My Turn – Dr. Balaji B. Singh
THREE TOP REASONS FOR YOU TO ATTEND FLEXPO – OCT 17-19 in Bangkok
Number 3 – First opportunity to meet major suppliers, Government, and downstream processors in Thailand- the Gateway to China;
Number 2 – Come and Meet your future customers – the downstream converting industry in Thailand, and ASEAN Countries;
Number 1 – Bangkok – Hospitality, Food, Tourism; The Future Growth and an Opportunity to meet future growth region.
For more information visit www.CMRHouTex.com
FlexPO2007 on October 17-19th, 2007 and Polyolefins; Downstream Processing Workshop- October 16th Bangkok, Thailand
CMR is pleased to announce that we will be hosting a conference & polyolefins and downstream processing workshop in Bangkok, Thailand. The conference will be held from October 17-19 at Shangri La Hotel and the workshop will be held on 16th October. Please plan on attending.
Comments: Please find enclosed the brochure for FlexPO2007 & Workshop. For more information, please call us at 281-557-3320.
Chemical Market Resources introduces a new section – trade statistics
With globalization, the understanding of polyolefins trade dynamics has become increasingly important. On a global basis demand and capacity are growing at unprecedented rates and will have a major impact on global trade patterns. Chemical Market Resources, Inc. will track & publish trade statistics between the United States and World for LDPE & LLDPE, HDPE, and PP every month in PO&E. The current PO&E issue presents the trade dynamics for the years 2003, 2004, 2005, 2006, 2006 Year to Date, and 2007 Year to Date. Please keep this issue for future reference on historical trade information. Subsequent PO&E issues will present monthly trade dynamics for 2006 & 2007 and Year to Date trade dynamics for 2006 & 2007.
This issue highlights the trend of increasing exports and decreasing imports for the United States. Higher oil prices relative to natural gas prices continue to support exports. While these appear to be short-term trends the composition of the countries exported to will have to be closely monitored to determine the long-term viability of exports. Currently, it seems that South America accounts for the largest portion of the net exports, a region that will not be significantly impacted by the wave of capacity additions in the Middle East. As we continue our analysis of the trade dynamics we will provide more information on the percentage of net exports with long-term viability and the percentage of net exports that will be affected by global dynamics.
Trade information by country is available on request. Please contact Chemical Market Resources, Inc. for further information.
ExxonMobil to construct second cracker & petrochemical complex in Singapore
ExxonMobil Chemical Company announced that it has completed its detailed study of a second world-scale steam cracker complex in Singapore and made the final decision to proceed with construction. The project will be located at and integrated with its existing Singapore site, providing feedstock, operating, and investment synergies with both the chemical plant and refinery.
The new petrochemical project will include a world-scale, one million tons-per-year ethylene steam cracker, two 650,000 tons-per-year polyethylene units, a 450,000 tons-per-year polypropylene unit, a 300,000 tons-per-year specialty elastomers unit, an aromatics extraction unit to produce 340,000 tons-per-year of benzene and an oxo-alcohol expansion of 125,000 tons-per-year. A 220-megawatt power cogeneration unit will also be built. The project start-up is expected in early 2011.
ExxonMobil Asia Pacific Pte Ltd also announced that it has awarded the design, engineering, procurement, and construction (DEPC) contract for the steam cracker recovery unit to The Shaw Group. The EPC contract for the steam cracker furnaces has been awarded to Mitsui Engineering and Shipbuilding and Heurtey. Mitsui Engineering and Shipbuilding has also been awarded EPC contracts for the polypropylene and specialty elastomers units. The EPC contract for the two polyethylene units has been awarded to Mitsubishi Heavy Industries.
Comments: This will be the second large-scale investment by ExxonMobil in Singapore. The total investment in the cracker is estimated to be $4 billion with a start-up date in 2011. The investment includes a world-scale naphtha-based cracker with a 1 million tons per year capacity. By the time we reach 2010, the mass of known capacity from Saudi, Qatar, Kuwait, China, and other Asia (Thailand, Korea, Singapore), totaling close to 25 million tons per annum (2006-2010) would have been brought onstream. Iranian producers will add at least 2-3 million tons per annum of capacity to the above figure.
