This week's news in brief

22 November 2012 20:24  [Source: ICB]

AMERICAS

BRAZIL WORKERS EXTEND PETROBRAS STRIKE
Unionised workers at Petrobras' Abreu e Lima refinery and Saupe Petroquimica voted to continue a labour strike on 19 November. The strike began in late October and was extended because workers said disparities in wages continue. The Abreu e Lima refinery has a capacity of 230,000 bbl/day. Saupe Petroquimica is planning a complex that produces 700,000 tonnes/year of purified terephthalic acid (PTA) and 450,000 tonnes/year of polyethylene terephthalate (PET) resin.

METHANOL, AMMONIA UNITS RESTART IN TRINIDAD
Methanol Holdings (Trinidad) Limited's methanol and ammonia plants in Trinidad and Tobago were restarted last week, the National Gas Company (NGC) said. The island's 11 ammonia and seven methanol plants shut down on 15 November because of an interruption in power after NGC experienced high levels of liquids in its natural gas supply.

US RENEWABLE ENERGY GROUP ACQUIRES REFINERY
US biodiesel producer Renewable Energy Group (REG) purchased a 15m gal/year (57m litres/year) biodiesel plant near Atlanta Georgia for $2.6m (€2.03m). The former BullDog facility ceased operations in April due to a combination of poor market conditions and upgrades needed to make it more efficient. REG has about 225m gal/year production capacity at biorefineries across the world.

IOWA FERTILIZER COMPANY BREAKS GROUND
Egypt-based Orascom Construction Industries (OCI) said its subsidiary, Iowa Fertilizer Company (IFCo), held a groundbreaking ceremony, marking the start of construction on a new Greenfield nitrogen fertilizer plant in Wever, Iowa. OCI announced in September that it would build a $1.4bn (€1.1bn) fertilizer plant that will produce up to 2m tonnes/year of ammonia, urea and urea ammonium nitrate (UAN). The plant is expected to be completed by mid 2015.

ACC'S CHEMICAL ACTIVITY BAROMETER DROPS BY 0.5%
A US chemical activity indicator fell by 0.5% from last month, and the sharp decline may reflect post-election uncertainty, the American Chemistry Council said. The Chemical Activity Barometer's drop to 90.9 followed four consecutive monthly gains but is still higher than last year's index. The ACC said this could be a reflection of the effects of Hurricane Sandy, as well as uncertainty from the "fiscal cliff" that automatically implements income tax increases and federal budget cuts at the end of the year.

BP GAS DISCOVERY ENOUGH FOR METHANOL PLANT
BP Trinidad and Tobago (BPTT) said it has discovered an estimated 1 trillion cubic feet (tcf) of gas offshore of Trinidad, doubling the estimated gas in the previously discovered gas field. A source close to the methanol industry said 0.8 tcf of gas could run a 1m tonne/year methanol plant for 20 years.

PETRONAS EXTENDS BID FOR CANADA'S PROGRESS
Malaysia's state-controlled energy and petrochemicals major Petronas extended its takeover bid for Canadian natural gas firm Progress Energy to 30 December amid ongoing uncertainty whether Canada's government will approve the deal. Details of the new deal were not disclosed. In June, Petronas agreed to a C$5.5bn ($5.3bn) deal to acquire Progress.

US HOUSING STARTS IN OCTOBER RISE BY 3.6%
US home building increased by 3.6% in October from September, the US Department of Commerce said. Housing construction increased by 41.9% year on year. Single-family home construction declined by 0.2%, while multi-family housing starts increased by 10%. According to the American Chemistry Council (ACC), each new home represents $15,000 (€11,700) worth of chemicals and derivatives used in the structure or production of component materials.

ROCKWOOD WILL NOT RAISE BID FOR TALISON LITHIUM
US-based specialty chemicals producer Rockwood will not raise its takeover bid for Australia's Talisman Lithium, despite a rival bid from Chinese firm Chengdu Tianqi Industry Group (Tianqi). Rockwood said its Canadian dollar (C$) 6.50/share offer in August was the final offer and will not raise to Tianqi's C$7.50/share offer made last week.

PEMEX RESTARTS PROCESSING PLANTS
Petroleos Mexicanos (Pemex) restarted processing plants after a power failure at the Dovali James refinery, the state-owned oil company said. The refinery, the largest in Mexico, has a processing capacity of 330,000 bbl/day. The refining circuit has reported several incidents in the past years that have affected production capacity, forcing Mexico to look for more products from the US Gulf and Europe.

