My Turn – Commentary by Dr. Balaji B. Singh

We look forward to seeing you at this year’s FlexPO2006. We have selected the best topics/best speakers in an organized fashion – Some good reasons to attend Flexpo2006 in Houston, Sept 20-22, 2006 – Just see the program.

Reliance selects Unipol and Aker Kvaerner for the Jamnagar PP complex

Reliance Industries has selected Unipol polypropylene (PP) technology for its previously announced world-scale complex at Jamnagar, India, The complex will comprise two lines, each designed to produce 450 KT per year of PP. Completion is planned for the third quarter of 2008. Aker Kvaerner has been appointed contractor.

The PP complex will be built downstream of Reliance Petroleum’s export-oriented oil refinery at Jamnagar, which is also due for completion in 2008. Reliance plans to produce only homopolymer PP at the plant until the completion of a previously announced project to extract dilute ethylene streams at the refinery. That project would provide feedstock to make PP copolymers. The ethylene project, together with a previously announced styrene unit, is on hold at present.

Comments: Reliance is the largest producer of polypropylene in India. Reliance recently completed a 280 KT/year PP line at Jamnagar. This is the company’s fourth line at the location. The addition of the fourth line raised its capacity at the site to just more than 1 million m.t./year, all based on Unipol technology.

The company also has two PP lines at Hazira, India with a combined capacity of 440 KT/year. Both units use the Unipol process and produce homopolymer PP. Reliance’s IPCL (Baroda, India) subsidiary owns two PP plants at Baroda with a combined capacity of 140 KT/year, and one plant at Nagothane, India with a capacity of 110 KT/year. The Baroda plants produce homopolymer, and Nagothane makes a mixture of homo- and copolymer PP. Both sites use Basell technology.

India is witnessing many investments due to high growth in the last few years and projections of sustained growth in the future. New players such as IOC and ONGC are also expected to compete in the Indian commodity plastics industry.

Private Equity firm to buy Ferro’s specialty plastics unit

Private equity firm Wind Point Partners (Chicago) will acquire Ferro’s specialty plastics business. Wind Point Partners has agreed to pay $133 million for the business and the deal is scheduled to close in the third quarter.

The specialty plastics business develops and produces customized thermoplastic compounds and alloys, plastic colorants, gel coats, and thermoset pastes. The business generated 2005 revenues of about $275 million. It has about 750 employees and operates 11 production units including plants at Evansville, IN; Stryker, OH; Almazora, Spain; and Rotterdam, The Netherlands.

Ferro announced in June that it had reached a nonbinding agreement to sell the specialty plastics business. Ferro says it plans to use proceeds from the sale to reduce outstanding debt.

Comments: The trend of private equity firms investing in the chemical industry started in recent years and continues. Rising oil prices and competition from developing countries, especially China is forcing many chemical companies to streamline their operations. Private equity firms are finding various opportunities as chemical companies try to focus on areas of specialization and shed non-core assets.

Wind Point Partners has had previous investments in the chemical industry. It sold Arr-Maz Custom Chemicals, a producer of process chemicals to the phosphate fertilizer mining and manufacturing industry, to a fund managed by GSO Capital Partners in July.

DuPont to invest $100 million in Nomex Production

DuPont announced plans to invest more than $100 million to increase its worldwide capacity for its flame-resistant, high-temperature Nomex fiber. The company said it plans to build a plant in Spain to make isophthalic chloride, an ingredient used to make Nomex. It also plans to increase its Nomex manufacturing capacity in Spain and its Nomex paper production capacity in Japan.

The multi-faceted expansion is comprised of the following projects spanning Nomex® ingredients, fiber, and paper:

DuPont Chemical Solutions is planning to construct a significant new isophthalic chloride (ICL) facility in Asturias, Spain. ICL is one of the principal ingredients used to manufacture Nomex®. This new ICL facility will also liberate additional existing capacity to be used for the production of ingredients for Kevlar®.

The existing Nomex® site at Asturias plans to add new equipment to increase Nomex® fiber manufacturing capacity thereby more than 30 percent.

DuPont Teijin Advanced Papers, a joint venture, will double Nomex® paper production capacity in Japan.

Comments: DuPont™ Nomex® is an inherently flame-resistant, high-temperature meta-aramid fiber that will not melt, drip, or support combustion in air. It provides outstanding resistance to a broad range of chemicals, delivering protection against a variety of threats.

