News in brief

14 March 2014 09:53  [Source: ICB]

AMERICAS

US CHEMS ATTRACTIVE TARGETS FOR ACTIVISTS
US chemical companies remain attractive targets for activist investors due to increasing free cash flow amid an improving economy, credit-ratings company Moody’s said. Moody’s said that activist investors seem to be targeting companies whose share prices have lagged the Dow Jones US Chemicals Index, have accumulated large cash balances or have benefited from low US energy and feedstock costs but have not proportionally increased returns to shareholders. Pressured by activists, companies have moved to sell assets, implement cost-reduction programmes and increase dividends and share repurchases.

FMC TO SPLIT INTO MINERALS AND AGRO
US-based FMC will split into two companies, with New FMC comprising the agricultural, health and nutrition segments of the group and FMC Minerals gathering the minerals segment which includes the alkali and lithium businesses. The company expects the separation to be completed in early 2015, when both companies will be listed on the New York Stock Exchange. “We believe that creating two companies, each with its own publicly-listed equity, will enable the management of each company to pursue its own strategy,” said Pierre Brondeau, FMC’s CEO.

SHERWIN-WILLIAMS IN TALKS ON COMEX DEAL
US-based Sherwin-Williams representatives met with officials of the Mexican Federal Economic Competition Commission regarding its effort to acquire the Comex business in Mexico. The meeting was held to discuss issues relating to potential remedies required by the commission as a condition of regulatory approval of the acquisition. Sherwin-Williams signed an agreement to acquire Consorcio Comex in November 2012. In July 2013, the commission rejected the deal. Sherwin-Williams appealed, but was informed on 29 October that the appeal was rejected.

US ECONOMY TO GROW 2.8% IN 2014
The US economy likely will expand this year by 2.8%, said the Manufacturers Alliance for Productivity and Innovation (MAPI). It raised its forecast from a previous estimate of 2.6%, as consumer spending, business investment and the housing recovery accelerate. MAPI expects GDP to grow 3.2% in 2015. In normal times, the US economy would be expected to grow at an annual pace of 3-3.5%, excluding recessions.

CELANESE TO DEVELOP PIPELINE COMPOSITES
US-based Celanese has formed a strategic alliance with Airborne Oil & Gas to develop and supply composite materials for deepwater oil and gas pipelines. Airborne Oil & Gas supplies spoolable thermoplastic composite pipe systems for deepwater offshore oil and gas operations. Its systems are designed to withstand the high pressures and tensile loads of deep-sea offshore operations.

ENBRIDGE REVERSING PIPELINE TO CARRY CRUDE
Canada’s National Energy Board (NEB) has approved Enbridge’s proposal to reverse the flow and expand its Line 9B between Westover, Ontario, and Montreal, Quebec. The project, in combination with the previously approved project to reverse Line 9A between Sarnia, Ontario, and Westover, will enable the delivery of North American crude oil to Ontario and Quebec refineries. The NEB said that the line would transport oil sourced from western Canada and North Dakota’s Bakken shale play.

US NTSB EYES OIL, ETHANOL SHIPMENTS
The US National Transportation Safety Board (NTSB) is launching an official inquiry into the safety of shipping crude oil and ethanol by rail, with a hearing to be held in Washington on 22-23 April. The board said that the hearing would focus on railroad tank car design, railroad operations, risk management strategies and emergency response challenges. “While the soaring volumes of crude oil and ethanol travelling by rail have been good for business, there is a corresponding obligation to protect our communities and our environment,” said NTSB chairwoman Deborah Hersman.

GEVO IN LICENCE AGREEMENT WITH PORTA
US-based renewable chemicals and biofuels company Gevo has signed an agreement with Argentine alcohols producer Porta for use of its patented technology to make bio-based isobutanol. Porta will be the exclusive licensee in Argentina of Gevo’s integrated fermentation technology (GIFT) to make isobutanol from renewable sources such as grains, sugarcane and cellulosic feedstocks. Isobutanol is used as a solvent and a gasoline feedstock, and can be further processed into jet fuel and feedstocks for the production of synthetic rubber, plastics and polyesters.

