My Turn – Comments on Global Polyolefins & Elastomers – Gujarat – India – The Optimism in the Air! – Dr. Balaji B. Singh
I recently had an opportunity to visit India, my home country to attend “Vibrant Gujarat!” organized in the state of Gujarat – the chemical/plastics capital of India.
The state of Gujarat in India has been long known for its seafaring entrepreneurs and trading community. Gujarat with its long coastline has always served as the port and manufacturing hub for petrochemicals and plastics, with its hardworking and simple living people.
Under the leadership of the new Chief Minister, Mr. Narendra Modi Gujarat state has taken on an additional bounce to transform itself into “Vibrant Gujarat” to attract FDI (Foreign Direct Investment) to make the state a center of chemicals and petrochemicals. By the way, it is also the home of Reliance – fast becoming the household name in the world.
India’s situation can be well summarized as follows:
1. The growth is driven by the expected increase in the number of consumers and increasing standard of living – closely dependent on the end-use/converting industry from the perspective of plastic – the Indian government already recognized it and made every effort to improve it – A golden opportunity for the converting industry.
2. The infrastructure – basic requirements for the movement of goods are improving every day. Bypass the city centers and move to well-improved grass roots developments.
3. The major petrochemical complexes – the private sector (that already took over sick/underutilized public sector operations) are booming with new investments to the tune of $42 billion committed in just one meeting.
4. The much talked about newer public sector projects are in planning stages – Their size and plans assure enough capacities for the future.
5. Most outside organizations from overseas are right now showing interest in research labs, and TS&D labs – to take advantage of the less expensive & well-educated labor – this will soon change to benefit India more by translating to more production facilities.
Overall, India and Gujarat in particular will be the place to consider for future plastics and petrochemicals expansions.
Visit website – www.VibrantGujarat.Com.
General Electric puts its plastics division – GE Plastics for sale
General Electric (GE) has decided to sell its plastics business. Goldman Sachs is acting on behalf of GE and is said to have contacted bidders for the business, which is valued at $10 billion.
There appear to be restrictions on the ability of bidders to team up with other firms, but the exact details are not known. The high cost of benzene, a key raw material for the company, is reported to have squeezed margins, prompting the sale of the business.
Comments: From General Electric’s viewpoint, GE Plastics is a very small business unit of GE’s Industrial division which comprises GE Plastics, Consumer & Industrial, and others. Over the last few quarters, there was a decline in the revenues of GE’s industrial division which was attributed to poor performance of plastics divisions.
Recently GE acquired Vetco Gray to improve its oil & gas portfolio and where the company expects double-digit growth – higher than GE Plastics. GE Plastics which accounted for less than 5% of the company’s total sales has been under margin pressures due to increasing raw material prices, mainly benzene.
GE Plastics’ product portfolio consists of engineering thermoplastics – polycarbonate, ABS, PPO, and blends. The company has a strong leading position in these businesses. GE Plastics may not be a good fit for General Electric but is a strong acquisition candidate.
Basell’s Spheripol® technology selected by Egyptian Propylene & Polypropylene Company
Egyptian Propylene and Polypropylene Company (EPPC) has selected Basell’s Spheripol® technology for a new 350 KT per year polypropylene plant to be built at Port Said, Egypt. Start-up is expected in 2009. The project will also include a new 350 KT per year STAR technology propane dehydrogenation plant licensed by Uhde.
EPPC is a joint venture owned by Oriental Petrochemical Company (OPC), Oriental Weavers, and ECHEM. Basell is the world leader in the licensing of polyolefin process technologies. To date, the company has granted more than 100 process licenses with a combined annual capacity exceeding 20 million tons.
Comments: This is somewhat expected development by The Egyptian Propylene & Polypropylene company [EPPC, a joint venture owned by Oriental Petrochemical Company (OPC), Oriental Weavers, and ECHEM] based on their long-term business strategy. The EPPC has already assigned Uhde GmbH – a construction unit of ThyssenKrupp AG, to establish a Petrochemiekomplexes in Port Said, approximately 170 kilometers northeast of Cairo. The complex consists of propylene and a polypropylene plant with an annual production capacity of in each case 350,000 tons and contains all pertinent auxiliary and off-sites, among them a liquid air separation and a refrigerant plant as well as the necessary fuel depots. A contract was signed at the end of 2006, investing approximately $680 million in this Petrochemiekomplex. The completion is planned for the end of 2009. As a raw material, propane from Egyptian Erdgasvorkommen is used.
Uhde’s promising Steam Active Reforming (STAR) – technology for the dehydrogenation of light hydrocarbons, like propane to propylene or butane to butylene, is based on conventional Steam Reforming technology and an oxidation reactor downstream (Oxyreaktor) underemployment of a special dehydrogenation catalyst.
