FlexPO2005 Rescheduled for March 15-17, 2006 in Singapore – Mark Your Calendars
We greatly appreciate the continued patronage of FlexPO2005. The program scheduled for September, 21-23, 2005 in Galveston, Houston, TX had to be re-scheduled due to hurricane Rita – an act of God, or God’s middle managers.
We are rescheduling the program to March 15-17, 2006 in Singapore. The program will be redesigned to take into account the innovations and the unbridled enthusiasm in the Asian region – a breath of fresh air from all the bad news.
We look forward to having the conference at the same level you have expected in the last ten years. CMR Inc. proposes, God disposes, but God knows, CMR Inc. is not a quitter – we will be back 🙂
GAIL enters the domestic octane-based LLDPE market in India
Gas Authority of India, Ltd. (GAIL) announced that it has entered the domestic octane-based linear low-density polyethylene (LLDPE) market. GAIL has manufactured the octene comonomer-based LLDPE film grade at its Pata petrochemical plant.
The company plans to gain a 15-20% market share in the near future in the domestic market which is growing at a compounded annual rate of 10 percent.
GAIL is the only company to have a petrochemical plant in North India and GAIL hopes to benefit from the location advantage, as the demand for the Octene-based LLDPE grade is high in Northern India. The domestic customers for this grade now have a choice as earlier they were dependent largely on a single domestic source.
GAIL’s Polyethylene production capacity is at 310,000 MT/year. The company is planning to expand PE capacity to 410,000 MT/year with an investment of Rs. 647 crores, GAIL is setting up a 2,80,000 TPA Assam Petrochemical Complex Greenfield project with an investment of Rs 5200 crore and is also planning to set up a 7,00,000 TPA Petrochemical Complex in Kochi with an investment of Rs 7000 crore.
Comments: The market for octene-based polyethylene in India is being spurred on by the increased demand for PE resins in food packaging applications. Among food packaging applications, one of the key areas has been the packaging of milk and milk products where octene-based PE resins provide increased mechanical and heat seal properties. GAIL currently participates in the octene-based polyethylene markets via its 160 KT Sclairtech unit at its petrochemical complex in Pata. They also have a 100 KT Mitsui CX unit for the production of HDPE. To keep pace with the increasing demand for such octene-based PE resins, GAIL plans to debottleneck its existing capacity by 50 KT. It also plans to construct a new swing unit with a capacity of 120 KT, which is expected to come on-stream by 2007. This should allow GAIL to increase its competitive position in this market which currently is dominated by Reliance/IPCL.
German PVC producer Vinnolit for sale by Advent International
PVC producer Vinnolit (Ismaning, Germany) announced that it has been put up for sale by its private equity capital owner Advent International.
According to the company, Advent is also considering the possibility of keeping a reduced stake in Vinnolit and keeping the present Vinnolit management in place.
Vinnolit has undergone restructuring in the past five years and become back-integrated into vinyl chloride monomer production. It generates sales of about EUR600 million/year ($744 million). The company has production sites at Burghausen, Cologne, Gendorf, and Knapsack, Germany with a combined capacity of 650,000 MT/year, of which 200,000 MT/year is commodity grades of PVC and the rest paste and specialty copolymers.
Comments: In 1993, Wacker & Celanese formed a 50-50 joint venture to form Vinnolit Kunststoff GmbH to produce and sell PVC. In 2000, Wacker made a strategic decision to distance itself from PVC. As a result, Wacker sold its 50% share in Vinnolit to U.S. group Advent International Corp.
Earlier this year Advent bought a combined 10% stake in Vinnolit from Wacker-Chemie and Celanese, increasing the management stake held by Advent and Vinnolit to 100%.
Vinnolit is the fourth largest PVC producer in Europe with a total capacity of 650 KT/year. The company has manufacturing sites located in (1) Burghausen, Germany, (2) Cologne, Germany, (3) Gendorf, Germany, and (4) Hurth-Knapsack, Germany.
Vinnolit’s future owners will play a role in the expected consolidation of Europe’s PVC industry. Discussions were held some years ago to merge Vinnolit with Vestolit (Marl), another PVC producer in which Advent has a minority stake, but talks did not come to fruition.
PolyOne to sell its engineered films business unit to a group of investors
PolyOne Corporation, a leading global polymer compounding, and North American distribution company has signed a letter of intent to sell its Engineered Films business unit to an investor group comprising members of the unit’s management team along with an investor group formed by Matrix Capital Markets.
Matrix Capital is an investment banking firm that has been retained to advise management and arrange financing for the transaction. The new entity, yet to be named, will consist of the operating assets and liabilities of the Engineered Films unit.
