My Turn – Commentary on Global Polyolefins and Elastomers – Dr. Balaji B. Singh
Disappearing Giants of Polyolefins and Elastomers – With the recent disappearance of Amoco-BP-Innovene, another giant bit the dust. The difference this time – Innovene a much-tooted polyolefins spin-off of BP-Amoco did not even survive the first anniversary of their inauguration. We are sure Inneos will take it to the next level in both technology and markets.
Maybe we should take a few minutes to reminisce on the old giants of the polyolefin industry and think where they are today – Montedison, Chevron, Fina, Union Carbide, Mobil, Rexene, Texaco, All the old Japanese companies??? At least with fewer and fewer giants left – this merger mania will stop, especially with the renewed focus on the next growth region – “Middle East, China, India.. so on”
Polyolefin producers announce Q4, 2005 Earnings Reports
Dow Chemical
Dow Chemical Company announced a 15% increase in 2005 sales as compared to 2004 sales, with total sales at $46.3 billion.
The company reported record sales of $11.9 billion for the fourth quarter of 2005, a 9% increase compared with the same period in 2004. Price rose 10 percent, with strong gains in all operating segments, except for Agricultural Sciences, and in most geographic areas.
In the Performance Plastics segment, sales for the fourth quarter were $2.9 billion, an increase of 12% compared to 2004. Price was up 10% while volume climbed 2%, bolstered in part by the successful integration of ENGAGE™, NORDEL™, and TYRIN™elastomers, businesses acquired by the Company in connection with the dissolution of the DuPont Dow Elastomers joint venture. Dow Automotive had an excellent quarter, increasing price and volume globally and underscoring the value of the Company’s geographic balance, as strength in Latin America and Asia Pacific more than offset dampened demand in North America and Europe. And Building and Construction reported solid sales growth, capturing an increased share of U.S. demand for insulation and weather barrier products.
Fourth quarter EBIT for the Performance Plastics segment was $973 million, including a gain of $637 million related to the UOP sale, partly offset by restructuring charges totaling $28 million. Excluding this net gain and the gain on the sale of the DERAKANE resins business in 2004, EBIT was $364 million, an increase of 39 percent compared with $261 million in the same quarter last year.
Sales in Performance Chemicals rose to $1.9 billion for the fourth quarter of 2005, an increase of 7 percent compared with $1.8 billion posted in the same period last year. Specialty Polymers reported an increase in volume compared with the fourth quarter of 2004, with particular strength in pharmaceuticals, personal care, and water treatment applications. Performance Chemicals reported an EBIT of $177 million for the fourth quarter, which included restructuring charges totaling $14 million. Excluding these charges, EBIT was $191 million, an increase of 4 percent compared with $183 million in the same period last year.
ExxonMobil
ExxonMobil Corporation reported fourth quarter 2005 results. Earnings excluding special items were $10,320 million, an increase of $1,900 million from the fourth quarter of 2004. Fourth quarter net income included a special gain of $390 million from the resolution of a previously disclosed litigation issue. Including this gain, net income of $10,710 million ($1.71 per share) increased by $2,290 million.
Downstream earnings were $2,390 million, up $46 million from the fourth quarter 2004. Higher refining and marketing margins were partly offset by residual impacts from hurricanes Katrina and Rita. Petroleum product sales were 8,322 kbd, 124 kbd lower than last year’s fourth quarter, primarily due to the hurricanes.
U.S. Downstream earnings were $1,158 million, up $282 million. Non-U.S. Downstream earnings of $1,232 million were $236 million lower than the fourth quarter of 2004.
Chemical earnings excluding special items were $835 million, down $413 million from the same quarter a year ago primarily due to reduced margins from increased feedstock costs. Prime product sales of 6,292 kt (thousands of metric tons) were down 657 kt from last year’s fourth quarter, largely due to the hurricanes.
Nova Chemical
NOVA Chemicals reported a net loss of $68 million for the fourth quarter of 2005. The quarter’s net loss compares to a net loss of $105 million ($1.28 per share loss) for the third quarter of 2005. In the fourth quarter of 2004, NOVA Chemicals reported a net income of $162 million.
For the full year 2005, NOVA Chemicals reported a net loss of $104 million compared with net income of $252 million in 2004.
The Olefins/Polyolefins business reported a net income of $45 million in the fourth quarter of 2005 compared to a net income of $39 million in the third quarter of 2005. Higher margins were mostly offset by the effects of the Corunna outage. Polyethylene sales volumes were 9% lower, including a 51% reduction from Sarnia area assets, and ethylene co-product sales volumes were down 31% due to the extended outage at Corunna. The negative impact on Olefins/Polyolefins earnings of the maintenance and modernization work at Corunna is estimated to be $65 million after-tax in the fourth quarter of 2005.
