taiwan's Nan Ya Plastics has ramped up its 60,000 tonne/year butanediol (BDO) No. 2 line at Mailiao to full capacity, a company source said. The company restarted the BDO line on October 9 and started adding butadiene (BD) feedstock to the plant on October 11 or 12, the source added. Nan Ya Plastics has been offering spot BDO cargoes since October 17, the source said.

MIDDLE EAST & AFRICA

REFINERY GROUNDBREAKING AT PETKIM SUPERSITE
The groundbreaking ceremony has taken place for the construction of a refinery in Turkey to provide feedstock for the planned $5bn (€3.6bn) Petkim Peninsula petrochemical "supersite," according to the Azerbaijani−Turkish joint venture SOCAR & Turcas Energy. Turkish Prime Minister Recep Tayyip Erdogan and Azerbaijan President Ilham Aliyev attended the ceremony at the Aliaga site of SOCAR and Turcas Energy-owned petrochemical producer Petkim, near Izmir, on Turkey's western Aegean coast.

BRENNTAG, AECI VENTURE ACQUIRES WK CROXTON
Germany-based distributor Brenntag and South African industrial conglomerate AECI's joint venture Crest Chemicals has completed the acquisition of South African caustic soda importer WK Croxton. In addition, Crest Chemicals acquired 64% of the outstanding shares of Protank, a storage company in the port of Durban, South Africa for bulk liquid products. The deals were completed for a total investment of €12.4m ($17.2m). Croxton operates from Pietermaritzburg in Kwazulu Natal, managing the supply chain for four main products: caustic soda, magnesium oxide, sodium chlorate, and sodium hypochlorite. Protank provides the infrastructure to service Croxton's chemical receiving, storing and shipping needs.

CORRECTION
In the article on China caustic soda on page 34 of the October 10 issue, we incorrectly indicated that China membrane process chlor-alkali production was being shut down. In fact, mercury-cell process units were shut down.

By: Joseph Chang
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