The obvious question is why Singapore when the whole world is adding capacity in regions with access to low-cost feedstock. The factors impacting the decision for a new cracker location include (1) availability of consistent and low-cost feedstock, (2) a stable operating environment with supportive infrastructure (physical assets, labor, and governmental support in tax breaks, etc.), and (3) easy access to customers or demand. ExxonMobil will be able to leverage the support of its existing petrochemical units on the island. Also, sourcing third-party naphtha and access to the growing Chinese market would be relatively easier given Singapore’s geographical trade route. The combination of existing operations, logistics advantage, political stability, and successful operation of its existing assets in Singapore must be the key reasons for ExxonMobil’s decision regarding investment in Singapore.
The Singapore government has been extremely successful in attracting investment in the country in the chemical sector. The country has been able to offer a competitive advantage via integration, infrastructure, and logistics. The country has set an example by attracting investment though it does not have a cost advantage in terms of feedstock or labor.
Dow Epoxy announces acquisitions for its epoxy systems unit
Dow Epoxy, a global business unit of Dow Chemical, announced the signing of definitive agreements to acquire UPPC AG in Germany, and POLY-CARB Inc. and GNS Technologies in the United States. Each of these businesses is a leading epoxy systems formulator in its region. Dow expects to complete each acquisition within 30 to 45 days.
These acquisitions are consistent with Dow’s strategy to invest in its downstream performance businesses. For Dow Epoxy, the acquisitions will accelerate the growth and geographic expansion of its new Dow Epoxy Systems business unit, which launched earlier this year. Dow Epoxy Systems offers solution-based epoxy systems to the industry.
Dow Epoxy Systems will focus on applications in civil engineering, specialty protective coatings, composites, wind energy, and other industries where Dow’s unique technology and systems solutions can offer performance enhancement and differentiation to customers.
Comments: Dow’s acquisition of the epoxy business strengthens its business position. The major players in epoxies are Hexion, Huntsman, Dow, and others. After Hexion acquired Huntsman, the company significantly increased its market share in the epoxy business and hence Dow is doing the same. Epoxy-based products are part of Dow Chemical’s performance plastics business unit.
With these acquisitions, the company will be better positioned in (1) high-performance products and customized systems to thermoset polymer markets with a focus on cross-linking polymers such as epoxies, polyurethanes, polyureas, etc. used for civil engineering, industrial maintenance, and steel structure coating applications, (2) industries such as highway bridge restoration & waterproofing, parking structures restoration & waterproofing, pavement striping and delineation, industrial floor surfacing and maintenance, corrosion control and tank linings, structural adhesives, and coatings and grouts, and (3) specialty coatings and composites industries, as well as specialty markets.
GAIL achieves mechanical completion of 100 KT new HDPE plant at PATA
GAIL (India) Limited has achieved mechanical completion of its new HDPE (High-Density Polyethylene) Plant at the Petrochemical Complex at PATA. The capacity of the new HDPE plant is 100,000 TPA and is based on technology from Mitsui, Japan. With the completion of the new HDPE plant, the polymer capacity of the Pata Petrochemical plant has increased to 410,000 TPA from 310,000 TPA.
The project was completed within the estimated project cost of Rs. 647.38 Crore. The commissioning process will now commence and the plant is expected to be commissioned shortly. GAIL’s polymer products include a wide range of HDPE grades based on technology from Mitsui, Japan, and a wide range of HDPE and LLDPE grades based on technology from NOVA Chemicals, Canada.
GAIL made an entry into the petrochemicals market in the year 1999. Since then, polymer sales have increased nearly three-fold in volume, from 110 KT in the Financial Year 1999-2000 to 347 KT in the Financial Year 2006-2007, and over five-fold in value, from Rs 479 crore in the Financial Year 1999-2000 to Rs. 2570 crore in the Financial Year 2006-2007. Out of a total Gross Margin of Rs. 2387 crore, polymers have contributed nearly 40 percent in 2006-07.
GAIL is currently also setting up a 280,000 TPA polymer capacity at Dibrugarh in Assam at an investment of Rs. 5460.61 crores through a Joint Venture Company Brahmaputra Cracker and Polymer Limited. GAIL is also looking to expand its presence through Joint Ventures – with at least one more plant in India and one overseas.
Comments: Gail is one of the leading polyolefin producers in India with capacities for ethylene, propylene, LLDPE, and HDPE. Gail’s petrochemical complex is in Uttar Pradesh. Gail had 300 KT ethylene, 20 KT propylene, 160 KT LLDPE, and 180 KT HDPE capacities. Gail has decided to add capacities for ethylene, LLDPE, and HDPE. Reliance Industries is the largest commodity plastics supplier in India.
