Dow to strategically evaluate its business portfolio
Dow Chemical announced its decision to realign a number of businesses to a newly created business group, Dow Portfolio Optimization. Each of the businesses within the new group has been earmarked for strategic evaluation, with the goal of defining how best to maximize its long-term value to the Company – whether that be through realignment to other Dow businesses, joint ventures, or divestitures.
Dow’s chairman and the chief executive officer said that within any organization, systematic portfolio management is fundamental to a company’s evolution and sits right at the heart of long-term shareholder value creation.
George Biltz, who currently heads the Company’s Specialty Plastics and Elastomers portfolio, has been appointed business group president of the new portfolio, which will include SARAN™ Products and Specialty Films, Polycarbonate, Compounds and Blends, Synthetic Rubber, and Specialty Copolymers. Going forward, the Company expects to align other Dow businesses to the portfolio as they are assessed for strategic alignment with Dow’s transformational strategy.
Comments: There are two ways to interpret this: (1) Dow is putting all the dead ducks on the selling blocks – notice the absence of any core businesses or (2) It is a step towards Market Facing Platforms to assess the needs of each of the selected market platforms – Building Solutions; Wire & Cable; Automotive; Coatings & Adhesives; Food; Personal Care; Footwear and Inks/Toners.
Our opinion is the latter – Dow Chemical Company will internally evaluate the options of each of the selected “specialties” to see which will fit the overall strategy and then decide if any of them need to be disposed of.
Moreover, Dow Chemical Company will be probably buying more product lines than disposed of. This will allow the company to meet the future needs of “Re-organized Dow” – to be an innovative company that meets the market needs independent of technology.
INEOS Polyolefins to invest in polyolefins at the Grangemouth facility
INEOS Polyolefins announced its intention to invest in random co-polymer technology on its liquid pool polypropelene (PP) unit at Grangemouth, Scotland. By linking ethylene supply from its crackers to the PP unit, random co-polymer grades with a wide range of melt flow rates will be produced commencing Q3 2008 for the blow molding, packaging, and medical sectors.
In early 2007, INEOS Polyolefins announced the 50ktpa debottleneck of its liquid pool polypropylene unit, raising its capacity to 285ktpa. This investment has now been completed and has enabled the company to implement a further step-change in the asset’s capability, As part of its development of the polyolefin platform at Grangemouth, INEOS Polyolefins also intends to introduce swing capability on its 310 ktpa LLDPE plant to produce HDPE grades. This follows the recent development by INEOS Polyolefins of roto-molding grades at Grangemouth and the appointment of ICO Polymers as its exclusive partner to distribute its range of advanced hexene co-monomer roto molding polymers. The new HDPE injection molding grades will be produced in addition to the existing LLDPE/MDPE grades and will complement the existing HDPE product range.
Comments: It is anticipated that there will be a shortage of resins in Europe due to a lack of new investment and stable demand. Exports from other countries to Europe have also increased due to the strengthening of the Euro. Random copolymers exhibit superior properties and usually receive a premium over homopolymer resins. The premium received by random copolymers is dependent on the end-use application.
Ineos currently has a 250 KT PP capacity at the Grangemouth facility. There are only two producers of PP in the U.K. Basell operates a 210 KT a year plant at Carrington; and Ineos has a 250 KT a year unit at Grangemouth. Ineos was planning on raising the capacity of the unit to 280 KT by 2008. UK is a net importer of PP. Recently SABIC Europe decided to put its polypropylene project in Wilton, UK on hold, citing an unfavorable business environment.
Ineos currently has an LLDPE plant at its Grangemouth facility and is now planning to introduce swing capability. Historically swing plants used to operate either LLDPE or HDPE; however, due to advancements in technology producers have been able to swing their plants more frequently. Swing capability will allow Ineos to react to market conditions and effectively participate in these dynamic market conditions.
Pemex to increase capacities at Morelos, La Cangrajera
Mexico’s state-owned Pemex on Thursday outlined its petrochemicals investment priorities for 2008, all of them in the Morelos and La Cangrejera complexes in the southern Gulf state of Veracruz.
