AMERICAS
LyondellBasell Updates
Access Industriesterms US$12 billion offer by RIL too low for LyondellBasell
Access Industries claimed that the US$12 billion which RIL has valued LyondellBasell was too low, and lacked merit.
Access Industries claimed that since creditors like Apollo would make losses if the deal were to go through at RIL’s initial offer, the present management and stakeholders continued to resist the offer. They suggested that any reasonable bid would have to go beyond the company’s present value. The restructuring plan submitted by the current management, including Access Industries, has proposed a US$2.8 billion rights offer to infuse funds into the cash-strapped company.
Comments: LyondellBasell is a combination of Lyondell, Equistar, and Basell organizations. Access Industries paid much more than the current amount just for the Lyondell portion. As an organization, LyondellBasell stands a better chance of expansion under its reorganization plan at the transaction price –thus avoiding a new organizational restructuring with RIL with no benefits.
RIL raises cash component three times for LyondellBasell acquisition offer
Reliance Industries Ltd has raised its cash component of the deal by three times for its acquisition offer of LyondellBasell.The cash component of RIL’s USD 12 billion acquisition of LyondellBasell has been increased from US$2 billion to US$5-6 billion. This might be considered as a counteroffer to the move by Apollo Group and to improve RIL’s chances of holding a stake in the company.
Comments: RIL stands to gain a strategic positioning in (1) technology, (2) raw materials, and most importantly (3) Global Market Access –which Reliance currently does not have. Increasing the cash component can and will assist in temporary relief and may change with time.
Reliance Raises US$576 Million in a share sale
Reliance Industries has raised Rs26.8 billion (US$576 million) in a share sale. Reliance sold 25.9 million shares at an average price of Rs. 1, 035/share(US$22.5/share). The state-run Life Insurance Corporation of India(LIC), Reliance’s biggest institutional investor, bought 25 million shares.
Comments: Reliance on its credit has an excellent record and reputation of providing value to its investors. Reliance has done a superb job of providing value over the last two decades and developing investor trust.
Reliance increases the offer for LyondellBasell stake
RIL increased its offer to buy a stake in LyondellBasell Industries, valuing the bankrupt chemicals maker at $13.5 billion compared with$12 billion in a November 2009 bid.
LyondellBasell’s board rejected the latest offer from Reliance, which would entail India’s biggest company buying $2.25 billion in stock and backing a $2.8 billion share sale.
LyondellBasell’s reorganization plan values the company to$15.5 billion and Reliance has until February 2010 to make another offer.
Key LyondellBasell Creditors BacksReorganization Plan
LyondellBasell’s creditors have agreed to support the company’s reorganization plan. The holders of LyondellBasell’s debt have agreed to convert about US$18 billion in debt into common equity under the agreement.
The company has also filed a motion to approve an equity commitment agreement entered into earlier this month. Under the agreement, a group consisting of Access Industries, Apollo Management, and Ares has agreed to stop an equity rights offering that is expected to be part of LyondellBasell’s reorganization plan. The revised plan calls for the company to raise US$2.8 billion through the purchase of equity upon emerging from Chapter 11.
Although Reliance Industries has made a cash bid in the range of US$6 billion-US$12 billion for a controlling stake in LyondellBasell Industries, with most secured creditors backing the company’s reorganization plan, it is unlikely that Reliance Industries will place a binding offer for the company.
Reliance becomes a victim of false rumor resulting in serious sabotage in Andhra Pradesh state, India
Reliance has a major role in oil and gas exploration in the coastal areas of the State of Andhra Pradesh–one of the largest progressive states. Reliance worked with the local state government in oil and gas exploration.
The Chief Minister of Andhra Pradesh was killed recently in a helicopter accident due to inclement weather conditions. Some of the political followers of the late Chief Minister, who also own the popular TV channel, spread the unsubstantiated rumor that Reliance Group had a role in the Chief Minister’s death.