Gail’s decision to increase capacity seems to be based on robust demand and growth in India. LLDPE is projected to grow at 15% annually for the next five years on a consumption base of approximately 500 KT. The largest demand for LLDPE in India is in film applications accounting for 80% of the market. Other markets include roto molding, extrusion coating, and injection molding.
HDPE is projected to grow at 8% annually for the next five years on a consumption base of approximately 800 KT. The major end-use markets for HDPE include blow molding, films, woven sacks, pipes, injection molding, and others.
Reliance to construct cyclohexane manufacturing unit using Axens technology
Reliance Industries Limited has awarded Axens a basic engineering contract and license for the production of 40,000 tons per annum (TPA) of high-purity cyclohexane. The unit will hydrogenate benzene using Axens’ proprietary two-step process technology which employs low-temperature, liquid-phase homogeneous catalysis followed by gas-phase heterogeneous catalysts. The process design affords complete conversion, product purity in excess of 99.9%, and very low utility consumption.
The unit, to be located in the Hazira Petrochemical Complex in Gujarat Province, India is on a fast-track schedule with expected commissioning in 2008. Axens has licensed 36 cyclohexane units for a cumulated capacity of over 4.2 million tpa.
Comments: It seems a good business for both Reliance Industries and Axens Technologies. The latter continues its success in licensing its cyclohexane units – it has already licensed 36 such units for a total capacity of over 4.2 million tons per annum. The process design affords complete conversion, product purity in excess of 99.9%, and very low utility consumption. The unit, to be located in the Hazira Petrochemical Complex in Gujarat Province, India is on a fast-track schedule with expected commissioning in 2008. This new unit will supply the much-needed cyclohexane capacity – a key industrial solvent for commercial processes such as the PE solution process by Reliance Industries.
Axens, formed on July 1, 2001, through the merger of IFP’s technology licensing division with Procatalyse Catalysts & Adsorbents, is a refining, petrochemical, and natural gas market-focused company offering market-leading products including processes, catalysts, adsorbents, and equipment, backed by nearly fifty years of R&D and industrial success. Reliance Industries Limited (RIL) is India’s largest private sector enterprise, with businesses in the energy and materials value chain. The Group’s annual revenues are in excess of USD 22 billion. Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fiber producer in the world and among the top five to ten producers in the world in major petrochemical products.
Degussa’s parent company RAG has changed its name to Evonik Industries
Degussa’s parent company RAG has changed its name to Evonik Industries, and its Degussa chemical operations as well as its real estate and energy businesses will take the new name. The name change is the last move before RAG‘s planned initial public offering in first-half 2008.
The German coal mining operations will retain the RAG name. Evonik Industries is active in over 100 countries around the world. In fiscal 2006 around 43,000 employees generated sales of EUR14.8 billion and operating Profit (EBIT) of over EUR1.2 billion. Evonik plans to enter the capital market in the first half of 2008.
Comments: Degussa AG was formed in 2001 from the merging of Degussa-Huels and SKW Trostberg. Both these companies had their origins in the industrialization of Germany well over 100 years ago. The common themes of their development were product diversification and geographical expansion and both companies had themselves have been built up through acquisitions and mergers.
RAG Aktiengesellschaft, Essen, Germany (RAG), held a 50.1 percent interest in Degussa AG (Degussa) through its wholly owned subsidiary RAG Projektgesellschaft mbH (RPG), and in 2005 the company acquired all remaining shares in Degussa.
IOC progresses on its refinery and petrochemical complex in India
Indian Oil Corp (IOC) will commission its 15 million tons oil refinery and an accompanying petrochemical complex at Paradip in Orissa by October 2011. The refinery-cum-petrochemical complex would cost Rs 25,646 crore.
Technological selection for all major units has been completed while Project Management Consultant (PMC) has been selected for Front End Engineering and Design (FEED) of the project.
Comments: This is one step in progress in IOC’s planned Paradip refinery and petrochemical complex.
Indian Oil Corporation (IOC) is India’s largest commercial enterprise in terms of sales and profits and is the 18th largest petroleum company in the world. The company was formed in 1964 through the merger of Indian Oil Company Ltd. (Estd. 1959) and Indian Refineries Ltd. (Est. 1958). The company has plans to reach US$ 60 billion in revenues by the year 2010-11 from current earnings of approximately US$ 35 billion. The road map to attain this milestone has been laid through vertical integration – forward into petrochemicals and backward into exploration and production of crude oil, besides diversification into the natural gas business and globalization of operations.
The Paradip facility will allow IOC to vertically integrate into chemicals and take advantage of its surplus naphtha. However, the plans for installing a cracker and polymer units will be implemented in the second phase.
