AMERICAS
FlexPO 2012
CMR Inc. recently concluded its 21st annual FlexPO conference. The conference was conducted over two days in downtown Houston, TX, and featured speakers from across the globe.
The conference was inaugurated by Dr. Balaji Singh, President of CMR. Dr. Balaji Singh welcomed all the delegates and introduced the main theme for the conference – outlining the changing roles of America in the global petrochemical landscape.
The first speaker of the day was Dr. Kevin Swift, Chief Economist and Managing Director of the American Chemical Council (ACC). Dr. Swift highlighted the opportunities offered by the recent shale gas finds in the United States to the domestic petrochemical industry. Dr. Swift also discussed the overall implications of the advent of abundant shale gas to the manufacturing sector, and its role in revitalizing the United States economy.
As the keynote session continued, Dr. Kevin Swift was followed by Bob Bauman, President of Polymer Consulting International. Keeping on the theme of shale gas, Mr. Bauman discussed the impact of the advent of cheap shale gas on the competitiveness of United States producers in the global petrochemical industry — particularly in reshaping trade dynamics of the polyethylene markets. Bon Bauman’s presentation was followed by Mr. Larry Gros, the Global Polyolefin Products and Technology Manager for ExxonMobil Chemical Company. Mr. Gros highlighted the changes influencing the global polyolefins and elastomers landscape.
Following a brief coffee break, Dr. Sarah Eckersley, Global Director of Performance Packaging for The Dow Chemical Company, discussed the leadership role of the Americas in defining and paving the future growth of the global packaging industry – while tackling key challenges such as sustainability.
W. R. Grace & Co. forms agreement with Dow to develop new catalysts for PP
W. R. Grace & Co. has agreed with The Dow Chemical Company to develop new catalysts for polypropylene production. The catalysts, which use one of Dow’s non-phthalate internal donor technologies and Grace’s proprietary catalyst expertise, will be sold by Grace under the HYAMPP™ brand. HYAMPP™ catalysts are non-phthalate catalysts with industry-leading activity and performance benefits and represent sixth-generation technology. They enable producers to make resins that improve the performance of plastics, including better clarity, stiffness, and impact strength, providing a pathway to new applications requiring more demanding properties that cannot be met by current-generation catalysts. Customers can use the resins in a broad range of applications such as films, high-performance pipes, automobile parts, household appliances, and household containers. Grace expects to begin commercial production of the new catalysts in 2012.
Comments: The announcement was also made on March 30 at CMR’s FlexPO Houston 2012 by Tony Dondero, Vice President and General Manager of Grace. Grace is a leader in polyolefin catalysts with an array of high-performance commercial PE catalysts (Cr-based, Ziegler type, and metallocene) and PP catalysts (Ziegler type). In the past decade, Grace has expanded its polyolefin catalysts portfolio way beyond the Cr/silica type where Grace was a trailblazer. Grace has the silica source in Curtis Bay (Maryland) and Worm (Germany). It also has the most advanced catalyst process facilities and technologies to make a wide range of supported catalysts to meet stringent requirements such as high activity, morphology control (spherical beads), high powder high bulk density, MWD control, desirable hydrogen response, etc. Dow’s non-phthalate catalyst system C601 provides high MFI without using peroxide and thus no taste and odor issue, broad MWD distribution to achieve excellent processability, and the best balance of stiffness and impact to facilitate downgauging This Grace/Dow JV on PP catalyst is going to add more impetus to the field which is already fiercely competitive.
CP Chem plans 1-Hexene plant at Baytown, TX
TXChevron Phillips Chemical (CPChem) says it will build a 250 KTA on-purpose 1-hexene plant at its Cedar Bayou Chemical Complex at Baytown, TX. Construction is expected to begin in the first half of 2012, and CPChem is targeting start-ups during the first quarter of 2014. Financial terms were not disclosed. The company has executed agreements with S & B Engineers and Constructors to engineer and build the plant utilizing CP Chem’s on-purpose 1-hexene technology, which produces comonomer grade 1-hexene from ethylene. The technology is already used at Qatar Chemical’s facility in Mesaieed, Qatar, and will soon be utilized at the Saudi Polymers’ plant in Al Jubail, Saudi Arabia. Both of these facilities are CPChem joint ventures. Once online, the site will be the world’s largest on-purpose 1-hexene plant.