This has resulted in violent protests and sabotage of Reliance facilities in the state. High-level inquiries are underway to bring the guilty parties to trial.
Overall Comments: As it stands now, LBI sticks to the reorganization plan, which is the only road map approved by the creditors. LBI is open to serious offers before the February deadline (stipulated in the reorganization plan). However, the creditors made clear that they believe this is the trough of the polymer business and that the stocks will be worth much more in the next few years. So any offer would have to be sweetened enough to exceed what the company is evaluating now.
In addition, Relianceacquiring LyondellBasell would be the first of its kind for both Reliance and the global petrochemical industry. No Indian company has acquired a major petrochemical company so far. Reliance has not succeeded in acquiring and running a major “Western” company so far.
Celanese acquires Long-fiber Thermoplastics Business of Future Advanced Composites Technology(FACT GmbH)
Celanese Corporation has acquired the long-fiber reinforced thermoplastics (LFT) business of FACT GmbH (Future Advanced Composites Technology) of Kaiserslautern, Germany, a business unit of The Ravago Group. FACT is a leading producer of LFT used in injection molding, extrusion, compression molding, and blow molding applications.
Comments: The use of long-fiber reinforced thermoplastics (LFT) in automotive applications initially started in Europe and is now accepted globally. The growth of the LFT market is largely driven by the automotive industry to reduce weight and thus lower fuel consumption. This is achieved by switching from metal to reinforced plastic materials such as LFT. This also allows OEMs to integrate parts, thus greatly reducing assembly costs in front-end modules, instrument panels, and door modules. The Celanese acquisition of FACT GmbH’s LFT business will allow it to take advantage of the growing demand for more fuel-efficient vehicles.
Chemtura sells PVC additives business a New York-based private equity firm
Chemtura Corp. has agreed to sell its PVC additives business to SK Capital Partners LP, a New York-based private equity firm. The deal, worth US$ 45 million mainly consists of the assumed liabilities.
Chemturahasfiled a motion with the U.S. Bankruptcy Court in New York to make SK Capital the lead bidder for the PVC additives business. If the deal is terminated, SK Capital could receive a US$500,000 break-up fee, plus up to US$750,000 in due diligence costs and expenses.
Comments: Chemtura Corporation has formed in 2005 as a result of the merger between Crompton Corporation and Great Lakes Chemical Corporation. Crompton Corporation’s legacy companies include Crompton& Knowles Corporation, Uniroyal Chemical Corporation, and Witco Corporation.
The PVC additives business of Chemtura has seen sales fall significantly in recent years which is not surprising since the PVC business is shrinking. The growth in the PVC market in North America and Europe has been stagnant or even negative in some markets. Consumers have been looking for environmentally friendly materials as replacements.
Eastman files lawsuit against Indoramato to protect IntegRex Technology
Eastman Chemical Co. has filed a lawsuit against Indorama Polymers Public Co. Ltd. for alleged unauthorized use of Eastman’s IntegRex-brand PET technology in the U.S., Europe, and Thailand.
Eastman filed the suit in U.S. District Court in Wilmington, Del. The complaint alleges patent infringement, breach of contract, and trade secret misappropriation.
The breach of contract and trade secret claims initiated from Indorama’s unauthorized disclosure and use of information are covered by a license agreement between Eastman and several Indorama business entities in Europe. Indoramacurrently is in the process of opening a new billion-pound capacity PET plant in Decatur, AL.
Comments: Indorama Polymers is the world’s second-largest producer of Poly (ethylene terephthalate) or PET resin (for bottles, sheets, and film applications) headquartered in Bangkok, Thailand, with operations in North America, Europe, and Asia. It started its production in 1995 with 21.6 KTA and now 14 years later, it has the capacity of over 1 MTA. The IntegRex is presumably a process-related technology pertaining to condensation polymerization. It claims to improve clarity, gloss, and consistency, with less acetaldehyde generated.
With the going global PET demand extremely strong, this is a high-stakes situation for both parties in the lawsuit.
