News in brief

24 February 2014 00:00 Source:ICIS Chemical Business

ETHYLENE XXI PETCHEM PROJECT 58% COMPLETE
Brazil-based Braskem said the engineering, procurement and construction (EPC) of the Ethylene XXI petrochemical complex in Mexico was 58% complete at the end of the fourth quarter. The $3.2bn project – a joint venture between Braskem and Mexico’s Grupo Idesa – will produce 1.05m tonnes/year of polyethylene (PE) from ethane feedstock, with expected start-up in the third quarter of 2015. “The project is progressing well,” said Braskem CEO Carlos Fadigas in conference call with investors. “We have started pre-marketing activities and have already started relationships with several Mexican customers.”

US HOMEBUILDER CONFIDENCE PLUMMETS
Confidence among US homebuilders fell sharply in February, with the largest one-month drop in 30 years as contractors struggled with foul weather and shortages of – and rising costs for – labour, land and materials. The National Association of Home Builders (NAHB) said its housing market index (HMI) fell by 10 points from the reading of 56 in January to 46 this month, a level not seen since May of last year. The February drop of 10 points marks the largest one-month decline in the index since it was established 30 years ago.

CRUDE OIL DRIVING UP FOOD PRICES – RFA
Corn-based ethanol and the US renewable fuel standard (RFS) are not driving up the price of food, the Renewable Fuels Association (RFA) said. RFA president Bob Dineen said the World Bank attributed the increase in food prices to crude oil prices, instead of ethanol. “That’s because food production and distribution is so heavily tied to petroleum for fertilizer, energy, transportation and refrigeration and storage,” he said. “So to the … alarmists that believe ethanol is driving up the price of food, I say, check your facts and stop spreading false information.”

CEREPLAST FILES FOR BANKRUPTCY
US bio-based plastics producer Cereplast has filed for Chapter 11 bankruptcy protection. Cereplast said that the move was done “to strengthen its balance sheet, clean up its capitalisation structure and gain financial flexibility as it continues to realign its operations”. Reorganisation of the company will be targeted toward focusing its operations on compounded products and recycling polyolefins, as well as making bioplastics from feedstocks such as algae and polylactic acid (PLA).

ASHLAND TO SELL WATER TECHNOLOGY FOR $1.8BN
US-based Ashland has agreed to sell Ashland Water Technologies to a fund managed by Clayton, Dubilier & Rice (CD&R) for $1.8bn in a transaction expected to close 30 September 2014. Water Technologies, a leading supplier of specialty chemicals and services to the pulp and paper and industrial water markets, has annual sales of $1.7bn and about 3,000 employees worldwide. Over the past year, the company has shown steady profit growth and improved margins.

TWO ACTIVIST FUNDS TARGET WILLIAMS
Two activist funds working in tandem now have a 9% stake in Williams, a US-based midstream company. Corvex Management now owns 39.0m Williams shares, according to a filing made with the Securities and Exchange Commission (SEC). The managing partner of Corvex is Keith Meister. Soroban Capital Partners now owns 21.0m shares. The managing partner of Soroban is Eric Mandelblatt. Earlier in December, Mandelblatt and Meister requested seats on Williams’s board of directors. Once cash-settled options are included, the combined stake increases to nearly 10%.

OCCIDENTAL TO SEPARATE, MOVE HQ TO HOUSTON
US-based Occidental Petroleum will separate its California oil and gas assets into an independently traded company, and move its headquarters to Houston, Texas. Meanwhile, the remaining Occidental Petroleum will move its headquarters from Los Angeles, California, to Houston. It will have exploration and production operations in Texas, the Middle East and Colombia, and include a midstream and marketing segment and Occidental’s chemical subsidiary OxyChem.

CALUMET DIESEL REFINERY TO START UP IN Q4
US-based Calumet Specialty Products expects to start up its new 20,000 bbl/day joint-venture diesel refinery in North Dakota in the fourth quarter of 2014. The refinery – a 50:50 joint venture between Calumet and MDU Resources – is expected to be completely supplied with North Dakota Bakken crude. In an update, Calumet CEO Bill Grube also said that Calumet is on track to double capacity at its Montana refinery to 20,000 bbl/day.

