16 January 2012 00:00 [Source: ICB]
pic caption: Cannon: new at Valence Group
pic credit: The Valance Group
US DEMAND FOR PETCHEMS DECLINES AS YEAR ENDS
US demand for petrochemicals waned in the last few months of 2011, mainly because of a seasonal slowdown, said the US Federal Reserve (Fed). The Fed's periodical Beige Book report on the US economy noted that the producers of plastics and plastic feedstocks said prices stabilized after sharp declines in October and November. Chlorine demand was also weak, partly as a result of sluggish global growth, the report said. "Contacts in the refining industry noted weak domestic consumption of refined products, especially gasoline, although export markets were still strong," the report said. "Inventories were said to be near expectations for this time of year."
ENERGY DEPT SEES HIGHER OIL, LOWER NATGAS
The US Department of Energy expects the global price of crude oil to average $100/bbl this year, about $5/bbl higher than the 2011 average, while US natural gas prices are expected to plummet by 50 cents/MMBtu in 2012 from last year to an average of $3.53/MMBtu. In its monthly short-term energy outlook for January, the department's Energy Information Administration (EIA) also said it expects the benchmark US crude, West Texas Intermediate (WTI), to climb further in 2013 to reach $106/bbl by the fourth quarter of that year. The EIA expects natural gas prices to rebound in 2013 to an average of $4.14/MMBtu.
SENATOR SEEKS BLOCK TO HYDRAULIC FRACTURING
A New York state senator plans to introduce a bill to re-establish the state's moratorium on hydraulic fracturing until June 2013. New York is home to part of the Marcellus Shale, which contains rich natural gas with large amounts of ethane, an important feedstock for the petrochemical industry. New York had a moratorium on hydraulic fracturing in place that was lifted in the summer of 2011. Spokeswoman Emily DeSantis with the Department of Environmental Conservation said additional staff would be needed to oversee high-volume hydraulic fracturing operations in New York. The department estimates that it would need an additional 140 staff in 2012, with another 200 by the fifth year of hydraulic fracturing operations.
ENTERPRISE ALLOWS EXTRA DEMAND ON ATEX PIPELINE
US-based midstream energy firm Enterprise Products will accommodate additional shipper demand on its planned Appalachia-to-Texas ethane pipeline, or "ATEX Express". Enterprise had announced on January 3 it would move forward with the 1,230-mile (1,980km) pipeline project after receiving sufficient long-term transportation commitments from shippers. However, since then Enterprise has received additional inquiries for capacity on ATEX, which will ship ethane from the Marcellus/Utica shale gas areas of Pennsylvania, West Virginia and Ohio to petrochemical plants on the US Gulf coast. Enterprise decided to conduct "a two-week supplemental open commitment period" to accommodate additional shipper demand.
PENNSYLVANIA COURTS SHELL TO BUILD CRACKER
US legislators from Pennsylvania are aggressively lobbying Shell to build an ethane cracker in their state. Houston-based Shell announced plans to build an ethane cracker in Ohio, West Virginia or Pennsylvania, with the location expected to be revealed this month. US Senator Bob Casey (Democrat-Pennsylvania) wrote a letter to Mark Quartermain - president of Shell Energy North America - encouraging investment. Currently, there is no infrastructure in the northeast to process ethane extracted from the rich natural gas in the Marcellus Shale.
ATLAS METHANOL PLANT IN TRINIDAD TURNAROUND
Methanex's Atlas methanol plant in Trinidad has shut for a 37-day turnaround, according to a company source. The 1.7m tonne/year plant began maintenance on January 6, said Deborah Samaru, spokeswoman for Methanex in Trinidad and Tobago. Methanex's other methanol plant in Trinidad, the 850,000 tonne/year Titan plant, continues to operate, Samaru said.
CPCHEM REPORTS FLARING AT CRACKER AFTER STORM
US-based Chevron Phillips Chemical reported flaring from its Sweeny complex in Texas, citing a lighting strike in a public filing. "A lightning strike caused a power outage affecting areas at the Sweeny Complex, resulting in unauthorized emissions from ethylene unit 33," the company said in the filling with the Texas Commission on Environmental Quality. It was unclear if the 907,000 tonne/year cracker was still off line. Chevron Phillips has two other crackers in Sweeny, with a combined 971,000 tonnes/year of capacity.
