This week's world news

03 November 2008 00:00  [Source: ICB]

MITSUI UPS SOLAR CELL ENCAPSULANT CAPACITY
Japanese producer Mitsui Chemicals plans to expand capacity for the production of its solar cell encapsulant, Solar Eva, by 11,000 tonnes/year. Subsidiary Mitsui Chemicals Fabro will expand the capacity of its Nagoya facility in two phases, the first 4,000 tonnes/year is to be completed by mid-2009, with another 7,000 tonnes/year to be added by the end of 2009.

US HEXION SUES BANKS ON HUNTSMAN MERGER
US producer Hexion Specialty Chemicals has sued the lenders of its proposed $10.6bn (€8.4bn) merger with Huntsman, alleging that their refusal to finance the deal amounts to a breach of their obligations. “Both Hexion and Huntsman are ready, willing and able to complete the merger immediately but have been prevented from doing so by the banks’ breach,” according to a statement by Craig Morrison, Hexion CEO. “We are seeking judicial relief to compel the banks to fund the merger as required by their commitment letter, and we intend to pursue this action.”
 
TESSENDERLO ACQUIRES PLASTIC FITTINGS FIRM
Belgium-based chemical company Tessenderlo has agreed to acquire Netherlands-based plastic fittings manufacturer Nyloplast Europe for an undisclosed sum. Nyloplast Europe employs about 100 people with an annual turnover of around €13.5m ($17.3m). The deal is expected to close by the end of November.

CNOOC PLANS $6.5BN HUIZHOU EXPANSION
State-run oil major China National Offshore Oil Corp. (CNOOC) plans to invest yuan (CNY) 45bn ($6.5bn) to expand its current refinery capacity and to build an ethylene cracker in Huizhou, in the southern province of Guangdong. CNOOC will raise the capacity of the refinery by 83% to 22m tonnes/year from a current 12m tonnes/year, and build a naphtha cracker. The 12m tonne/year refinery is due to start up by the end of this year.

BASF TO BUY RECTICEL’S SPECIALTY PU BUSINESS
German chemical major BASF has signed an agreement to buy Netherlands producer Recticel’s worldwide polyurethane (PU) compounds business for glass encapsulation for an undisclosed sum. The transaction includes Reticel’s Colofast aliphatic light stable compounds. “By acquiring this business, BASF will achieve an excellent global position in this attractive specialty market,” said Jacques Delmoitiez, president of BASF’s PUs division.

SINOPEC Q3 NET PROFITS PLUNGE 39%
Chinese state-owned refinery and petrochemical giant Sinopec has reported a 39% plunge in its net profit for the third quarter ended 30 September, due to rapidly falling chemical prices, squeezed refinery margins, and waning market confidence. China’s largest petrochemical company reported net profits fell to yuan (CNY) 8.17bn ($1.19bn) from CNY13.41bn year on year.

DALIAN BOURSE TO TRADE MORE CHEMICALS
China’s Dalian Commodity Exchange (DCE) will launch more chemical products, including polyvinyl chloride (PVC) and polypropylene (PP), for futures trading. DCE currently trades futures for one chemical product, linear low density polyethylene (LLDPE).

SHIPPING UNCERTAINTY MAY HALT NEW BUILDS
The financial crisis has increased uncertainty in shipping, and ship-building orders may be canceled, UK shipbroker Braemar Seascope Group says. “Vessel values have come under pressure because of the contraction of available finance and perceived falls in the demand for bulk commodities,” said chairman Graham Hearne.

RUSSIA AND VIETNAM IN AMMONIA, FERTS JV
Russia and Vietnam have agreed to form a joint venture (JV) to build ammonia and fertilizer production facilities in the Russian internal republic of Kalmykiya, authorities said. Russia and Vietnam will invest nearly $1.5bn (€1.2bn) in the project, which is expected to begin operations in 2013.

EASTMAN PUSHES COAL-GAS FOR BEAUMONT…
Despite the current economic environment, US-based Eastman Chemical will continue to pursue its $1.6bn (€1.3bn) coal-gasification project in Beaumont, Texas, CEO Brian Ferguson said during the company’s third-quarter results call. “It may be counterintuitive to say this, but we think that the overall attractiveness of this project is actually set to improve as world events play out,” he said.

…BUT SES DROPS COAL-GAS AT BENWOOD
US-based Synthesis Energy Systems (SES) is abandoning its coal-gasification project in Benwood, West Virginia, US. “Given the current state of the US credit markets, SES is proactively reevaluating domestic capital investments at this time,” said SES president Tim Vail.

