AMERICAS
LyondellBasell approved for NYSE listing
LyondellBasell’s shares of its common stock are expected to begin trading on the New York Stock Exchange (NYSE) on October 14. Class A ordinary shares will trade under the symbol LYB and Class B ordinary shares under the LYB.B symbol.
The company was de-listed from the NYSE after the 2007 merger of Basell and Lyondell Chemical. LyondellBasell previously expected its shares to be listed in the third quarter, after its emergence from Chapter 11 bankruptcy protection. However, that goal was missed because the Securities and Exchange Commission (SEC) determines the timing of public listings. The company currently has about 566 million ordinary shares outstanding, including about 337 million Class A ordinary shares and about 229 million Class B ordinary shares. Both the Class A and Class B shares have been trading on the over-the-counter market.
Comments: LyondellBasell has been moving forward rapidly after emerging out of bankruptcy in April 2010. Currently, the largest shareholder is the private equity firm Apollo Management with a 29.2% stake, the remainder distributed between Access, Royal Bank of Scotland, Ares Management, etc.
As of October 11, 2010, the Class A share closed at USD 25.16 while Class B shares closed at USD 26.15, which amounts to a total market capitalization of USD 14.8 billion.
Sabic to compound Stamax PP in Mississippi plant
Sabic Innovative Plastics LP will begin producing polypropylene compounds at its plant in Bay St. Louis, Mississippi, in early 2011. Sabic will begin producing standard PP compounds for the automotive market and for other sectors as well in the first quarter of 2011. Long-fiber grades of Stamax-brand PP compounds will then be added at Bay St. Louis in the third quarter of 2011. The addition of PP compounding – at a site already used to compound ABS and various engineering resins – will create new jobs and result in the installation of new equipment.
Comments: Stamax was originally launched as a joint venture between DSM N.V. (Heerlen, Netherlands) and Owens Corning (Toledo, OH). Sabic acquired the line with its purchase of DSM Petrochemicals in 2002. Long-fiber grades based on polypropylene became a part of Sabic’s product portfolio after its acquisition of DSM Petrochemicals. They were introduced into North America in 2008 when it acquired Rhemax.
Stamax has a polypropylene base resin with long glass fibers. The resin finds application in front-end modules, door modules, instrument panels, center consoles, and other automotive applications. The use of Stamax helps reduce the overall weight of the automotive parts and improves the overall fuel efficiency of the vehicle. The automotive industry has increasingly replaced parts with polypropylene-based compounds for several years. Therefore, the automotive industry had become the major driver for polypropylene demand and this trend is expected to continue due to the booming automotive sector in developing economies, mainly in Asia.
Dow sells stake in LG Dow Joint Venture to LG Chem
Dow Chemical says it has closed the sale of its 50% stake in the LG Dow Polycarbonate joint venture to LG Chem, for an undisclosed price. LG Dow Polycarbonate, a 50-50 joint venture of Dow and LG Chem, was established in 1999. Following the completion of this transaction, the LG Dow JV will be dissolved and the enterprise will be wholly owned by LG Chem. The enterprise will operate under the name of LG Polycarbonate and will continue to serve existing customers and markets.
Comments: This is consistent with Dow’s long-term strategy: to divest volume plastics and focus on specialties, which are less cyclical and provide consistently higher margins. In 2008, Dow was gearing towards a JV with Kuwait’s PIC, which encompassed five volume chemicals/plastics including polycarbonate, but the deal failed to materialize. After going through a difficult phase in 2009 like most other chemical companies, Dow is now coming back strong and is continuing its transformation to become a major specialty company.
Frito-Lay moving away from some PLA packaging
In April 2010, Frito-Lay North America Inc. began converting its film-based bags for its SunChips brand to 100 percent polylactic acid (PLA). However, Frito-Lay seems to be abandoning this project – media outlets have picked up stories about consumer complaints related to the noise of the PLA bags. Frito-Lay will continue to offer the PLA packaging on its Original SunChip product but is however moving away from the material on its other five flavors – and continuing to develop new varieties of environmentally friendly packaging.
Comments: Corn-based plastics are made by fermenting corn sugar to produce lactic acid, which is then polymerized to become PLA. PLA is typically used in packaging chilled food, such as milk and other beverages. The biggest marketing point is its compostability, which helps position the polymer as an environmentally friendly packaging option. Unfortunately, the benefits offered by PLA are now negated by its ultimate judge – the customers, who consume what’s inside the bags. Hopefully, an improved/ quieter version of this compostable material will soon be developed.