EUROPE

DOW COMPLETES PG EXPANSION IN GERMANY
US chemicals giant Dow Chemical has completed a capacity expansion at its propylene glycol (PG) production facilities in Stade, Germany. The expansion increases Dow's PG capacity at the facility by 10,000 tonnes/year, bringing total PG output at the site to 290,000 tonnes/year. Dow produces a total of 900,000 tonnes/year of PG across five plants. Financial details were not disclosed.

PURE WELCOMES DECISION OVER US ETHANOL MANDATE
The European Renewable Ethanol Association (ePURE) said it hopes the US Environmental Protection Agency's (EPA) decision to uphold the ethanol mandate will show decision-makers in Europe there is no link between food prices and biofuels mandates. There were calls to waive the US Renewable Fuel Standard (RFS) after a severe summer drought devastated American corn crops, resulting in higher food prices.

ICL Q3 NET PROFIT FALLS BY 10% ON LOWER SALES
Israeli-based ICL's third-quarter net income fell by 10% year on year to $395m on lower sales fuelled by increased raw materials and energy cost. Its third-quarter earnings before interest, tax, depreciation and amortization (EBITDA) fell by 11% to $561.7m. Looking ahead, due to the seasonality of its products and general holiday-related slowdown of sales in December, the fourth quarter is generally characterised by lower profit margins, it said.

ZAP COMMITS TO HIGHEST CAPEX IN A DECADE
Polish chemical group Zaklady Azotowe Pulawy (ZAP) has earmarked more cash for capital expenditure investment for the fiscal year 2012/13 than it has for any year in the past decade. ZAP is to invest more than Polish zloty 360m ($112m, €87m) in capex spending during the year.

BASF TO ACQUIRE FATTY ACIDS MAKER PRONOVA
BASF is planning to acquire Norway-based omega-3 fatty acids maker Pronova BioPharma and will offer to pay Norwegian kroner (NKr) 12.50 ($2.18, €1.70) in cash for each Pronova share. The German chemicals major has reached an agreement with Pronova to make a "recommended voluntary public takeover offer to Pronova's shareholders. BASF expects to finalise the transaction in the first quarter of 2013.

EU CONSTRUCTION OUTPUT FALLS 1.8% IN SEPTEMBER
Statistics office Eurostat reported that EU construction levels slumped in September following a slight increase in output during the previous month, declining 1.8% in September compared with August, while construction output in the eurozone fell by 1.4% month on month. The construction sector is one of the key downstream markets for the chemicals industry.

RUSSIA'S JAN-OCT PETCHEM OUTPUT DOWN
Russian production of petrochemicals decreased in the past 10 months. According to statistics agency Rosstat, in the January to October period, the country's total output of mineral fertilizers was down by 4.3% year on year at 14.9m tonnes. Ammonia production was 2.2% down year on year at 11.3m tonnes, while plastics output was lower by 1.4% year on year at 4.4m tonnes.

JOHNSON MATTHEY H1 PRE-TAX PROFIT DOWN 6%
Johnson Matthey's underlying profit before tax slipped by 6% year on year to £191.2m in the six months to 30 September this year, weighed by the fall in average precious metal prices, the UK-based specialty chemicals firm said. The company's sales for the period fell by 17% to £4.89bn, while its pre-tax profit was down by 6% at £183.4m. Johnson Matthey's performance in the second half is expected to be similar to the first half of the year.

EU GROUPS CALL FOR ANTIDUMPING RENEWAL
European fertilizer producers are set to prepare a strong case for the renewal of an anti-dumping duty against Russian exporters of ammonium nitrate (AN), according to a source at Poland's Zaklady Azotowe Pulawy. The European Commission has given notice that the producers within the EU's 27-nation bloc must submit a request for a review, and possible subsequent renewal of the duty on solid fertilizer grade AN, no later than three months before its expiry on 13 July 2013.

BANK DOWNGRADES GERMANY'S K+S GROUP
Investment bank JP Morgan Cazenove  downgraded its rating for German potash and salt maker K+S Group to "Underweight", as production constraints and cost inflation puts further pressure on profits. "Ongoing production constraints suggest the company has limited opportunity to benefit from a potential [potash] demand recovery, while the cut in prices required to prompt such a recovery presents significant downside risk to current [full year 2012] company guidance and consensus expectations," it said.

EUROPE REMAINS SHORT OF PROMPT JET KEROSENE
The European jet kerosene market remains short of prompt barges, despite refineries coming back online and product being fixed to mainland Europe. Barge differentials have remained above cargo differentials for the sixth consecutive week, despite barges usually being cheaper as they are sold on a FOB (free on board) basis rather than CIF (cost, insurance and freight).