EUROPE

BASF DIVESTS LIQUID MASTERBATCH ASSETS
Germany-based BASF said it will divest its liquid masterbatch business in Clermont de l’Oise, France to Audia International for an undisclosed amount. The transaction is expected to close in mid-2014. The liquid masterbatch business will be run as part of Audia’s subsidiary, Uniform Color Company. Audia International is a global supplier of polyolefins and color masterbatches.

OMV’S PETCHEM Q4 EARNINGS NEARLY TRIPLE
Austria-based OMV’s fourth-­quarter 2013 clean petrochemical ­operating profit improved to €25m from €9m in the same period in 2012, driven by better propylene (C3) margins. Petrochemical sales volumes edged down to 540,000 tonnes from 550,000 tonnes. The company’s ethylene/propylene net margin was €356/tonne in the fourth quarter of last year, compared with €349/tonne in the third quarter of 2013 and €345/tonne in the fourth quarter of 2012. OMV described the fourth-quarter petrochemical margins overall as “relatively stable”.

CLARIANT Q4 NET INCOME FALLS 16.5%
Switzerland-based Clariant reported a fall of 16.5% in net income to Swiss Francs (Swfr) 80m (€65.4m) for the fourth quarter of 2013 while sales rose 4% to Swfr1.56bn. Clariant’s four business areas, Catalysis and Energy, Natural Resources, Plastics and Coatings and Care Chemicals, all recorded higher sales in Q4 2013. Clariant expects 2014 to remain “challenging” on the back of heterogeneous global economic development and volatile currency markets, especially in the emerging markets.

STYRON TO ACQUIRE S-SBR RIGHTS FROM JSR
US-based Styron has acquired the 50% production capacity rights held by Japan’s JSR for one of its solution styrene butadiene rubber (S-SBR) trains operating in Schkopau, Germany. Styron will have full capacity rights for S-SBR produced by the unit from 1 April this year. The deal adds 25,000 tonnes/year to Styron’s S-SBR capacity at the site, according to rubber business director Francesca Reverberi.

GERMANY ADVOCATES SELECT EXEMPTIONS
Germany needs to “separate the wheat from the chaff” in granting exemptions to the surcharges it levies on electricity consumers to finance the build-up of renewable energies, an industry executive said. Markus Kerber, general manager of the country’s top industry trade group BDI, said the exemptions needed to be limited to benefit only those energy-intensive industrial producers that are exposed to international competition. Chemical, aluminium and paper producers qualified for the exemptions, as did most of plastics manufacturing, he added.

OLTCHIM BIDDING DELAYED TWO MONTHS
The renewed attempt to privatise the core assets of Romanian chemical producer Oltchim has been postponed until the end of March, Romania’s economy ministry said. The previous deadline of 31 January for binding bids has been extended to 28 March. Investors have been invited to bid for “Oltchim II”, a special purpose vehicle that includes Oltchim’s vital assets but not its substantial debts of €811m, some of which the ministry proposes to pay off with privatisation proceeds.

OLTCHIM HALVES NET LOSS TO €64M IN 2013
Crisis-stricken Romanian chemical producer Oltchim approximately halved its net loss to Romania New Lei (New Lei) 285.1m ($87.2m, €63.5m) in 2013 from New Lei 569.4m in 2012 due to a significant decrease in financial expenses, the company said. Oltchim added that annual revenues sank to New Lei 498.0m from New Lei 760.6m year on year. Oltchim was entered into insolvency proceedings and placed under the management of an administrator in January last year by its majority owner, the economy ministry, after an attempt at selling the indebted firm collapsed.

SPOLCHEMIE PLANS ECH TURNAROUND IN LATE MARCH
Czech Republic-based epoxy and alkyd resins producer Spolchemie plans to shut down its 26,000 tonne/year epichlorohydrin (ECH) plant for a two-week maintenance period from late March to early April, a company source said. Spolchemie uses the produced ECH to manufacture epoxy resins. The ECH maintenance turnaround will not affect epoxy resins production, the source said, noting that the company has built up 
ECH stockpiles.

PKN ORLEN ‘REMAINS KEEN’ ON SHALE GAS
Poland’s PKN Orlen stands ready to accelerate its shale gas exploration programme the moment test drilling identifies promising resources. Wieslaw Prugar, president of the Orlen Upstream management board, responded to observations from analysts that Orlen had for 2014 adopted a modest shale gas exploration programme. “It is not a secret that, in general, the exploration works for unconventional hydrocarbons in Poland have slowed down, although PKN Orlen is the most active shale gas and oil exploration company in the country,” said Prugar.

