This week's world news

23 January 2012 00:00  [Source: ICB]

AMERICAS

US GEORGIA GULF REJECTS UNSOLICITED TAKEOVER BID
Georgia Gulf's board of directors has rejected an unsolicited takeover bid by fellow US-based Westlake Chemical, as it is "financially inadequate" and not in the best interest of its shareholders. On January 13, Westlake made a $30/share (€23/share) bid valued at more than $1bn (€780m) to acquire all outstanding shares of Georgia Gulf. "After careful consideration, Georgia Gulf's board determined that Westlake's proposal is financially inadequate and not in the best interest of Georgia Gulf stockholders," said Paul Carrico, Georgia Gulf's president and CEO (see news focus, page 10).

ECONOMIC TRENDS FAVOR US CHEMICAL SECTOR
The US chemical sector is poised to benefit from favorable macroeconomic conditions in 2012, an economist said. "2012 will be a slightly stronger year than 2011 from an economic standpoint. Industrial production is beginning to heat up, and this is consistent with leading indicators and on-the-ground information," said Alan Beaulieu, president of US-based economics research and consulting firm ITR. Beaulieu spoke at a meeting of the Societe de Chimie Industrielle in New York. The economist sees US industrial production rising 4.5% in 2012, driving growth in the chemical sector.

METHANEX MAY MOVE SECOND PLANT FROM CHILE
Methanol producer Methanex may move a second plant from Chile to the US Gulf, a New York stock analyst said last week. Methanex said earlier it would move one of its four methanol plants in the South American country to a site in southern Lousiana by mid-2014. But Charles Neivert, managing director at Dahlman Rose & Co., said he has been told that the site could easily contain two methanol units. Neivert said it would cost $300-$400m (€237-316m) to move one unit but that two plants could be moved for $500-$600m.

DEMAND, BRENT, RULES THREATEN US REFINERIES
More US refineries will likely shut down because of falling US fuel demand, higher prices for Brent versus other grades of crude and increasingly stringent and costly environmental regulations, an analyst says. "Demand in emerging markets has overtaken demand in the US [for fuel]," said PFGBest analyst Phil Flynn. "Demand for production is really not making financial sense right now."

PLASTICS THEFT A GROWING CONCERN IN THE US
Stolen plastic has become the focus of a multimillion dollar criminal enterprise, sources said last week. Law enforcement officials and private businesses all over the US have become increasingly concerned with the theft of plastic goods, such as beverage crates, shelves, pallets and other items. There are two primary elements to the crime. First, the plastic is stolen from businesses, either by scavengers or, in some cases, an employee and some partners. Then it is transported to illegal grinding operations, typically hidden in unmarked warehouses - or even in someone's backyard.

US HESS TO PERMANENTLY CLOSE JV REFINERY
US energy firm Hess and partner Petroleos de Venezuela plan to permanently close their joint-venture refinery in the US Virgin Islands amid difficult market conditions. Hess said that following the closure, HOVENSA would operate as an oil storage terminal. HOVENSA had explored all available options to keep the refinery operating, but severe financial losses left it with no other choice, Hess said.

US PPG COMPLETES DEAL FOR COLOMBIA COATINGS
US-based chemicals, paint and coatings firm PPG Industries has completed the acquisition of the coatings business of Colombia's Colpisa Colombiana de Pinturas, including Colpisa Ecuador. PPG announced the planned acquisition in August last year. As part of the acquisition, PPG took over Colpisa's coatings manufacturing facility in Itagui, Colombia, which employs about 315 people.

EUROPE

NON-OECD TO DRIVE ENERGY DEMAND, GDP - BP
Nations that are not part of the OECD (Organisation for Economic Co-operation and Development) will account for 96% of energy demand growth between 2010 and 2030, with demand from industry accounting for the greatest share, BP said. Population and income remain the key drivers of energy demand, the oil giant said in its Energy Outlook 2030. "Global GDP growth is likely to accelerate, driven by low- and medium-income economies. We project GDP growth to rise over the next 20 years to 3.7%/year, from 3.2%/year between 1990 and 2010."