In a Q4, 2007 earnings performance, Pemex said that it plans to expand the capacity of its Morelos ethylene plant from 600 KT per year to 850 KT per year. Pemex will also increase the capacity of its ethylene oxide plant at Morelos from 225 to 360 KT per year.+
At La Cangrejera Pemex plans to increase the capacity of its ethylene plant from 600 KT per year to 900 KT per year, including the integration of ethylene derivatives. The aromatics chain will be updated and expanded at La Cangrejera, where the capacity of the styrene plant is being raised from 150 KT per year to 250 KT per year.
Comments: Petroleos Mexicanos (PEMEX) is Mexico’s state-owned, nationalized petroleum company. The company is engaged in the exploration, production, refining, and marketing of oil and gas. The company mainly operates in Mexico. It is headquartered in Mexico City and employs 141,275 people. PEMEX Petrochemicals manufactures different petrochemical products. The product includes methane derivatives, such as ammonia and methanol; ethane derivatives, such as ethylene, polyethylenes, vinyl chloride monomer, and ethylene oxide; aromatics and their derivatives, such as styrene, toluene, and paraxylene; propylene and its derivatives, such as acrylonitrile; oxygen, nitrogen, and other products.
The company was unsuccessful in finding partners for its project Phoenix which is now being restarted differently. The company expects to continue its investment in the higher value-added petrochemical chains and believes that this will certainly contribute to increasing its participation in the domestic market and trigger the growth of the petrochemical industry in Mexico.
ONGC drops plans of HDPE unit at proposed project at Dahej
Oil and Natural Gas Corporation (ONGC) has reduced the projected cost of the proposed mega-petrochemical plant at Dahej, Gujarat, by Rs 1100 crore. The project was initially configured with a styrene butadiene rubber (SBR) and a dedicated HDPE (high-density polyethylene) unit that has now been removed in view of current market demand-supply dynamics. This reconfigures the cost of the project to Rs 12440 crore, approved by the company board. The project is being implemented by the subsidiary ONGC Petro Additions Ltd (OPAL). ONGC has management control with a 26% stake in OPAL.
Comments: In the last few years, there have been many announcements regarding capacity expansions in India. When those announcements were made, CMR, Inc. had indicated that not all capacity addition plans will materialize. We anticipate further delays or cancellations related to capacity expansions in India. If all the announcements were to materialize on time then there will be overcapacity in India. However, some players will restrain from additional capacity either due to supply-demand dynamics, lack of capital, or change in business strategy. Capacity announcements related to polyolefins are more likely to get delayed or canceled than announcements related to elastomers, or non-polyolefin-based materials.
Reliance Industries plans to restart EVA manufacture
LReliance Industries is considering restarting its ethylene vinyl acetate (EVA) plant. The EVA manufacturing facility is located at Gandhar, Gujarat having a manufacturing capacity of 15 thousand metric tons per annum
Comments: Reliance’s plan to restart the EVA plant comes at a time when the supply of the material is tight and the price of EVA continues to increase as the supply fails to satisfy the demand. The EVA shortage has come about due to the shortage of VAM a raw material for EVA, this trend is been seen across the globe. The effect is even more prominent in India due to the lack of EVA capacity. EVA is mainly consumed in Wire and Cable, footwear, and adhesive application. Reliance’s move to restart its EVA plant will ease the supply shortage that India is currently facing.
Dow introduces plasma-coated PP bottles to compete with PET
Dow Chemical Co. is touting the value of plasma-coated polypropylene containers as a PET replacement in smaller bottles. According to the company, in testing, plasma-coated PP bottles can be downgauged to create 10 percent cost savings vs. PET. The material also can offer similar oxygen transmission rates. Test runs of 500 bottles have been accomplished in bottles less than 32 ounces in size, including 500-milliliter bottles for isotonic drinks.
Comments: Polyethylene terephthalate (PET) has been a widely used and accepted material for use in bottles.