In the fourth quarter of 2004, the Olefins/Polyolefins business reported net income of $82 million. The $37 million decrease when comparing the fourth quarter of 2005 to the fourth quarter of 2004 is primarily attributed to the Corunna outage, which reduced polyethylene and co-product sales volumes.
For the fiscal year 2005, the Olefins/Polyolefins business reported a net income of $241 million compared to $249 million in 2004.
DuPont
DuPont reported a net income for the fourth quarter of 2005 of $153 million, or $.16 per share. Fourth quarter 2004 net income was $278 million, or $.28 per share, including significant items totaling a net after-tax charge of $93 million, or $.09 per share.
Consolidated net sales for the fourth quarter were $5.8 billion, down 3 percent versus the fourth quarter of 2004, but were flat on a comparable business basis. Local selling prices were up 5 percent offsetting a 4 percent volume decline.
Hurricane-related production disruptions to U.S. plants affected sales in all regions. Excluding these production disruptions, worldwide volumes would have been flat, and U.S. volumes up modestly, as shown in the table below. Volumes in the Asia Pacific region were negatively affected by the hurricane impact and lower sales of crop protection chemicals were attributable to lower insect pressure in the growing season.
Performance Materials
PTOI was $54 million versus $26 million in 2004 which included a $118 million litigation charge. Excluding this charge, PTOI declined 62 percent, primarily due to lower earnings from packaging and industrial polymers reflecting business interruptions resulting from the hurricanes and higher raw material costs.
Fourth quarter sales of $1.6 billion, increased marginally versus fourth quarter 2004, on a comparable business basis. Higher prices essentially offset lower volume. Fifty-seven new products were launched during the quarter, including new packaging resins and new compounds for improved processing. One hundred eighty-four new products were introduced in 2005.
Safety & Protection
PTOI was $210 million versus $227 million in the prior year. The earnings decline was largely due to hurricane disruptions to production and sales, higher raw material costs, and increased spending for growth initiatives.
Fourth quarter sales of $1.3 billion were up 3 percent as 4 percent higher USD prices were partly offset by lower volume. The volume decline is largely attributable to the impact of hurricanes on Gulf Coast operations. Volumes grew in all businesses except industrial chemicals. Twenty-four new products were introduced during the quarter, including new transformer applications for Nomex and new products for medical packaging.
Huntsman in discussions – possible sale or merger
Huntsman Corp. announced that it has talked with multiple suitors about a possible acquisition of the company.
Huntsman received an indication of interest in late 2005 and has since had discussions with a “limited number of potential acquirers or merger partners,” the company said. Huntsman has its operational headquarters in The Woodlands, where it has about 650 employees. Huntsman shares jumped more than 11 percent to $21.62 after a report that it was in “serious discussions” to be bought out for more than $4.3 billion.
The company said it has retained financial advisers Merrill Lynch and SG Cowen to consider its options. Huntsman posted 2005 sales of $11.5 billion. The company, which makes a range of products from polymers to base chemicals, was close to filing for bankruptcy in 2001 before MatlinPatterson Asset Management bought up much of its debt and 35 percent of its shares. The private equity firm took Huntsman public in February 2005 at $23 a share.
Comments: The chemical cycle is currently strong and if Huntsman is going to sell, now is the time, before the chemicals segment heads downwards again which is inevitable given the very cyclic nature of the industry. Analysts say that a sale of Huntsman to a strategic or financial party is not all that surprising, what may be surprising to some however is the price that has been “hinted” at of $4.3B when taking into account that any buyer would also have to assume the $4.4B in debt on Huntsman’s balance sheet. Whatever the outcome, the company believes the suitors are serious enough that the board of Huntsman has authorized financial and legal representation in the case a transaction were to materialize. The buyer’s name that keeps surfacing is not a strategic buyer but a financial buyout firm, Apollo Management. Altogether, the Huntsman family and a private equity firm indirectly and directly control 58.7% of the company so a buyout would mean a windfall for the current owners and allow Huntsman to provide further major donations to the Cancer Institute. Credit analysts say it is unlikely that Huntsman will be purchased by a strategic buyer, also commenting that a financial buyer would be inclined to add much more debt to the company’s balance sheet.
Other than indicating there have been discussions, Huntsman sources have declined any comment on specifics of any discussions – speculation of the buyout has driven the stock of Huntsman up almost 15% in the several days since the news broke.
According to the latest news, Huntsman has abandoned sale plans. Huntsman directors decided not to sell the company because offers submitted by potential buyers were too low.