Braskem and Petroleo Brasileiro close to Quattor acquisition
Brazilian petrochemicals producer Braskem SA and Petroleo Brasileiro SA (Petrobras) could be close to the acquisition of Quattro PetroquímicaSA. Braskem is likely to acquire a 51% stake with the remainder to be acquired by Petrobras. Quattro has 13 production lines located in three Brazilian states Rio de Janeiro, São Paulo, and Bahia. It produces LDPE, HDPE, LLDPE, PP, EVA, and other petrochemicals.
Comments: Brazil’s petrochemical industry began in the early 70s when intense demand emerged for petrochemicals, especially plastics. During the 80’s the industry grew based on the tripartite model comprising of Petrobras, a foreign technology partner, and Brazilian entrepreneurs–each with an equal (one-third) stake in the company. In the 90s there was a wave of privatization in which Petrobras sold its stake to several domestic and international players leading to a fragmented industry. In late 90s there was a significant opportunity for consolidation and so was the case in the past decade.
From 2001, there were several mergers including the formation of Braskem in 2002, an integration of six companies: Copene, OPP, Trikem, Nitrocarbono, Proppet, and Polialden. Braskem, owned by Odebrecht Group (62.3%), Petroleo Brasileiro SA (Petrobras) (31%), and BNDESPAR (Brazil’s National Bank for Economic and Social Development), became the largest petrochemical company in Latin America. In 2007, Braskem acquired Grupo Ipiranga leaving very few petrochemical players. Petrobras made a move on acquiring Suzano, which was another petrochemical company in Brazil. The merging of Suzano with Unipar created the Southeast Petrochemical Group. All of this consolidation was thought to have ended until the two major polyolefin players Braskem and Quattor, recently announced plans to merge in 3Q of 2009. If the deal goes through, Braskem and Quattor would have a combined revenue of about USD 17.5 billion.
While the parties are close to agreeing to the terms, there are a few points of conflict. These include:
1) Petrobras, with a 31% stake in Braskem and a 40% stake in Quattor, has demanded that a company executive be named either chairman or chief executive of the combined Braskem-Quattor in addition to management positions at several key units. This is potentially in conflict with the Odebrecht group that controls the majority of Braskem.
2) A member of the Geyer family –which has a 60% stake in Quattor’s controlling shareholder Unipar is vowing to fight the deal in court.
ExxonMobil: Petchem Sector Has Lost Three Years of Growth
A broad-based recovery in petrochemicals will not come quickly despite the resumption of demand growth in the second half of 2009, according to ExxonMobil ChemicalCompany.
ExxonMobil expects that the demand for petrochemicals will not hit 2007 levels until 2011. In addition, capacity utilization is also expected to remain at low levels for several years to come. Growth in mature regions will be about equal to GDP and 2%-3% above GDP in developing regions.
The Mideast is expected to play an important role in meeting the demand. Global trade in these products has doubled in Mideast, with the region now accounting for more than 25% of net exports. World trade was expected to grow double again, with the Middle East expected to capture 75% of net exports, while Europe and North America swing into a net import position.
Comments: The traditional chemical industry cycles dictate that the next recovery will be at the end of 2011.
The cycle theory as we know it may completely disappear by 2012 –due to Global developments.
The chemical industry cycles were essentially the result of U.S., Europe, and Japanese planning cycles from the 1950s to 2000. However, with the Middle East, China, Asia, and South America entering the system, the cycles will become more unpredictable. E.g.., the7 year chemical industry cycle is related to 2 years for planning, 3 years for construction, and 2 years for market development. Imagine a situation, if the time limit for all these can be reduced due to: (1) more liberal economics, (2) low-cost feedstocks, (3) efficient construction, and (4) efficient planning. Just look at how fast Reliance was able to bring their cracker on stream…
Kraton issues Initial Public Offerings
Kraton Polymers completed its initial public offering (IPO), offering 10.3 million shares, about a 35% stake in the company, on the New York Stock Exchange.
