March 2013 Archives

The ICIS Kavaler Award, sponsored by The Chemists' Club

By Joseph Chang on March 25, 2013 10:00 AM

ICIS Chemical Business and The Chemists' Club are launching a new unique global chemical industry award.

The ICIS Kavaler Award, sponsored by The Chemists' Club, will recognize one CEO or senior executive for outstanding achievement and excellence each year.

The key distinguishing feature of this award is that the winner is selected by his/her peers - the executives selected in the previous ICIS Top 40 Power Players listing, a global rundown of the people making the greatest impact on the chemical industry.

"We are very pleased and excited to join with The Chemists' Club in organizing this unique award and event," said Joseph Chang, global editor of ICIS Chemical Business. "We know of no other award in the chemical industry given on the basis of a senior executive peer vote."

"The Chemists' Club is pleased to honor Arthur Kavaler, a great journalist and former Club member by recognizing outstanding achievements by industry leaders," said Roland Stefandl, president of The Chemists' Club.

We will invite each of the ICIS Top 40 Power Players for 2012 to vote for three individuals in the ballot, based on newsworthy achievement in one or more of the following categories:

* profitability/shareholder value (EBITDA growth, stock price, dividend);
* mergers and acquisitions (deals or integration);
* projects/capital investment; and
* innovation - technology, product, business process with an impact on industry and society.

We will send out the letters and ballots in early April, and the deadline for the ballot entry will be May 1, 2013.

We plan to present the ICIS Kavaler Award, sponsored by The Chemists' Club, to the winner at a black tie dinner in New York City in late October or early November, on a date to be announced.

BACKGROUND
The award is a revival of the Kavaler Award, which was presented by Chemical Market Reporter to leading chemical CEOs from 1990 to 1999, including Jon Huntsman Sr, founder, chairman and CEO of Huntsman, and Frank Popoff, chairman and CEO of Dow Chemical.

Arthur Kavaler, who served for 46 years as reporter, editor and eventually publisher and editor-in-chief of Chemical Market Reporter - one of the three publications incorporated into ICIS Chemical Business - passed away at the age of 91 on January 18, 2012.
Kavaler, a probing reporter and an editor with unwavering conviction, had a major impact on chemical industry journalism.

Mardi Gras for US petrochemicals

By Joseph Chang on March 21, 2013 8:28 PM
Interesting comments from Wells Fargo analyst Frank Mitsch attending the IHS Global Petrochemicals Conference in Houston, Texas, which had record attendance of around 1,200.

"The mood is rather jovial, with every other sentence containing shale gas and cheap ethane," said Mitsch.

"The Middle East, long thought to be advantaged, is having to shift its slate to heavier feedstocks amid declinding NGL supply, positioning the region modestly higher on the cost curve. The atmosphere surrounding discussions with LyondellBasell, Westlake and IPIC NOVA reminded one of Mardi Gras," he added.

Downstream partnerships can take advantage of US shale

By Joseph Chang on March 21, 2013 8:10 PM
Non-US chemical companies may feel like they're on the outside, looking into the shale gas party. But there's an opportunity for these firms to take advantage of cheap shale gas feedstocks - through downstream partnerships.

There are already plans to build 7 new world-scale crackers in the US. That combined with expansions of existing facilities could add 37% to existing US ethylene capacity.

Dow Chemical's plans came into focus this week with its announcement of an ethylene offtake agreement with Japan-based firms Idemitsu and Mitsui.

The latter companies will build a linear alpha olefins (LAO) plant and take ethylene from Dow's planned new 1.5m tonne/year cracker in Freeport, Texas. Dow will in turn buy some of the LAO for use in its performance plastics business.

Dow itself will build polyethylene (PE), EPDM and elastomers plants downstream.

But most other companies' downstream plans are not yet fully defined. Herein lies the opportunity for foreign and domestic players to partner up to build downstream facilities.

Look at all the non-US companies that have announced that they are exploring the construction of world-scale crackers in the US.

They include South Korea's Hanwha Chemical, Thailand's Indorama Ventures and PTT Chemical, Saudi Arabia's SABIC and Brazil's Braskem.

But there is more than one way to take advantage of low-cost shale gas feedstock. Why not partner downstream for higher value added products instead?

A geographic disconnect

By Joseph Chang on March 6, 2013 8:45 PM
There is an interesting disconnect between how players in one geography view conditions in another, and how local players see their own market dynamics.

For example, major European chemical companies have a rather optimistic outlook on growth in China and Asia, pinning their hopes on the region to drive earnings growth in 2013 and beyond.

Yet the sentiment is far less sanguine in Asia with some recent chemical price declines being attributed to a slowing rate of manufacturing growth in China.

The HSBC China Manufacturing Purchasing Managers' Index (PMI) fell to a reading of 50.4 for February - down from 52.3 in January and a four-month low. However, the PMI showed China's manufacturing economy is still in expansion mode as any reading over 50 indicates. But it is a slower pace of growth.

Interestingly, players in Asia are pointing to the US budget "sequestration" as a source of concern. Around $85bn in US government spending cuts kicked in on 1 March when the president and Congress failed to reach an agreement.

Yet in the US, businesses have largely shrugged off the impact with stock prices surging. The Dow Jones Industrial Average hit an all-time high on 5 March and continued higher through mid-week. There was nary a word about the sequester on US chemical company fourth quarter earnings calls.

As the Americas and Europe looks to Asia for growth, Asia looks right back at its largest and troubled export markets.

US ethylene and PE margins headed for a record in Q1

By Joseph Chang on March 1, 2013 7:47 PM
It's going to be a bonanza in the first quarter for US ethylene and polyethylene producers using ethane/propane feedstock.

Buoyed by abundant natural gas liquids (NGL) production from shale gas, margins are headed for record highs, even as spot ethylene prices come off a bit, noted Susquehanna International Group analyst Don Carson.

"With increases in Asian and European resin prices making US exports incrementally more competitive once again and scheduled US maintenance outages set to take more than 10% of capacity off-line in April and May, the near-to-intermediate term outlook for ethylene chain profitability remains positive," said Carson.

And JPMorgan analyst Jeffrey Zekauskas has upgraded Westlake Chemical to an "outperform" rating, citing "oceans of ethane" feedstock.

"Oversupply conditions in ethane stand to become materially looser over the next several years," said the analyst.

"According to Lyondell's data, ethane production, if maximized, would about touch 1.6m bbl/day by the second half of 2014," said Zekauskas.

"Ethane production today is roughly 1m bbl/day. An incremental 600,000 barrels of ethane per day is capable of being used as feedstock for 21.2 billion incremental pounds of ethylene. North American ethylene production inclusive of projects to convert napthenic and propane crackers to ethane is probably no more than 5 billion lbs. Accordingly, a loose market should slacken further," he added.

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