This week's world news

23 April 2012 00:00  [Source: ICB]

Correction: In the ICIS Chemical Business news in brief headlined "Uncertainty is here to stay - SBR producer" dated April 23-29 2012, please read the headline as "Synthetic rubber industry faces difficult few months - SBR producer" instead of "Uncertainty is here to stay - SBR producer". In the second sentence please read ...two to three months... instead of ...two to three years...and please note amended first sentence to reflect this change. A corrected story follows.

AMERICAS

REPSOL BLASTS YPF GRAB, THREATENS LEGAL ACTION
Repsol YPF, majority owner in YPF, plans full legal action against Argentina to get a fair price for its assets after the seizure of the company's oil and gas production in Argentina. President Cristina Kirchner ousted Spanish owner Repsol YPF to seize control of YPF, the nation's largest crude producer, amid escalating tensions and accusations of a continued decline in oil and gas production and investments in the country. Argentina took over management of YPF with immediate effect, replacing chief executive Sebastian Eskenazi with planning minister Julio De Vido, Kirchner said. The government will also send a bill to Congress to take a 51% stake in YPF, she said.

DOW CHEMICAL TO BUILD TEXAS ETHYLENE PLANT
US chemical producer Dow Chemical will build a new world-scale ethylene plant in Freeport, Texas, which is scheduled to start up in 2017. "Constructing this new ethylene cracker at Dow Texas Operations will create a long-term advantage for our downstream businesses and for our company as a whole, and the benefits will accrue not only to Dow but to the state and national economy," said chairman and CEO Andrew Liveris.

CLIMBING NGL SUPPLIES SPARK US GULF EXPANSION
Natural gas liquids (NGL) production, particularly ethane and propane, is the key to profitable shale drilling and is causing massive supply increases and infrastructure issues, an executive with Enterprise Products Partners says. Demand for NGL is expected to grow through 2015, but that does not take into account construction of ethane crackers after that year, said Enterprise vice president of fundamentals and supply appraisal Tony Chovanec.

GLOBAL ECONOMY TO GROW BUT EUROPE RISKS LOOM
Global economic growth this year is expected to slow from 2011 and improve in 2013, but risks of a renewed crisis in Europe continue to loom large, according to the International Monetary Fund (IMF). World economic output was projected to grow by 3.5% in 2012 - down from close to 4% in 2011 - but should recover to 4.1% in 2013. In Europe, real GDP was projected to contract in the first half of 2012 but then start recovering, except in Spain, Italy, Greece and Portugal.

INEOS TO BOOST CAPABILITY FOR FURTHER EXPANSION
INEOS Olefins & Polymers USA will have the ability to expand capacity at its Chocolate Bayou facility in Texas beyond its planned 115,000 tonne/year debottlenecking with the installation of a new ethylene furnace, a company official has confirmed. On 10 April, US engineering firm KBR announced it will design and construct an ethylene furnace that would add 465m lb/year (211,000 tonnes/year) of furnace production capacity to INEOS's Chocolate Bayou complex.

OBAMA CALLS FOR ACTION AGAINST CRUDE OIL PRICES
President Barack Obama has called for increased federal monitoring and control of crude oil trading and pricing, saying that Middle East tensions and energy market speculators are responsible for continuing high US retail gasoline prices. Obama said he would ask Congress for an additional $52m (€39.5m) to hire six times more surveillance and enforcement staff at the Commodity Futures Trading Commission (CFTC) and boost the commission's computer technology to keep better track of energy futures trading.

ESTIMATES INCREASED FOR DOW, LYONDELLBASELL
US-based investment bank Wells Fargo has increased its earnings estimates for Dow Chemical, LyondellBasell and Westlake as a result of strong olefins spreads. "Ethylene [C2] spreads widened significantly in [the first quarter], owing to ethane oversupply as a number of crackers were offline, as well as resilience in [ethylene] pricing," Wells Fargo said. "Thus far this year, spot margins are up roughly $0.30/lb, approaching $0.50/lb, surpassing levels seen in the October 1988 heyday."

US PANEL FINDS CANCER LINK FOR CHEMICALS
A US science panel has released a study that showed a probable link between exposure to perfluorooctanoic acid (C8) used by a DuPont plant in West Virginia and testicular and kidney cancer.