Comments: One major use of hexene-1 is the comonomer in LLDPE and HDPE. Chevron Phillips ethylene trimerization technology typically provides hexene-1 with good selectivity and high purity. With the proliferation of shale gas in N. America, the planned start-up of the hexene-1 plant in 2014 appears to be timely.
Berry Plastics planning IPO
Packaging firm Berry Plastics Group Inc. is preparing to go public. The company plans to raise USD 500 million in an initial public offering. It will use part of that revenue to pay down debt, according to a March 23 filing with the Securities and Exchange Commission. The filing did not include how many shares Berry plans to issue or the expected price of these shares. It also did not name an underwriter.
Berry Plastics is currently owned by investment funds associated with Apollo Group Management LLC and Graham Partners Inc. After the offering is completed, Apollo will retain majority voting power. Berry has 88 plants in the U.S. and operates in 13 locations internationally. Berry serves more than 13,000 customers worldwide. Berry had sales of USD 4.56 billion for the fiscal year that ended Oct. 31, 2011, up from USD 4.25 billion in 2010. But, it posted a loss of USD 299 million in 2011, compared with USD 113 million in 2010, partly due to higher operating expenses.
Comments: Berry Plastics is a conglomerate of plastics fabrication operations with 70 plants all over the world. In addition to the four major business lines namely rigid open top, rigid closed top, tapes and Coatings, and flexible films, Berry Plastics is also the #1 manufacturer of injection molding equipment. The IPO should alleviate the current financial situation and pave the way for growth and profitability.
Dow announces plant closures, job cuts
Dow Chemical intends to implement several cost-reduction efforts, including shutting down plants and laying off approximately 900 employees, in response to continued weakness in the European economy. Dow will shut down three plants that produce Styrofoam-brand insulation products located in Estarreja, Portugal; Balatonfuzfo, Hungary; and Charleston, Illinois. It will also idle a Styrofoam plant in Terneuzen, The Netherlands, and close a toluene diisocyanate (TDI) plant in Camaçari, Brazil. Dow anticipates that it will save approximately USD 250 million annually from these actions.
In addition to these closures, Dow will consolidate certain other assets in its polyurethanes and epoxy businesses, optimizing their operations while remaining focused on meeting customer needs and sourcing through non-impacted assets. These actions are expected to take place over the next two years. The cost-reduction plan also includes the cancellation of a selection of capital projects, although Dow is yet to disclose details.
Comments: Dow, as a leader in the chemical industry, typically moves swiftly to deemphasize the areas which do not show promise and at the same time invest or expand the areas which conform to the company’s overall objectives and have the potential to harvest greater profitability.
FDA rejects petition seeking BPA ban
The U.S. Food and Drug Administration today announced that it was rejecting a petition from the Natural Resources Defense Council (NRDC) to ban bisphenol A (BPA) from food-contact materials. Dennis Keefe, director of the FDA’s office of food additive safety, announced that because there had been increasing concern about the use of BPA in polycarbonate infant bottles and sippy cups, FDA has been supporting industry efforts to find alternative materials. But the agency rejected the NRDC petition, stating that the scientific evidence did not suggest that the very low levels of human exposure to BPA through the diet were unsafe.
Dow debuts ‘Solutionism’ campaign
Dow Chemical Co. has launched a marketing campaign with the theme “Solutionism: The New Optimism.” The campaign illustrates how Dow provides solutions to help solve some of the world’s most pressing global challenges, such as efficient energy and feeding the planet. The campaign is part of Dow’s broader “Human Element” campaign. The budget was undisclosed.
Comments: In recent years, many companies have emphasized that their company is a “solution” provider. But Dow’s “Solutionism” provides a much broader scope that covers “sustainability” in its deeper and more comprehensive senses. More details will be spelled out in the months ahead.
Dow takes on IRS in R&D tax credit lawsuit
Dow Chemical is appealing a U.S. tax court decision rejecting the company’s claim that supplies used in certain process improvements conducted by Union Carbide in the mid-1990s are eligible for R&D tax credits. Oral arguments are scheduled for March 29 at the U.S. Court of Appeals for the Second Circuit (New York). Dow’s case, if successful, would set an important precedent for other companies seeking to establish certain activities that are eligible for R&D tax credits. The credits apply to certain costs including those incurred during the development of innovative products, but Dow argues process improvements for existing products should also qualify for the credits. Dow acquired Union Carbide in 2001.
