Market outlook: Growth continues in chemical triangle

26 April 2013 10:06  [Source: ICB]

Despite the gloomy European economic picture, investment is still brisk in the region of Central Germany, thanks to the efficiencies offered by extensive networking of the major production sites there

The chemical industry in the former East Germany has come a long way since re-unification in 1990. The region covering Saxony-Anhalt, Saxony and Brandenburg, generally referred to as Central Germany, houses several large chemical sites which have seen more than €17bn ($22.2bn) of investment in restructuring and modernisation since the early 1990s, for both infrastructure and production.


 The extensive Leuna complex houses more than 20 companies and has had €6bn of investment to date. Turnover in 2102 was €320m

Copyright: CeChemNet

And the investment continues, even in today's hard-pressed economic climate in Europe. The five major chemical sites - Dow ValuePark Schkopau, BASF Schwarzheide, ChemiePark Bitterfeld Wolfen, Chemical Site Leuna, and Chemical and Industrial Park Zeitz - are all seeing some form of investment, either in new production or innovation capabilities.

Most of the activity is centred around the so-called chemical triangle, which includes the above sites and more, and offers a complex network of feedstock integration infrastructure.

Coordination of the chemical parks in this area is undertaken by CeChemNet, which has as its partners the major site operators P-D ChemiePark Bittefeld Wolfen, InfraLeuna, Dow ValuePark, BASF Schwarzheide and Infra-Zeitz Servicegesellschaft, as well as the North-East Chemical Association (VCI) and the isw Gesellschaft für wissenschaftliche Beratung und Dienstleistung.

CeChemNet is an interdisciplinary league that networks a wide range of expertise, specialised engineering excellence and chemical park management. It focuses regional capacities in chemical park development, creates synergies with its feedstock integration and promotes cross-acquisition of know-how in the six chemical sites.

The formula seems to be successful, judging from the way the sites have been attracting investment over the past 18 months. Although, inevitably, there have also been some closures in these straightened times. BASF has taken the decision to decommission its toluene di-isocyanate (TDI) unit in Schwarzheide as of 2015, as part of a programme to add new TDI capacity in Ludwigshafen (see box), and the Irish company Quinn Chemicals will decommission its newly built methyl methacrylate (MMA) facility in Leuna, due to financial difficulties at group level.

In a press statement released in March, Quinn Chemicals said: "The regional authorities have been informed that, having exhausted all options, the difficult decision has now been taken to decommission the Leuna plant." The 100,000 tonne/year plant would have been the first in Europe based on tertiary butyl alcohol (TBA) technology.

Construction of the plant began in 2006. But construction work was suspended in 2009 as a result of the global financial crisis in 2008 -2009, as well as the financial difficulties of the group at that time, the statement said. "Following the financial restructuring of the Quinn Group in December 2011, a decision was made in 2012 to proceed with the construction, provided a suitable alliance partner could be found."

The company added that a thorough and exhaustive global tender process failed to identify a suitable partner to form an alliance for the completion of the project. It is estimated that over €191m had been spent on the project, the company said.

But there is plenty of positive news to balance the negative. Global styrenics producer Styron has opened its new 50,000 tonne/year solution styrene butadiene rubber (S-SBR) production line in Schkopau.

The expansion, first announced in December 2010, takes into account the growing demand for high-performance tyres, which are produced with S-SBR. The unit, which was built alongside existing lines, has the capability to produce all existing clear and oil extended Styron grades, the company says. Financial details of the expansion were not disclosed.

Marco Levi, Styron's vice president and general manager for emulsion polymers, said: "S-SBR is a valued and strategic business within Styron and is core to the company's growth plans. Since the company's formation, the rubber business has been the top recipient of new capital investment."

Francesca Reverberi, business director for rubber at Styron, added: "There is a need for tyres with low rolling resistance combined with excellent wet grip and abrasion resistance in the tread. Using S-SBR in the compounds is seen as a key enabling technology for delivering these three contradictory characteristics."

Also at Schkopau, Altana's BYK Kometra additives business has recently opened a €7m plastics modifier facility, expanding its capacities for plastics modifiers by about 50%, according to Altana. The plastic modifiers are used in the automotive and other industries and the new facility was needed, it said, to meet increasing global demand for high-performance plastic modifiers.

Dow Chemical is also investing in Schkopau and broke ground last year on a new facility to produce ENLIGHT polyolefin encapsulant films for the photovoltaic industry. The plant came on stream in March this year and employs a staff of 35.

Dow says the expansion "not only marks a substantial increase in global capacity, but also means that Dow is now able to supply its customers in the photovoltaic industry from within the region in Europe, Asia and the Americas, and ultimately helps customers reduce total system costs and increase global competitiveness".

Since 2010, Dow has tripled its production capacity for photovoltaic film. Shortly after the second photovoltaic film production plant was inaugurated in Map Ta Phut, Thailand, in early 2012, construction of this third production line in Schkopau, Germany, began. The energy efficient facility was completed with no recordable injuries or process safety incidents just 10 months later in February 2013.