EU CAR REGISTRATIONS RISE 5.5% IN JANUARY
EU passenger car registrations rose 5.5% in January compared to the same month a year earlier, in their fifth monthly increase on the back of economic recovery, the European Automobile Manufacturers’ Association (ACEA) said. EU car registrations totalled 935,640 units in January 2014 although the figure represents the second lowest result for a month of January since ACEA started the series in 2003. However, recession-hit countries like Greece, Ireland and Portugal registered significant year-on-year increases: 15.4%, 32.8% and 31.8%, respectively.

RUSSIA PETROCHEMICAL OUTPUT INCREASES IN JAN
Russia’s overall production of chemical and petrochemical products was up in January, Russian statistical agency Rosstat said.In January 2014, the country’s total output of mineral or chemical fertilizers was up by 18.3% year on year at 1.7m tonnes, according to the agency. Ammonia output was 9.1% up year on year at 1.4m tonnes. Plastics output was 9.3% up year on year at 555,000 tonnes, the agency said.

ASIA

SHELL EYES MAINTENANCE FOR SINGAPORE IPA PLANT
Shell Chemicals plans to shut its 75,000 tonne/year isopropanol (IPA) plant on Pulau Bukom in Singapore in the first half of March for 2-3 weeks of maintenance, a source close to the company said. Shell has cut its monthly supply to its regular buyers by up to 50% in preparation of the shutdown, according to these buyers. Market participants said the tight supply is expected to bolster price hike efforts in March.

SHOWA DENKO PLANS VAM TURNAROUND MAR-APR
Japan’s Showa Denko is scheduled to shut its 175,000 tonne/year vinyl acetate monomer (VAM) plant at Oita for annual maintenance in mid March lasting one month, a company official said. The annual turnaround will take place from 14 March to 19 April, the official said, adding that the plant is currently operating at almost full capacity to build up inventories. Some domestic buyers added that they have covered their requirements for March and April ahead of the producer’s shutdown.

YANGZHOU WINBASE TO EXPAND STORAGE CAPACITY
China’s Yangzhou Winbase International Chemical Tank Terminal will improve the warehousing and logistics capability of Yangzhou Chemical Industry Park, industries sources said. A ground-breaking ceremony for the new 200,000 cubic meters (cbm) of liquid chemicals storage tanks and ancillary facilities was held in Yangzhou Chemical Industry Park on 17 February, the sources said. The completion date has yet to be disclosed.

TIANJIN BOHAI RESTARTING PDH PLANT
China’s Tianjin Bohai Chemical Industry Group is in the process of restarting its 600,000 tonne/year propane dehydrogenation (PDH) unit after it was shut down in January. “The PDH plant is in the process of restarting and we expect the on-spec product to be achieved in a few days,” the company said on 17 February. The plant was shut down on 12 January because of a technical problem.

JSR TO KEEP FULL RUN RATE AT KASHIMA EPDM PLANT
Japan’s JSR Corp will keep running its 36,000 tonne/year ethylene-propylene-diene monomer (EPDM) plant in Kashima at full tilt in March, a company source said.“We are running at full rate for February and will keep the same 100% rate in March,” the source said.EPDM prices for the medium ethylidene norbornene (ENB) grade were at $2,500-2,600/tonne CFR (cost and freight) southeast (SE) Asia on 12 February, according to 
ICIS data.

OUCC RUNS ETHANOLAMINES UNIT AT 40% CAPACITY
Taiwan’s Oriental Union Chemical Corp (OUCC) is operating one of its two 40,000 tonne/year ethanolamines units in Kaohsiung at 40% capacity, a source close to the company. The run rates are below half the nameplate capacity because of the current weak demand in Asia, he said. Meanwhile, the other unit at the same site remains shut and there is no plan to restart it, the source added.

PETROCHINA STARTS UP NEW PX UNIT, RUNS AT LOW RATE
State owned PetroChina is running its new paraxylene (PX) unit at Pengzhou in Sichuan province. The new plant has a nameplate capacity of 650,000 tonnes/year of PX. PetroChina started up the plant on 7-8 February, and it is currently running at low rates, a source familiar with the matter said. The complex at Pengzhou mainly includes a 200,000 bbl/day refinery and a cracker capable of producing 800,000 tonnes/year of ethylene, among other downstream units.

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