The case involves less than USD 8 million in disputed claims but has more to do with setting a precedent in terms of the interpretation of the R&D credit. The IRS argues that Dow’s claim involves supplies not used in the conduct of qualified research and that Dow’s interpretation would transform the R&D tax credit into a manufacturing subsidy.
Dow claims the supplies used in its process improvement project are just as essential as two chemicals used in an experiment. Dow also challenges the IRS’ assertion that the supplies in question were routine costs.
Indorama completes purchase of Old World’s EO-EG business
Indorama Ventures (Bangkok) has completed the previously announced acquisition of the chemical assets of Old World Industries, including a production facility at Clear Lake, TX, for USD 795 million. Indorama announced plans for the acquisition in February 2012. The plant is the largest single ethylene oxide (EO)-ethylene glycol (EG) production facility in the U.S. with an EO capacity of 435 KTA and an EG capacity of 358 KTA. Old World acquired the plant from Celanese in 1999. Indorama says it has taken charge of the plant effective April 1, 2012. Old World will retain its consumer products division.
Indorama is also studying a world-scale, greenfield steam cracker, and EG project in the U.S. The EG plant would be wholly owned by Indorama while the cracker project would be a joint venture with an existing polyolefins player in the U.S.
Comments: This is another example of the downstream acquisitions and expansions galvanized by the recent surge in the abundance of shale gas which contains ethane and can be cracked to ethylene. The availability of shale gas in the USA has not only triggered the new constructions and expansions of crackers but has also led to the activities (acquisitions of expansions) of chemicals derived from ethylene. MEG is a major derivative of ethylene and is used in antifreeze and also a component of PET with wide applications in fiber/textile, rigid packaging, and film.
UOP expanding catalyst production
Honeywell’s UOP subsidiary intends to invest $20 million to expand production at its Mobile, AL adsorbents and catalysts facility. The company will expand its capacity to produce Ionsiv Ion Exchange adsorbents, which remove radioactive material from liquid, as well as the production of adsorbents and catalysts used by petrochemical producers and refiners. The expansion is expected to be completed in the fourth quarter of this year.
EUROPE
LyondellBasell to refinance USD 3 billion in debt; S&P raises rating
LyondellBasell is issuing USD 3 billion in new senior debt that will be used to buy back three classes of outstanding notes due in 2017 and 2018. The currently outstanding notes have interest rates of 8% and 11%. The new debt will be issued in a private placement to institutional investors. It will consist of two classes, one USD 2 billion class due in 2019 with a 5% interest rate, and one USD 1 billion class due in 2024 with a 5.75% interest rate.
On the heels of the announcement, rating agency Standard & Poor’s (S&P; New York) has raised LyondellBasell’s credit rating to ‘BBB-‘, the lowest investment grade rating. The rating agency also expressed increasing comfort with LyondellBasell’s financial policies and capital structure, in which it sees continuing improvement.
Comments: Along with these financial maneuvers, efforts within the company operations have been cost reduction, streamlining the operations, and improving sales and markets. Significant progress has been made since it emerged out of Chapter 11 in April 2010.
MIDDLE EAST & AFRICA
Dow to build coatings facility in Saudi Arabia
Dow Chemical plans to invest in a new manufacturing facility for its Dow Coating Materials business unit in Jubail, Saudi Arabia. The planned facility will manufacture a range of coating materials for both Saudi Arabia and export markets worldwide.
The new facility is the latest in a series of investments to be announced by Dow in Saudi Arabia, the company says. Dow and Saudi Aramco announced last year an agreement to form Sadara Chemical, a joint venture to build and operate a world-scale, fully integrated chemicals complex at Jubail. Upon completion, the JV will be among the world’s largest petrochemical facilities and would represent the largest foreign direct investment in Saudi Arabia’s petrochemical sector. Dow also announced plans to invest in a manufacturing facility for Dow Filmtec reverse osmosis elements in Saudi Arabia.
Comments: Middle East has become one of the fastest-growing markets for paints and coatings due to the growing construction industry and industrial growth. Saudi Arabia has the highest growth with more than 60% of the total coating market. Projects on infrastructure in the region were kept on hold during the recession but have now shown renewed activity. Dow’s decision to build a chemical complex in Jubail will allow it to take advantage of the growth phase the region is experiencing and utilize its experiences in the coating industry.