EUROPE
BASF establishes a styrenics business unit
BASF is establishing a new business unit – Styrolution – that will integrate the bulk of its styrenics operations, which have been under review since 2007. The new Styrolution unit will include the company’s styrene monomer, polystyrene, acrylonitrile butadiene styrene, styrene-butadiene copolymer, and other styrene-based copolymer operations. It will employ around 1,460 people and generated sales in 2009 of around € 2.5 billion (USD 3.5 billion).
BASF’s global polystyrene foams operation and the styrene monomer and polystyrene capacity at Ludwigshafen in Germany dedicated to that business will remain with the parent company.
Comments: The establishment of Styrolution is a further step in the implementation of BASF’s strategy for its styrenics business. The move to create this new business unit, which BASF plans to complete by the end of the year, has been under review for several years, with divestment as one of the eventual strategic options; BASF, like other global majors such as Dow Chemical, has been faced with declining performances in its styrene business. In 2007, the company was considering an offer for operations from a third party. It had previously sold its North American operations in 2005 to Ineos Group. Earlier this year, Dow Chemical sold its Styron division to U.S. private equity group Bain Capital Partners for USD 1.63 billion.
The process of carving out the styrenics business unit was initiated in 2008 but was suspended with the onset of the recession. Through the new establishment, BASF intends to sustain and improve its global business in an environment characterized by volatile demand, high pressure on margins, and intense competition.BASF plans to transfer its styrenics business at production sites in Germany (Ludwigshafen, Schwarzheide), Belgium (Antwerp), Korea (Ulsan), India (Dahej), and Mexico (Altamira) to the new Styrolution business unit.
Styrenics find numerous applications in household, office, electrical, and communications engineering, and packaging solutions. Styrene copolymers are essentially thermoplastics based on styrene monomers and acrylonitrile and have many different uses in markets such as the automotive and electrical industries.
UAE to fight back EU decision to impose new customs duties on plastics exports
The European Union has imposed new duties on plastics from the UAE, Iran, and Pakistan, saying the three were illegally subsidizing exports to Europe. The decision means Polyethylene Terephthalate from the UAE, Iran, and Pakistan will face EU import duties of €44.02 (USD 60.5/ton), €139.70(USD 192/ton), and €42.34 per ton (USD 58.2/ton) until 2015.
The UAE has decided to fight back against the EU decision to impose new customs duties on the country’s plastics exports on the grounds the move has no justification. The Ministry of Economy rebuffed EU claims that it is subsidizing its plastics production and threatened to take the issue to the World Trade Organization (WTO).
Also, the six-nation Gulf Cooperation Council (GCC) said the country has the right to defend itself against that decision since there was no reason for a new tariff by the EU. The Ministry will ask the EU Commission, in accordance with WTO agreements, to open an interim review to ascertain the absence of any subsidy on its plastics production, which removes a main element for the continuation of such duties.
Comments: Due to the low cost of petrochemical feedstock in the Middle East region, India recently imposed anti-dumping duties on imports of polypropylene from Oman, Saudi Arabia, and Singapore. The Gulf Petrochemicals and Chemicals Association (GPCA) formally protested this decision to the Indian government.
Now a similar situation has arisen between the EU and GCC nations. For petrochemical products like PE, PP, PET, etc., the cost is primarily determined by its feedstock price – this controversy is difficult to circumvent but has to be resolved.
BASF opens Polyurethanes systems house in Poland
BASF has opened a polyurethane (PU) systems house at Srem, near Poznan, Poland, which will manufacture systems for a wide range of industries.
BASF is currently the market leader in Poland in PU system solutions. It expects growth to come mainly from the construction, cooling appliance, and automotive industries.
Comments: BASF’s move to set up a system house in Poland is of strategic relevance as the country has a high population and the highest GDP growth rates in the region. Poland is centrally located and in recent years western European countries have concentrated on Poland due to its cheaper labor and growth potential.
Polyurethane is most commonly used in automotive markets for applications such as an instrumental panels. There are many applications for polyurethane in the construction industry that includes adhesives and insulations in buildings. Other applications include footwear and packaging.
Rosneft upgrades Angarsk, Russia petrochemical complex
Rosneft, based in Moscow, is upgrading its Angarsk, Russia petrochemical complex. The company has selected the Ineos Innovene technology for a polyethylene (PE) plant and the Lummus Novolen process for a new polypropylene (PP) facility. Ineos will provide its Innovene S slurry process for the manufacture of high-density and linear low-density polyethylene. The 345 KTA plant will produce a full range of Ziegler and chrome monomodal and bimodal products. It will cater to the Russian and Chinese markets.