The Spheripol process has proven to be the preferred technology for new PP plants. The process has enjoyed this success because it fulfills important needs for producers: low capital and operating costs, a record of high plant operability, broad product capability, easy and rapid grade changes, and demonstrated commercial success. Continuous improvements have helped maintain its leading position.
Borealis invests EUR 90 million to further develop its polypropylene business
Borealis announced its plans to invest EUR 25 million to expand the capacity of its PP plant in Porvoo, Finland, by 65 KT per year to 220 KT/year by the end of 2008. The increased capacity will meet rapidly growing customer demand for innovative plastics solutions in the pipe and advanced packaging markets and better supply the developing Russian market.
Borealis will also invest EUR 35 million to create a four-reactor configuration at its Borstar® PP plant in Schwechat, Austria, to support the production of superior materials that meet the needs of the automotive, pipe, and advanced packaging industries. The plant is well-positioned to take advantage of the expanding automotive markets in Central and Eastern Europe. The additional gas phase reactor will be operational in 2009.
In addition, Borealis will invest EUR 30 million in a four-reactor Borstar® PP pilot plant at Schwechat that will strengthen the company’s ability to readily develop innovative, advanced multimodal PP solutions. The pilot plant will be completed in 2009. Borealis recently announced that it is expanding its plant at Burghausen in Germany to manufacture 330 KT per year Borstar® PP.
Comments: Borealis was formed in 1994 when Neste and Statoil merged. The company has over 40 years of heritage in polyethylene and polypropylene, operating as BP Antwerp, Danubia, EPSI, Esso Chemical Stenungsund, Himont Beringen, NSP, PCD, PCS, Saga Petrokjemi, Union Carbide, Unifos, and Saga. In 1998 construction of Borealis’s first Borstar PP was started at the Schwechat site in Austria and production started in 2000. Currently, Borealis is one of the top ten largest suppliers of polypropylene in the world having a capacity of 1370 KT.
Borealis move to increase its polypropylene capacity in line with the current situation in Europe. The European polypropylene production is approaching capacity, and an expansion in the polypropylene capacity is needed to meet the increase in demand which is currently at 5% in Western Europe and close to 7% in Eastern Europe. The largest market in Western Europe is in injection molding applications with over 51% of the total demand, other large applications include fiber, film, and other extrusion. Western Europe is currently the second largest consumer of PP in the world after Asia with 22% of the total global demand. The global demand in 2005 was close to 38000 KT.
INEOS to invest in polyolefins business in Europe
INEOS Polyolefins announced its plans to invest EUR 150 million over the next three years in its European assets.
The company plans to expand PP capacity at its facilities in Geel, Belgium, and Grangemouth, Scotland. At Geel, the Innovene P gas phase PP unit will undergo a 220 KT per year expansion, taking the unit’s capacity to 500 KT per year.
The company will close a smaller slurry/dry flash PP asset at Geel towards the end of 2007. The company will increase capacity at its PP plant in Grangemouth from 220 KT to 280 KT per year. If there is no improvement in the market, INEOS will close its HDPE unit there at the end of 2007, redeploying the 35-strong workforce. At its Lillo site in Belgium, INEOS will invest in its HDPE production. The capacity of its bi-modal slurry phase unit will shoot up from 200 to 630 KT per year by 2009.
INEOS also intends to commit “significant funds” to accelerate the development and commercialization of advanced LLDPE products made from its proprietary metallocene catalyst technology.
Comments: INEOS completed the integration of Innovene’s business in late 2006. Now the company is focusing on growth areas and making efforts to improve it. The PP plant at Geel was first constructed by Amoco, then BP Amoco, then Innovene, and now by INEOS. It is one of the older facilities producing PP, which will be expanded by INEOS.
Until recently there has been more emphasis on capacity investments in the Middle East and Asia – which has led to higher operating rates in Europe and North America. In the future, we may see more capacity additions in these regions.
Reliance considers more investments including a potential bid for GE Plastics
Reliance Industries announced its plans to invest US$15 billion (Rs 670 billion) in petroleum and coal projects in the state of Gujarat in Western India. The investments include Reliance’s earlier announced plans to spend Rs 270 billion on setting up a new refinery, polypropylene unit, and in a special trade zone in Jamnagar. Reliance will invest Rs 400 billion in coal, lignite gasification projects, a gas pipeline, and a distribution network to supply natural gas to houses and businesses. This is the biggest investment in its core petroleum and chemicals businesses announced by the company in the fiscal year commencing on April 1.