ASIA PACIFIC
JSR breaks ground on Thailand S-SBR plant
BASF will be starting a new compounding plant at Yesan, by the end of 2015 to make compounds based on BASF’s Ultramid –brand nylon resins and Ultra dur-brand polybutylene terephthalate resins. The plant will have a compounding capacity of approximately 36 KTA.
Comments: Thailand has one of the largest automotive production centers in Asia. In 2011 the country produced close to 1.5 million vehicles. The recent move to make vehicles more fuel efficient has led to an increase in the consumption of SSBR. The rubber is generally used in the outer tread on a tire giving it a lower rolling resistance leading to fuel efficiency. JSR’s new plant will allow the region to meet the demand of tire producers and OEM vehicles that require these tires. Several regions such as Japan and South Korea have legislated to label tires according to fuel efficiency. The European Union has passed a similar law and other regions such as China, Brazil, and the USA have plans.
Dow opens Thailand complex
Dow Chemical officially announced the grand opening of its new production complex in Asia Industrial Estate (AIE), Ban Chang, Rayong Province. This comes at the same time Dow marks its 45th anniversary in Thailand and the 25th anniversary of the SCG-Dow partnership, part of the SCG-Dow Group. A portion of an investment totaling more than USD 3 billion, the new production complex is a joint venture project between Dow, SCG, and Solvay S.A. under the project named Thai Growth Project. The project, which was announced in 2006, has involved the building of world-class production facilities including an advanced naphtha cracker plant operated by Map Ta Phut Olefins Co., Ltd. (JV between Dow and SCG Chemicals), and downstream facilities to produce polyethylene (SPEII), specialty elastomers, propylene oxide, and hydrogen peroxide, operated by Solvay. The successful completion of all plants under the ThaiGrowth Project makes Thailand Dow’s largest manufacturing base in the Asia Pacific.
Comments: With the opening of the new production complex, Dow and SCG will be able to meet the growing demand for raw materials that is rapidly growing in Asia. Dow will be in a better position to serve their Asian consumers with specialty products and provide technical service that is targeted for local market application. The demand for elastomers commonly used as sealant layers are growing in response to the growth of the film market that is consumed in the packaging industry. Elastomers’ growth is in response to the growing automotive and consumer market in the region. Polyolefin elastomers are commonly blended with polypropylene and are used for bumper applications in the automotive. These blends are also consumed in various automotive interior applications and consumer markets such as grips for razors.
Dow to invest an additional USD 125 million in Thailand operation
Dow Chemical Co plans to invest an additional USD 125 million into its Thai operations, strengthening the country’s role in transforming the US-based firm from a manufacturer of basic chemicals to a maker of specialty products. The new investment follows the recent completion of Dow’s USD 3 billion Thai Growth Project that began in 2006. Two new projects are set to finish construction this year – a USD 100 million propylene glycol (PG) plant with an annual capacity of 150 KTA and a USD 25 million polyolefin encapsulant film factory to produce materials for solar panels.
Comments: Dow has been focusing on converting itself to a specialty company throughout its global operations. Dow has had a long-term association with SCG of Thailand. With the growing importance of Asia and especially China, Thailand is suitably Dow’s strategic platform for its Asia-Pacific market developments.
Mitsui and SCG Chemicals Form LLDPE Film JV in Thailand
Mitsui Chemicals’ Tohcello subsidiary has agreed to establish a joint venture with SCG Chemicals, the chemical subsidiary of Siam Cement Group, to construct a new production facility for highly functional linear low-density polyethylene (LLDPE) sealant film, at the Eastern SeaboardIndustrial Estate in Rayong, Thailand. The JV company, which will be established this month, will be called Siam Tohcello Co., and Mitsui Chemicals Tohcello will hold a 55% stake in the JV, and SCG Chemicals will hold the remaining 45%. The JV will have a production capacity of 15 KTA of LLDPE sealant film, and it is expected to begin production in early 2014.
Mitsui’s TUX brand LLDPE sealant film, which is mainly used in food packaging, is made from polyethylene manufactured by Mitsui’s Prime Polymer Co. (Tokyo) subsidiary. The new production facility will increase Mitsui Chemicals Tohcello’s production capacity of highly functional LLDPE sealant film to 65 KTA with a possibility of further facility expansion.