Blackstone strengthens investments in the Chinese chemical industry
China National Chemical Corporation (“ChemChina”), a leading international diversified chemical company, and The Blackstone Group announced a strategic partnership to build a global leader in the specialty chemical industry. The Blackstone Group will invest up to US$ 600 million into China National Bluestar (Group) Corporation (“Bluestar”), a wholly-owned subsidiary of ChemChina, for a 20% stake. Antony Leung, Blackstone’s Chairman of Greater China, and Ben Jenkins, a former director of Celanese, will join the board.
UBS AG acted as financial advisor to ChemChina, and Merrill Lynch acted as financial advisor to Blackstone on this transaction. The transaction is subject to final regulatory approvals.
Comments: Blackstone is one of the world’s largest independent alternative asset managers. The firm operates through four segments, including corporate private equity, real estate, marketable alternative asset management, and financial advisory. The company recently sold a stake for $3 billion to the Chinese government. While the dynamics of the government relationship will evolve, capital market opportunities in China appear abundant. This transaction is a result of Blackstone taking advantage of one of these opportunities.
Blackstone Group has been involved in some of the acquisitions in the chemical industry – specifically: Celanese and Nalco Company and hence it can better succeed based on its experience.
AET Films to close an OPP plant in Virginia in 2008
Applied Extrusion Technologies, Inc. announced that the Company will close its Covington, VA facility in 2008.
According to the company, the plant’s relatively small size and large infrastructure costs have hindered its long-term competitiveness, and this ultimately led to the decision to close the plant.
The Covington plant employs 126 people and produces oriented polypropylene films used in labels and packaging applications. The plant was acquired by AET in 1994 as part of the Company’s acquisition of the films business from Hercules Incorporated. Mr. Mohr said salaried employees would receive severance pay and benefits, and that the Company would bargain the effects of the closure with the union.
For the past year, AET has been improving its financial performance by optimizing its product portfolio, improving efficiency and effectiveness, redesigning its North American business platform, and strategically planning for growth options.
Applied Extrusion Technologies, Inc. is a leading North American developer and manufacturer of specialized oriented polypropylene (OPP) films used primarily in consumer products labeling and flexible packaging applications.
Comments: Applied Extrusion Technologies (AET) is North America’s second-largest producer of BOPP films. AET, headquartered in Peabody, MA, manufactures and markets BOPP films through its Packaging Films Division at New Castle, DE. AET was organized in 1986 to acquire businesses that develop manufacture and sell oriented films and nets, as well as non-net type thermoplastic products. The company manufactures various types of BOPP films including (1) clear BOPP films, (2) coextruded BOPP film, (3) metalized BOPP film, (4) PVDC-coated BOPP films, and (5) opaque BOPP films.
The film market is a very competitive industry with newer and better products continuously being produced. AET’s move to close down older plants makes economic sense in the current situation.
Georgia Gulf to close profile extrusion facility at its subsidiary – Royal Group
Georgia Gulf Corporation announced that it will close Royal Group’s Winnipeg, Manitoba window and door profile extrusion facility later this year, with the extrusion operations currently in this facility to be transferred to other Royal Group profile extrusion plants. Georgia Gulf acquired Royal Group in October of 2006 and has acted rapidly since then to optimize manufacturing operations and improve financial results.
Royal Group has profile extrusion facilities located strategically throughout North America to serve its expanding window manufacturer customer base. Royal Group’s window and door profile extrusion plants are located in Toronto Ontario, Montreal Quebec, Pittsburgh Pennsylvania, Reno Nevada, Bristol Tennessee, and Seattle Washington.
Georgia Gulf also announced that its RoyalGuard(TM) impact-resistant system has been granted Florida Building Code-HVHZ (High-Velocity Hurricane Zone) approval (including Miami-Dade and Broward Counties). The system is targeted at windstorm-prone areas of the US, such as the Florida coastline. In May 2007, Georgia Gulf announced the completion of the construction of a window and door profile extrusion plant in Bristol, Tennessee, to serve its expanding window manufacturer customer base in the Southeastern US.
Comments: Since acquiring Royal Group, Georgia Gulf is considered the largest compounder in North America. The North American demand for windows and profiles will depend on the construction industry and over 50% of the raw material used is PVC based, an area in Georgia Gulf that is well established. The PVC-based windows and profiles have been growing rapidly displacing other material-made windows such as aluminum.
Georgia Gulf’s move to close down will utilize the latest technology in extrusion profiles and take advantage of financial savings.
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