The major success factors in PET being so widely accepted are (1) clarity and (2) recyclability. None of the other clarity polymers could surpass these two characteristics without increasing the cost.
Clarity PP is the clear contender for the markets, except for the stress whitening – Plasma coated PP bottle may avoid the situation better than other clarity PPs introduced by other major polyolefin players – See Chevron Phillips; Basell; JPP; product offerings for the same markets.
Russian firm Nizhnekamskneftekhim Outlines its future investment plans
Nizhnekamskneftekhim (Nizhnekamsk), Russia’s second-largest chemical company behind Sibur announced its plans to invest and expand production at its Nizhnekamsk manufacturing complex and diversify production to meet local and export needs.
The plans include (1 ) an increase in butyl rubber output; (2) the manufacture of fatty alcohols and ethoxylates; and (3) conducting a feasibility study for the production and sulfonation of linear alkyl benzene.
Nizhnekamskneftekhim plans to raise the output of butyl rubber, including chloro- and bromo-butyl rubbers, from just more than 90 KT per year to 120 KT per year in 2008, and to 200 KT per year in 2012.
The project will reinforce the company’s position as the third-largest producer of butyl rubber worldwide, trailing ExxonMobil Chemical and Lanxess. Nizhnekamskneftekhim says that 2006 production at its butyl rubber complex, at 108,000 m.t., exceeded nameplate capacity and accounted for 32% of the global market. The company says its halo butyl rubber unit, onstream since 2004, accounted for just more than 5% of the global market. Nizhnekamskneftekhim is also considering the construction of a complex to make styrene-butadiene rubber, a product so far not made commercially in Russia.
Expansions of existing plants at Nizhnekamsk include: phased revamps of a Lummus-process ethylene plant from 450 KT per year, to 600 KT per year, and of a polybutadiene plant from 60 to 100 KT per year; completion of a Spherilene-process 230 KT per year polyethylene (PE) unit & 50 KT per year polystyrene (PS) plant in 2008; an expansion of isoprene rubber capacity to 175 KT per year; and construction by 2010 of a 70 KT per year acrylonitrile butadiene styrene plant based on Polimeri Europa’s continuous mass polymerization technology. Nizhnekamskneftekhim is also planning to increase PE production further and build plants producing polycarbonate and foamed PS.
Comments: Nizhnekamskneftekhim (NKNC), Russia’s largest synthetic rubber manufacturer, has reported a net profit of 36% to $117.5 million. Revenue grew by 30% to $1,6 billion, while operating profit rose by 36% to $210.6 million. Over the long term, the main driver for growth in operating activities will be the successful implementation of the capital investment program, which aims to dynamically escalate petrochemical and rubber production while expanding processing for polymer production.
Kazanorgsintez completes investment in production modernization
Russian firm Kazanorgsintez completed the reconstruction of phenol and low-pressure polyethylene production and is soon to finish the reconstruction of ethylene production.
In October 2007, the company started a new Bisphenol-A plant, which produced 2,388 tons of the new product in IVQ 2007. The design of high-molecular polyethylene production has been finished and since July 2007 the company has made 5 thousand tons of bimodal polyethylene. In 2007, sales amounted to RUR21.358 billion.
Comments: Kazanorgsintez is one of the largest petrochemical companies in Russia and the largest Russian producer of polyethylene. About 80% of company output is consumed in Russia.
The company has excellent margin potential because it is the only facility in Russia that can convert cheap ethane into ethylene. Existing polyethylene capacities in Russia are nearly fully loaded, and consumption per capita is set to rise quickly from current low levels.
Despite existing advantages, the company has problems with feedstock supplies. The company buys most of its ethane and other inputs from Gazprom, which wants to keep ownership of these inputs and the outputs made from them at Kazanorgsintez (a “processing” arrangement), reducing the company’s revenues and profits.