AKZONOBEL BUYS ENVIROLINE
Netherlands-based coatings producer AkzoNobel has bought the Enviroline tank linings and corrosion control coatings business from US-based Industrial Environmental Coatings. AkzoNobel said the acquisition would expand and extend its paints product range.

KURARAY TO BUY WACKER PVB KNOW-HOW
Chemical maker Kuraray Europe, a subsidiary of Japan’s Kuraray, has signed a contract to acquire polyvinyl butyral (PVB) resin-related intellectual property from Germany-based Wacker Polymer Systems. The deal includes manufacturing and application patents for specialized PVB resins, technology, and the Pioloform brand.

LANXESS TO EXPAND AROMATICS CAPACITY
Germany-based specialty chemical company LANXESS will invest €35m ($44m) to expand capacity at its aromatics network in Leverkusen, Germany, by up to 60%. “The ongoing expansion of the aromatics network through the single biggest investment that the basic chemical business unit has ever made is a clear expression of faith in the Leverkusen site,” said board member Werner Breuers.

BASF’S Q3 NET PROFITS PLUMMET BY 37.5%
The world’s largest chemical company, Germany’s BASF, has posted a 37.5% plunge in its third-quarter net profits to €758m ($591.2bn) owing to high raw material costs and hurricane-related losses. “The impact of the global financial crisis on the real economy is speeding up and hitting harder,” said Jurgen Hambrecht, chairman of the board of executive directors at BASF. Sales rose by 13% for the company’s third quarter, ending 30 September, to €15.78bn on substantial price and volume increases, while operating income tumbled by 10.7% to €1.51bn, from €1.69bn year on year, it said. Hambrecht foresaw an extremely challenging business environment for the company and downgraded its full-year outlook.

ASHLAND REMAINS COMMITTED TO HERCULES
US specialty chemical major Ashland is still committed to its pending $2.60bn (€2.08bn) cash-and-stock acquisition of Hercules despite sharp declines in profits and the current economic climate. Covington, Kentucky-based Ashland reported a fourth-quarter net loss of $10m, down by 69% from $32m net profits in the same period last year. US water and paper chemical producer Hercules, based in Wilmington, Delaware, reported third-quarter net profits of $39.5m, down by 19% from $48.8m reported in the same period last year.

AKZONOBEL Q3 PROFITS DROP, SCRAPS SALE
Netherlands-based paints and coatings company AkzoNobel’s third-quarter net profit dropped by 23% year on year to €157m ($199m) from €203m, owing to one-off charges, the company said last week, adding that it would not sell its National Starch unit this year. Net profits were hit by charges including post-retirement health care benefits, the final results of the requested divestments by the European Commission. The firm said that because of the economic climate, the intended sale of National Starch, the former ICI specialty starch business, was not expected to take place this year, and would be reclassified as a continuing business.

SHAREHOLDERS APPROVE CHEMICAL FIRMS MERGER
Shareholders of the US specialty chemical firm Rohm and Haas have voted in favor of its $18.8bn (€14.4bn) merger with Dow Chemical. The deal comes to about $78/share, well above the $68/share level that Rohm and Haas was trading under on the New York Stock Exchange last week. The merger should close in early 2009. After merging with Dow, Rohm and Haas will retain its name and its headquarters in Philadelphia, Pennsylvania. Dow will contribute several of its specialty chemical segments to Rohm and Haas.

FUND ACQUIRES US SPECIALTY CHEM FIRM
US specialty chemical producer Petroferm has been acquired by HIG Chemicals Holdings, a subsidiary of US private-equity fund HIG Capital. The acquisition includes Petroferm’s operations in Gurnee, Illinois, and Fernandina Beach, Florida, both US. Petroferm's UK-based Joseph Storey fire-retardants business will be spun off to shareholders. HIG sees the acquisition as a complement to its Uniqema Americas oleochemical business, the US firm that it acquired this year from Croda, the UK-based specialty chemical company. The two businesses have combined annual sales of more than $300m (€237m).

EU CRACKS DOWN ON SELLERS OF 15 CHEMS
Suppliers of articles, substances and preparations containing 15 named chemicals will have to supply safety data on the chemicals to customers and consumers when they are sold in the EU. The European Chemicals Agency has published its candidate list of substances of very high concern, which immediately imposes certain legal obligations on the suppliers and users of the chemicals. The substances will be subject to authorization under the EU’s chemical regulation, Reach. Chemicals on the candidate list include certain phthalates and arsenic compounds, short-chain chlorinated paraffins, xylene musk and anthracene.