The C8 Science Panel revealed its findings in a study that was part of a 2005 class action settlement over the release of C8 from DuPont's Washington Works plant in Wood County, West Virginia. The panel examined data from all registered cancers supplied by the Ohio and West Virginia Health Departments. DuPont has committed to no longer using, making or buying C8 by 2015.

FREE-TRADE AGREEMENT TO DRIVE US-COLOMBIA PVC
The free-trade agreement between the US and Colombia, which will come into effect 15 May, will probably start to drive significant volumes of polyvinyl chloride (PVC) imports into Colombia in three years' time, but not immediately, sources in Colombia say. The current import duty on US PVC into Colombia stands at 10% and will decrease every year until it is zero in seven years, according to the agreement. By the time the current duty on PVC is reduced to about 5.5%, US PVC exports to Colombia may substantially increase, according to the sources.

SARNIA CRACKER COULD LIMIT SHELL'S US GROWTH
The lack of infrastructure for Shell's potential northeast US cracker provides an opportunity for NOVA Chemicals to expand its Corunna ethylene facility and displace Shell's ethane supply, a consultant says. "If I were NOVA's CEO, I would not want Shell in my backyard," said Peter Fasullo of consulting company En*Vantage. US-based Shell chose Monaca, Pennsylvania, as a site for its potential world-scale petrochemical complex, which would use ethane from the Marcellus shale in the US northeast.

EUROPE

GERMANY'S HELM TO EXIT POLYMERS AT END OF JUNE
Helm AG will stop dealing in the distribution of polymers from the end of June as this no longer meets its business objectives and is a risk to the firm's portfolio, according to a source at the German company. "We are stepping out of PET [polyethylene terephthalate]. We will stop as of the end of June with the whole polymer activity PP [polypropylene], PVC [polyvinyl chloride] and PE [polyethylene]," the source said. The company will concentrate on its other liquid products such as methanol, monoethylene glycol (MEG), acetic acid, styrene, propylene and vinyl acetate monomer (VAM).

EVONIK PLANT BLAST LEAVES US AUTOS SHORT
The plant blast at Evonik Industries's cyclododecatriene (CDT) plant in Marl, Germany, has taken out an estimated 40% of the world's nylon 12 capacity, leaving automotive customers scrambling to find alternatives, sources said last week. The US automobile industry held an emergency meeting last week to discuss the shortage of nylon 12, also known as polyamide 12 (PA 12), media reports said. The shortage followed the 31 March explosion at the Evonik plant, which makes the feedstock for the resin.

POLAND'S CIECH IN TALKS OVER ZACHEM SUBSIDIARY
Poland's Ciech Group is in talks with investors interested in acquiring its Zachem toluene di-isocyanate (TDI), epichlorohydrin (ECH) and epoxy resins business. Following Zachem's loss-making 2011, Ciech's management decided it would be difficult to fit the firm into Ciech's strategy for the coming years. Ciech, Europe's second-largest producer of soda ash, is continuing with a major restructuring that has already seen it sell, or earmark for sale, several assets. Zachem is Poland's sole, and Europe's fifth-biggest, TDI producer.

INEOS Q1 EBITDA DOWN YEAR ON YEAR, UP ON Q4
INEOS's first-quarter EBITDA was down 19.4% year on year at €465m ($612m) but up sharply from the previous quarter, following a significant improvement in trading, the Switzerland-registered group says. It reported comparable earnings before interest, tax, depreciation and amortisation (EBITDA) for the fourth quarter of 2011 of €190m, and €577m for the year-earlier period. Margin pressure in European olefins and polymers (O&P) eased as the quarter progressed but the business was hit hard by high naphtha costs at the start of the year and an unscheduled turnaround.

AKZONOBEL Q1 PROFIT FALLS ON HIGH MATERIALS
Dutch chemicals producer AkzoNobel had a 44.5% year-on-year decline in its first-quarter 2012 net profit to €71m ($93m) amid high raw material costs. The company's revenue rose by 6% to €3.97bn in the January-March period of 2012, mainly driven by pricing actions to offset higher raw material costs. Earnings before interest, tax, depreciation and amortisation slipped by 3% to €423m, due to weaker end-markets and cost inflation. CEO Hans Wijers said: "Our global margin management efforts are also proving successful as we continue to mitigate adverse higher raw material costs."