Reliance Industries Ltd is also exploring the possibility of bidding for GE Plastics.
Comments: Reliance Industries Limited’s (RIL) strengths are in its ability to build businesses of global size and scale and execute complex, time-critical, and capital-intensive projects favorably in a highly regulated industry environment. The expansion of the Hazira complex and the completion of the Jamnagar petrochemicals complex are excellent examples. Over the last few years, the company has demonstrated its ability to tap high-growth industries at the early stages of their lifecycle like oil and gas (O&G), petrochemicals, financial services, telecom, and utilities. The company is now utilizing the benefits of SEZ set-up by the government.
Reliance’s potential acquisition of GE Plastics will be a good fit for the company. It will give RIL an entry into engineering thermoplastics with a significant market share.
Titan plans on increasing polyolefins presence in Asia
Malaysian olefins and polyolefins producer Titan Chemicals Corp. Bhd. announced its plans to expand business in China, Southeast Asia, and India over the next few years. Titan will debottleneck an existing cracker at its Pasir Gudang site and expand the Malaysian sites, with commercial production of new products expected to begin there in 2009.
Titan has three plants, two in Malaysia – in Pasir Gudang and Tanjung Langsat – and one in Indonesia.
While keeping operations lean, Titan is working on product diversification. It also continues to strengthen its presence in its main markets, with priority in Malaysia, Indonesia, and Vietnam. In Malaysia, Titan is boosting the production of butadiene and propylene. Titan Chemicals started in Malaysia with one polypropylene plant in 1991. It has been publicly traded in Malaysia since 2005.
Comments: Titan Chemicals constructed its first facility in Malaysia, an RM300 million PP plant, in 1989. Currently, the company operates eight integrated process facilities in Pasir Gudang and Tanjung Langsat in the southern state of Johor, Malaysia.
Recently, Titan Chemicals acquired PT TITAN Petrokimia Nusantara, Indonesia’s first and largest Polyethylene plant in the country. With significant investments in the Asian region, the company now is planning to gain market share.
Liaoning Huajin selects Basell’s Spheripol® technology for the new PP plant in China
Liaoning Huajin Chemical (Group) Corporation announced that it has selected Basell’s Spheripol® technology for a new 250 KT per year polypropylene plant it plans to build in Panjin, Liaoning Province, China. Start-up is expected in 2009.
According to the companies, in the highly competitive polypropylene market, the superior product range, and cost-effectiveness of the Spheripol process continue to have a major impact on our industry. The Spheripol process offers licensees an elegant and economical method of producing a wide range of polypropylene products. Through the refinement of bulk liquid and gas-phase polymerization reactors, this technology includes features that reduce both resource consumption and emissions from the process.
Comments: Liaoning Huajin Chemical is increasing the capacity of its planned cracker project at Panjin, Liaoning province to 450 KT per annum from 300 KT per annum. With the available feedstock, the company is investing in downstream polyolefin units.
This will be the first polyolefins unit for Liaoning Huajin Chemical. Other products manufactured by the company include urea, ammonia, and others.
INEOS to shut down HDPE plant at Grangemouth, UK
INEOS announced that it will close its HDPE plant in Grangemouth, UK, at the end of 2007.
According to the company, no redundancies are planned, and all of the employees, which number approximately 35, will be redeployed if the plant is closed.
Comments: It is one of their older plants and the technology from INEOS developed much farther ahead.
Owens-Illinois reviews strategic options for its plastics operations
Owens-Illinois, Inc. announced that the Company has retained advisors to review strategic options for its plastics packaging business, including a possible sale.
O-I Plastics, comprised of HealthCare Packaging and Closure & Specialty Products, is an innovation and technological leader in the fields of healthcare packaging and specialty closure systems in the U.S. The Company is a pioneer in the design, manufacture, and sale of plastic packaging solutions for companies in the pharmaceutical, healthcare, food and beverage, household, chemical, and personal care industries.
O-I Plastics has plants in the United States, Mexico, Brazil, Hungary, Singapore, and Malaysia. O-I has retained Goldman, Sachs & Co. as its financial advisor on this matter.
Comments: Owens-Illinois is the global low-cost producer of glass containers, which accounts for roughly 90% of the sales portfolio. The company has about 25% global market share of glass containers and the plastic containers business is a very small unit for the entire company.
Earlier, the company had sold its blow-molded plastic container assets. The current Plastics Packaging segment is entirely focused on the more value-added segment of the rigid plastic packaging industry. The company focuses on healthcare containers (for prescriptions and over-the-counter products) and injected-molded plastic closures sold in most drug stores, grocery stores, and pharmacies that incorporate tamper-resistant and child-lock-type systems. It also manufactures plastic closures used for beverage containers that require tamper evidence. The company manufactures other miscellaneous packaging features used by consumer product companies, such as toothpaste and deodorant containers.