Lanxess to invest in butyl rubber capacity in Singapore
Specialty chemicals group LANXESS AG is set to make the biggest single investment in its history in Singapore. A new chemical production site for synthetic rubber is to be built at the chemical park on Jurong Island. LANXESS has earmarked a record amount of EUR 400 million for this investment. From 2011, the site in Singapore will produce up to 100,000 tons of butyl rubber annually, making the LANXESS plant the largest facility of its type in Asia. Construction is due to begin in the first quarter of 2009 and will be completed by the end of 2010. Some 200 new jobs will initially be created.
The new chemical facility will produce butyl and halobutyl, synthetic rubbers that are used in the production of tires.
Comments: Butyl rubber is the premium rubber because of the markets (tires) and the unique technology. ExxonMobil, Bayer, and Lanxess, each with their proprietary technology are the dominant players in the industry.
All said and done – butyl rubber manufacturing is more of an art of operating the equipment rather than science – due to cryogenics.
Arkema develops self-healing rubber
broken or cracked rubber that can self-heal simply through new contact, ultra-tough bitumen laid at 140°C instead of 180°C, easily-molded plastics with superior mechanical strength and chemical stability, and hotmelt glues from vegetable origin all have one thing in common: they are based on the concept of supramolecular chemistry, a promising branch of chemistry that offers a major improvement potential for everyday applications. Arkema, a partner in this research, is one of the first manufacturers poised to offer products derived from this chemistry shortly.
Self-healing and thermoreversible rubber from the supramolecular assembly is a result of research work conducted in the Matière Molle et Chimie Laboratory, a mixed research unit between CNRS and ESPCI (Ecole Supérieure de Physique et de Chimie Industrielles) run by Professor Ludwik Leibler, a former colleague of Pierre Gilles de Gennes, 1991 Physics Nobel Prize. Arkema, as a key industrial partner in this research, in particular through its expertise in nanostructured materials, is entering the phase of commercial development for several materials derived from this research.
Supramolecular chemistry consists in building complex assemblies of molecules joined by non-permanent or reversible bonds; these assemblies of molecules with a reversible structure are called supramolecular.
Comments: This is an interesting development not only in terms of basic material science discovery – but also its reduction to commercial practice by Arkema, a partner of this research work that has been conducted in the Matière Molle et Chimie Laboratory – a collaboration between CNRS and ESPCI in France run by Professor Ludwik Leibler, a former colleague of Pierre Gilles de Gennes, 1991 Physics Nobel Prize.
It is nice to see how collaboration between fundamental research and industrial research can lead to major innovations in the field of materials. This discovery relies on the new supramolecular Chemistry building complex assemblies of molecules joined by non-permanent or reversible bonds; these assemblies of molecules with a reversible structure are called Supramolecular – as observed in biological systems like DNA.
Over the last few years, the Chimie Laboratory has created various supramolecular networks from new building blocks – small fatty acids and a combination of multiple amides groups such as aminoethyl imidazolidone, di(amidoethyl) urea, and diamidotetraethyl triurea – creating hydrogen bonds that are reversible under the effect of temperature.
Unlike the previous self-healing materials systems based on very complex chemistry and processing, the use of a simple and renewable resource vegetable oil as a source of fatty acids is commendable.
Pactiv to close two plants to streamline operations
Pactiv Corp. announced its decision to streamline operations with two plant closures. The company plans to close plants with some plastics capacity in Yakima, WA, and Wheeling, IL.
Pactiv on Jan. 29 filed with the state of Illinois under the federal Worker Adjustment and Retraining Notification (WARN) Act, informing state officials the company will close a plant that produces items including plastic kitchenware by April 1.
For 2007, Pactiv reported a net profit of $245 million on sales of $3.25 billion. Since 2005, the company has been restructuring operations to control its costs.
Comments: Pactiv in 1965 was operating under Packaging Corporation of America, as a subsidiary of Tenneco Inc. In 1995, the name was changed to Tenneco Packaging Inc, and in 1999 was spun off as an independent company and renamed Pactiv Corporation. The company caters to food and consumer packaging markets. The food service products include molded-fiber egg cartons and foam trays for meats. The company’s consumer products include plastic food-storage bags, trash bags, and aluminum cookware under such names as Hefty, Baggies, and EZ Foil.
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