Nomex® paper, which is found in consumer appliances, industrial equipment, and transportation equipment such as high-speed trains and commercial aircraft, has been providing high-performance electrical insulation for motors, transformers, and generators for nearly 40 years. The Nomex® announcement follows multiple investments by DuPont in Kevlar® over the last few years. The company has not made any expansions for Nomex in the last few years.

DuPont is the largest producer of meta-aramid accounting for 70% of the global meta-aramid capacity. Other producers of meta-aramid include Kermel, Teijin, and Yantai Spandex. DuPont currently has a facility in the United States and Europe.

‘Orenburggazprom’ to Build Polypropylene and Polyethylene Plants

‘Orenburggazprom’ jointly with ‘Sibur-Holding’ will build up polypropylene and polyethylene plants in Orenburg. The estimated cost of each project is RUR22 billion and the implementation period is 4 years for each project. By building up polypropylene and polyethylene plants ‘Orenburggazprom’ is to close the technological cycle, from gas extraction to finished product, and create a vertically integrated company.

A polypropylene plant with a capacity of 450 thousand tons per annum will be constructed first. Its startup is scheduled for 2012. Polyethylene making plant with a capacity of 650 thousand tons is to be put into operation in 2016.

Comments: There have been significant expansions in Russia as demand for polyolefins has seen growth in recent years. The majority of the oil-producing nations are trying to monetize their natural resources and this is a similar attempt. Both of these are long-term plans as their capacity is not expected to come on-stream till 2012 and 2016.

Solvay Plan to Increase Vinyl Production in Brazil

Solvay has announced plans for a USD 150 million investment program to expand and modernize its vinyl production plant in Santo Andre, Brazil, in anticipation of rapidly growing demand in Latin America.

The investment program includes upgrading the plant’s electrolysis unit through the implementation of modern membrane technology with a nameplate annual capacity of 150,000 metric tons of chlorine and the expansion of the downstream vinyl chloride monomer (VCM) and polyvinyl chloride (PVC) manufacturing facility, with the installation of larger, more competitive equipment.

As a result, by the end of 2008, the Santo Andre plant will have a total annual VCM and PVC production capacity of 300,000 metric tons, with world-class, state-of-the-art installations. Subsequent developments will be considered to further expand the plant, whose fully integrated PVC capacity could be easily lifted in line with the demand growth.

Comments: Comments: The Solvay group is one of the world’s leading vinyl producers, ranking second in Europe and third globally. In addition to SolVin, and its joint venture with BASF in Europe, the Group’s activities in PVC and other products of the vinyl chain span across Asia and Latin America, through the affiliates Vinythai in Thailand and Solvay Indupa in Argentina and Brazil.

Solvay’s investment plans reflect the high growth in Latin America. Brazil is one of the countries that is projected to show a healthy growth rate for the next few decades. The economic growth will translate into growth for plastics and the region/country will see many more investments in the future.

Dow Announces Plant Closures

In its ongoing drive to improve the competitiveness of its global operations, The Dow Chemical Company announced that it will shut down several assets around the world.

As a consequence of these shutdowns, and other optimization activities, the Company expects to incur a charge in the range of $550 million to $650 million, which includes costs such as severance and asset write-downs. This charge will be reflected in Dow’s third quarter of 2006 results. The Company expects that these actions, when fully implemented, will reduce structural costs by approximately $160 million a year.

The most significant shutdowns will take place at Dow’s facilities in Sarnia and Fort Saskatchewan, Canada, and the Porto Marghera plant in Italy. In Sarnia, all production activity will cease by the end of 2008, reflecting the outcome of individual assessments by each of the four businesses located at the Ontario facility. The assessments, which were triggered by the recent suspension of ethylene shipments through the Cochin Pipeline, highlighted a variety of issues related to the effectiveness, efficiency, and long-term sustainability of the Sarnia-based assets. As a consequence:

— The linear low-density polyethylene plant will be shut down over the coming weeks;

— Polystyrene production will cease before the end of this year;

— Latex production from the UES facility will shut down by year-end 2008; and

— The polyols plant will also shut down by year-end 2008.

In Fort Saskatchewan, the Company will shut down its chloralkali and direct chlorination ethylene dichloride plants by the end of October 2006.

In Porto Marghera, Italy, the Company has decided to not restart production of the toluene diisocyanate (TDI) facility, which was shut down for planned maintenance in early August.

Comments: Dow is known to shut down inefficient capacity to improve its margins and efficiency. In the last few years, Dow has also streamlined its inefficient higher-cost crackers.