PolyOne will retain a minority ownership interest in the new entity. The Engineered Films unit is a leading provider of customized, high-performance plastic films for use in diverse applications, including automobile and truck interiors, flooring, wall covering, and pool liners. Headquartered in Winchester, Virginia, the unit operates manufacturing facilities there and in Lebanon, Pennsylvania. The Engineered Films unit’s revenues in 2004 were approximately $126 million.
Comments: In 2003, PolyOne announced that it would sell three of its non-core operations including (1) elastomers and performance additives, (2) engineered films, and (3) specialty resins. The company was able to divest its elastomers business in 2004 for $120 million, and this is the second of the remaining businesses to be divested.
This decision was made by the company to put its strategic emphasis on its Plastics Compounding, Color and Additives Masterbatch, and Distribution businesses. These businesses have leading market positions, and most are global in scope.
Impact of Hurricane Rita on several plants
Dow Chemical
Dow’s sites at Freeport, Deer Park, Clear Lake, and LaPorte, as well as the Union Carbide facilities in Texas City and Seadrift and the Dow Haltermann site in Houston, were all safely shut down before dawn last Friday. The Company’s Houston business centers were also closed. Dow Chemical reported that inspection crews at sites owned or controlled by Dow or by Union Carbide along the Gulf Coast have so far found no significant structural damage at any of its facilities.
Georgia Gulf
Georgia Gulf said its Lake Charles, LA, facility, which produces vinyl chloride monomer (VCM), and its Plaquemine, LA, facility, which produces chlorine, caustic, VCM, vinyl resins, phenol, and acetone, are still shut down until natural gas, feedstocks, and utilities are restored.
Georgia Gulf also has declared a force majeure on caustic soda and vinyl resins. Other products could be placed on allocation before the plants resume normal operations.
Goodyear Tire & Rubber
Goodyear Tire & Rubber Co.’s synthetic rubber plant in Beaumont, Texas, is closed as the company assesses damage from Hurricane Rita.
Goodyear ordered shutdowns of its chemical plants in Houston, Bayport, and Beaumont last week in preparation for Rita. The Houston and Bayport plants have resumed production.
Huntsman Corp.
Huntsman Corp. announced that it may not be able to fill orders for ethylene, propylene, and specialty chemicals produced at six Texas sites because of damage from Hurricane Rita.
Huntsman invoked force majeure clauses in contracts for products made at Port Arthur, Port Neches, Conroe, Dayton, Chocolate Bayou, and Freeport.
Lyondell
Lyondell Chemical Company announced that its Texas Gulf Coast facilities are in the process of resuming operations that were shut down as a result of Hurricane Rita. All but one of Lyondell’s Texas facilities are expected to be in operation.
PPG Industries
PPG Industries Inc., a maker of coatings and sealants, said power was restored at its chemical plant located in Lake Charles, LA., after being shut down on Sept. 22 due to Hurricane Rita.
The facility — which makes chlorine, caustic soda and derivative products, and amorphous precipitated silicas — is generating the minimum amount of electricity needed for the plant’s basic infrastructure, PPG said. The company said it is still uncertain when production will resume.
Westlake Chemical
Westlake Chemical announced that it has re-started its Geismar, Louisiana vinyls complex following the shutdown necessitated by Hurricane Rita. The company’s VCM (vinyl chloride monomer) and PVC (polyvinyl chloride) units are currently operating at reduced rates due to constraints associated with the hurricane.
The company’s olefins petrochemical complex in Lake Charles, Louisiana remains in a safe, shut-down mode awaiting the full restoration of electrical power. Some limited power was restored to the site, and personnel is onsite making minor repairs and monitoring and preparing the facilities for a safe and timely return to operations.
Comments: There is significant chemicals and petrochemicals capacity located in the US Gulf Coast. Some of this capacity is impacted by Hurricane Katrina and Rita. Most of the plants escaped significant structural damage, however, lost production. This could be reflected in the third quarter results of some of the chemical companies. For more detailed information on the Gulf Coast Petrochemicals industry and the impact of hurricanes, please refer to our previously published articles.
Dow Fiber Solutions introduces non-iron stretch fabric
Dow Fiber Solutions introduced DOW XLA™ fiber – a revolutionary fiber – the first and only stretch solution that can be combined with true non-iron finishes.
Dow is partnering with the textile industry to provide differentiated solutions for brands, retailers, and consumers. Brooks Brothers were the first U.S. retailer to use DOW XLA fiber, introducing it in the fall of 2004 by weaving it into its two-ply cotton shirt to create a new women’s fitted shirt that doesn’t require ironing.
Other major retailers are also now incorporating DOW XLA fiber into their garments and retailers in Europe, such as CasaModa in Germany, are also using the fiber.
DOW XLA fiber is the world’s first olefin-based stretch fiber that is inherently resistant to harsh chemicals and high heat – enabling it to be combined with true non-iron finishes. DOW XLA behaves perfectly in this environment and is the only stretch fiber to allow the achievement of a DP rating of 3.5, even after 50 washing cycles. This rating defines a true non-iron fabric.
