December 2010 Archives

The most efficient 10% of chemical producers will be 100% exempt from having to pay for C02 emissions. The other 90% will pay more, the less efficiently they produce chemicals. CEE producers using coal as a feedstock or for power generation will pay a heavy price. Contacts at Europe's chemical trade association, Cefic, pointed this issue out to me in a call on issues affecting the chemical industry in Europe.

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Now, according to Steelguru.com, shale deposits rich in gas have been discovered in many parts of Europe including France, Germany, Hungary, Italy, Netherlands, Poland, Romania, Spain, Sweden, Switzerland and the United Kingdom. 

According to this article, as a result of the discoveries LNG rich nations such as Qatar and UAE have already begun re-evaluating options of exporting gas to some of its gas strapped neighboring countries. 

It adds: "Looking at the regional LNG market, the fact we are currently in the middle of a global economic downturn coupled with the emergence of the unconventional gas supply and new LNG capacity coming on-stream, it is likely that there will be a reduction in project activity in the LNG sector over the coming year.

North America has been the leader in developing and producing shale gas and the great economic success of the Barnett Shale field in Texas has spurred the search for other sources of shale gas across both the US and Canada. Within the Middle East region, shale reserves exist in Jordan and Syria, but the extent to which the deposits will have on the overall gas balance will largely depend on the speed at which exploration efforts advance."

Image credit http://www.sxc.hu/browse.phtml?f=download&id=1126306

Russian chemical giant, Sibur, is controlled and wholly owned by the country's gas giant, Gazprom. I think it is high time the company was set free and allowed to boost its potential for growth through an initial public offering. An IPO would give it independence and also access to stock market funds, especially if it chose to list on the London Stock Exchange. 

The company's management tried for a management buyout a couple of years ago which was cancelled at the last moment and I expect they would relish the chance to be independent if Gazprom let them go. It has a dynamic, young management team led by 40-year old Dmitry Konov.

Sibur this week settled its old debts with Gazprom, so now is a perfect moment for the floatation. According to ICIS news, Sibur Holding has completed a process to settle its old debts. 

Poland and Hungary will lead central and east Europe's chemical industry out of recession, according to a new forecast by Oxford Economics (see below). Although chemicals output fell by around 10% in late 2008, steady recovery since then has led to a peak of 25% growth at the mid point of 2010 (see graph, page 3). 

Poland was not as badly hit by the financial crisis as its domestic banking sector adopted a slightly more conservative approach to lending than others in the region. 

The forecast suggests that emerging markets will account for over half of chemical output by 2016. How the world is changing.

In the build-up to this deadline there had been many, many predictions of failure by those seeking to comply: many were worried about the operation Substance Information Exchange Forums - the groups set up by manufacturers of the same chemical. Others feared a repeat of ECHA's IT meltdown which plagued the pre-registration period.

But interviews I conducted last week with Europe's trade group Cefic and ECHA painted a different picture of a relatively smooth lead-up to the deadline. And statements put out today by the UK's ReachReady, Cefic, and ECHA reinforce this mood. French Rhodia, BASF and even Russia's Lukoil have all said how smoothly it has gone in recent days.

Could all the fuss have been just a worried industry whipped up into a frenzy by the media? This has echoes of the Millennium bug which turned out to be something of a non-event. We will have to wait now to see if there is any fallout over the next few weeks.

The main concerns which remain at present are about the impact on downstream users who may experience an interruption to supplies of key raw materials. ECHA is seeking solutions and started by recommending the stockpiling of chemicals. It has also has asked them to register these supplies themselves if they are imported. 

The next deadline of 2013 for 100 tonnes/year or less may prove more problematical. This will bring a huge number of small-to-medium sized enterprises into the sights of Reach. These companies lack the financial resources and skilled manpower of the BASFs of this world and may struggle with compliance.