Borealis evaluates possible closure of HDPE plant in Norway
Borealis announced that it will evaluate the future of the Borealis high-density polyethylene (HDPE) plant in Bamble, Norway. The potential closure of the plant in 2006 is one of the options being considered.
Borealis is continuously aiming to strengthen and improve the competitiveness of its European operations. In today’s polyolefins business, HDPE is one of the toughest markets to be in. Despite efforts to improve the situation, the Norwegian plant is the least competitive of the three HDPE plants in the Borealis Group due to several factors, including negative profitability during the last few years and a lack of integration with a feedstock supply.
The HDPE plant in Norway is one of three production units in Bamble, 160 kilometers southwest of Oslo. The plant started up in 1979 with a capacity of 50 KT per year and after several debottleneckings, the current capacity is 110 KT per year. The main products are in the areas of blow molding and roto molding e.g. materials for bottles and leisure boats.
Borealis in Norway has 500 employees of which about 300 are linked to the operation of the production units. The innovation center and various support and Group functions total about 200. The possible closure of the plant will affect about 100 employees in Norway.
A consultation process with employees and their organizations will be initiated. Once the evaluations and consultations are complete, the Board will present a final recommendation to the Borealis AS Supervisory Board for decision in an extraordinary meeting planned for March 13, 2006.
Comments: Borealis is looking to optimize its operations globally to achieve operational efficiency and best-in-class production. As stated above, the HDPE plant in Bamble, Norway lacks economies of scale and feedstock integration, leading to uncompetitive manufacturing costs. While Borealis studies to rationalize some capacity in Europe, it continues to invest in expanding its Borouge venture in the Middle East where it maintains a competitive ethylene feedstock advantage.
Reliance Industries to Increase PP Capacity in India
Reliance Industries announced its plans to construct two polypropylene production lines with a combined capacity of 1,000 KT per annum at the Jamnagar, India complex by the end of 2008 or the beginning of 2009.
Reliance’s subsidiary Reliance Petroleum will build the refinery and PP plants at a special economic zone (SEZ) that the company is establishing at Jamnagar, at a total cost of $6 billion. Propylene from the refinery will be used to feed the PP lines.
Reliance is in the process of commissioning a 280 KT per annum PP unit at Jamnagar, its fourth line there, increasing the combined PP capacity at the site to 1,100 KT per annum. The Jamnagar SEZ will initially occupy an area of 10,000-12,000 acres, and it will ultimately grow to 20,000 acres.
Comments: Reliance is the largest producer of polypropylene in India accounting for over 80% of the polypropylene capacity in India.
Polypropylene markets in India are projected to grow at an annual average growth rate of 18% for five years reaching 8,289 KT by 2010. Even with these high growth rates, Reliance’s plans to expand capacity will flood the market with polypropylene. A total of 1,340 KT of new polypropylene capacity is already expected to come on-stream by 2010. With all the current expansions polypropylene capacity will exceed demand by 75 KT. If these two plants come are constructed on schedule then there will be an excess capacity of 1,075 KT by 2010.
The decision to build two polypropylene production lines seems to be based on two factors: (1) excess propylene capacity and (2) the advantages of a special economic zone. As the polypropylene market is growing at a high rate in India, the capacity will be eventually consumed. However, in the short term it seems that by 2010, polypropylene could face pricing pressures in India due to overcapacity. The investments in the plastics processing sector are also low compared to the expansions planned by the polyolefins producers.
Another Unique Service From Chemical Market Resources, Inc. 560 Blossom Street, Ste C, Houston, TX 77598 USA; Tel: 281-557-3320 Email: POE-SNA@CMRHouTex.Com Copyright © 2006 Page 7/21of Issue 03 – Volume 4 Some of the other players adding polypropylene capacity in India by 2010 include (1) Haldia Petrochemicals, (2) Indian Oil Corporation (IOC), and (3) Oil and Natural Gas Commission (ONGC).
Reliance being an established player could have an advantage over IOC and ONGC; the two new players entering the polypropylene market. Reliance with its strong position in the marketplace may be able to sell its polypropylene while the new players might get affected due to a lack of experience in operating the plants and selling the polymer.
Haldia Petrochemical to expand polyolefin capacities using Basell technology
Haldia Petrochemicals (HPL) announced its plans to expand its PE and PP capacities based on Basell technologies – Shperilene and Spheripol.
Basell’s Spherilene technology would help HPL increase the capacity of its high-density polyethylene swing plant from 260,000 tons per annum to 320,000 tons per annum while the Spheripol technology would be used to ramp up the polypropylene plant from 220,000 to 320,000 tons per annum.
HPL will also procure new chemical catalysts that will develop high-grade polymers used to make automobile components and household durables.