Net proceeds from the stock sale of about US$130 million will be used to repay part of Kraton’s credit facility and to fund capital projects, including alternative production capabilities and additional latex capacity for isoprene rubber. The fund is also expected to be used for upgrading operational controls at the company’s Belpre, OH plant.
Comments: Kraton Polymers’ initial public offering was more for assisting Kraton Polymers.
The global SB copolymers industry has more opportunities in Asia. SBS –critical markets –roofing, footwear, and impact modification; SIS–adhesives; SEBS –competing against elastomeric polyolefins –All the products have opportunities in the Asia region.
Kraton’s major focus is in the U.S. The innovations in the SB copolymer sector weakened after Shell’s exit.
Cereplast on verge of bioplastics deal
Cereplast is weeks away from announcing a major partnership with a U.S.-based manufacturer to produce its proprietary bioplastics. The company had announced in May 2009 that it planned to shift its corporate strategy by focusing on product development and marketing while contracting out manufacturing to large plastics compounders.
Comments: Cereplast is a leading bioplastic resin design company with a broad range of blends and alloys that help bioplastics effectively compete with traditional plastics. Over the past couple of years, the company has expanded its portfolio of products while adding capacity following the increasing demand for its products. The success has been bittersweet with some financial hurdles including delay in funding. This led to some layoffs and delays in the capacity coming on-stream at their new proposed facility in Indiana.
The company is slowly shifting its focus to its strength –which is its IP and product development and plans to move away from manufacturing. Collaborating with a major compound would be of great benefit to both parties as several compounders are looking to develop/expand their green portfolio. Recently, the company announced an agreement with A. Schulman for resin distributionin Europe. We see A. Schulman is a leading contender for the potential deal; however, there are others including PolyOne, Teknor-Apex, and others who are keen on developing a bioplastics portfolio.
Polimerica awardsFEED contract to TechnipPolimerica has awarded Technip
SA a contract to perform the front-end engineering design (FEED) for a new ethylene plant, planned with a capacity of 1300 KTA. The ethylene unit will be part of a new petrochemical complex to be built in Jose, Venezuela, at an investment of US$3.2 billion. The FEED activities are scheduled to be completed by Q2-2011.
Comments: Polimerica is a joint venture between Pequiven and Braskem. The company has selected technologies for three polyethylene (PE) units, which are part of an integrated petrochemicals complex in Jose, Venezuela.
Polimerica has chosen LyondellBasell’s Lupotech T technology for its 300 KT LDPE plant. The company will also have a 430 KT gas phase polyethylene plant using INEOS’ Innovene PE(G)swing gas phase technology to produce LLDPE and HDPE. The third plant will be a 400 KT slurry polyethylene plant using INEOS’ Innovene PE(S)slurry technology for the production of HDPE. This complex will allow Venezuela to be competitive with foreign markets.
EUROPE
BASF Restarts Antwerp Cracker; Ludwigshafen Due Online in February2010
BASF restarted its 1000 KTAethylene plant at Antwerp. The unit was taken offline on December 20, 2009, following a fire, which was caused by a leakage in a naphtha pipeline. In addition to ethylene, the Antwerp cracker is designed to produce 650 KTA of propylene.
Separately, BASF experts are working on a plan to restart the smaller of its two-ethylene plants at Ludwigshafen, Germany, which also suffered a fire on December 23. The fire was due to the malfunction of a plant component, which led to the release of a cracker gas/petroleum mixture in a wastewater duct and the subsequent fire. The plant, designed to produce 220KTA of ethylene and 140KTA of propylene, is due to start up at the end of January or the beginning of February. BASF also operates an a400 KTAethylene plant at Ludwigshafen.
Comments: BASF’s Antwerp cracker is the largest in Europe, with the 1000 KTA of ethylene (C2) and 650 KTA of propylene (C3). The temporary closure did not force BASF to declare force majeure mainly because the demand for petrochemical products has been low in Europe.
