My Turn – Dr. Balaji B. Singh – Semi-Retirement of Mr. Kurt Swogger, VP of Technology, Dow Chemical Company
Mr. Kurt Swogger left his position as the Global Vice President of Technology at Dow Chemical Company after an illustrious career. He will continue with Dow Chemical Company as a part-time Vice President of Business Development assisting other divisions.
Kurt has been in the lead position for polyolefin innovations for almost three decades at the Dow Chemical Company. He brought a resurgence into polyolefin innovations in 1989 after a dull period (1985-89) when everyone thought polyolefins were just commodities without any new developments.
He had been the backbone of polyolefins at Dow and a de facto spokesperson for Global polyolefins. He is currently extending his knowledge and experience by assisting the rest of the Dow groups. Located in his newly built mansion in Austin, Kurt now commutes to Midland on a part-time basis to assist Dow Chemical Company in changing the future direction.
After completely retiring from Dow he will still be interested in assisting other organizations!
Rumors of the buyout of Dow Chemical increase stock price
A news story that the chemicals producer, Dow Chemical Company could be the target of a $54 billion takeover sent the shares higher Monday.
Shares of Dow Chemical increased to a new 52-week high on Feb. 26 after a report from The Express on Sunday the previous day said that buyout firms such as Kohlberg Kravis Roberts & Co., Blackstone Capital Partners LP, and Carlyle Group are expected to snap up the chemicals giant for $54 billion and a lot of debt.
Dow’s performance plastics, performance chemicals, agricultural sciences, basic plastics, basic chemicals, and hydrocarbons, and energy businesses could be separated into smaller pieces. The Express report said the leveraged-buyout deal is expected to take place in a few weeks and come in at $60 per share. Speculators believe Dow Chemical’s break-up value is anywhere up to $80 per share, the U.K. newspaper reported, without naming sources.
Investors bid up the stock 5.1% to $45.69 per share in early afternoon trading on the New York Stock Exchange. Earlier Feb. 26, Dow’s shares hit the high of the year at $47.26 per share. Some experts doubted the UK news report.
Comments: Investment by private equity firms in the chemical industry seems to have reached a peak. However, the current rumor seems to be just that “a rumor”. Dow chemical company enjoys significant advantages from integration and the break-up value of the company may not be as high as the value of the integrated company. The break-up value could be higher than the current market capitalization suggesting inefficiencies in the market.
Dow has been managing its assets aggressively and strengthening its position. The company has shut down or sold some of the underperforming assets. The company has also increased its investment in the cost-advantaged Middle East region. However, Dow did announce that the company would look into opportunities to partner in its polypropylene and polystyrene business; this could have fueled the speculations regarding the break-up of the company. This only suggests that Dow is restructuring its assets to decrease the cyclicality of earnings. It remains to be seen if the current rumor has any authenticity.
Dow Chemical sells its subsidiary Safripol
A consortium backed by Absa Capital bought Dow subsidiary Safripol, a producer of high-density polyethylene and polypropylene.
The reason for this sale was due to Dow’s strategic objectives in the Middle East and China. The company is developing a shift towards the Middle East to secure access to reliable feedstock. The region was also closer to the high-growth economies of India and China.
Dow acquired Safripol through its acquisition of Sentrachem in 1997. Two years later, Dow took full control of Safripol when it bought Hoechst South Africa’s interest in the company.
Comments: Dow has been considering divestment of some parts of its Sentrachem subsidiary for a long time now. Safripol was originally formed as a joint venture between Hoechst and Sentrachem. Dow then acquired Safripol from Sentrachem in 1997 for about $450 million. Dow has made several investments in China and the Middle East in line with its original strategy.