IEA CUTS 2012 GLOBAL OIL DEMAND FORECAST
Crude oil demand growth will slow to closer to 1m bbl/day in 2012, with a continued decline in demand among the OECD nations, the Paris-based International Energy Agency (IEA) says. It cut its 2012 global oil demand growth forecast to 1.1m bbl/day from an earlier estimate of 1.3m bbl/day because of the bearish economic climate and early indications of lower-than-expected oil demand growth in the fourth quarter of 2011.

IPIC MAY SEEK MAJORITY STAKE IN AUSTRIA'S OMV
Analysts are examining whether Abu Dhabi's International Petroleum Investment Company (IPIC) is seeking to acquire majority-control of Austrian oil, gas and petrochemical group OMV, an investment bank says. A report in an Austrian daily, Die Presse, said IPIC - currently a 24.9% shareholder in OMV - may have parked additional OMV shares at numerous funds, awaiting approval from the Austrian economy ministry to increase its stake.

INEOS ANTWERP ETHYLENE TERMINAL READY BY 2013
INEOS's new ethylene terminal in Antwerp, Belgium, is now expected to be in full operation by the start of 2013, Tom Crotty, director of the Switzerland-headquartered producer, said. "It's well on track and in terms of commissioning we're not too far away," said Crotty. "Much of the main heavy construction work is complete and we are now into the more detailed issues around engineering systems and tie-ins [to the pipeline system]." The 1m tonne/year facility has been under construction for around 15 months.

BASF'S GROWTH FORECAST UNDERPINS TDI EXPANSION
BASF's competitive cost structure and its growth expectations for toluene di-isocyanate (TDI) in eastern Europe, the Middle East and Africa are underpinning its new capacity plans at Ludwigshafen in Germany (see page 26), a company source said. Research has shown that TDI demand from now until 2020 is likely to grow in Europe, the Middle East and Africa by around 5.5%, driven by emerging markets in the region, the company source said. Demand in the more mature northwest Europe market, however, is likely to be linked to GDP performance, the source added.

IMCD EXPANDS BUSINESS IN INDIA, AUSTRALIA
IMCD Group has acquired India's silicones distributor Mata Polymers and the Australian unit of UK-based Infineum in a move to further strengthen its position in the Asia-Pacific region, the Netherlands-based specialty chemicals distributor said last week. Infineum Australia will be fully integrated into IMCD's Australia business by the end of January this year. UK-based Infineum is a developer, manufacturer and marketer of lubricant additives used primarily in automotive, heavy-duty diesel and marine engines.

RUSSIA STARTS BUILDING NEW PET PLANT
Russian authorities have announced that work has started on the construction of a major import-substitution plant to produce polyethylene terephthalate (PET). The 486,000 tonne/year bottle grade plant will be located in Kabardino-Balkariya. It will supply southern Russia, Sergei Ashinov, CEO of Russian company Etana, which is operating the project, said. The new plant will cost roubles (Rb) 12.3bn ($390m) and is due for completion by 2015.

EVONIK TO INVEST UP TO €100M IN VENTURE CAPITAL
German specialty producer Evonik Industries plans to invest up to €100m ($126.6m) in start-ups and specialist venture capital funds over the medium term. As part of its plans to strengthen its innovation capacity, the group will establish a new organisational unit, Corporate Venturing, within its Innovation Management unit. "Evonik is following an ambitious growth strategy," said Patrik Wohlhauser, a member of Evonik's executive board. Evonik will focus its investments on Europe, the US and Asia, the company said.

GERMANY LOWERS 2012 GDP GROWTH FORECAST
Germany's government has lowered its official GDP growth forecast for 2012 to 0.7% from 1.0% as the eurozone crisis continues to weigh on the country's economy. In 2011, GDP growth in Europe's largest economy was 3.0%, and in 2010 it was 3.7%. Economics minister Philipp Rosler said that after two unusually strong years, Germany's economy remained in a "robust" position. However, because of difficult conditions in external markets, in particular in the eurozone, the government expects a temporary slowdown in growth, he said.