For HDPE/ LLDPE, HPL also uses Mitsui’s slurry CX process and that capacity would be increased from 300,000 to 320,000 tons per annum. HPL is also increasing its naphtha cracker facility from 520,000 to 670,000 tons per annum and the expansion is expected to get completed by mid-2007.
Comments: The announcement to expand polyolefins capacity by Haldia Petrochemicals comes as a surprise as the company is overleveraged and is facing a lot of financial difficulties. The company was planning to float and IPO after the completion of its first petrochemical cracker complex. However, the company’s public issue could not materialize and, therefore, the associated equity was instead financed through debt, increased equity contribution from the promoters, and deferred payment credit.
During 2001, the company incurred operating losses (excluding interest and depreciation) of Rs. 1,420 million. High losses and high-interest costs further deteriorated the inadequate fund position of the company, leading to a highly strained cash position. The company was defaulting on interest payments to its lenders.
During 2002, Haldia incurred cash losses (excluding depreciation) of Rs 2.98 billion, though these were significantly lower than cash losses of Rs 6.2 billion (accounted as preoperative expenditure) during trial runs in 2001. The upward trend in margins in 2004 helped Haldia in turning around the company and declaring a net profit of Rs 500 million for the year ended March 31, 2004, compared to a loss of Rs 5,180 million for the year ended March 31, 2003. The company has barely made profits for two years and is again leveraging its position by planning these expansions.
After these expansions, LL/HDPE capacity in India in 2010 will exceed demand by 269 KT and polypropylene capacity will exceed demand by 1,075 KT. We will have to wait and see how these situations affect Haldia’s balance sheet in 2010.
Haldia is the second largest polyolefins player located in the state of West Bengal in India, a state ruled by the Communist party ( a true testament to the Indian democratic government of people’s choice). Haldia keeps a very low profile shunning any publicity and total control of communications.
BASF announces Engelhard board nominees
BASF Aktiengesellschaft, the world’s leading chemical company, announced the nomination of two candidates for election to Engelhard Corporation’s Board of Directors by Engelhard’s bylaws. The candidates will stand for election at the upcoming annual meeting of Engelhard’s stockholders, which is currently scheduled for May 4, 2006.
According to BASF, the company’s all-cash tender offer of $37 per share offers Engelhard stockholders an opportunity to realize a significant and timely return that Engelhard otherwise would be unable to achieve, either on a stand-alone basis or in connection with an alternative transaction. The BASF nominees are Julian A. Brodsky and John C. Linehan. BASF’s tender offer is scheduled to expire at 12:00 midnight, New York City time, on February 6, 2006, unless extended.
Mr. Julian A. Brodsky is a founder and, since 2004, has served as non-executive Vice Chairman of Comcast Corporation, a leading provider of cable, entertainment, and communications products and services in the United States. Mr. John C. Linehan is currently a member of the Board of Directors of Pacific Energy Partners, L.P., a company engaged principally in the business of gathering, transporting, storing, and distributing crude oil, refined products, and related products in California and the Rocky Mountain region.
Comments: According to the latest news, BASF has extended its bid offer till March 3, 2006.
NOVA Chemicals’ Corunna, Ontario, facility resumes normal operations
NOVA Chemicals Corporation announced that its Corunna, Ontario, manufacturing facility has returned to normal operations following a maintenance outage that was extended primarily due to equipment problems.
NOVA Chemicals’ Corunna ethylene flexi-cracker resumed production on January 24, 2006, and is now producing and shipping ethylene and all related co-products. NOVA Chemicals’ Sarnia, Ontario, area polyethylene facilities are returning to normal production rates.
The company lifted its force majeure on hydrogen on January 30, 2006. The force majeure declarations on ethylene, polyethylene, propylene, and other co-products are expected to be lifted individually during February, as sufficient inventories are built to provide steady supplies to customers. The negative impact on net income in the first quarter of 2006 is expected to be U.S. $20 – $25 million.
Comments: It has been a tough year for NOVA from an operations standpoint given Alberta feedstock interruptions, power outages, startup difficulties at Corunna, and of course the Gulf Coast hurricanes that shut down Texas operations for a spell. Now the string of events is behind Nova but the total P&L impact for all disruptions probably exceeds $50mm.
With all facilities now operating at a maximum, polyolefins profitability should soar and the next quarter should be the time when styrenics become profitable. It has been a long hard road for styrenics but there is light at the end of the tunnel, given further rationalizations in the US and the joint ventures in Europe and Mexico kicking in their projected savings. Now, if profitability in styrenics can only be sustained.
PVC expansion in India announced by Finolex Industries
Finolex Industries Ltd (FIL), one of the largest PVC manufacturers in India, announced its plans to double the output of PVC resin from 130 KT per annum to 260 KT per annum at its plant in the Konkan region of Maharashtra.