EUROPE

EU CONSIDERS PLAN FOR INEOS/SOLVAY JV
INEOS and Solvay added to a list of potential asset disposals in a bid to win approval for their proposed polyvinyl chloride (PVC) joint venture. The measures are currently under consideration by the European Commission. Legacy PVC assets in Beek, the Netherlands, and Mazingarbe, France, remain on the table for disposal, as do the chlor-alkali, ethylene dichloride (EDC) and vinyl chloride monomer (VCM) operations in Tessenderlo, Belgium. Assets in Schkopau, Germany, were removed, but PVC and VCM operations at Wilhelmshaven are newly-included.

AKZONOBEL TO IMPLEMENT SAVINGS IN 2014
Dutch producer AkzoNobel will keep implementing its savings programme through 2014 after achieving €545m in savings in 2013, said CEO Ton Buchner, who expects the economic environment to remain fragile. Buchner said the company will focus now on achieving an improvement in returns and cash flow. The company will focus on what it calls “high-growth” markets, despite “potential difficulties” for future growth in China.

EUROPEAN MEPS VOTE FOR PLASTIC BAGS CRACKDOWN
European parliamentary ministers said they have voted in favour of rules that would drastically reduce the use of plastic carrier bags in the EU. The draft legislation would aim to reduce consumption of single-use plastic bags in the EU by 80% by 2019. 44 ministers of European Parliament (MEPs) voted in favour of the proposals to 10 against and six abstaining. The text of the bill will be put to a vote in a European Parliament plenary session, running 14-17 April.

GERMANY Q4 CHEMICAL PRODUCTION RISES
Germany’s chemical production rose 2.3% in the Q4 2013 from Q3, driven by higher pharmaceuticals output, said chemical trade group VCI. Compared with Q4 2012, production was up 3.7% year over year. Excluding pharmaceuticals, chemical production rose 1.9% in Q4 2013 from Q3, and was up 3.2% year over year.

EU CHEMICALS PRODUCTION UP 0.2% IN JAN
Chemicals production in the EU increased by 0.2% in January 2014 compared with the previous month, statistics agency Eurostat said. Chemicals production levels in January in the eurozone, however, fell by 0.1% month on month, Eurostat added. Year-on-year data for January was not available. Total industrial production rose by 0.1% in the EU but fell 0.2% in the eurozone month on month in January.

TURKEY PROCESSING CAPACITY HITS 8.1M TONNES
Turkey is the second largest producer of plastics processing capacity in Europe and the seventh biggest globally, having reached 8.1m tonnes in 2013. The country’s high output is supported by its emerging growth potential, said Mehmet Fatih Karakaya, vice general manager of Petkim and commercial director at SOCAR Turkey, at the ICIS 9th World Olefins Conference. Turkey’s strong position in plastics processing is supported by its young population.

NON-OPEC OIL SUPPLY IN 2014 TO INCREASE
Non-OPEC oil supply in 2014 is forecast to increase by 1.31m bbl/day over last year to average 55.49m bbl/day, OPEC said in its March monthly oil market report. The current supply expectation indicates an upward revision of 60,000 bbl/day to total non-OPEC supply from January to February 2014, while anticipated growth for the rest of the year was revised up 30,000 bbl/day from OPEC’s previous report, on the back of strong output growth from OECD members in the Americas.

BAYER EXPECTS SALES, MARGINS GROWTH TO 2016
Germany-based Bayer expects to see strong growth in sales and margins though to 2016, supported partly by newly-launched pharmaceutical products at its healthcare business. “I’m particularly confident about our healthcare business thanks to the encouraging development of the five pharmaceutical products we have recently launched,” said Bayer CEO Marijn Dekkers. Bayer HealthCare plans to increase its total sales by an average of 6%/year through to 2016.

ASIA

SUMITOMO STARTS 40,000 TONNE/YEAR S-SBR UNIT
Japan’s Sumitomo Chemical has started commercial production at its new 40,000 tonne/year solution styrene butadiene rubber (S-SBR) plant in Singapore. A ceremony for the start-up was held at the plant’s site on Jurong Island on 7 March, with the president of Sumitomo Chemical and the officials of the Singaporean government present to mark the occasion. The plant was built due to the rapidly growing demand for S-SBR for fuel-efficient tires, Sumitomo Chemical said. The company is considering increasing its capacity of S-SBR in Singapore, it added, but did not elaborate.