ASIA

CHINA STARTS REVIEW ON MEK ANTIDUMPING
China has started an expiry review on anti-dumping measures for methyl ethyl ketone (MEK) cargoes imported from Taiwan and Japan, China Commerce Ministry said in a statement. The ministry will announce the final review decision before 21 November 2013. During the one-year review period, the ministry will investigate whether the anti-dumping duties (ADDs) need to be extended, it added. The Ministry imposed ADDs for MEK cargoes imported from Japan at between 9.6% and 66.4% and for the cargoes imported from Taiwan at 25% on 21 November 2007, which was to last for five years.

CHONGQING KABEILE MAY DELAY METHANOL START-UP

China's Chongqing Kabeile may delay a planned start-up of its new 850,000 tonne/year natural gas-based methanol plant at Chongqing in southwest China to end of December this year, a company source said. "We may have to delay the [start-up] target schedule by two months - to the end of December - because of tight supply of feedstock natural gas", the source said. The company is expected to achieve on-spec production at the plant in January 2013, the source added.

FORMOSA TO SHUT ACRYLIC ACID, ESTERS UNITS
Taiwan's Formosa Plastics Corp (FPC) plans to shut its acrylic acid (AA)/acrylate ester plants located at Kaohsiung in early December because of a scheduled power shutdown at the facility ordered by the Taiwanese government, a company source said. The plants will be shut from 1-10 December, while the power cut is expected to last for about 4 days, the source said.

ONGC, GAIL TO BE OFFERED MINORITY STAKE
India's Oil and Natural Gas Corporation Limited (ONGC) and GAIL India Limited will only be offered minority equity stakes in the $1bn (€780m) petrochemical project to be constructed by a joint venture of Korea's LG Chem and Bharat Petroleum Corporation Limited (BPCL), a senior Indian official said. "Both ONGC and GAIL have communicated to BPCL management seeking an equity stake in the petrochemical project to be implemented in southern Indian port town of Kochi. But with LG Chemicals [LG Chem] insistent of maintaining majority stake in the project, ONGC and GAIL can at best be offered small minority holdings," said the official, from India's Ministry of Petroleum and Natural Gas.

STYRINDO PLANS SM TURNAROUNDS IN H1 2013
Styrindo Mono Indonesia plans to shut its styrene monomer (SM) plants in the first half of next year, for maintenance, a source close to the company said. The units located in Merak will undergo turnaround at different periods during the first six months of 2013, the source said. The company is the sole producer of SM in Indonesia, with two plants - a 100,000 tonne/year unit and a 250,000 tonne/year unit.

MITSUBISHI TO KEEP 85-90% CRACKER RUN RATES
Japan's Mitsubishi Chemical plans to maintain an 85-90% operating rate at its three crackers into December, a company official said. It plans to keep running its 500,000 tonne/year Mizushima cracker at 85% and its two crackers in Kashima - a 392,000 tonne/year No 1 unit and a 489,000 tonne/year No 2 unit - at above 90% of capacity. The official said, this is based on November demand and the shutdown of Kashima No 2 cracker in October. The No 2 cracker in Kashima had a three-week outage because of a technical fault related to power supply issues, and was restarted on 27 October.

ADVANCED BIOCHEMICAL THAILAND TO SHUT ECH UNIT
Advanced Biochemical Thailand will be shutting its 100,000 tonne/year epichlorohydrin (ECH) plant in Map Ta Phut for a scheduled turnaround from 9-22 December, a company source said. The plant, which was restarted on 31 May after an extended shutdown for maintenance checks from 22 April, has not been running at full rate, added the source. The company, like most of the others, has kept its operating rates below 100% to maintain lean inventories for accounting purposes as the year end approaches, said the source.

NIPPON POLYMER RESTARTS POLYMER PLANTS
Japanese chemical producer Nippon Polymer has restarted the operation of its acrylic polymer production plants in Himeji, Japan, its parent Nippon Shokubai said. The plants produce acrylic polymer emulsions and water-soluble acrylic polymers, and are adjacent to the fire-hit Nippon Shokubai plant in Himeji, Nippon Shokubai said in a statement. All supplies of the main feedstocks including acrylic esters to Nippon Polymer's plant from Nippon Shokubai's Himeji plant were stopped, following an explosion in September, the producer said.


By: Will Beacham
+44 20 8652 3214



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