This decision was driven by the substantial capital costs required to maintain long-term operations at the 27-year-old facilities — an investment that could not be justified based on expected rates of return.

The decision to not restart the TDI plant was due to weak fundamentals in the TDI business owing to excess global production capacity.

Like other companies, Dow also seems to be focusing on new investments in the low-cost Middle East region and high-demand/low-labor-cost Asian region.

Chemopetrol increases HDPE production capability in the Czech Republic

Univation Technologies has reached an agreement with Chemopetrol to increase plant capacity by 40 kilo-tonnes-per-year (kta) at its Polyethylene II UNIPOL(R) PE gas-phase process line located in Litvinov in the Czech Republic.

“UNIPOL’s proven flexibility has enabled Chemopetrol to increase HDPE production by 20% without any significant capital investment,” said Kenneth Glover, Univation President.

Comments: Chemopetrol has been using UNIPOL PE technology for the production of HDPE since the startup of its Polyethylene I lines in 1976. Its latest reactor line started up in 2002 with a design capacity of 200 KT per year.

This expansion was possible without significant investment and will help Chemopetrol increase its revenues.

Chemopetrol is a joint-stock company and the largest petrochemical enterprise in the Czech Republic. The joint-stock company of Chemopetrol, a. s. was established on 28 May 1996. The enterprise originally began as a factory producing motor fuel from gasified brown coal in 1939. The company employs nearly 2,400 people. Chemopetrol is a wholly owned subsidiary of the refinery–petrochemical Holding Unipetrol, which also includes Kaučuk Kralupy, Benzina, Česká Rafinérská, Paramo, Koramo, and companies of the Aliachem Association. The company has production capacities for both polyethylene and polypropylene.

Iran attains polyethylene catalyst manufacturing know-how

Carried out by the efforts of domestic researchers, Iran’s first chromium catalyzers were synthesized at a laboratory scale for ethylene polymerization at Petrochemical Research and Technology Company of Iran, the company’s Public Relations Office reported.

The work was initiated as a doctoral project with the cooperation of Zanjan University in late March 2006 and the first experimental batch was successfully introduced in the research institute, MNA reported.

“The chromium catalyzers are less sensitive to toxic materials and the molecular weight of the polymer can be controlled by the catalyst at the active temperature,” the head of the polymeric research at the company, Dr. Seyyed Mehdi Qafelehbashi, said.

Moreover, this type of catalyzer has many applications in auto industries, home appliances, agricultural fields, films, and pipes as well as the manufacture of gasoline tankers, hygienic food plates, and bottles designed to contain chemicals.

The price of the product is about 160 Euros per kilogram and domestic production at mass scale could save the country six to seven million euros annually.

Only large multinationals like Phillips, Basel, DuPont, and a few others work on chromium-based catalyzer which accounts for 30% of high-density polyethylene (HDPE) production in the world.

Comments: The catalyst development in Iran is still at the infant stage. However, the trend needs to be closely followed. It may impact the global polyolefin catalyst market in the future. Historically, Iran simply licensed the manufacturing technology and bought the catalysts. It may evolve in the same way as the Chinese polyolefin producers such as Sinopec and PetroChina. Sinopec and PetroChina used to license the manufacturing technology and import catalysts. To reduce the cost, they started to develop their catalyst. Initially, it was only used domestically for replacing imported catalysts. Today, the Sinopec Catalyst Company exports polyolefin catalysts to Korea, Thailand, Indonesia, Russia, and other countries. Their technology was also licensed to Engelhard, now part of BASF. Because of the large polyolefin capacities in Iran and other Middle East countries, any commercial development of polyolefin catalysts is important to global catalyst suppliers.

Mitsui & BASF Both Set up R&D Collaborations in Singapore

Mitsui Chemicals has set up a technical center in Singapore in collaboration with the Singapore government’s Institute of Chemical & Engineering Services. The center will conduct research on catalysis and asymmetric synthesis.

BASF has signed a one-year R&D agreement with Singapore-based NanoMaterials Technology. BASF says its new Competence Center for Nanostructured Surfaces in Singapore will test NMT’s technology for producing zinc oxide nanosuspensions.

Comments: Singapore has been attracting investment in the Chemical industry owing to government support, excellent infrastructure, and an educated English-speaking population. The country’s concept of developing a mega industrial park in Jurong Island has been very successful and is being duplicated by other Asian countries. These collaborations suggest that Singapore has also been successful in attracting investment in the R&D area. This also suggests the popularity of the new trend of contract R&D.