HUNTSMAN TO EXPAND EUROPE PU CATALYSTS
US-based producer Huntsman plans to expand its capacity of specialty amines used as polyurethane (PU) catalysts in Hungary and Spain. The expansion at plants in Petfurdo, Hungary, and Barcelona, Spain, will increase PU catalysts capacity by 25%. Huntsman president of performance products Stu Monteith said demand has begun to fill production capabilities at the company's two main production sites in Petfurdo and Conroe, Texas.

SYNTHETIC RUBBER INDUSTRY FACES DIFFICULT FEW MONTHS - SBR PRODUCER
After the boom years that ended with the 2008 financial crisis and subsequent recovery, the synthetic rubber industry faces more uncertain times, a source from Synthos said on the sidelines of a synthetic rubber conference last week. “The next two to three months will be difficult because tire demand is down which means less SBR [styrene butadiene rubber] is sold,” the source from the Poland-based producer said. Replacement small vehicle tire sales have fallen by up to 15% in Europe compared with last year, and truck tire sales are down by as much as 20%.

UNIONS URGE SARKOZY TO BROKER BERRE DEAL
A group of labor unions want French president Nicolas Sarkozy to help broker a deal that would see the sale of LyondellBasell's Berre-L'Etang refinery to a Libyan investor. LyondellBasell mothballed the 105,000 bbl/day refinery near Marseille in southern France earlier this year after failing to find a buyer. However, the company remains open to selling the plant, should a credible buyer emerge. The unions said Sarkozy was well-placed to help broker such a deal, given his strong support for the Libyan people in last year's war that toppled former dictator Muammar Gaddafi.

BASF TO BOOST AMMONIUM CARBONATE CAPACITY
Germany's BASF is increasing production capacity by 30% at its ammonium bicarbonate and ammonium carbonate plant in Ludwigshafen. BASF said the capacity increase will help it meet rising demand for high-purity food additives on the world market. The German company added that the upgrade is scheduled for completion by early 2013.

SIBUR, RHODIA COMPLETE STUDIES FOR SURFACTANTS
France-based producer Rhodia and Russian petrochemical firm Sibur have completed studies to set up a surfactants plant at Sibur's petrochemicals production site at Dzerzhinsk, Russia. The plant is expected to be operational in 2014, they said in a joint statement. The capacity and financing details of the plant were not disclosed. The home and personal care and oil and gas end-use markets are growing at more than 6% per year, they added.

SUSCHEM SEEKS BROADER EUROPEAN COLLABORATION
SusChem plans to evolve into a broader Europe-wide chemical and biotechnology innovation platform as it seeks to tap into the EU's new €80bn ($105bn) research program, Horizon 2020. Running from 2014 to 2020, the EU's new program for research and innovation is part of the drive to create new growth and jobs in Europe, according to the European Commission.

ENI IMPLEMENTS 12-MONTH PARTIAL STOPPAGE AT GELA
Italy-based energy company Eni is to implement a temporary and partial stoppage at its Gela refinery following a fall in demand for petroleum products. The stoppage will last for 12 months, with the plant scheduled to restart in April 2013. Approximately 500 employees will be affected by the measure, said Eni. "The situation continues to be of concern, due to a significant contraction in demand for petroleum products, and the surplus of refining capacity, which have led to a collapse in margins," Eni added.

ASIA

PETROCHINA, PDVSA TO START REFINERY BUILD
PetroChina and Petroleos de Venezuela SA (PDVSA) plan to begin building a 20m tonne/year, or 400,000 bbl/day, joint-venture refinery in Jieyang, Guangdong province, in the April-May period, a PetroChina source said. China's National Development and Reform Commission has approved the project. Construction of the facility is expected to be completed at the end of 2014 and it will be brought on stream in 2015. The refinery is a 60:40 joint venture between PetroChina and PVDSA. A 1m tonne/year cracker might be built in the future, the source said.