Comments: XLA Fibers is an innovative product launched by Dow Chemical Company in the third quarter of 2002. The fiber is different from spandex and is an olefin-based crosslinked elastic fiber as opposed to traditional materials that are based on polyester. XLA fiber is a melt-spun fiber that is designed to offer a soft stretch performance combined with superior heat and chemical resistance. XLA is the first commercial olefin-based fiber founded on metallocene chemistry.
XLA fiber is used in a wide range of fabrics, including knits and wovens. The major market for Dow’s XLA fiber would be apparel applications such as (1) swimwear, (2) intimates, (3) career wear/Uniforms, (4) Denim, (5) ready-to-wear, (6) active wear, and (7) tailored clothing. Perry Ellis International Inc. and Phillips Van Heusen were among the firms to introduce cotton shirts blended with about 2% Dow XLA.
Three apparel makers have rolled out shirts with XLA in recent months, and Dow thinks XLA could generate $300 million in sales in 10 years. The current application is the latest in XLA fibers. Dow will continue to introduce XLA fibers in new applications. Some of these products/applications were developed based on reverse R&D. Reverse R&D essentially involves market research and a survey of the needs of the end-users before developing a product.
Please see our detailed article covering XLA developments in our New Generation Polyolefins Bimonthly Review.
BASF and SINOPEC joint venture officially starts
BASF and SINOPEC announced the opening of their Verbund site in Nanjing, China. The new Verbund site is being run by BASF-YPC Co. Ltd. and is the largest petrochemical project between SINOPEC and a foreign company, with a total investment of $2.9 billion.
Due to the smooth and successful start-up, BASF and SINOPEC will invest in additional downstream plants and the expansion of the steam cracker at their joint venture site in Nanjing to further strengthen the Verbund synergies.
BASF-YPC Co. Ltd. is a 50-50 joint venture between BASF and SINOPEC, founded in 2000. The groundbreaking for the site, located in Nanjing, Jiangsu Province, took place on September 28, 2001. BASF-YPC Co. Ltd. successfully started commercial production at a steam cracker as well as nine downstream plants in China in June 2005. These plants are interconnected to use products, by-products, and energy most efficiently, thus realizing cost efficiency and minimizing environmental impact. The 220-hectare site produces 1.7 million metric tons of high-quality chemicals and polymers per year for the rapidly growing Chinese market. The site also has a gas-fired power plant and an international port on a tributary of the Yangtze River to ensure optimum energy supply and logistics.
Comments: The completion of BASF’s project in China marks its progress towards the company’s strategy of achieving 10% of global sales in Chinese markets. The company will now plan several downstream units including polyolefins.
In the last ten years, Chinese demands for PE and PP have more than tripled. The domestic POs capacity has been growing at double digits; however, it still cannot keep up with the surging demand. As of 2004, roughly 50% of China’s PE consumption and 40% of its PP consumption are imported. To capitalize on the growing opportunity in China, multinational petrochemical companies have established several joint ventures with Chinese domestic players. BASF-YPC is one of the so-called “Big Three” in China. The other two are SECCO, which is a joint venture between BP and Sinopec Shanghai, and CSPC, which is a joint venture between Shell and China National Offshore Oil Company (CNOOC). BASF-YPC and SECCO both came on stream in June 2005. CSPC is scheduled to start at the end of 2005. Another JV between ExxonMobil, Aramaco, and Sinopec Fujian is scheduled to start in 2008.
This new expansion by itself is not a problem. However, it may present a long-term problem if all the information is pieced together.
1. Most recent data suggest that the historical double-digit growth of Chinese POs demand may not be sustainable.
2. The Chinese domestic players are aggressively expanding their capacities through JVs and on their own. The newly announced expansion of BASF-YPC is just one example.
3. The Middle East is ambitiously expanding its POs capacity, mainly targeting export to China.
The net result of the above factors is potential global over-capacity. It may come much sooner than many have thought.
The upcoming issue of Plastics News will feature Chemical Market Resources’ view regarding the long-term trend of the Chinese POs market. In the next issue of Next Generation Polyolefins (NGP), please read our article on “Chinese Polyolefins 2005-2015: Opportunities and Challenges”.
Reichhold announces management buyout
Reichhold announced that the executive management team, led by President and CEO John S. Gaither, reached an agreement with Dainippon Ink and Chemicals, Incorporated (DIC) for a management buyout. Reichhold has been the wholly owned subsidiary of DIC since 1987. The agreement was signed on September 12, 2005, and is planned to close on September 30, 2005.