Chemical Market Resources, Inc. through its JV Innovante is also active in providing contract R&D services at competitive prices. Please contact Chemical Market Resources, Inc. or Innovante to learn more about our services.

Sinopec selects Univation for its new PE plant at Ningbo, China China

Petroleum &Chemical Corporation (SINOPEC CORP) has selected the UNIPOL PE process for a 450 KT per year polyethylene plant at its affiliate, Sinopec Zhenhai Refining and Chemical Company Ltd., in Ningbo, People’s Republic of China. The new facility, scheduled for start-up in 2009, will be capable of producing a full range of linear low and high-density polyethylenes.

The proven capability and reliability of the UNIPOL PE process to manufacture a broad range of polyethylenes at high throughput with low capital investment per ton of capacity was a key consideration in the selection.

Comments: SINOPEC is one of China’s largest petroleum and petrochemical companies. SINOPEC operates eight UNIPOL PE reactor lines, with two more currently under design. The Unipol process was developed by Union Carbide during the late 1960s and early 1970s to enable the production of HDPE and LLDPE in a low-pressure, fluidized bed reactor significantly cheaper to build and operate than conventional high-pressure or solution processes. Unipol was first applied to HDPE production in 1968 and to LLDPE production in 1975.

Unipol PE (LLDPE), with an estimated capacity of over 9,600 KT, has its largest installed capacity base in North America (34%), Middle East/Africa (25%), and Asia-Pacific (24%). The least successful regions have been South America (1%) and Japan (5%). Unipol PE (HDPE), with an estimated capacity of over 6,700 KT, has its largest installed capacity base in North America (31%), Middle East/Africa (29%), and Europe (24%). The least successful region has been Japan, accounting for only 1% of the installed capacity.

China Datang Corporation Signs 500 KTA License Agreement for UNIPOL™ PP Process Technology From Dow

Dow Technology Licensing, a business group of Dow Chemical announced that a subsidiary company of China Datang Corporation selected UNIPOL™ PP Process Technology with a design capacity of 500 KTA for its new polypropylene facility.

Located in Inner Mongolia Autonomous Region, People’s Republic of China, the plant will produce homopolymers, random copolymers, and impact copolymers. Toyo Engineering Corporation has been chosen to perform the basic engineering work on the plant.

Comments: China Datang Group is one of the largest power enterprises in China. The coal-based olefin project was approved by the Inner Mongolia Autonomous Region in April 2005, and the construction started in September 2005. The total investment is $1.5 billion. It is scheduled to come on stream in 2008. Initially, there was a rumor that they were going to select Spheripol technology for polypropylene. Now, it is confirmed that the Unipol process will be selected.

Dow (Union Carbide) extended the utility of the Unipol process by adapting it to produce polypropylene in the mid-1980s by utilizing Shell’s SHAC catalyst. As is usual for multi-reactor sequences, homopolymers or random copolymers are produced in the first stage, and the second stage is used to add an ethylene/propylene rubber component to the homopolymer produced in the first stage to make impact copolymers.

Ex-Dow Worker Charged in Trade-Secret Probe

Federal authorities have arrested a former Dow Chemical Co. employee and charged him with attempting to sell stolen plastics-related trade secrets to Chinese companies.

Wen Shyu Liu — also known as David Liou — was arrested on Aug. 22 on an intercontinental flight inbound to Seattle from Taipei, Taiwan. Liu, age 69, worked in Dow’s research and development area for 27 years before retiring in 1992. Former Dow employees John Wheeler, Keith Stoecker, and a person identified only as “HM” are also named in the indictment against Liu, although none have been charged.

The secrets Liu allegedly was trying to sell were connected to Dow’s Tyrin-brand chlorinated polyethylene business. Tyrin, the chlorinated polyethylene elastomer is primarily used in roofing and pipe applications.

Comments: It’s a sad, but necessary outcome of momentary lapses in ethical standards for immediate gains.

This case will probably serve as a “Monkey on a Stick” for anyone contemplating such actions.

Since we do work in a competitive industry and we are becoming more and more blatant, to the extent. Some of the major organizations have people with the titles like “Competitive Intelligence Associates”, We feel, organizations have to impart good ethical standards from the beginning.

Please see the article on our website on U.S ANTI-TRUST REGULATIONS; ETHICAL COMPETITIVE BEHAVIOR A PRIMER. “in our Recent CMR publications list.

 

 

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