This week's world news

26 October 2012 08:43  [Source: ICB]

AMERICAS

DOW TO SLASH 5% OF WORKFORCE, SHUT 20 PLANTS
US-based Dow Chemical plans to eliminate about 2,400 jobs and shut down about 20 plants. The layoffs amount to 5% of the company's global workforce. The cuts should save the company $500m/year (€385/year) by the end of 2014. The closures include a high density polyethylene (HDPE) plant in Tessenderlo, Belgium, and a sodium borohydride plant in Delfzijl in the Netherlands. Those in the performance materials segment include an automotive systems diesel particulate filters plant in Midland, Michigan; an epoxy resins plant in Kina Ura, Japan; and formulated-systems plants in Ribaforada, Spain, Birch Vale, UK, and Solon, Ohio, US.

DOW CEO: EUROPE TO SEE MORE CRACKER SHUTDOWNS
Europe will see more cracker shutdowns and plant idlings in the coming five years as producers adapt to market demand and Middle East production capacities, the CEO of Dow Chemical said. "What we are going to see in the next five years in Europe, is, in my belief, more shutdowns and more idlings because you can't keep [crackers] running at the [current] slim margins," Andrew Liveris told analysts during Dow's third-quarter conference call. Dow may re-evaluate its crackers in Europe once its Sadara petrochemicals project in Saudi Arabia comes on line, he said.

EVONIK TO INVEST AROUND €200M IN SOUTH AMERICA
Evonik is investing around €200m ($260m) to build three new plants in South America that are due to start up in 2014, the German specialty chemicals producer said. The plant in Brazil will produce 50,000 tonnes/year of oleochemical specialty surfactants for the cosmetics and consumer good industries, and one in Puerto General San Martin, Argentina, will produce 60,000 tonnes/year of catalysts for biodiesel. The facility in Castro is a partnership with US-based Cargill for biotechnological production of Biolys, a source of L-lysine.

POLYONE EXPANDS WITH SPARTECH ACQUISITION
US-based plastics compounder PolyOne will acquire US-based plastic sheet, compounds and packaging solutions producer Spartech based in Missouri for about $393m (€303m). The transaction is expected to close in the first quarter of 2013.

US DISTRIBUTOR CSI BOOSTS BLENDING CAPACITY
US chemical distributor Chemical Solvents Inc (CSI) has announced the addition of a new multi-shaft mixer and additional 10,000-gallon stainless steel storage tanks. These additions will enable CSI to produce more blends to meet increased demand. CSI specialises in the production of flammable products and is capable of producing a wide range of high viscosity blends from 100 to 1,000,000 CPS (centipoises).

INCREASES SEEN IN ACC'S ACTIVITY INDICATOR
The American Chemistry Council's (ACC) Chemical Activity Barometer rose in October for the fourth straight monthly gain. Chief economist Kevin Swift said that the 0.6% increase to 90.7 was driven by the US housing sector recovery and rising consumer spending, particularly rising activity in construction-related plastic resins, coatings, pigments and other chemistry.

EUROPE

INEOS Q3 EBITDA UP 16% ON STRONG US BUSINESS
INEOS has posted a 16% year-on-year increase in earnings before interest, tax, depreciation and amortisation (EBITDA) for the third quarter of 2012 on a stronger North American market, the Switzerland-headquartered petrochemicals company said. It generated EBITDA of €432m ($561m) for the quarter, compared with €371m in the third quarter of 2011, and €308m in the previous quarter of this year. INEOS attributed this to improved business in North America, driven by cheaper feedstock prices in the region.

PKN DOWNGRADED ON NONPERFORMING SUBSIDIARIES
WOOD & Company has downgraded its recommendation on the stock of Polish oil and petrochemical group PKN Orlen from 'hold' to 'sell', noting difficulties with subsidiaries, which management is struggling to resolve. "We continue to see serious problems with the nonperforming subsidiaries and we are not aware of any solutions from management in sight," the investment bank added in its latest analysis of Orlen.

GERMANY'S BASF Q3 NET PROFIT FALLS 20.6%
BASF's third-quarter net profit declined by 20.6% year on year to €946m ($1.23bn), partly on lower earnings from its chemicals segment. Sales for the three months to September grew by 8.0% to €19.0bn, with operating income rising 6.4% to €2.00bn. "Earnings [for chemicals] declined considerably, owing to lower margins as well as to plant shutdowns in the petrochemicals division," BASF said, adding: "BASF does not anticipate an upturn in the global economy or in demand in its chemicals business for the fourth quarter of 2012." BASF said it is still aiming for 2012 sales and EBIT before special items to exceed record levels in 2011, buoyed by oil and gas earnings.