Dow Chemical has adopted an “Asset Light” performance strategy which calls for strengthening the commodity Basics portfolio through joint ventures. This entails building new plants with JV partners and placing existing assets into JVs (like MEGlobal). Dow has entered into exclusive negotiations with Saudi Aramco to form a JV to build a world-scale complex in Saudi Arabia. Progress is being made in negotiations with other partners in the Middle East and Asia. Dow agreed to a JV in Thailand with Siam Cement to manufacture propylene and other building blocks.
Repsol selects Basell’s Spherizone technology for new PP plant in Portugal
Repsol Polímeros, Lda., an affiliate of Repsol YPF, has selected Basell’s Spherizone technology for a new 300 KT per year polypropylene plant it plans to build in Sines, Portugal. Start-up is expected in 2010.
According to Basell, the novel product range available from the Spherizone process technology enables the production of a highly innovative product portfolio, enhancing performance in existing applications while creating opportunities for polypropylene to expand into new end uses.
The Spherizone process, which has been licensed by Basell since 2004, has now been selected for ten polypropylene projects in all major polyolefin markets; these licenses represent nearly 3 million tons of capacity.
Comments: Basell has been extremely successful in licensing its Spherizone technology since its introduction in 2004. The Spherizone process has now been selected for ten polypropylene projects and these licenses represent nearly 3 million tons of capacity. Spherizone technology is supposed to offer a broader product portfolio at competitive economics. All the commercial licenses offered by Basell are still in the construction stage so there is no information available on the actual output capabilities of the plant. The data is only available from a plant operated by Basell. This plant was converted from Spheripol to Spherizone. As these plants come on stream more information will be available on the capabilities of Spherizone technology.
Mitsui & Company plans to participate in a joint venture with Saudi International Petrochemical
Japan’s second-largest trading house Mitsui & Company announced its plans to participate in a $7-8 billion joint venture in Saudi Arabia for the integrated production of petrochemicals.
Mitsui will take part in a project planned by Saudi International Petrochemical Co. (Sipchem), which was founded by major Saudi Arabian conglomerate Zamil Group. The project would be Mitsui’s first large petrochemical project in the Middle East since the former Iran-Japan Petrochemical Co. was forced to withdraw in 1989 with a huge loss following the Iran-Iraq war, according to the Daily.
In addition to Mitsui, Sipchem has called on several corporations, including chemical giants DuPont of the US and Lucite International Ltd. of the UK, to participate in the project, and negotiations are now in the final stages.
Comments: Mitsui & Company was established in 1876 as a trader, wholesaler, and European agent. It handled over 300 types of goods, including its principal exports (coal, rice, cotton yarn and fabric, and raw silk). It was responsible for almost 20% of Japan’s total trade value at the start of the 1900s.
Mitsui & Co., a part of Mitsui Sogososha has developed as a powerful organization in trading several products including chemicals and petrochemicals. Mitsui & Co. is independent of Mitsui Petrochemicals and often creates confusion in the rest of the world.
Mitsui Chemicals (previously called Mitsui Sekka, Mitsui Petrochemicals, etc., is a major petrochemical producer in Japan. Mitsui Petrochemicals is one of the largest polyolefin companies in Japan and represents HDPE and LLDPE and LDPE technologies in addition to Mitsui Hypol PP technology. Mitsui Petrochemicals’ TAFMER copolymers were the benchmark for most of the Metallocene polyolefins in the early 90s.
Such a joint venture could be advantageous for both Sipchem and Mitsui. This will give Mitsui access to lower-cost feedstock & Sipchem access to specialty products technology (via Mitsui Chemicals).
IPIC acquires 20% stake in Oman Polypropylene
International Petroleum Investment Co. (IPIC) announced that it acquired a 20% stake in Oman Polypropylene from Oman Oil.
The company has also signed a $5 billion agreement with the Pakistani authorities to set up the Khalifa Coastal Refinery project in Pakistan.
The company officials said that the project, which will be completed in 2010, will have an annual production capacity of 13 million tons.