VALENCE GROUP EXPANDS ITS M&A PRACTICE
Investment bank The Valence Group has expanded its chemicals mergers and acquisitions practice with the appointment of Maureen Cannon. Having worked in the US, Europe, Asia and Latin America, Cannon has over 30 years of experience, with positions at producer Eastman Chemical, consultancy McKinsey and US agrochemicals and biotechnology major Monsanto.
BRAZIL TO INVEST $53.8BN IN BIOFUELS THROUGH 2020
A Brazilian ministry approved an energy development plan that calls for investments in the biofuels industry of Brazilian reais 97bn ($53bn, €41bn). Those investments will take place through 2020 and will cover plants as well as pipelines, ports and other infrastructure, according to the country's 10-year energy plan, called the Plano Decenal de Expansao de Energia. According to the plan, domestic and international demand for ethanol could increase to 73.3bn liters (19.4bn gal) in 2020 from 27.6bn liters in 2010.
EUROPE CHEMS FACING A YEAR OF TWO HALVES
The European chemical sector is expected to experience a challenging start to the year, with a fall in chemical prices, destocking and the possibility of a recession in 2012 pointing to a discouraging short-term outlook, analysts at global bank HSBC said. However, HSBC added that the chances of a turnaround in the industry's prospects in the second half of the year could improve, as low stock levels in several end-markets might lead to some restocking once economic uncertainty clears, particularly in Europe. "Our near-term outlook for the European chemicals sector remains cautious, but it looks like 2012 might turn into a year of two halves," the analysts said. Falling chemical prices and lead indicators do not bode well for the next couple of months, it added.
FITCH KEEPS MOL'S RATING, DESPITE DOWNGRADE
US-based credit ratings agency Fitch Ratings has not cut MOL's credit rating, despite its downgrade of Hungary, citing the improved 2010/2011 credit metrics of the Hungarian oil, gas and petrochemical group. On January 6, Fitch became the third agency to cut the credit rating of the country to junk status, blaming the Hungarian government's "unorthodox policies" as it dropped the country's foreign currency Issuer Default Rating (IDR) to BB+ from BBB-, with a Negative Outlook. However, Fitch said it had retained MOL's long-term foreign and local currency IDRs of BBB- with Stable Outlooks, reflecting MOL's "improved credit metrics in 2010-2011 and the company's plan to fully finance [capital expenditures] from operating cash flow in 2012-2013."
DOW CORNING COMPLETES DISTRIBUTION CENTER
US-based silica materials producer Dow Corning has completed construction of a 32,000-square meter European distribution center in Feluy, Belgium. The new facility, which took 15 months to complete and doubles the size of the current warehouse, will allow the company to support future growth in Europe, it said. "The new European distribution center uses optimized workflows and will significantly improve materials delivery capabilities, quality and customer service performance," said Europe, Middle East and Africa president Klaus Hoffmann.
UBS DOWNGRADES AKZONOBEL SHARE RATING
Swiss investment bank UBS has downgraded AkzoNobel's share rating to "sell" from "neutral" on lower expected earnings. UBS trimmed the Dutch specialty chemicals maker's expected earnings for 2011, 2012 and 2013 on slower demand and higher raw material costs. In October 2011, AkzoNobel reported a third-quarter net profit of €149m ($191m), down by 37% year on year, as higher cost of sales and other expenses offset its growth in sales. At the same time, the company announced a major performance improvement plan to deliver €500m in earnings before interest, tax, depreciation and amortisation (EBITDA) in 2014.
LINCOLN APPOINTS SCHNEIDER HEAD OF CHEMS
Global investment bank Lincoln International has appointed Bernd Schneider as director and head of chemicals. Based in Frankfurt, Germany, Schneider plans to leverage his large industry network and long-standing deal experience in the chemical and related industries. Schneider joined Lincoln International as a chemical industry specialist. Previously, he held several leadership roles in the specialty chemicals industry and headed the Chemicals Competence Center for global consultancy PricewaterhouseCoopers. He has been involved in more than 30 transactions in the chemical sector.