The scheduled completion date for this plant is 1st quarter 2006. The plant at Ratnagiri was set up in technical collaboration with Uhde Gmbh of Germany under a technology license from Hoechst AG.
Finolex is one of the country’s leading business conglomerates with an interest in diverse areas such as telecommunications, petrochemicals, irrigation, and education. The group’s range of products covers electrical and telecommunication cables, optical fiber cables rigid PVC pipes, suspension and paste grade PVC resins, continuous cast copper rods, and PVC sheets.
Comments: Finolex Industries Limited was established in 1981 and is part of the Pune-based Finolex group, which also includes Finolex Cables Limited. Finolex runs a PVC plant near Ratnagiri, Maharashtra State, and is the second-largest PVC resin manufacturer in India. The 260 KT PVC (27% of domestic capacity) resin plant was built in collaboration with Uhde GmbH of Germany under a license from Hoechst AG. Finolex manufactures both suspension and emulsion/paste PVC.
Finolex’s PVC plant enjoys location advantages, the key of which is proximity to its market. Further, the Pipes division and Finolex’s associates consume around 45 KT of PVC. Within its PVC complex, Finolex has an open sea cryogenic jetty used to import feedstock for the manufacture of PVC as well as for bringing in LPG.
Finolex manufactures PVC resin from ethylene di-chloride and ethylene that are brought in through its jetty. Finolex’s profitability in the PVC division continues to be linked to tolling margins and the duty differential between PVC and EDC. Demand for PVC remains strong, reflecting the economic environment and infrastructure construction.
PVC operating rates have improved markedly in the past couple of years, aiding profits, and, in turn, Finolex’s financial profile. Finolex is the largest PVC pipe manufacturer in India, with a 40 KT capacity split between its two plants at Pune and Ratnagiri.
Finolex offers a wide range of PVC pipes and fittings for use in agriculture, housing, telecoms, industry, etc, ranging between 20 mm and 400 mm in diameter. For more information on Global PVC markets, please refer to our multiclient or contact us at 281-557-3320.
Kraton Polymers introduces styrene block copolymers as alternatives to PVC in medical and packaging applications
Kraton Polymers LLC introduced two new grades of its KRATON G® SBCs for film applications. These new grades provide an alternative to plasticized PVC for numerous film-based, medical, and packaging applications.
The new grades, MD6932 and MD6945, offer USP Class VI certification, as well as easy processability in blown and cast films while maintaining the high degree of toughness, flexibility, and clarity necessary for a variety of medical and packaging products. They can be used as a mono-layer film, as a layer in a multi-layer structure, or dry blended with polyolefins to get the desired performance and transparency.
Comments: In recent years, inconclusive studies have suggested that plasticizer migration from PVC films used in medical and food applications could be harmful to human health. Because of these concerns, manufacturers of medical and food packaging have begun marketing new PVC-free and polyolefin-based alternatives. Kraton’s new SBC films are in line with these alternatives and are being marketed to consumers concerned about PVC. Several European manufacturers of PVC medical bags have voluntarily switched to polyolefin-based films because of impending legislation and consumer concerns. In North America, PVC-based bags are still widely used, however, alternatives are increasing in popularity.
KRATON should be able to capitalize on trends to use non-PVC films in medical and packaging applications with their new SBC-based film.
For more information on intermaterial competition on Flexible PVC with other polyolefins and elastomers, please refer to our new multiclient “Intermaterial Competition of Worldwide Flexible PVC & Polyolefins and Elastomers 2005-2010”. For more information, please call 281-557-3320.
Grace expands its presence in the Middle East through a joint venture with Chevron
W. R. Grace & Co. announced expanding its reach in the Middle East through Advanced Refining Technologies, a joint venture of Chevron Products Company, a division of Chevron USA, and Davison Chemicals, a business unit of Grace.
ART has entered into an agreement with the Kuwait Catalyst Company (KCC) pursuant to which KCC will manufacture residuum hydroprocessing catalysts for ART. KCC serves the petroleum refining industry in the Arabian Gulf region. Residuum hydroprocessing catalysts help refiners produce environmentally friendly, cleaner-burning transportation fuels by removing sulfur and other contaminants from petroleum. The agreement also includes an alliance with Japan Energy Corporation (JE), a supplier of fuel and gas, that enables KCC to have access to research and development and technical support for both JE’s and ART’s catalyst technology.