Comments: Food packaging technology is among the most complex in flexible packaging design. This is because the great varieties of foods, each with an array of requirements such as clarity, seal ability, economics, strength, tear properties, and hot ticket., often involve several different polymeric materials, and compatibility and synergism are the key challenges. LLDPE is a favored sealing layer due to its lower melting. But it often needs Corona treatment to adhere to polar materials such as PET.
Westlake opens office in Singapore
Westlake Chemical has established an office in Singapore. The office will be led by David Chao, director/of business development, Asia at Westlake, and will focus on seeking new opportunities for growth and expansion in the region. The new office in Singapore will serve as a platform for Westlake’s greater Asian and global strategy. It is intended to further strengthen their operations and their ability to compete on a global basis.
Comments: Westlake has recently been aggressive in expanding its global reach and establishing an office in Singapore is no surprise. Westlake already has a presence in Asia and with the new office, the company will be better equipped to serve local regional consumers. Asia currently has the highest economic growth with the largest volume growth fueled by the rapidly growing middle-class population.
Sabic and Sinopec begin construction of USD 1.7- Billion polycarbonate plant in China
Sabic and Sinopec’s 50-50 joint venture (SSTPC/Sinopec Sabic Tianjin Petrochemical Co.) in Tianjin, China, has broken ground on the previously announced 260 KTA polycarbonate (PC) plant at Tianjin. The PC plant will involve a total investment of Rmb11 billion (USD 1.7 billion). Sabic and Sinopec first announced plans for the project in May 2011. The project was approved by the National Development and Reform Commission (NDRC; Beijing) on January 13, 2012. The plant is expected to become operational in 2015 and it will produce four major classes of PC, including mixed grade, extrusion grade, optical grade, and molding grade PC.
SSTPC, which was established in October 2009, has been fully operational since 2010, and it produces a variety of petrochemical products including ethylene, polyethylene, ethylene glycol, polypropylene, butadiene, phenol, butene-1.
Comments: Polycarbonate is widely used in automotive parts, home appliances, and medical products, and with the recent growth in industries such as electronics, automotive, information technology, and building materials, there is a significant increase in the demand for PC and other engineering plastics in China. In 2010, China consumed 1,130 KT of PC, with a domestic output of only 220 KT, and therefore China mainly relies on imports for PC. The demand for PC in China is projected to reach 1,780 KT by 2015, an average annual increase of nearly 10%.
LG Chem, Kazakhstan Petrochemical Industries reconfirm plans for a joint petrochemical complex
LG Chem and state firm Kazakhstan Petrochemical Industries plan to move ahead with a petrochemical complex in Atyrau, at a total investment outlay of USD 4.2 billion. The project, to comprise an 800 KTA ethylene unit and an 800KTA unit for polyethylene, will be the biggest project since Kazakhstan announced its independence in 1991.
Comments: Kazakhstan with the establishment of ethylene and Polyethylene plants will be able to develop a downstream industry mainly catering to the film-converting market for use in the packaging industry other areas include blow molding, thermoforming, and others. With the jv, LG Chem will have access to low-cost petrochemical resources and be in a better position to compete against low-cost Middle East products.
SOCAR to build 550 KTA polypropylene plant in Azerbaijan
The State Oil Company of Azerbaijan Republic (SOCAR) will be building a petrochemical complex having the capacity to produce 550 KTA of polypropylene. SOCAR will be constructing the oil and gas processing plant and petrochemical complex at an estimated total cost of €13 billion, near the capital Baku. 30% of the capital would be invested by the Azerbaijan Government and SOCAR, and the remaining amount would be a private investment.
The petrochemical complex is likely to be commissioned by 2020. Besides its thermal power plant, it will have 30 processing plants to process 10 million tons of oil and 10 billion cu m of gas.
Comments: SOCAR is also responsible for producing oil and natural gas in Azerbaijan and operating the country’s two refineries. The company runs the country’s pipeline system and manages the country’s oil and natural gas imports and exports. SOCAR’s decision to establish a polypropylene plant gives the company access to the downstream market for its material. Polypropylene fibers are used in various applications such as carpets, geotextiles, and nonwoven applications as personal hygiene applications.
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