"The Schkopau site is based at the heart of the so-called solar valley with proximity to leading photovoltaic companies and research institutes in Central Germany," said Reiner Roghmann, site director for central Germany at Dow. "This and the good conditions at the site offer opportunities for growth in industry relationships."

Examples of such collaborations include Dow's involvement in the innovation cluster Solar Kunststoffe, headed by Fraunhofer. Partnering with players along the entire value chain can bring advantages to the industry, says Dow. For example, linking research facilities may open new markets to plastic producers and solar companies, and can stimulate innovations that will help the German solar industry gain a competitive edge in the international marketplace.

Just north of Schkopau, at Bitterfeld, a joint venture between Bayer MaterialScience and Japanese conglomerate Mitsui & Co is building a facility to produce specialty bisphenols. The new capacity will double production at the Bitterfeld site.

With an estimated cost of €50m, the work involves construction of a second plant specialising in the production of materials for use in APEC, a highly heat-resistant plastic produced by Bayer MaterialScience for use in the automotive, lighting and electronics industries. Construction started on 1 October and the plant is expected to come on stream in mid-2014.

According to Bayer, sales of the material are increasing significantly faster than those of the overall plastics market, which it predicts will grow by 5%/year in the medium term.

Hi-Bis GmbH, the joint venture company, is 55%-owned by Mitsui subsidiary Honshu Chemical Industry, 35%-owned by Mitsui, and 10%-owned by Bayer MaterialScience.

The existing Bitterfeld bisphenols plant owned by the joint venture began production in November 2004 and cost €38m to construct.

Zeitz is also seeing new investment. US-based recycler Puralube plans to build a third base oil plant at its site in the German state of Saxony-Anhalt, with government support for the €54m investment. This is expected to create 30 new jobs at Puralube's site near Zeitz, south of Leipzig. If everything goes according to plan, the plant could start up in 2014.

According to information on its website, Puralube's existing two plants in Saxony-Anhalt have a combined capacity to process some 150,000 tonnes/year of used lubricating oils into 90,000 tonnes/year of group II base oils. The units started up in 2004 and 2008, respectively.

But it is not just chemical production that is attracting investment in the region. The Leuna site has recently decided to extend its operations into research and development (R&D). Germany's Fraunhofer Institute last year opened a research centre here for chemical-biotechnology processes, and ThyssenKrupp Uhde, the engineering company, has been building a pilot plant on the site for the testing of a succinic acid technology, in alliance with the US biochemical producer Myriant.

"We want to attract R&D projects to the site because they can be a source of new investment ideas and could offer opportunities for not only the expansion of the site but also the region's economy," explains Martin Naundorf, Leuna's business development manager.

The site has its own long-term research project with industrial and academic partners developing technologies based on turning local lignite into chemical feedstocks. But what was originally to be a €1bn investment has recently been downgraded to one of less than €500m because of economic and environmental problems.

Nonetheless, Leuna typifies a prevailing trend among European chemical sites of wanting greater self-sufficiency in energy and feedstock supplies while also becoming centres of knowledge based on expertise both within their sites and localities.

The Fraunhofer facility represents an investment of €53m and is aimed at research into non-food biomass raw materials. The centre for chemical and biotechnological processes will focus on renewables - in particular wood - to replace oil as a raw material for chemicals production. The centre aims to "close the gap between laboratory and industrial-scale use of renewables", Fraunhofer says.

It offers a unique platform in Europe that connects the chemical and biotechnology sectors with the aim of developing new processes and products for the chemical industry. Chancellor Angela Merkel, who officially opened the centre, said that the investment was an outstanding example of the rebuilding of industry in Germany's eastern regions - and in particular the Leuna chemical site - following the country's reunification more than 20 years ago.

For more on CeChemNet and its activities in promoting investment in Central Germany, go to

BASF adds to fungicide, logistics capabilities
BASF is expanding its activities at its major Schwarzheide site in Brandenburg, with investment in crop protection production. In a €100m investment, the single largest on the site to date, the German major is building a unit to increase production of F 500 fungicide.

The new capacity - a third line - is expected to be onstream in 2014. F 500 is made exclusively at Schwarzheide and added capacity is needed, says BASF, because of steady increase in global demand for the high quality product.

Karl Heinz Tebel, chairman of BASF Schwarzheide, commented that: "Expanding the plant in Schwarzheide yet again underscores our high performance level and strategic alignment aiming at profiling the site as a specialist site for BASF."

BASF Schwarzheide posted sales of €1.007bn in 2012, the third year running it has exceeded the €1bn mark, albeit 5% below the record achieved in 2011.

In 2012, BASF invested a further €90m on the site to fund maintenance and other expansion work on production facilities as well as modernising infrastructure facilities.

It has attracted 16 co-sited businesses to Schwarzheide in recent years. Most recently logistics provider Alfred Talke invested €2m in expanding its logistics centre on the BASF site. And in 2012, trial operations began for relog plastics, which reprocesses plastics waste from the processing industry. This year, Puralis is adding a new production hall and warehouse on the site.

By: John Baker
+44 20 8652 3214

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