DIC had planned a restructuring of the company and concluded that the sale of all shares of Reichhold to the existing management team was in the best interest of both firms. Under the terms of the agreement, although DIC will retain the Austrian coatings operations, both DIC and Reichhold will be free to continue to independently supply the worldwide coatings markets.
Reichhold is one of the world’s largest manufacturers of resins, gel coats, and bonding pastes for the composites industry and a leading supplier of a wide variety of polymers for the coatings and graphic arts markets. With 1,600 employees and 16 manufacturing facilities worldwide, Reichhold’s manufacturing reach includes 11 plants in the Americas, four in Europe, and one in the Middle East. Reichhold’s world headquarters and technology center is located in Research Triangle Park, North Carolina. The name Reichhold will be retained under the new ownership. The executive management team will continue to lead the company in their current roles.
Comments: Reichhold was formed in 1927 and was acquired by Japanese firm Dainippon Ink & Chemicals (DIC). Since then the company expanded globally via a series of acquisitions including: (1) Costenaro SpA (Italy), (2) Heitz Alsacol (France), (3) Resana S/A (Brazil) (4) Jotun Polymer (Europe/Asia & Middle East), and several others. Currently, the company is one of the leading global players in the composites and coatings industry.
DIC announced its plan to sell Reichhold earlier in 2005 to refocus its managerial resources on industries such as printing ink and electronic materials.
Scientists design a new process to produce nylon-6
With the help of a new catalyst, chemists at the University of Cambridge, in England, have developed a one-step procedure for making caprolactam from cyclohexanone.
The new route is solvent-free and doesn’t generate any unwanted ammonium sulfate by-products hence it could offer the industry an environmentally friendly process.
The scientists, John Meurig Thomas and Robert Raja thought they could eliminate the by-product with judicious use of a bifunctional catalyst. They designed a nanoporous aluminophosphate catalyst with redox-active cobalt sites and acidic silicon, magnesium, or zinc sites integrated into the catalyst’s framework.
The cobalt redox centers generate hydroxylamine in situ from ammonia and air. After hydroxylamine and cyclohexanone form the intermediate oxime, the acidic centers nudge the Beckmann rearrangement along via acid catalysis. The nanoporous nature of the catalyst allows products and reactants to move freely throughout the system.
Comments: Nylon-6 constitutes approximately a third of all polyamide production. The major applications of Nylon-6 include (1) wire and cables, (2) industrial machinery parts, (3) tubing and pipe, (4) monofilaments, and others. Honeywell and BASF are the two largest producers of caprolactam and both companies captively use it for the production of Nylon-6. DuPont and Honeywell are the two largest manufacturers of Nylon-6 in North America.
By being able to eliminate ammonium sulfate by-products, caprolactam can be produced without harmful environmental repercussions. This new catalyst could contribute to increased production and demand for Nylon-6, as producers will reduce their production costs since the disposal of ammonium sulfate would no longer be a consideration.
BP awarded $57 million in favor of China’s intellectual property case
BP announced that it has been awarded more than $57 million as part of a default judgment by a California court, for trade secret misappropriation related to the manufacture of equipment for an acetic acid project in China.
The Superior Court of the State of California made the judgment against Yankuang Group Boyang Foreign Economic and Trade Co. and the Shanghai Chemical Industry Design Institute (SCIDI). According to BP, it discovered in 2003 that AstroCosmos Metallurgical (Oxnard, CA) was manufacturing equipment in California for shipment to Yankuang Mining Group (YMG), a sister company of YBC, for an acetic acid plant at Lunan, China.
BP filed a lawsuit against AstroCosmos, SCIDI, and YBC in 2004, alleging intellectual property theft. The court, in its ruling, also granted a permanent injunction preventing certain equipment manufactured using BP’s trade secrets from leaving the U.S.
Kuraray’s polyvinyl alcohol plant shuts due to a blast in the vinyl acetate plant
Following the explosion of a tank that was part of its vinyl acetate plant in Okayama, Japan, Kuraray has stopped production of the water-soluble polymer polyvinyl alcohol at the site. The total PVOH capacity in Japan is about 96 thousand metric tons per annum. The company is not sure when the plant will restart.
Comments: Kuraray is one of the major producers of polyvinyl alcohol. The company is upward integrated into the manufacture of vinyl acetate, the starting raw material for PVOH. Kuraray has PVOH manufacturing sites in Japan, Europe, and Asia. This blast should not impact the company’s supply of PVOH significantly due to its global manufacturing sites. However, the operating rates for vinyl acetate are high and there is a tight supply-demand balance for VAM.
The most important characteristic of polyvinyl alcohol-based polymers is their water solubility. The main application of polymers is their use as a raw material in the production of nylon fiber and film. Other applications include its use as a stabilizer for emulsion polymerization, a paper sizing, an adhesive, and a stabilizer for polyvinyl chloride polymerization.
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