Comments: IPIC was created in 1984 as a 50-50 venture between Abu Dhabi Investment Authority (ADIA) and the Abu Dhabi National Oil Co. (ADNOC) to focus on oil-related acquisitions overseas. ADIA can give their judgment on the financial sense of the investment and ADNOC decides on the impact of the investment in Abu Dhabi.
Oman Polypropylene is a joint venture set up in 2002 where state-run Oman Oil Company (OOC) holds an 80 per cent stake and South Korea’s LG Engineering holds 20 per cent. After IPIC’s stake, Oman Oil’s stake will reduce to 60%.
Egypt plans an investment of US$750 million to produce propylene and polypropylene
A new petrochemical project is being planned in Port Said, Egypt, at an investment of US$750 million. The complex will have a capacity of 400,000 tons annually for producing propylene and polypropylene compounds.
Cooperation of the Egyptian private sector has been instrumental in establishing this project of high economic feasibility, which will help boost exports, provide local needs, and consequently, back up the national economy.
Comments: Oriental Petrochemicals is the only current producer of PP in Egypt with a total capacity of about 160 KT per year. Once the project is materialized, this will be the second producer of PP. Based on the announcement, the project seems to be at a very early stage.
Dow introduces new grades of VERSIFY™ plastomers and elastomers
Dow Chemical Company introduced eight new grades of VERSIFY™ Plastomers and Elastomers, each designed to deliver performance and processing benefits to address specific market needs.
Launched in 2004, VERSIFY Plastomers and Elastomers use a novel catalyst technology, matched with Dow’s INSITE™ polymerization process, to create a unique molecular architecture that gives the polymer features and property combinations previously unavailable. The highly versatile family of propylene-ethylene copolymers offers performance benefits for converters, processors, and formulators in films, sheets, and molded parts.
Dow has expanded the commercial offering with six new plastomer grades and two new elastomer grades. The new products are:
VERSIFY 2000, VERSIFY 2200, VERSIFY 3000and VERSIFY 3200 Plastomers were developed for greater differentiation in flexible packaging applications. These resins offer a unique balance of heat-sealing properties, shrink, and optics with modulus and adhesion to polypropylene and polyethylene.
VERSIFY 4000 and VERSIFY 4200 Plastomers are ideal for applications requiring easier flow such as injection molding and extrusion coating. These resins offer a unique combination of toughness, processability, and modulus. In addition, they complement traditional polypropylene resins.
VERSIFY™ 2400 Elastomer is well suited for extrusion and calendaring applications, as well as for thermoplastic elastomer applications. It can be readily formulated to bring a unique balance of flexibility, heat resistance, durability, and optical properties for flexible TPO applications.
VERSIFY 3401 Elastomer is particularly appropriate for impact modification of polypropylene to make transparent goods by injection molding or thermoforming. This elastomer requires no special blending or compounding equipment and is an ideal choice to boost the mechanical properties of cast films.
The VERSIFY product line also includes VERSIFY 2300 and VERSIFY 3300, commercialized in October 2005. Designed for fabrication via blown and cast film and calendaring processes, these two products have applications in the stretch hood, cling film and flexible sheet.
Comments: Dow introduced VERSIFY® grades of plastomers and Elastomers in 2004. These grades are specialty propylene-ethylene copolymers that are produced with a novel catalyst and Dow’s INSITE™ technology and solution process. The company built a 125 million pound plant at Tarragona Spain that would serve its global clientele. These grades are mainly targeted for applications such as flexible and rigid packaging, fibers, films, molded parts and other endues products.
Dow’s move to expand the product portfolio of its Versify grades will allow it to increase its sales and improve plant utilization of its new plant.
GE Plastics and PetroChina suspend PC joint venture plans
GE Plastics and PetroChina Co. Ltd. have suspended their plans for a polycarbonate (PC) production project in China, wherein PetroChina would have supplied feedstocks for a phosgene-free melt-technology-based plant to serve the Chinese market.