DEFAULTS RISE AS ASIA PETCHEM VALUES CRASH
A string of petrochemical trade defaults in Asia have shaken market confidence, as end-users and traders have begun to renege on deals since spot prices have gone into free-fall over the past three months. “There have been a lot of flakers,” said a Singapore-based chemical trader. “I don’t know the number, but we heard practically all deals had to be repriced, discounted or diverted.” China appeared to be the hardest hit, with buyers unable to or refusing to accept cargoes amid rapidly falling prices.

MEXICO FACES ENERGY AND ECONOMIC CRISIS
Mexico is facing an energy crisis that will affect its economy and petrochemical industry, the former head of the country’s state-run chemical scheme the Phoenix Project says. “Today, Mexico faces a fundamental problem, which makes the issues in the petrochemical industry of minimal concern compared to the oncoming energy crisis and its impact on the country’s economy,” said Arturo Garcia. “If Mexico runs out of crude oil and gas in about five to eight years, then there will be no feedstock to supply any new petrochemical facility or refinery,” he added.

CEE POLYOLEFINS USAGE LAGS BEHIND WEST – MOL
Polyolefins consumption in central, eastern and southeastern Europe remains far behind the consumption rate in Western Europe, Hungarian energy and petrochemical group MOL says. Annual per capita demand for polyethylene (PE) and polypropylene (PP) in Poland, the Czech Republic, Slovakia and Hungary was only 21.3kg/year, 40kg/year, 24.3kg/year and 37.6kg/year, respectively. PE and PP per capita demand in western Europe was 56.5kg/year.

ARGENTINA COULD GET SOLVAY SHARES
Argentina’s National Congress began debating a pension nationalization bill last week that could result in a large portion of polyvinyl chloride (PVC) producer Solvay Indupa shares winding up in the hands of the government. Congress began talks on a controversial bill to nationalize private pension systems valued at billions of dollars. If approved, the state would own the 10 firms that manage retirement funds and pensions. The management firms have shares in 40 private companies from diverse sectors, including petrochemicals.

ZLOTY WEAKNESS TO HIT PKN ORLEN
The net profit of Polish refining and petrochemical group PKN Orlen looks set to take a substantial hit from the heavy depreciation of Poland’s zloty against the US dollar, an investment bank said. For every 1% decline in the value of the zloty against the dollar, Orlen’s net profit falls 2.4%, according to Jan Tomanik, analyst at Czech bank Wood & Company.

FINLAND’S KEMIRA RECORDS A 33% DROP
Finland-based Kemira Group recorded a 33% plunge in its third-quarter net profits to €35.4m ($44.9m) from €52.9m year on year. “The price of raw materials and energy was very high, which eroded our profitability from the same period in 2007,” said Kemira CEO and president Harri Kerminen.

SHELL’S CHEMICAL SEGMENT POSTS Q3 LOSS
Royal Dutch Shell has recorded a $79m (€61.62m) third-quarter loss for its chemical segment on lower margins and sales, amid the global slowdown, but posted a 22% jump in net profits at group level. Sales volumes in the chemical segment decreased by 13% year on year as a result of lower global demand and the impact of the hurricanes in the US Gulf Coast region, the Anglo-Dutch major said. Shell’s total chemicals output for the third quarter to September 30, declined by 13% to about 5m tonnes from 5.7m tonnes.

ROHM AND HAAS OPENS PLANT IN TURKEY
US specialty chemical producer Rohm and Haas has officially opened its plastics additives plant in Gebze, Turkey. With capacity of up to 40,000 tonnes/year, the plant will meet growing demand for acrylic impact modifiers and processing aids from the plastic industry in Turkey and neighboring markets. The facility is Rohm and Haas’s first new plastic additives plant in 25 years. “Turkey is part of a strategic growth region for our company and this is yet another successful example of our ongoing commitment to the Turkish market,” said Jean-Francois Mayer, Rohm and Haas vice president and director for Central & Eastern Europe and Turkey.

EU EMISSIONS PLAN TO SCUPPER FERTILIZERS
The European nitrogen fertilizer industry will cease to be competitive, and producers could move out of the EU if they are forced to buy emissions rights under the EU emissions trading scheme after 2012, a regional trade body warned last week. The European Fertilizer Manufacturers Association said that a study by the Pellervo Economic Research Institute, based in Helsinki, Finland, proved that the nitrogen fertilizer industry was energy-intensive and was exposed to international competition and should therefore be granted “free emissions rights.”

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