CHEMICALS SALES SOFTEN DOWNTURN FOR WACKER
Increased sales and revenues across most of Germany-based producer Wacker Chemie's chemicals divisions have helped to offset the impact of a slump for the group's polysilicon and silicon wafer businesses in the third quarter of 2012. Wacker reported a 78% year-on-year fall in net profit to €26.9m from €124.9m in the third quarter of 2011.

BENTELER-SGL OPENS €36M AUSTRIA FACILITY
Benteler-SGL has opened a €36m ($47m) plant to manufacture carbon components for the automotive industry, the Germany-based joint venture said. Located in Ort im Innkreis, Austria, the facility will produce carbon composite components for the industry, and is expected to begin output in mid-2013.

OLTCHIM RESTARTS LIQUID CAUSTIC SODA UNIT
Oltchim has restarted its 120,300 dry metric tonne/year liquid caustic soda unit following months of restricted production, the Romanian petrochemical and plastics manufacturer said. The unit is the first one to be opened after late this month the Romanian government announced plans to begin negotiations with local banks to secure a loan of around €10m ($13m) to enable it to resume activity at the majority state-owned chemical company. Output has been restricted for over a year on a lack of working capital.

ASIA

LIAOYANG STARTS CHINA'S FIRST COPOLYESTERS UNIT
PetroChina's subsidiary, Liaoyang Petrochemical, has successfully started up China's first polyethylene terephthalate glycol (PETG) copolyesters plant and achieved on-spec products on 18 October. The start-up of the 100,000 tonne/year plant at Liaoyang in Liaoning province means that China will be able to produce the high-end copolyesters on an industrial scale, according to PetroChina. Liaoyang Petrochemical has been conducting research and development on industrialising PETG copolyesters since 2002, it said.

GNFC BEGINS FEEDING ETAC PLANT IN INDIA
India's Gujarat Narmada Valley Fertilizers Co (GNFC) has begun feeding raw materials at its new 50,000 tonne/year ethyl acetate (etac) plant at Bharuch in Gujarat state, a company official maintained. Once the plant achieves on-spec output, GNFC will initially focus on supplying to the domestic market, the company official added.

HOHHOT CONDUCTS TRIAL RUNS AT NEW PP UNIT
China's Hohhot Petrochemical has begun trial runs at its new 150,000 tonne/year polypropylene (PP) unit at Hohhot in Inner Mongolia Autonomous Region earlier in the week ended 26 October, a source close to the company said. It is estimated that the PP unit will begin producing on-spec product in around 20 days, the source added. The Chinese producer completed the construction of its PP unit at the end of July.

SHOWA DENKO TO CUT OITA CRACKER OPS BELOW 90%
Japan's Showa Denko plans to reduce operating rates at its 695,000 tonne/year naphtha cracker at Oita to below 90% in November and December, because of weak derivative polypropylene (PP) demand, a company official said. "We will reduce the cracker operating rate in November and December to below 90% because PP demand is very low as supply is long. So maybe ethylene supply will decline because we had plans to export ethylene in the fourth quarter."

LG CHEM TO SHUT IPA UNIT FOR MAINTENANCE
South Korea's LG Chem plans to shut its 55,000 tonne/year isopropanol (IPA) plant in Yeosu in end-October or early November for about one-and-a half weeks of maintenance, a source close to the company said. The shutdown of the acetone-based line will likely limit the producer's exports in November, market sources said. The company has already delayed a mid-October shipment to early November, possibly because of the upcoming turnaround, another trader said.

LUCITE TO SHUT SINGAPORE MMA PLANT
Lucite International plans to shut its 120,000 tonne/year methyl methacrylate (MMA) plant at Jurong Island in Singapore some time this week for scheduled maintenance, a company source said. The turnaround is expected to last two weeks and the plant will resume production in early November, the source said.

EPPC RESTARTS PP PLANT AFTER MONTH-LONG SHUTDOWN
Egyptian Propylene and Polypropylene Co (EPPC) has restarted its polypropylene (PP) unit after a month-long shutdown, a source at the company said. The PP plant at Port Said in Egypt was shut down towards the end of September because of technical difficulties. The company then decided to use the shutdown to ramp up its PP plant run rates from 70% to 85-90% EPPC's PP plant in Port Said has a capacity of 350,000 tonnes/year, according to ICIS data.


By: Will Beacham
+44 20 8652 3214



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