France launches bio-based waste bag initiative
France’s ecology minister has launched a framework agreement to promote bio-based, compostable plastic waste bags in the country.
The government will make the bags, which will contain 40% vegetable-based material next year and 70% in 2018, more available to consumers across the country. As well as developing waste bags made out of biodegradable plastics, the French government intends to prioritize organic waste, either by promoting individual composting or by building more industrial composting sites.
Comments: This is a significant move as one of the largest consumables for the plastic resin is in plastic bag application. Decreasing the consumption of traditional plastics and replacing it with bio-based plastics will reduce waste in landfills and oceans.
By one account, about 60 billion tons of plastic materials have been produced so far and only 5% were recycled, with the rest ending up in landfills and oceans. The dire need of developing more economical biodegradable plastics and establishing more widespread recycling operations are now becoming an essential component of the packaging industry, which justifies government intervention.
Linde awarded major engineering and gas supply contracts in Russia
The Linde Group has won several key contracts for plant engineering and gas supply projects in Russia. Under the terms of these unrelated deals, Linde is building two olefin plants for two chemical customers in Western Siberia. In addition, the company will be building an air separation unit (ASU) to ensure the long-term on-site supply of industrial gases to a steel company in the Moscow region. The combined value of these new contracts is estimated to be over €530 million(US$ 750 million).
Linde-KCA-Dresden GmbH(LKCA), a member of The Linde Group, will construct a polypropylene plant with an annual capacity of 500KTAin Tobolsk, Western Siberia, for the plastics manufacturer Tobolsk-Polymer LLC. This will be integrated into SIBUR’s new complex to dehydrogenate propane and manufacture polypropylene in Tobolsk.LKCA has already started engineering work plans to deliver large parts of the new plant to Tobolsk in 2010 and 2011. The unit is expected to come on stream sometime in mid-2012. Valued at around €450 million(US$645.3 million), this is one of the largest investments in the Russian petrochemical industry in recent times.
Comments: Russia recently started focusing on the petrochemical industry; the region until now has been developing in other sectors such as fertilizers, where Russia has been one of the leading producers in the world. With the economy surging and consumer demand increasing, Russia has increased importing more petrochemical products to meet the growing demand. The building of the new plant is a step in the right direction for the region to alleviate the shortage.
W.R. Grace increases PP catalyst capacity in Germany
W.R. Grace will increase production capacity for the company’s Polytrack polypropylene catalysts in Worms, Germany. Construction will begin in the first quarter of 2010 with start-up planned for 2011.
Comments: Grace Davison is well-known for its polyethylene catalyst offerings, especially the chrome catalysts and silica supports. In 2002, Grace diversified its polyolefin catalyst business into PP via the acquisition of Borealis’s catalyst assets in Europe. This gave them access to spherical MgCl2. Grace currently offers POLYTRAKTM catalysts which have seen a positive response from the market. The announced capacity increase is in response to increasing demand.
POLYTRAKTM8500 currently offered by Grace is designed for bulk and bulk/gas hybrid processes producing high-quality homopolymer, random copolymer, and impact copolymer (ICP) polypropylene grades. The catalyst has been commercially proven on SpheripolTMand Borstar processes.
MIDDLE-EAST & AFRICA
Huntsman, Zamil to build Saudi Amines Plant
Huntsman and Zamil Group have signed a memorandum of understanding(MoU)to explore the feasibility of building a morpholine and Diglycolamine (DGA) joint venture in Jubail, Saudi Arabia. The 50-50 JV would use technology licensed from Huntsman, with Huntsman, also having the rights to global sales and marketing of products produced at the plant. This JVwould positionHuntsman as a key global supplier of DGA and morpholine, with assets in Europe, the United States, and now in the Middle East.
Huntsman and Zamil are existing 50-50 partners on a 27 KTAethanolamineJVproject in Jubail that is expected to start operations soon. This unit is mechanically complete and will be commissioned in January.