According to the companies, this decision was made due to significant changes in the economics of the PC markets. GE said that there is no tentative plan at this time of when the project might be restarted.
Comments: Major producers of polycarbonate – GE Plastics, Bayer, and Teijin had announced their plans to construct PC plants in China. If all the plants came on-stream the total new capacity for these 3 producers in China would have been over 400 KT per year after 2008.
GE Plastics’ decision to suspend their JV polycarbonate plant may have been the result of two things: (1) GE’s decision to sell GE Plastics and (2) fear of overcapacity.
BASF plans transformation into a European Company
The Board of Executive Directors and Supervisory Board of BASF Aktiengesellschaft have resolved to propose to the Annual Meeting on April 26, 2007, the transformation of BASF Aktiengesellschaft into a European Company (Societas Europaea, SE) with the name BASF SE. The company’s headquarters and chief administrative offices will remain in Ludwigshafen, Germany.
BASF’s shareholders will be provided with more detailed information on the transformation of the company’s legal form in the invitation to the Annual Meeting, which will be sent out as of March 16, 2007. Europe is BASF’s home market: In 2006, it posted approximately 60 percent of its sales and employed around two-thirds of its global workforce of more than 95,000 employees in the region.
Comments: This is just a PR issue for BASF. In a way, it is the politically correct move by BASF to have Europe as its home market – generating approximately 60 percent of its sales and employing around two-thirds of its global workforce of more than 95,000 employees in Europe. The transformation into a European Company is intended to further strengthen corporate governance at BASF. For BASF, this legal form is an affirmation of an entrepreneurial vision of Europe – strengthening the participation of European employees in the company and thus demonstrating its leadership in the European chemical industry.
Mitsui Chemicals plans reorganization of its units
Mitsui Chemicals, Inc. has newly drawn up “Grand Design”, with an eye on further growth in the next 10 to 15 years.
Mitsui Chemicals announced its plans to reorganize four business groups (Functional Chemicals & Engineered Materials, Functional Polymeric Materials, Basic Chemicals, and Petrochemicals) into three business sectors (Performance Materials, Advanced Chemicals, and Basic Chemicals).
In its reorganization plan, the company has emphasized: (1) the development of technologies to utilize non-fossil resources, (2) the minimization of industrial wastes, and (3) annual growth of more than 10%. The company will establish a “Process Technology Center” to integrate process development and manufacturing technology functions, such as strengthening common fundamental technologies. Additionally, it will rename the Production & Technology Division as “Planning & Coordination Division”.
Comments: Mitsui Chemicals along with Sumitomo has been one of the major players in polyolefins and elastomers. Most of the other polyolefin players have formed JPP/JPC. Mitsui is a vertically integrated olefins and derivatives organization.
Mitsui Chemicals (previously called Mitsui Sekka, Mitsui Petrochemicals, etc., is a major petrochemical producer in Japan. Mitsui Petrochemicals is one of the largest polyolefin companies in Japan and represents HDPE and LLDPE and LDPE technologies in addition to Mitsui Hypol® PP technology. Mitsui Petrochemicals’ TAFMER® copolymers were the benchmark for most of the Metallocene polyolefins in the early 90s.
Japan does not have any feedstock advantage & has limited opportunities for economies of scale. In current global dynamics, companies in Japan have to look for innovative ways to maintain competitive advantage. These include investment in a technology center, specialty product development, search for alternative feedstock, and cost-reduction via integration.
The current announcement seems to be a more focused & structured approach to accomplish the above. This would allow the company to effectively compete in current market conditions.
Alcoa to shut Reynolds Food Packaging plant in Mt Vernon, KY
Alcoa announced that it will close its Reynolds Food Packaging plastics manufacturing plant in Mt Vernon, Kentucky by the middle of 2007. The plant closing will impact 115 people and will align production systems in the company’s food-packaging business. This action is part of Alcoa’s overall restructuring and re-positioning of downstream operations to improve returns, announced in the fourth quarter of 2006.
