Polyolefin producers announce third-quarter earnings
Dow Chemical
Dow Chemical reported third-quarter earnings under which it stated that the sales for the three months ended September 30 set a new third-quarter record of $11.3 billion, 12% higher than the same period in 2004. Net income rose 30% to $801 million, while earnings per share were $0.82, up 26% from the third quarter of 2004.
Price improved 12% year-over-year, with increases in all geographic areas and across virtually every business, while volume held steady compared with a very strong third quarter in 2004, despite the impact of the two hurricanes that hit the US Gulf Coast.
Although Dow’s feedstock and energy costs were almost $850 million higher than in 2004, the Company recorded its 11th consecutive quarter of year-over-year margin recovery and was able to further reduce debt by $500 million.
In the Performance Plastics segment, sales for the third quarter were $2.9 billion, an increase of 22% compared with the same period in 2004, with volume up 5% and price up 17%. Dow Automotive reported a healthy year-over-year volume improvement, outpacing the industry by securing higher content with its traditional global OEM customer base and continuing to capture opportunities with new customers. Volume was also up in Dow’s Building and Construction business, with strong demand growth for STYROFOAM™ brand products in both Europe and North America. Results for the segment in the third quarter were bolstered by the successful integration of ENGAGE™, NORDEL™, and TYRIN™elastomers, acquired in connection with the dissolution of the DuPont Dow Elastomers joint venture. Third quarter EBIT for the Performance Plastics segment was $580 million, almost two and a half times the $238 million reported in the same quarter of 2004.
Sales in Performance Chemicals rose to $1.9 billion for the third quarter of 2005, an increase of 13% compared with the same period last year. This improvement was driven by a 17% increase in price, while volume was down 4% from the robust levels of a year ago. Dow Latex had a strong quarter, with both Emulsion Polymers and UCAR™ Emulsion Systems reporting double-digit price increases in most geographic areas. Specialty Polymers also reported a good quarter, benefiting from the sale of FILMTEC™membranes to the world’s largest desalination plant in the Middle East. And Acrylics and Oxide Derivatives recorded a strong increase in both sales and earnings, as the business overcame the impact of higher feedstock costs and lower volume. Performance Chemicals reported EBIT of $298 million for the third quarter, an increase of 84 % compared with $162 million in the same period last year.
ExxonMobil
ExxonMobil Corporation reported a third quarter of $8,300 million ($1.32 per share), an increase of $2,070 million from the third quarter of 2004. Third quarter net income also included a special gain of $1,620 million from the restructuring of the Corporation’s interest in the Dutch gas transportation business (“Gasunie”). Including this gain, net income of $9,920 million ($1.58 per share) increased by $4,240 million.
Downstream earnings were $2,128 million, up $727 million from the third quarter of 2004, reflecting higher refining margins partly offset by weaker marketing margins. Petroleum product sales were 8,217 kbd, 25 kbd lower than last year’s third quarter.
U.S. Downstream earnings were $1,109 million, up $548 million. Non-U.S. Downstream earnings of $1,019 million were $179 million higher than last year’s third quarter.
Chemical earnings were $472 million, down $537 million from the same quarter a year ago with reduced margins due to increased feedstock costs. Prime product sales of 6,955 kt (thousands of metric tons) were down 162 kt from last year’s third quarter.
Nova Chemical
NOVA Chemicals Corporation reported a net loss of $105 million ($1.28 per share loss diluted) for the third quarter of 2005. This quarter’s total net loss compares to a net loss of $25 million ($0.29 per share loss diluted) for the second quarter of 2005. In the third quarter of 2004, NOVA Chemicals reported a net income of $56 million.
Olefins/Polyolefins:
Net income of $39 million in Q3 2005 compares to $45 million in Q2 2005. Polyethylene sales volume was 2% lower than Q2 2005 due to the continued impact of planned and unplanned outages. The estimated loss of sales due to maintenance outages negatively impacted net income by $14 million.
Polyethylene prices were up 5%. The sales volume loss due to the Alberta storm that interrupted ethane production is estimated to have negatively impacted net income by $20 million in Q3 2005, for a total impact of $24 million.
Styrenics: Net loss of $59 million in Q3 2005 versus a net loss of $76 million in Q2 2005. North American styrenic polymer prices declined 3% and sales volumes fell 6% primarily on weaker EPS demand. European styrenic polymer prices declined by 3%, while sales volumes increased by 11%. Hurricanes Katrina and Rita forced the shutdown of 83% of North American styrene monomer capacity, resulting in the loss of more than 600 million pounds of production. Our Bayport, TX styrene site avoided significant damage. The NOVA Innovene JV in Europe commenced operations on October 1 and took rapid steps to reduce fixed costs.
Lorestan and Mahabad Petrochemical select Basell’s Spherilene technology
Lorestan Petrochemical Company and Mahabad Petrochemical Company, affiliates of Iran’s National Petrochemical Company (NPC), have both selected Basell’s Spherilene technology for the new LLD/HDPE swing plants they intend to build in Iran. The Lorestan Petrochemical plant will be built in Khoramabad in Lorestan province, while the Mahabad Petrochemical plant will be built in Mahabad in the West Azerbaijan province of Iran. Each plant will have an annual capacity of 300 KT with a start-up planned for 2008.
The new plants will be part of NPC’s 11th Olefin project. Ethylene feedstock will be supplied from an ethane gas cracker located at Al Assaluyeh. In addition to the two new Spherilene plants, the 11th Olefin project includes a 300 KT per year HDPE Hostalen plant and a 300 KT per year LDPE Lupotech T plant, both licensed by Basell.