AZERBAIJAN TO BUILD CHEM PARK IN EX-SOVIET CITY
Petrochemical production will be the main focus of a modern industrial park to be built in Sumgayit, the Azerbaijani city that was once the centre of the former Soviet Union's chemical industry. The Azeri government had transferred a 168-hectare (415-acre) plot, formerly used by state chemical producer Azerkimya, to the ministry for the creation of the Sumgayit Chemical Industrial Park, located near the Caspian Sea, it added. An initial Azerbaijani manats 2m ($2.5m, €2m) was allocated by the president from the state budget's Presidential Reserve Fund to the ministry for development of the park.
INVESTORS SEEK $4BN FOR NEW TURKEY REFINERY
Investors backing the construction of a refinery in Turkey that is to produce naphtha feedstock for the planned Petkim Peninsula petrochemical "supersite" are seeking up to $4bn (€3bn) in long-term loans to help finance the $5bn installation, said the Socar Turcas Aegean Refinery joint venture - 81.5% owned by the State Oil Company of Azerbaijan (SOCAR). It instructed Unicredit to explore potential loan arrangements with export-import credit insurance agencies of countries that are home to companies that may tender to build the refinery. Apart from the loans, the remaining cost of the refinery, to be known as the Star Refinery, would be financed by SOCAR and the other joint venture partner, Turkish fuel retailer Turcas Petrol, with an equity injection of $1bn. The groundbreaking ceremony for the 214,000 bbl/day Star Refinery was held last October in Aliaga, near Izmir, on western Turkey's Aegean coast.
BROTHERTON APPOINTS MACKENZIE AS ITS MD
UK-based chemical producer Brotherton Esseco has appointed Chris McKenzie as managing director. He takes charge of the company after 26 years at INEOS (formerly ICI) - headquartered in Switzerland - with his most recent position business manager for its sulfur chemicals business. Since merging with Italy-based parent Esseco in 2008, Brotherton has doubled annual sales to almost £30m ($46m, €36m). The company is a supplier to the surface-coating, food, oil exploration, pharmaceutical and transport industries.
CHINA '11 CHEM REVENUE UP 31%; SLOWER '12
China is estimated to have generated yuan (CNY) 11,200bn ($1,775bn) in petrochemical revenue in 2011, representing a 31% increase from the previous year, the China Petroleum and Chemical Industry Federation (CPCIF) said. More than half of the full-year revenue, or CNY6,580bn, came from the chemical industry, a 32% increase from 2010. The 2011 estimates took into account a projected 8% growth in China's natural gas output of 102bn cubic metres (cbm) and a flat crude oil output of 203m tonnes. For 2012, CPCIF said it is projecting a slower revenue growth for the industry at 20-25% to CNY 13,000bn. China's crude oil output this year is expected to rise 1.5% to 200m tonnes, while its natural gas production is projected to grow 11% to 113bn cbm.
ODFJELL ENTERS CHINA TERMINAL JOINT VENTURE
Norwegian shipping firm Odfjell, through its subsidiary Odfjell Terminals Asia, has agreed to enter into a joint venture to develop a terminal and marine facilities for bulk liquid chemicals, petroleum products and gases in the Nangang industrial zone, northern China. Odfjell will take part in the project with Tianjin Economic-Technology Development Area (TEDA) via the latter's subsidiary Nangang Port Company. The initial total investment in the project is estimated to be about $160m (€125m) and the first phase will start operations during the second quarter of 2014, the company said. Odfjell will hold 49% ownership and control the operational management in the joint venture company, which will be named Odfjell Terminals Nangang (Tianjin), it added.
SUMITOMO TO EXIT CHIBA SM VENTURE IN APRIL
Japan's Sumitomo Chemical has decided to exit from joint venture Chiba Styrene Monomer (Chiba SM) in late April. Chiba SM is a 40:60 joint venture between Sumitomo Chemical and Denki Kagaku Kogyo Kabushiki Kaisha (Denka). Sumitomo plans to sell Denka all of its shares in Chiba SM on April 29, according to the producers. The sale price was not disclosed. Sumitomo currently offtakes 40% of the 270,000 tonnes/year of styrene monomer (SM) produced by Chiba SM. "We have been selling the SM we offtake from Chiba SM through Nihon Oxirane, but the business environment of SM has become very difficult in recent years due to sluggish demand in the US and Europe and decreased competitiveness due to capacity expansions in China and the Middle East," Sumitomo Chemical said.