LYONDELLBASELL TO CLOSE GERMANY PP PRODUCTION
The Netherlands-headquartered LyondellBasell says it will shut down two polypropylene (PP) lines at Wesseling, Germany, by mid-2012. The lines have a combined capacity of 90,000 tonnes/year and are among its smallest and oldest units, according to the company. "Some jobs in manufacturing and maintenance will be affected by this announcement," a spokesman said. The company is working with the local works councils and is trying to offer alternative employment to the employees concerned." The site's current capacity is 350,000 tonnes/year, according to the ICIS plants and project database.

ARPECHIM REFINERY SOLD TO STATE, NOT OLTCHIM
Romania's economy ministry says the state will acquire the idled Arpechim refinery from OMV Petrom. Initially, the refinery was going to be acquired by Oltchim, which relies on the complex for feedstock. However, in an agreement with the International Monetary Fund, state officials opted not to allow the current management of Oltchim to go ahead with their planned acquisition of the refinery. Instead, the state will take over the refinery and attempt to find a buyer.

EUROZONE CONSTRUCTION OUTPUT RISES 0.8% IN NOV
Eurozone construction output increased by 0.8% in November 2011 compared with the previous month, while production in the EU rose by 0.4%, according to statistics office Eurostat. Among the member states, month-on-month construction output rose in eleven and fell in Spain and Slovakia (both -0.7%) and Bulgaria (-0.3%). The largest increases were registered in Slovenia (+23.1%), Hungary (+7.4%) and Germany (+4.5%). On a year-on-year basis, output in November 2011 increased by 0.2% in the eurozone and by 0.7% in the EU27.

STANDARD & POOR'S FEARS PETROPLUS DEFAULT
Standard & Poor's (S&P) has again cut its ratings for Petroplus and warned that the Switzerland-based independent refiner could default soon. S&P said Petroplus's deal with lenders from last week was only a "temporary solution." Under that deal, Petroplus secured financing to keep its refineries in the UK and Germany running while shutting down refineries in France, Switzerland and Belgium.

CHLORINE GAS ACCIDENT NEAR COLOGNE INJURES 32
A chemical accident near Cologne, Germany, involving the escape of chlorine gas injured 32 workers last week. Seven of the injured were reported to be in a serious condition, local police said. DOM Sicherheitstechnik, a metal processing firm focused on security and locking systems, said the accident happened at its facility in Bruhl, near Cologne. DOM blamed a chemical supplier. While filling a tank, the supplier accidently mixed a chlorine solution with hydrochloric acid, which led to an escape of chlorine gas, DOM said.

WORKER INJURED AT BASF'S LUDWIGSHAFEN SITE
A BASF worker suffered burns to his face and arms in an accident at the company's petrochemicals hub in Ludwigshafen, Germany. BASF said the accident occurred during cleaning work at a container in the northern part of the site. During the work, a small amount of ethylene caught fire and injured the worker. The worker was hospitalised for further treatment.

SOLVAY APPOINTS JEAN-PIERRE CLAMADIEU AS CEO
Belgium-based Solvay has confirmed the appointment of Jean-Pierre Clamadieu as the company's next CEO. Clamadieu, who is the company's current deputy CEO, will succeed Christian Jourquin, who is scheduled to retire on 10 May, Solvay said. Clamadieu will be proposed for appointment to Solvay's board of directors at the company's annual shareholders meeting on May 8.

ASIA

CHINA'S GDP GROWTH SLOWS TO 8.9% IN Q4 2011
China's GDP growth slowed to 8.9% year on year in the fourth quarter of 2011, down from 9.1% in the previous quarter and the weakest expansion in two and half years, official statistics show. For the full year 2011, the world's second-biggest economy grew by 9.2% year on year to yuan 47,160bn ($7,470bn), data from the National Bureau of Statistics (NBS) show. The growth rate was down from the 10.3% expansion recorded in 2010.