ExxonMobil Chemical, Qatar Petroleum Sign Deal for Qatar Petchems Project
Qatar Petroleum and ExxonMobil Chemical have signed an agreement to progress their previously announced plans to build a world-scale petrochemicals complex at Ras Laffan, Qatar. The complex will include a gas cracker with a capacity for 1,600 KTA of ethylene; two 650 KTAgas-phase polyethylene (PE) plants; and a 700 KTAethylene glycol plant. The complex is scheduled to start up in late 2015. It will serve global petrochemical demand, with a particular focus on Asia.
The project will use ExxonMobil’s proprietary steam cracking processes and other technologies. The complex will use feedstock from gas development projects in Qatar’s North Field. QP and ExxonMobil Chemical announced a head of agreement in 2006 to study the Ras Laffan complex. ExxonMobil was competing with Shell Chemicals, Total Petrochemicals, and Honam Petrochemical to be selected as QP’s partner in the first of the four projects to go ahead.
Comments: The agreement to build this world-scale gigantic petrochemical complex in Ras Laffan, Qatar further resonates with the trend in the global petrochemical industry. The Middle East will be the main supplier of basic resins and chemicals with Asia (Primarily China and India) as the major market. China will be a major exporter of finished goods made of these materials. Other Asian nations (Korea, Thailand, and Japan) which have been exporting basic resins and chemicals to China are actively pursuing more specialty-oriented products to mitigate the Middle East wave. However, companies in North America and Europe will still be part of the equation because they are JV partners of Middle Eastern firms. For years, JV has been a mandate for the petrochemical industry in the Middle East region.
SABIC teams up with state fund for US$2.67 billion bond issues
Saudi state-controlled petrochemical giant SABIC is opting for its first private bond placement to raise 10 billion riyals (US$2.67 billion) to boost its finances and fund expansion plans.
After the Dubai crisis, the Saudi major has been facing a regional investor climate tinged with uncertainty. This has pressed SABIC to sign an agreement with the Public Investment Fund (PIF) -the finance ministry’s investment arm and its biggest shareholder, over the planned issues. PIF holds a 70% stake in SABIC-the world’s biggest petrochemicals firm by market value while the balance is held by private investors. SABIC raised 16 billion riyals(US$4.3 billion)from the public through three Islamic bond issues from 2006-2008.
Comments: SABIC is taking this measure to steady the investors’ confidence. Dubai is part of the UAE, an adjacent nation to Saudi Arabia. Presumably, a crisis from any of the six members of the Gulf Coast Council (such as Dubai in UAE) would affect the economical stability of the entire region including the Kingdom of Saudi Arabia, the leading nation of GCC.
Oil RefineriesLimitedacquires Carmel Olefins
Oil Refineries Ltd. (ORL) has completed the acquisition of the remainder of the shares of Carmel Olefins. The parties involved have completed the transaction announced in October 2009 regarding the signing of an agreement with Israel Petrochemical Enterprises Ltd. (IPE) to acquire IPE’s share in Carmel Olefins Ltd., in exchange for the Company’s allocating 17.75% of its issued share capital (following allotment). ORL now holds 100% of CAOL, while IPE increases its holding in ORL to 30.7%, and the Israel Corp. and the public will respectively hold 37.1% and 32.2% of the Company.
Comments: Carmel Olefins Ltd. (Carmel) is Israel’s only producer of polyolefins. Carmel Olefins Ltd. was founded in 1991 through a merger of existing businesses then. It was a private company jointly owned by the Israel Petrochemical Enterprises Ltd(IPE). and by the Oil Refineries Ltd(ORL). Recently, ORL bought the remaining stake of the company from Israel Petrochemical Enterprises Ltd. to become the sole owner of Carmel.
Carmel’s production is in the Haifa Bay industrial zone, adjacent to the ORL’s refinery. Therefore, it serves as a downstream plant for the refinery, with most of its raw material supplied byORL. Some of the products from Carmel are also supplied back to ORL and Gadiv Petrochemical, a subsidiary of ORL, located in its vicinity. Due to already existing synergies, the acquisition of Carmel’s remaining shares from IPE is a strategic move by ORL -from both production and cost competitiveness basis.