ZHUZHOU CHEMICAL, CHINA DATANG CHEMICAL PARK
China Datang (CDT) and Zhuzhou Chemical Industry Group have signed an agreement with the Huitong government to build a chemical industrial park at Huitong in Hunan province. The park will include a 200,000 tonne/year caustic soda plant, a 15,000 tonne/year polysilicon plant, an 80,000 tonne/year polyvinyl chloride (PVC) resin plant and a 100,000 tonne/year titanium dioxide (TiO2) plant. Construction is expected to take three years.
XIN YUE ECH PLANT COULD RESTART IN LATE JAN
China's Xin Yue Chemicals' 95,000 tonne/year epichlorohydrin (ECH) plant in Shandong province, which has been closed down since the second half of October 2010, could be restarted later this month, according to a company source. The plant has three units: one with a 35,000 tonne/year capacity and two with combined production capacity of 60,000 tonnes/year. The facility was shut down because of poor production margins and some mechanical problems. However, market conditions are expected to improve towards February, after China's week-long Lunar New Year holiday, and this could allow Xin Yue to resume output.
DUTCH AKZONOBEL BUYS BOXING OLEOCHEMICALS
Dutch specialty chemicals producer AkzoNobel has completed its acquisition of China-based nitrile amines and derivatives producer Boxing Oleochemicals. Financial details of the acquisition - first announced in July last year - were not disclosed. Boxing Oleochemicals' activities will be integrated into AkzoNobel's surface chemistry unit, AkzoNobel said in a statement. AkzoNobel aims to generate $3bn (€2.34bn) in revenues from China by 2015, from €1.3bn in 2010.
JILIN PETROCHEMICAL TO SHUT CRACKER IN Q2
China's Jilin Petrochemical will most likely shut its 850,000 tonne/year naphtha cracker and derivative plants in Jilin for annual maintenance in the second quarter of the year. It will last for about one month. The derivative facilities of the cracker include a 275,000 tonne/year linear low density polyethylene (LLDPE) unit and a 300,000 tonne/year high density polyethylene (HDPE) unit.
KUMHO P&B TO DOUBLE MIBK CAPACITY IN 2012
South Korea's Kumho P&B Chemicals plans to double its methyl isobutyl ketone (MIBK) capacity to 60,000 tonnes/year in October 2012. Expansion of the company's existing 30,000 tonne/year MIBK plant in Yeosu will be carried out during annual maintenance planned for October. The source was unable to give an exact date or length of the plant shutdown because the details have yet to be finalized. "We usually carry out annual maintenance in spring, but it will be [in] autumn this year," the source said. "Our annual maintenance typically lasts three weeks, and it will be longer than three weeks this year because of the expansion."
SAMSUNG TOTAL TO BUILD NEW DAESAN PLANTS
South Korean producer Samsung Total Petrochemicals said that it will build a new aromatics complex and an ethylene vinyl acetate (EVA) plant at Daesan, with an investment commitment of won 2,000bn ($1.7bn). Construction of the No. 2 aromatics plant, which will have an annual production capacity of about 1m tonnes of paraxylene (PX) and 420,000 tonnes of benzene, is expected to be completed by September 2014. The new 240,000 tonne/year EVA plant, meanwhile, should be ready for operation by April 2014, it added. PX is the raw material for polyester production, while benzene is used in petrochemical products such as styrene. "With the completion of the No. 2 aromatics plant and the planned upgrade of the existing PX capacity, the company's total annual PX capacity will reach 1.76m tonnes by 2014," Samsung Total said.
MIDDLE EAST & AFRICA
IRANIAN-FLAGGED CAUSTIC SODA SHIP HIJACKED
An Iranian-flagged chemical tanker carrying 30,000 tonnes of caustic soda appears to be the first ship successfully hijacked by Somali pirates in 2012, according to an African news agency. The unnamed vessel was sailing through the Gulf of Aden to a destination in North Africa, according to the Somalia Report. In late December, pirates hijacked a chemical tanker carrying 15,750 tonnes of caustic soda. The Italian vessel Enrico Ievoli was en route to the Mediterranean Sea from Fujairah, United Arab Emirates, according to a shipping firm. The Gulf of Aden is the gateway to the Suez Canal and considered by the International Maritime Bureau to be the most dangerous body of water in the world because of pirates.
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