Comments: Kuwait Catalyst Company (KCC) was formed in 1996 by a group of investors with the objective of providing complete catalytic solutions to the regional refining industry to satisfy the requirements of catalysts used in crude oil refining. Having this vision and the technological arrangement with Japan Energy Corporation (JE), the company built a state-of-the-art catalyst manufacturing plant at the Shuaiba Industrial area in Kuwait. Strategically located within the vicinity of the refineries of Kuwait and with proximity to the other refineries of Middle East countries, the catalyst plant has a production capacity of 5,000 MTPA.
The plant is equipped with the latest automatic digital process control & manufacturing management systems and began production in 2001. The capabilities of KCC will be enhanced by access to the resources of both JE’s and ART’s catalyst product lines and technology. ART is a leader in offering residuum hydroprocessing catalysts along with Criterion and others. There is a substantial cost advantage to manufacturing refining catalysts in a location with access to inexpensive natural gas. Compared to North America’s natural gas costs, the cost to manufacture catalyst increases approximately 10% for every $1.00/mcf differential in natural gas cost. Given recent natural gas costs in the US, the advantage to manufacturing refinery catalysts by KCC could be as much as 80% to 140% less expensive than comparable costs in the USGC. This cooperative agreement by ART with KCC is a good strategic move to access Middle Eastern markets and save a good deal in manufacturing costs at the same time.
Shell and ONGC sign cooperation agreement for upstream and downstream projects
Royal Dutch Shell PLC and Oil & Natural Gas Corp. of India have signed a memorandum of understanding (MOU) covering upstream and downstream projects, mostly in India.
The agreement covers the exploration and production of hydrocarbons and the distribution of natural gas and oil products. It will also look into refining, petrochemicals, and coal gasification.
While giving Shell greater access to Indian projects, the MOU will allow ONGC more opportunities outside the country. There will be a joint steering committee to manage cooperation and identify other investment opportunities.
The steering committee will look at opportunities for raising production from existing fields and jointly bidding in future exploration rounds. Downstream, the committee could recommend a long-term oil products supply arrangement and joint operation of terminals and depots.
Comments: This will give Shell an opportunity to enter the Indian industry, with ONGC being one of the suitable candidates. Shell has been adopting west to East strategy. Under this strategy, Shell has formed alliances in the Middle East and this is another step in their strategy. Currently, Shell does not participate in the upstream sector in India. In the downstream sector, this will give Shell a chance to participate in the new 15 million-ton refinery and petrochemicals complex being planned adjacent to Mangalore Refinery and Petrochemicals.
Since 1996, ONGC has established several overseas investments with several companies. This agreement also fits well with the company’s strategy. ONGC is also considering the possibility of taking a stake in Sakhalin II being operated by Shell.
Iran plans more petrochemical complexes
National Petrochemical Co. announced its plans to build five additional downstream petrochemical complexes through its subsidiaries. These plants will be built along a 2,163-kilometer ethylene pipeline that will connect Bandar Assaluyeh in the south of Iran with Mahabad in the north.
Dehdasht Petrochemical will build a 250 KT per year HDPE plant at Dehdasht that will consume 245 KT/year of ethylene and 5 KT/year of butene-1.
Andimeshk Petrochemical plans to construct a 300 KT/year HDPE plant at Andimeshk using 305 KT/year of ethylene and 7 KT/year of butene-1 as feedstocks.
Charmahal-va-Bakhtiari Petrochemical plans to construct an LLDPE/HDPE swing unit with a capacity of 300 KT/year at Boroojen. That plant will consume 295 KT/year of ethylene.
Hamedan Petrochemical is planning to build plants producing 140 KT/year of vinyl acetate monomer and 45 KT/year of ethylene vinyl acetate, using 84 KT/year of ethylene and 97 KT/year of acetic acid as feedstocks.
Miyandoab Petrochemical will build a 300 KT//year polyvinyl chloride and a 190 KT/year caustic soda complex at Miyandoab, which will consume 144 KT/year of ethylene and 360 KT/year of salt. The five other plants along the pipeline, as previously announced, will be at Gachsaran, Kermanshah, Khoramabad, Mahabad, and Sanandaj.
The pipeline will supply a combined 2,800 KT/year of ethylene to the 10 downstream complexes. The suppliers of ethylene are Kavian Petrochemical and Arvand Petrochemical.
Comments: National Petrochemical Company has set aggressive targets for ethylene and derivatives expansion over the next decade. Recently NPC has decided to expand the capacity of its inland ethylene pipeline (which will stretch from Assaluyeh in the south of Iran to northwestern inland regions of the country) from 1.5 million tons/per year to 2.8 million tons/per year. The 2,163-kilometer pipeline is already under construction. The pipeline will result in the development of new ethylene-derivative petrochemical complexes in the cities of Gachsaran, Khoramabad, Kermanshah, Sanandaj, and Mahabad.