NAN YA PLASTICS RESTARTS MEG NO 4 PLANT
Taiwan’s Nan Ya Plastics restarted its 720,000 tonne/year monoethylene glycol (MEG) No 4 plant on 11 March, a company source said. The plant was taken off line on 28 February after unexpectedly high temperatures in the reactor of the plant were detected. The source said that the operating rate of the plant is kept low at present in order to monitor the reactor closely over the next few days.

KMCI’S MDI PLANT TO SHUT AROUND MAY
Kumho Mitsui Chemicals (KMCI) plans to carry out an annual maintenance turnaround for its 200,000 tonne/year methyl di-p-phenylene isocyanate (MDI) unit located in Yeosu, South Korea, starting around the end of May, said a source close to the company. The turnaround could take around three weeks, but the exact start date and duration of the turnaround were not available yet, according to the source. KMCI is a joint venture between Japan’s Mitsui Chemicals and South Korea’s Kumho Petrochemicals.

FUJIAN MEIZHOUWAN TO START UP PBT UNI
China’s Fujian Meizhouwan Chlor-Alkali Chemical plans to start up its 60,000 tonne/year polybutylene terephthalate (PBT) unit at Quanzhou in Fujian province at the end of March, a source close to the company said. The producer has carried out trial runs at its new PBT unit in early-to-mid March. The total investment in this project has hit yuan (CNY) 371m ($60.4m), exceeding its original budget of CNY357m, according to a statement from Fujian Provincial Economic and Information Technology Commission.

RELIANCE TO SHUT PVC UNIT IN APRIL
India’s Reliance Industries is expected to conduct scheduled maintenance at its polyvinyl chloride (PVC) facility in Hazira in early April, a source close to the company said. The shutdown at the 360,000 tonne/year PVC plant is expected to last until mid-April. “The maintenance ­activity has to be completed before monsoon since reactors cannot be opened during the monsoon season,” the source said. The plant was previously shut in March 2013 following a shortage in the availability of feedstock vinyl chloride monomer (VCM).

LG CHEM SHUTS YEOSU 2-EH PLANT
South Korea’s LG Chem shut its 2-ethylhexanol (2-EH) plant in Yeosu on 10 March because of technical problems, a company source said. The plant, which has a nameplate capacity of 144,000 tonnes/year, will be taken off line for around 10 days until the technical issue can be resolved. It was previously operating at 90% capacity. LG Chem will not be offering spot cargoes in the market until early April because of this unplanned shutdown, the source said. its n-butanol (NBA)/2-EH swing plant, which can produce 100,000 tonnes/year of 2-EH, in Naju, is operating normally, the source added.

PETROCHINA COMMISSIONS SICHUAN CRACKER
PetroChina has successfully commissioned its 800,000 tonne/year naphtha cracker at Pengzhou in Sichuan, and on-spec products were achieved on 5 March, the company said. The company is continuing its tests and is smoothing operations of the facility. An upstream 10m tonne/year refinery is running at approximately 65% of capacity and provides feedstock for the cracker.

PETROCHINA ACHIEVES ON-SPEC BENZENE
PetroChina has achieved on-spec benzene output at its new aromatics plant at Pengzhou in Sichuan province on 12 March, a company source said. The total capacity at the facility – comprising benzene output from the toluene disproportionation (TDP) plant and extraction from pygas and reformate – stands at 370,000 tonnes/year, the source said. Petro­China has a 51% stake in the project, while Chengdu Petrochemical, the investment vehicle of the local government, holds the remaining 49%.

SICHUAN PETCHEM TO START NEW BD UNIT
China’s Sichuan Petrochemical plans to start commercial production at its new 150,000 tonne/year butadiene (BD) unit, market sources said. The additional BD capacity coming on stream will further pressure prices lower in China, which is currently seeing domestic prices falling due to oversupply and weak demand, the market ­sources said.

DATANG TO SHUT CHINA PP PLANT IN JUNE
China’s Datang International Power Generation plans to shut its 500,000 tonne/year polypropylene (PP) plant in Inner Mongolia Autonomous Region in June, a company source said. The PP plant, consisting of two lines with a 250,000 tonne/year capacity each, is scheduled to shut in June for a 30-day turnaround, the source added. The plant’s No 1 PP line has been running at 60% capacity since early February, producing PP raffia yarn, while its No 2 PP line was shut on 30 January for maintenance, with the restart date yet to be confirmed.


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