According to Alcoa, the decision to close the plant will not impact Reynolds’s position in the marketplace nor will it affect our ability to serve current customers with the complete line of DelPak and other Food Packaging products. The Mt Vernon, KY plant produces thermoformed and injection molded plastic trays and containers, primarily used in the bakery, deli, and food service market segments. Production will continue through April until certain lines are transferred to other packaging facilities. A transition plan is being developed.
Comments: Alcoa’s operations consist of six worldwide segments: (1) Alumina, (2) Primary Metals, (3) Flat-Rolled Products, (4) Engineered Products, (5) Extrusions and End Products, and (6) Packaging and Consumer. The packaging and consumer segment includes consumer, food service, and flexible packaging products; food and beverage closures; and plastic sheet and film for the packaging industry. The principal products in this segment include aluminum foil; plastic wraps and bags; plastic beverage and food closures; flexible packaging products; design and prepress services; thermoformed plastic containers; and extruded plastic sheets and film.
This segment grew from the Alcoa closures business plus the Reynolds acquisition followed by the acquisition of plastics product makers. This decision to close the Mt Vernon plant is the company’s move to consolidate operations and gain the advantage of economies of scale.
NaturalNano was successful in a pilot-scale demonstration of halloysite nanotubes in polypropylene
NaturalNano, Inc., a materials science company, announced the successful pilot-scale dispersion of the Company’s proprietary, functionalized halloysite nanotubes (HNT)™ in polypropylene at levels ranging from 5% to 13%. Following closely on the recent production of a nylon Pleximer at the manufacturing scale, this latest result is another step toward a complete line of Pleximer products that will improve the mechanical properties of many polymer composites. Further trials with polypropylene will follow involving higher loadings of HNTs and production-scale equipment. Pleximer, which NaturalNano plans to offer commercially in the fourth quarter of 2007, is a turn-key nanocomposite additive enabling stronger, lighter, and less expensive materials for the 40 billion dollars polymer composite industry.
The highly concentrated polypropylene Pleximer product would be added to pure polypropylene in the final molding process by the manufacturer to obtain nanocomposite materials with the desired properties for a wide range of applications, including automotive, fabrics, fibers, and packaging.
In addition to the excellent dispersion of HNTs in polypropylene, this trial run once again demonstrated the improved properties that Pleximer additives impart to polymer nanocomposite materials. The modulus—a measure of stiffness—of the polypropylene composite containing treated HNTs was almost double that of polypropylene alone. In addition to the extra stiffness, tensile strength was increased while maintaining the desirable elongation properties of the polymer.
Traditional layered nano clays require extra processing and specialized equipment to separate the layers and disperse them throughout a polymer system. NaturalNano’s HNTs, utilizing the Company’s proprietary, patent-pending formulation and processes, do not require an extra separation step and can be run on standard equipment, enabling manufacturers to produce nanocomposites without additional capital investment.
Comments: This is a promising development in producing PP nanocomposites for commercial practice. Despite the many desirable attributes of PP nanocomposite, its relatively higher cost of large-scale production Vs other high-performance engineering thermoplastic composites has limited its commercial use. Both PP producers like ExxonMobil Chemical and auto manufacturers like Toyota, GM, and others have been active in developing commercially viable PP-based nanocomposites without any success to date. Historically it has been difficult to disperse nano clays in polypropylene because of the polymer’s hydrophobic properties. The fact that NaturalNano can perform runs under standard machine conditions and get excellent dispersion is quite promising. Unlike the traditional layered nano clays requiring extra processing and specialized equipment to exfoliate and disperse them effectively throughout a polymer matrix, this new process does not require an extra separation step and can be run on standard equipment, enabling manufacturers to produce nanocomposites without additional capital investment. NaturalNano has strong IP assets covering nanotubes in combination with other materials for a wide range of applications.
Contact us at ADI Chemical Market Resources to learn how we can help.