The resulting pipeline expansion will allow NPC to build five more complexes in Andimeshk, Dehdasht, Hamedan, Chaharmahal-va-Bakhtiyari, and Miyandoab. The contracts for the five initial complexes have already been awarded, with the major polyolefins projects going to Basell.
DSM Dyneema Files Patent Lawsuit against Chinese Company
DSM Dyneema, the inventor, and manufacturer of Dyneema, has filed a patent-infringement lawsuit against Hangzhou Pivot International Co. Ltd., of Hangzhou, Zhejiang Province, China.
Before the filing, DSM Dyneema obtained authorization to seize merchandise, including fiber, rope, and finished articles, exhibited by Hangzhou Pivot at the Milipol 2005 exhibition on state security in Paris.
The lawsuit asks the court to establish and confirm its findings that this merchandise infringes on DSM Dyneema patents and to forbid the sale or offering of these polyethylene-based, high-performance fibers by Hangzhou Pivot. DSM Dyneema is also seeking a recall of the infringing products sold, as well as damages and other corrective measures.
DSM Dyneema protects its technology by applying for patent protection in different countries and regions. It has filed several patents in the field of high-performance polyethylene (HPPE) fibers and their applications. The company monitors potential infringements on an ongoing basis and takes action against manufacturers, sellers, and users of infringing products – whether fibers or end products.
In 2004 DSM Dyneema obtained a verdict from the District Court of The Hague in the Netherlands, which confirmed the infringing nature of high-performance fibers offered by another Chinese company, CEN International Trading Company, and ordered the latter to stop further sales of such infringing material. DSM Dyneema is confident the Court of Paris will rule in favor of DSM.
Comments: The infringement of intellectual property rights has been always a problem in Chinese markets. This is a common problem in not only the petrochemicals sector but in other industries such as information technology, music, and others.
In 2004, Syngenta won a patent infringement lawsuit against two companies in China, namely Yancheng Luye Chemical and Yancheng Yongli Chemical. The Chinese government introduced legislation to protect foreign companies’ intellectual property as part of China’s 2002 accession to the World Trade Organization. However, these laws have to be enforced to prevent future lawsuits.
Dyneema is the ultrahigh-molecular weight HDPE fiber similar to Honeywell’s Spectra high-strength fiber. Its unique properties make them a valuable fiber for most high-strength applications including ropes & Cordage and fiber reinforcement applications.
Rubbermaid closing another plant in Ohio
Newell Rubbermaid announced its plans to close a 300,000-square-foot injection molding plant in Perry Township, near Canton, Ohio. The company will move that capacity to a Rubbermaid injection molding plant in Mogadore, Ohio. This plant manufactures several products for Rubbermaid’s Home Products division.
About two-thirds of Perry Township workers will be offered jobs in Mogadore. There are about 300 people that are employed at the Canton facility. The company plans to shut down the facility by the end of March this year.
The plant closing is the latest in a series of closures under publicly held Newell Rubbermaid, which in September 2005 had announced plans to cut 5,000 jobs and to close one-third of its 80 manufacturing facilities.
Comments: After the closing of this plant, Rubbermaid will have facilities located in Centerville, Iowa; Greenville, Texas; Winfield, Kan.; Jackson, Mo., and Mississauga, Ontario. The company has closed several facilities including one plant in Perry township that produced Graco products, another in Woorster, OH, and others.
According to Rubbermaid, one of the main reasons for selecting the Canton site was that it was landlocked despite its modern facilities. The company’s total production volume will not be affected and will benefit from economies of scale. The company has been adopting the consolidation strategy in order to remain competitive and cut costs.
Arkema opens a carbon nanotube pilot plant at its Lacq research center
Arkema announced the inauguration of the first plant in Europe capable of producing some 10 tons per year of carbon nanotubes. Arkema and the Conseil Régional d’Aquitaine have stated their intention of working closely together to develop a nanomaterials activity in the Aquitaine region of France.
With this unique pilot plant in Europe, operating a patented catalysis process, Arkema is now in a position to produce carbon nanotubes in semi-industrial quantities (up to 10 tons per year).
Arkema, the first manufacturer to undertake the production of carbon nanotubes Arkema’s pilot plant is designed to produce carbon nanotubes in semi-industrial volumes at a cheaper cost than those manufactured in the laboratory. With this new pilot plant, Arkema is looking to the genuine commercial development of carbon nanotubes to fulfill the expectations of converters in the thermoplastics, epoxy, elastomer, and coating sectors. Progress is also expected in the field of energy in which the use of carbon nanotubes will play a role in the manufacture of energy-efficient batteries and fuel cells.