Major customers for the company’s health care and prescription containers include AmeriSource Bergen, Cardinal Health, Eckerd Drug, Johnson & Johnson, McKesson, Merck-Medco, Pfizer, Rite Aid, and Walgreen. The largest customers for plastic closures include Coca-Cola Enterprises, Cott Beverages, Nestle Waters North America, Pepsico, and Procter & Gamble.
Graham Packaging to close the plant in North Charleston, SC
Graham Packaging Company announced its plans to close a manufacturing plant in North Charleston, SC, effective in mid-February. The plant’s 23 employees will receive severance based on their years of service.
The customer for which automotive lubricant bottles were produced at the plant has moved its operation. Future production of the bottles will be transferred to other Graham Packaging sites.
The company is a leader in the design, manufacture, and sale of technology-based, customized blow-molded plastic containers for the branded food and beverage, household, personal care/specialty, and automotive lubricants product categories. The company also is a leading U.S. supplier of plastic containers for hot-fill juice and juice drinks, sports drinks, drinkable yogurt and smoothies, nutritional supplements, wide-mouth food, dressings, condiments, and beers; the leading global supplier of plastic containers for yogurt drinks; and the number-one supplier in the U.S., Canada, and Brazil of one-quart/one-liter plastic HDPE (high-density polyethylene) containers for motor oil.
The Blackstone Group of New York is the majority owner of Graham Packaging.
Comments: Graham Packaging was founded in 1960 in York, Pennsylvania, USA. The company started as a regional domestic plastic bottle maker, using blow-mold manufacturing technology. The company by the 1990s had 30 plants and became a global player with plants in North America, France, Italy, the United Kingdom, and Brazil. In 1998, Blackstone Group acquired a majority share of Graham Packaging. Currently, Graham Packaging has its headquarters in York and is a major global producer of custom high-value-added blow-molded plastic containers with 87 facilities globally and produces more than 20 billion units per year.
Graham Packaging’s closure of the North Charleston, S.C. plant will allow it to better utilize its production capacities and make economic sense.
RTP Company starts production of long fiber thermoplastics in China
RTP Company, a global leader in specialty compounds, has added multiple long fiber-reinforced thermoplastics (LFRT) production lines at its Suzhou, China manufacturing facility. The long glass fiber compounds are based on various resin systems including nylon and polypropylene.
According to the company, the new LFRT lines will support its automotive and industrial customer base in China along with offering long fiber technology to other markets for applications requiring higher strength at lighter weights. RTP Company’s 16,000 square meters (170,000 square feet) manufacturing plant in Suzhou, China was opened in December 2005. The state-of-the-art facility offers a full complement of customer support, product development, and technical service.
RTP Company significantly expanded its LFRT capabilities earlier this year with the opening of a long fiber facility near its Winona, Minnesota headquarters. RTP Company also installed additional long fiber lines at several of its worldwide operations in 2006 and introduced a broader long fiber product offering.
Long Fiber Compounds are often used to replace metals and consequently have become one of the fastest-growing materials in the thermoplastic industry. They offer excellent mechanical properties and their high strength-to-weight ratios result in parts that can withstand heavy loads over long periods, even in elevated temperatures.
RTP Company, headquartered in Winona, Minnesota, is a global leader in specialty thermoplastic compounding. The company has eight manufacturing plants on three continents, plus sales representatives throughout North America, Europe, and Asia/Pacific. RTP Company’s engineers develop and produce custom compounds in over 60 different engineering resin systems for applications requiring color, conductivity, flame retardancy, high temperature, structural, elastomeric, and wear-resistant properties.
Comments: No surprise here again! Just like other specialty compounders – GLS, PolyOne, & others, RTP Company is also trying to establish itself in the hot Chinese market. It seems RTP is doing well, expanding aggressively its local operations too! Not too long ago, RTP launched a new TPE division, led by General Manager Scott Mumm, solidifying its commitment to provide customers with a complete portfolio of thermoplastic solutions in both elastomers and rigid substrates.
In September 2006, RTP acquired the Wiman Corporation, a manufacturer of customized plastic film for the medical, industrial, and consumer markets. The RTP Company, headquartered in Winona, Minnesota, is a global leader in specialty thermoplastic compounding, developing thousands of custom-reinforced thermoplastic formulations each year for the electronics, automotive, appliance, consumer, medical, and sports/leisure markets. The company has seven manufacturing plants on three continents, plus sales representatives throughout North America, Europe, and Asia/Pacific.
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