This move will significantly aid ORL to optimize the production processes among all its subsidiaries to obtain higher margins and increase its global competitiveness.
Total Petrochemicals expands in the Middle East
Qatofin, the JV of Qatar Petrochemical Co. (Qapco), Total, and Qatar Petroleum (QP) have inaugurated its 450KTA LLDPEplantat Mesaieed, Qatar. Total Petrochemical expects the new and planned capacity in the Mideast to play a crucial role in Total Petrochemicals’ strategy to increase its Asia’s market share to 25% by 2015.
Total is in discussions with the deputy prime minister, and minister of energy and industry of Qatar, on a separate project to build a world-scale complex based on a mixed-feed cracker. Other planned investments by Total in the Mideast and Africa include a refinery and aromatics complex that is under construction at Al Jubail, Saudi Arabia, and could be expanded, and a Petchemscomplex at Arzew, Algeria.
Comments: Qatar Petrochemical Company (Qapco) was established in 1974 to utilize associated ethane gas from petroleum production in line with the industrialization plan of Qatar.Qatofinis the joint venture of Qatar Petrochemical Co. (63%), Total(36%), and Qatar Petroleum(1%). QAPCO commenced its operations in 1981 with Total increasing its stake to 36% from an initial 20% in the company. This increase was mainly triggered by Middle East-advantaged feedstock enabling increasing advantage in the polyolefins pricing. This high advantage in pricing is beneficial, especially for the high-growth and price-sensitive regions in Asia.
This success of the start-up of the project in Mesaieed, Qatar, will increase Total’s market share in the Asian country. In addition, some of the other projects will further contribute to Total’s goal to increase the market share to 25% in Asia
ASIAN-PACIFIC
Indian government to enhance the competitiveness of India’splasticindustry
In a bid to improve the competitiveness of the plastic-converting Industry, the Indian government has enhanced the economies of scale by planning to set up plastic clusters or parks across the country. These special economic zone parks include tax holidays, the exemption in sales tax, octroi, excise, as well as subsidy.
The overall guidelines will be taken from the existing automobile, textile, and food processing parks in the states of Maharashtra and Gujarat.
The chemicals and fertilizers ministry will soon approach the Planning Commission and the finance ministry with a proposal to provide various fiscal incentives for the development of such parks. The finalization of incentives will be subject to approval from the Planning Commission, as well as the finance ministry. This step is expected to provide an impetus to exports of the Indian plastic industry, from existing levels of US$3 billion.
Comments: This move will significantly help the Indian plastic industry to decrease its manufacturing costs and thereby provide a high advantage in pricing to be more competitive in the global market. This will provide momentum to the exports of converted goods from India. Indian exports of plastic products are only worth $ 3 billion as compared to China’s $ 22 billion in exports.
The major stumbling block to the plastics converting industry in India is its classification as a small business investment–thus making economies of scale unachievable.
Formosa Petrochemicals considering collaboration with Sinopec
Qatar aidsSiam Cement Revive Petchem JVin Vietnam
Siam Cement Group has signed an agreement with Qatar Petroleum International (QPI), to build a petrochemical complex in southern Vietnam in a JV with Petrovietnam and chem. The Petchem complex will be located at Long Son Island and will involve a total investment of US$3.5 billion-US$ 4 billion. The agreement revives a project at the same site that SCG and its Vietnamese partners shelved in early 2009 when QPI was not a part of these plans.
Comments: SCG is one of the most progressive organizations in Thailand. Vietnam is considered the fastest-growing country in South East Asia for the plastics industry.
If we take Singapore out (no natural resources, no labor advantage, no manufacturing), Vietnam represents the fourth largest economy behind, Thailand, Malaysia, and Indonesia with great labor advantages, proximity to markets, and progressive advantages.