INDIAN OIL SEEKS PETCHEM INVESTMENT FROM QATAR
State-owned Indian Oil (IOC) is seeking a strategic investment partnership with Qatar's national oil companies for its $5bn (€3.8bn) petrochemical complex at Paradip, India's Ministry of Petroleum and Natural Gas officials says. The proposed collaboration could be extended to the import of liquefied natural gas (LNG) for IOC's $2bn LNG terminal to be constructed at Dhamra port, close to Paradip in India's eastern province Orissa, added the officials.

FENGLI PETCHEM BUILDS PROPYLENE UNIT
China's Fengli Petrochemical is building a 100,000 tonne/year propylene unit at Puyang in Henan province, a company source said. Construction of the unit, which will use heavy oil as feedstock, began in August 2011 and is expected to be completed in late 2013. "We have no plans to build any downstream units yet. However, as we expect to build more propylene units in the future, there is a possibility that we could invest in downstream units," the source added.

EVONIK TO FURTHER FOCUS ON ASIA MARKET
Evonik Industries will focus on further development in the Asian market, with more expansion planned, senior executives at the Germany-based specialty chemicals producer said. Evonik is aiming to double Asia sales to €4bn ($5.3bn) from 2010 to 2015 while generating 30% of Evonik's revenue in Asia by 2020, Dahai Yu, a member of the company's executive board, told delegates at the 2012 Chinaplas exhibition in Shanghai. Meanwhile, the company plans to achieve 60% of its production volume in Asia by 2015.

SK INNOVATION PLANS PP CARBONATE PRODUCTION
SK Innovation plans to start building a facility at Ulsan in South Korea by the end of 2012 or early 2013 to produce polypropylene (PP) carbonate resin, a company source says. Using carbon dioxide (CO2) and propylene oxide (PO) as feedstock, PP carbonate resin will be more competitive in terms of cost and mechanical property compared with the commodity resins such as linear low density polyethylene (LLDPE), the source said. The producer aims to start commercial production at the new plant in 2015.

AZERBAIJAN'S SOCAR AIMS FOR PP, LDPE PRODUCTION
The State Oil Company of Azerbaijan (SOCAR) intends to launch polypropylene (PP) and low density polyethylene (LDPE) production by 2014, the company said. Design work is under way for units that would supply raw material to a petrochemical industrial park to be developed at Sumgait, a city located by the Caspian Sea, about 30km away from capital Baku. The park is being developed by state petrochemical producer Azerikimya.

MIDDLE EAST & AFRICAS

AUDI KAYAN TO START UP LDPE UNIT IN Q3 2012
Saudi Kayan Petrochemical, a subsidiary of Saudi Arabia's petrochemical major SABIC, plans to begin commercial production at its new 300,000 tonne/year low density polyethylene (LDPE) unit at Al Jubail in Saudi Arabia in the third quarter of this year, a senior company official says. Output from the new LDPE unit will be marketed globally, said Khaled al-Mana, the company's executive vice president for polymers. "Part of the LDPE exports from the plant will be targeted at China," he added. Demand growth for polymers, including PE, will average about 6% in 2012, with growth in China forecast to be in the double-digits, al-Mana added.

SAUDI KAYAN STARTS UP NEW CHEMICAL PLANTS
Saudi Kayan Petrochemical has started up its ethanolamines and ethoxylates plants and aims to achieve on-spec production in the coming weeks, according to a source from SABIC. The ethanolamines unit, located at Al Jubail, is the world's largest facility, with a nameplate capacity of 100,000 tonnes/year, while the ethoxylates plant at the same site has a capacity of 40,000 tonnes/year, he added. Saudi Kayan aims to increase the operating rates at the units in phases over the next few months, with a priority on stable operation, the source said.

SABIC Q1 PROFIT FALLS ON LOW PRICES, HIGH COSTS
Saudi Arabian petrochemical major SABIC posted a 5% year-on-year decline in its first-quarter net profit to Saudi riyals (SR) 7.27bn ($1.94bn) on the back of lower product prices and higher feedstock costs. Its gross profit fell by 6% to SR14.5bn in the January-March period of this year, with income from main operations down by 8% at SR11.5bn. "The decrease in net income resulted from lower product pricing and higher feedstock costs for certain products, softened by the higher production and sales volumes," the chemicals major said.


By: Will Beacham
+44 20 8652 3214



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