Discovered in the early 90s, carbon nanotubes represent a new crystalline form of carbon. They are minute tubes that can feature several concentric graphite walls. 10,000 times finer than human hair, their diameter ranges from 1 to 60 nanometers, and they can be tens of microns long. Carbon nanotubes are 100 times stronger and six times lighter than steel. Their thermal conductivity is greater than that of diamonds, and, depending on their molecular structure, they react like electrical conductors or semiconductors. The carbon atoms making up the walls of the tubes are arranged in a honeycomb-like regular hexagonal lattice, which imparts outstanding strength to the carbon nanotubes.
Comments: Carbon nanotube belongs to the family of fullerene, which was first invented by Dr. Richard Smalley of Rice University. The 1996 Nobel laurel passed away on October 28, 2005. However, his discovery continues to impact academia and the industry, as evidenced by this carbon nanotube pilot plant of Arkema.
A carbon nanotube is categorized into single-wall nanotubes (SWNTs) and multi-wall nanotubes (MWNTs). SWNTs have some unique properties that MWNTs do not have. However, SWNTs are more difficult and more expensive to make, which inhibits their commercial application. It is most likely the carbon nanotubes produced by these Arkema plants are MWNTs. One example of the commercial application of MWNTs is GE Plastics uses multi-wall nanotubes (MWNTs) as a conductive additive in their Noryl GTX, a PPE/PA blend. The conductivity imparts online paintability to the automotive parts made of Noryl GTX.
Overall, nanotubes are still expensive to produce, and the development of more affordable commercial-scale synthesis techniques is vital to the future of carbon nanotubes. This Arkema pilot plant is a significant step in that direction.
EU phthalates ban goes into effect and proposed ban on phthalates in California gets defeated
California legislators have rejected a bill that would have banned the use of phthalates in baby products. The proposed phthalates to be banned include di(2-ethylhexyl) phthalate (DEHP), dibutyl (DBP), and butyl benzyl (BBP).
Proponents of the bill, which was introduced by Assemblywoman Wilma Chan (D.), were unable to gather enough votes to pass the bill through the Assembly’s appropriations committee, which defeated it 10-9. Appropriations committee member Leland Yee (D.) surprised environmentalists by casting the deciding vote to defeat the bill.
In European Union, a permanent ban on six phthalate plasticizers in toys came into effect in the European Union (EU). EU member states have until January 16, 2007, to adopt the legislation. The ban covers di(2-ethylhexyl) phthalate, di-n-butyl phthalate, and butyl benzyl phthalate in concentrations exceeding 0.1% in plastic items.
Comments: In December 1999, the European Commission introduced an emergency ban prohibiting the sale of soft PVC toys and childcare articles designed to be sucked by children under three years old and contain more than 0.1% by weight of one or more of the six phthalates. Later in 2004, The European Council of Ministers voted unanimously for a permanent European Union (EU) ban on the use of six phthalate plasticizers in toys and child-care items intended for use by children under the age of three. The ban went into effect this year.
In California, some legislators have been trying to ban phthalates in a similar way as in the EU. They have been not successful so far due to the lack of enough scientific evidence regarding the toxicity of phthalates.
Phthalate plasticizers are the most commonly used plasticizers. They account for about 80% of the global plasticizer demand. The other types of plasticizers include: (1) aliphatic plasticizers (adipates, maleates, azelates, and sebacates), (2) trimellitate plasticizers, (3) epoxy plasticizers, (4) phosphate plasticizers, and others. For more information on plasticizers, please refer to our multiclient studies on Flexible PVC and Plasticizers.
Jane Austin gets elected first female chair of SPI
Jane Austin, global business director for DuPont Co.’s fluoroelastomers business, was elected chair of the Society of the Plastics Industry Inc. for 2006, becoming the first woman to lead the nation’s plastics industry group in its 70-year history.
Austin has been active in SPI leadership for more than seven years, including terms as a board member, treasurer, and member of the finance committee. She also has served on the Material Suppliers Council. SPI chairmen serve for one year but are eligible to serve for a second term.
A native of Virginia, Austin graduated with a degree in chemical engineering from Virginia Tech in 1982. She joined DuPont as a process engineer in the textile fibers department, and subsequently held positions in research and development, manufacturing, supply chain, and quality control before becoming global product manager for Vitron Fluoroelastomers in 1993 and global business director in 1996.
In 2000, she was appointed global business director for DuPont Dow’s Engage® polyolefin elastomers business, and in 2003 became global business director for chloroelastomers.
Austin earned an MBA from the University of Delaware, where she won the Blaine G. Schmitt Award for the top graduating student.
Comments: The best part of being consultants in the polyolefins and elastomers – is the honor of working with great people – Jane is one of them.
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