Meanwhile, Rosneft has selected the Lummus Novolen technology for a 250 KTA PP plant at Angarsk. The units form part of a major upgrade at the Angarsk petrochemical complex and are due on stream in 2014. The concept for the upgrade also includes the expansion of the olefins plant, which is designed to produce 300 KTA of ethylene but has been working at well below that capacity.
Comments: Rosneft is one of Russia’s largest petrochemical companies, wholly integrated across the polymer chain. The Angarsk polymer plant produces ethylene, propylene, and polyethylene with the feedstock coming from gasoline and hydrocarbon gases produced by the Angarsk refinery.
In recent years, there has been an increase in demand for petrochemicals owing to the growth in Russia’s economy and increased consumer spending. The upgrades in the complex will facilitate this demand growth for polyolefins and would cater to China’s growth in polyolefin markets.
Sibur planning polyolefin deal with Indian Companies
GAIL, India’s flagship natural gas company, is said to be in discussions with Sibur to set up a joint polyolefins production venture in Russia.
A working group for developing the joint project was established between the two parties prior to a recent visit of Viktor Khristenko, Russia’s Industry and Trade Minister, to India. Financial details of the project and the timeline of the project are yet to be disclosed.
Reliance Industries Limited (RIL) has also an interest in participating in the Russian polyolefin projects.
Comments: Sibur has been increasingly extending its collaboration with the Indian polymer industry over the last year, with the firm particularly engaging in talks with Reliance Industries Limited. Earlier in June, Sibur announced plans to set up a joint venture with RIL to produce butyl rubber at the Indian firm’s petrochemical site at Jamnagar. As part of this JV, Sibur would be providing technology for separation and polymerization while Reliance Industries agreed to provide supplies of raw materials and infrastructure. This combined venture would benefit both parties- RIL would benefit from the opportunity to access Sibur’s technology and increase its participation in the Indian rubber markets, while Sibur would be presented with an opening to acquire a foothold in this fast-growing sector. The Indian rubber markets have been experiencing strong growth on the back of surging automobile demand in India and the subcontinent.
MIDDLE EAST/AFRICA
Kuwait studies PTA and PET investment plans
ASIA-PACIFIC
Sumitomo hikes PMMA capacity in Singapore
Sumitomo Chemical will build a 50 KTA polymethylmethacrylate (PMMA) plant at its Singapore complex by the third quarter of 2012. The new plant will add to Sumitomo’s two existing lines at the Singapore complex, raising the total capacity there to 150 KTA. Sumitomo also makes PMMA in Japan and Korea, and the expansion will raise the group’s total to 318 KTA, making Sumitomo the world’s largest producer of PMMA. Further, into the future, Sumitomo and Saudi Aramco, partners in Petro Rabigh, plan to invest in PMMA manufacture at Rabigh, Saudi Arabia.
Sumitomo also makes methyl methacrylate (MMA), the feedstock used in PMMA manufacture. It uses its direct oxidation technology and catalysts and plans to further expand its MMA business.
Comments: This is another example of Sumitomo’s expansion to overseas locations, where low-cost feedstock supply can be capitalized upon – Sumitomo’s strategy is to leverage its technology advancement to actively pursue overseas collaborations with feedstock advantages. Prior to this, the Petro-Rabigh (a JV of Sumitomo and Saudi Aramco) Phase I was a major JV, which was completed in March 2009. With a USD 10 billion investment, this was the largest refinery-petrochemical complex in the world. The Petro-Rabigh II study has been concluded and the construction is planned for completion in 2014-2015. Other major MMA and PMMA producers are Dow Chemical (Rohm and Haas), Arkema, Mitsubishi Rayon (Lucite International), and Evonik (Cyrolite).
Mitsui Chemicals and Honam form PP catalysts production JV in Korea
Mitsui Chemicals and Honam Petrochemical Corp. have agreed to form an equally owned joint venture to build a polypropylene (PP) catalysts manufacturing plant in Korea. The plant will be constructed at Honam Petrochemical’s Yeosu site and will begin production in April 2013. It will supply the Korean PP market.
The JV, capitalized at USD 18.5 million, will produce standard, rather than metallocene PP catalysts. Mitsui Chemicals, which already makes PP catalysts in Japan, will, in addition to licensing its technology to the JV, help with marketing.
Comments: Mitsui has long been an industry leader in PP catalyst (porous catalyst) and process technology (Hypol I and II) for decades. Honam, in recent years, has been making significant strides in PP technology development. Now, with the global PP industry growing at an average rate of 6% per year, this JV appears to be a good effort to meet the growing demand for PP catalysts in Korea. Conceivably, they will face stiff completion from Sinopec Catalyst Company, which is marketing aggressively in China, Korea, and other Asian regions. With China’s annual GDP growth projected at 8% for the next decade, over 40% of polyolefin resins will be imported primarily from regions such as the Middle East, Korea, Thailand, etc. The Mitsui/Honam PP catalyst JV thus appears to be well timed.