Taiwan mandates the recycling of PLA containers
Taiwan has officially listed PLA containers as recyclable items from December 2009, and put into place arrangements for PLA recycling by March 1, 2010. The EPA agency will ask beverage and food manufacturers to mark containers and bottles made from PLA.
A green policy adopted in Taiwan earlier in 2003 placed restrictions on the type of disposable containers that could be used, but most non-plastic materials, including PLA, have been exempt from that directive.
Comments: Taiwan’s decision to label PLA as recyclable is a positive step amid the ongoing debate on whether PLA can be recycled with mainstream PET. Several studies have been released in this regard –most of which seem to contradict each other. There are essentially two views: 1) PLA does not contaminate the PET streams and technologies are available to separate these streams, and 2) PLA does contaminate the PET stream and currently available separation technology is too expensive for recyclers to adopt.
While both of these claims have certain facts to support them, the real issue is the total consumption of PLA. Unless the total volume of PLA consumed does not surpass a threshold value, there will resistance from recyclers who cannot justify expensive screening systems. Further, there are some issues related to the performance and hence value offered by recycled PLA.
While this debate continues, Taiwan’s legislation might be the right test bed for others adopting similar legislation in the future.
Datang starts the first UNIPOLPP unit in China
China’s first UNIPOLpolypropylene gas phase technology unit, China Datang Inner Mongolia Duolun Coal Chemical Co. Ltd., has conducted a successful trial run, producing Aim-grade PP resin.
The Datang facility, located in Inner Mongolia, is also the first large-scale coal-to-olefin plant in China. the plant will produce 460KTA of PP per year.
Comments: Union Carbide extended the utility of the Unipol®process by adapting it to produce polypropylene in the mid-1980s by utilizing Shell’s SHAC catalysts. Dow got this technology following the acquisition of UCC and is currently one the largest licensors of PP technology. Today, Dow’s Unipol PPprocess accounts for approximately 16% of the global licensed PP capacity, with the majority of the capacity based in North America, Asia, and the Middle East.
However, the technology was never licensed in China where Novolen and Innovene PP have remained the prevalent gas phase technologies. Datang is the first Unipol PP unit in China and an important milestone for process technology. Datang International Power Generation plans to feed this plant with propylene produced using Lurgi’sMethanol to Propylene (MTP) technology.
Thai government supports the appeal to lift the suspension of 19 projects in Rayong
The Thai national government has supported the appeal to lift the suspension on some of the 65 major projects in Mab Ta Phut, Rayong province.
The Thai Cabinet has agreed to ask the Supreme Court to take out 19 more petrochemical projects in its suspension list deemed to have a very limited environmental impact. This will be in addition to the initial list of 11 that were allowed to proceed. The Supreme Administrative Court upheld the suspension of 65 projects in Thailand’s petrochemical hub of Mab Ta Phut while clearing 11 others that promote the use of clean energy. Seven of PTT’s projects had been cleared along with two SCG projects.
Thai PTT to complete plan to consolidate refining, and petrochemical businesses by Q1-10
PTT PCL is expected to consolidate its refining and petrochemical businesses by Q1-2010.PTT is expected to submit a petition to Thailand’s Central Administrative Court to get permission to proceed with nine projects suspended earlier, given that they received operating licenses before the 2007 constitution.
Comments: The strong economic growth has brought environmental problems to Thailand. The government has scrutinized several industries including refining, petrochemical, and chemical to assess their polluting impact on air, water, foods, forests, ecology, etc. The environmental problem is a by-product of the industrialization process for any country. Hopefully, the Thai government’s suspension measures have alerted the industries and pushed them to quickly take measures to reform by refining their processes and improving the technologies to meet environmental standards. This will also benefit Thai’s neighbors: Cambodia, Laos, Burma, and Malaysia, which already expressed concerns over the environmental problems (mostly air and water) in that region.
Contact us at ADI Chemical Market Resources to learn how we can help.