ASIA TIRE MAKERS RESIST BR PRICE HIKES FOR FEB
Major tire makers in Asia, stricken with weak export sales, are putting up a strong resistance to a $300-500/tonne (€234-390/tonne) hike in butadiene rubber prices this week for February and March shipments, industry sources said. BR producers are offering $3,600-3,800/tonne CFR (cost and freight) Asia - up by more than 10% from January levels - citing a continued spike in the cost of feedstock butadiene (BD). "We are not happy with this situation because when the feedstock BD price fell last November, BR producers did not adjust their prices downwards," said an India-based tire maker.

TAIWAN'S CGPC TO START COMMERCIAL OPS AT PVC
Taiwan's China General Plastics Corp (CGPC) plans to start commercial operations at its new 170,000 tonne/year polyvinyl chloride (PVC) plant at Linyuan district, Kaohsiung, in February, a source close to the company said last week. The plant was initially slated to come on stream in January, but this has been delayed as some adjustments were required after test runs at the facility.

HONAM TO START UP YESOU PE, PP IN EARLY APRIL
South Korea's Honam Petrochemical plans to conduct trial production at its new polymer facilities at Yeosu in early April, a company source said. The facilities consist of a 300,000 tonne/year polypropylene (PP) plant and a 250,000 tonne/year high density polyethylene (HDPE) plant, the source said. Honam Petrochemical will have a total capacity of 700,000 tonnes/year of PP and 620,000 tonnes/year of HDPE at Yeosu when the new facilities come on stream, the source said.

SAMSUNG TOTAL CHOOSES HONEYWELL TECH
Samsung Total Petrochemicals has chosen Honeywell subsidiary UOP to provide the technology for the production of petrochemicals, diesel and jet fuel at the company's Daesan complex in South Korea. Once complete, the new aromatics unit will produce 1m tonnes/ year of paraxylene (PX) and 500,000 tonnes/year of benzene. UOP's process technology will be used to produce 2.6m tonnes/year of distillate products, including diesel and jet fuels. The company said that start-up will be in 2014.

ZHEJIANG SATELLITE SIGNS ZHEJIANG JULONG DEAL
China's Zhejiang Satellite Petro Chemical has signed a framework agreement to fully acquire Zhejiang Julong Petrochemical for yuan 137m ($21.7m). Under the agreement signed on 18 January, Zhejiang Julong's propylene resources will help Zhejiang Satellite expand its upstream facilities and accelerate its production processes for acrylic acid (AA) and acrylate esters, Zhejiang Satellite said in a statement.

JAPAN'S PVC DECREASES 24% IN DECEMBER 2011

Japan's polyvinyl chloride (PVC) production fell by 24% to 107,631 tonnes in December 2011 compared with December 2010, official industry statistics show. The fall reflected the decline in domestic shipments and exports, data from the Vinyl Environmental Council (VEC) show. Month on month, the country's PVC production fell by 0.1% in December.

MIDDLE EAST & AFRICA

SABIC 2011 Q4 NET PROFIT FALLS 10% TO $1.40BN
SABIC's fourth-quarter net income fell 10% to Saudi riyals 5.24bn ($1.40bn), driven by a lower pricing environment. Income from operations for the fourth quarter dropped by 5% year on year to SR9.51bn. "The decrease in net income for the quarter is mainly driven by lower pricing environment in global markets for most products, despite an increase in sales volumes," it said.

SABIC SHIPS TO S AFRICA; PE VAT TALKS CONTINUE
Saudi Arabia's SABIC is still negotiating with local authorities in South Africa on VAT (value added tax) payments for polyethylene (PE) imports, an importing distributor says. SABIC suspended PE shipments in November last year over what it claims is the replacement of import duty with VAT. "A resolution is expected towards the end of the month," the South Africa-based distributor said. However, shipments to South Africa have resumed, the source added.

HIJACKED CHEMICAL TANKER RETURNS TO PORT,
A chemical tanker that was hijacked off the coast of Oman in August last year has arrived at an unnamed port after the Somali pirates who were in control of the vessel released the crew late last week, the ship's operators said. "A replacement crew has now taken over the vessel and the outgoing crew will be repatriated after an initial medical check-up and the required post-trauma support," the statement added.

By: Will Beacham
+44 20 8652 3214

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