Singapore expects USD 5 billion in downstream investment
Singapore’s downstream processing industry is expected to invest USD 5 billion over the next three to five years, as a follow on capacity building, supporting the recent completion of two mega crackers in the city-state. The Association of Process Industry (ASPRI) is expecting the downstream industry to invest USD 5 billion in new plants and capacity expansion.
The crackers by the Royal Dutch Shell and ExxonMobil Chemical Co. are the latest upstream petrochemical expansions on Singapore’s Jurong Island, an international processing hub. Shell started production at the ethylene cracker complex in March this year, which is designed to produce 800 KTA of ethylene, 450 KTA of propylene, and 230 KTA of benzene. ExxonMobil’s cracker is expected to commence production of polyethylene, polypropylene, and specialty elastomers as well as aromatics and oxo alcohol next year.
Comments: Singapore has multiple global petrochemical companies based at its Jurong Island chemicals hub, including Shell Chemicals and ExxonMobil Chemical. Shell has already started production from its cracker earlier this year and ExxonMobil is expected to commence production of polyethylene, polypropylene, and specialty elastomers, aromatics, and oxoalcohol in 2011.
To provide a boost to the overall economy of Singapore and reduce its dependence on imports, Singapore’s Association of Process Industry (ASPRI) is expanding the downstream industry. This will create new employment and provide increased opportunities to local contractors for these projects. ASPRI, previously known as Process Industry Contractors’ Association Singapore (PICAS) was established on March 7, 1996, with 50 members. ASPRI is a membership-based trade association that represents and promotes the interests of the Engineering Service Providers (ESPs) that supports the process industry in the area of plant construction and maintenance.
Petronas seeks to raise USD 4 billion with chemicals IPO; doubles the original estimates
Petronas Chemicals Bhd. (Kuala Lumpur), the petrochemicals arm of Malaysia’s state energy group is seeking to raise USD 4 billion in a previously announced initial public offering (IPO) of shares. Petronas initiated the IPO process last month when it filed a draft prospectus with the Malaysian Securities Commission (Kuala Lumpur). The company appointed the CIBM (Kuala Lumpur) bank as the principal adviser in the IPO. Deutsche Bank (Hong Kong) and Morgan Stanley & Co. International are joint global coordinators and joint book-runner of the institutional offering outside Malaysia. The IPO was estimated to raise more than USD 2 billion.
Petronas Chemicals has begun pre-marketing its IPO with formal investor roadshows planned to begin on October 27. The deal is expected to be priced on November 12. The banks advising Petronas Chemicals in the IPO set an indicative price of ringgit 5.20/share (USD 1.7/share) for indigenous investors. The pricing of the shares for institutional investors will be decided later after a marketing trip in two weeks.
Comments: This move will add to the Malaysian polyethylene segment, which is of relatively moderate size. In Malaysia, Petlin has Back to Headlines a 260 KTA DSM LDPE plant in Kerteh. Malaysia Polyethylene has two Innovene plants 130 KTA each (one for LLDPE and another one for LLDPE/HDPE swing); in addition, there is one 200 KTA Titan plant, utilizing Mitsui CX process for bimodal resins such as film and blow molding.
Toyota to use sugarcane-based PET in car interiors
Toyota Motor Corp. will use a sugar cane-based PET in vehicle liners and other interior surfaces in what it calls the world’s first use of the material. The bio-PET, called Ecological Plastic, is expected to offer improved performance in heat resistance and durability compared to other bio-based resins and can compete with standard PET.
Toyota’s plans to use PET extensively provides the volume production levels needed to improve the cost per part, while the material also can be used in both seats and carpeting in addition to standard plastic parts.
Its first use will be in the 2011 Lexus CT200h compact hybrid, as the luggage compartment liner. The car will go on sale in early 2011. From there, the company will expand both the number of vehicles using Ecological Plastic as well as the extent of vehicle interior parts using it. It will also introduce a vehicle in 2011 using plastic in 80 percent of the interior.
Comments: The automotive industry, over the past decade, has been increasingly looking at ways to mitigate its impact on the environment. The industry has undertaken a number of steps to promote the replacement of parts with lighter material and has sought to improve the recyclability of the parts, and has now begun exploring options with bio-based components.
The research and development being carried out for alternative materials would have a crucial bearing, particularly when considering the growth potential of this market in Asia. Measures taken in countries such as China and India would provide a considerable reduction in the industry’s environmental impact given the double-digit growth potential of the automotive market in this region.
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