Comments: National Petrochemical Company has set aggressive targets for polyolefins expansion between now and 2010. For example, NPC plans to expand its LLDPE/HDPE capacity from 425 KT in 2004 to 3,855 KT in 2010, an average annual growth rate of 13%. NPC’s current and future projects include (1) JAM PC, (2) Tabriz PC, (3) Amir Kabir, (4) Arak PC, (5) Arya Sasol, (6) Bandar Iman, (7) Ilam PC, (8) Marun PC, (9) NPC/Itochu, (10) Pouyesh PC, (11) West PC, (12) Mahabad PC, and (13) Lorestan PC. Presently Basell, BP/Innovene, and Mitsui are the leading technology licensors in the country. The majority of the future expansions are based on Basell’s technology and a few on Mitsui’s. Spherilene and Hostalen are the most popular of the Basell processes. By 2010, NPC will have over 900 KT of Spherilene capacity and 1,130 KT of Hostalen capacity.
Borealis and Novolen to enter into a license agreement for metallocene polypropylene rights
Borealis and Novolen announced that they have entered into a license agreement allowing Novolen’s metallocene single-site polypropylene (PP) technology rights to be available to Borealis.
This agreement grants Borealis access to Novolen’s metallocene PP patent rights to manufacture single-site polymerization catalysts to produce Borealis metallocene PP solutions. In addition, both parties have entered into a joint development agreement to further develop metallocene single-site polymerization catalysts for use in bulk PP polymerization processes.
Borealis has been successful in researching and developing catalysts and process technology for PP polymerisation. Its catalyst research is focused on ensuring the commercial success of Borealis Borstar technology for the development of sophisticated on-demand customer solutions.
Novolen has developed a new generation of high-performance metallocene catalysts for the production of a comprehensive range of homopolymer and copolymer products available for immediate license.
Comments: Novolen’s metallocene expertise extends from the former Hoechst, BASF, and Targor metallocene experts. Research at Novolene (and its former entities) began in the mid-1980s and comprises research in (1) Ligands, (2) Metallocene compounds, (3) Metallocene catalysts, (4) Metallocene polymers, and (5) Polymer applications. Novolen claims that its researchers have developed over 400 metallocene compounds synthesized on a lab scale, tested over 500 metallocene catalyst systems on a lab scale, tested over 50 on a pilot scale, and selected 5 for commercial scale. The catalyst systems are based on MAO-, boron-, and alternative Al/B-co-catalysts, as well as silica, talcite, wax, and polymer supports. The initial pilot plant work was done in the early 1990s. Semi-commercial production began in 1997 and commercial production in 1999. Initial market applications included injection molding and fiber.
Along the way, Novolen has collaborated with others to advance its metallocene technology including Celanese Ventures, Albemarle, and now Borealis. Borealis has also done a significant amount of work in metallocene catalysts. The majority of the research has focused on metallocene-based PE for its Borstar PE process. The recent agreement with Novolen should allow Borealis to further expand into value-added applications using its Borstar PP process.
Samsung Total to Invest in PP capacity expansion
South Korean joint venture Samsung Total announced its plans to invest 550 billion won by 2007 in the capacity expansion of several of its main products.
This investment by Samsung Total is implemented for main products according to its ‘selection and concentration’ strategy. The core plan of the investment includes increasing 200,000 tons of ethylene, 230,000 tons of propylene, and 200,000 tons of SM (Styrene monomer) for NCC(naphtha decomposition factory) and to establish a new factory that produces 300,000 tons of PP(polypropylene).
Samsung Total will achieve a production capacity of 830,000 tons of ethylene, 550,00-ton propylene, 870,000 ton SM, and 570,000 ton PP after the 2007 of investment completion at its Daesan Youwha complex in South Korea.
Comments: On a global basis Total is the fourth largest polypropylene player with a total polypropylene capacity in 2004 at 2,080 KT. The total polypropylene capacity in the United States, Belgium, and France. Total also has a 50:50 JV with Samsung in Korea. The total capacity of the JV in Korea is 240 KT and the Total portion of the 50:50 JV is 120 KT. The planned expansion will double Samsung Total’s polypropylene capacity. Total’s technology portfolio consists primarily of Spheripol (53%) and Fina Loop (37%) processes.
This expansion agrees with the company’s strategy of strengthening its position in the demand (Asia) and supply (Middle East) centers of the world.
Dow Chemical commercializes new grades of VERSIFY 2300 & 3300 resin for film applications
Dow Chemical commercialized two new grades of Versify® plastomers and elastomers mainly for film applications.
The versatile family of specialty propylene-ethylene copolymers now features VERSIFY 2300 for blown stretch hood applications and VERSIFY 3300 for use as a cast cling additive.
According to the company, VERSIFY 2300 generates the optimum performance balance for blown stretch hoods – designed to ensure the integrity of goods pallets. It gives film excellent elasticity and good holding force and allows the film to better follow the contour of the packaged goods, improving stability for full pallet loads. It delivers best-in-class tear resistance with considerably reduced wrinkling and ‘ear’ formations. There are fewer disposal issues for the industry to deal with at a like-for-like gauge with other available products which allows for reduced packaging film weight. In addition, the full ethylene/propylene structure delivers better recyclability.
In addition to blown stretch hoods, VERSIFY 2300 is ideally suited to a wide range of calendering and extruded applications and as a blend component for thermoplastic elastomers.
VERSIFY 3300 can be used not only for stretch cling and elastic film but also as a blend component in thermoplastic elastomers and thermoplastic olefins. It is particularly well suited for cast stretch film sealants. The grade generates higher unstretched film cling levels and can be used in blends at lower addition levels: typically 5-10% compared with the 30-40% needed with VLDPE. It gives consistent performance and film can be efficiently run on wrapping machines in both hot and cold conditions. Cling tested after three months was found to have retained its characteristics. It also delivers lower noise levels.
Comments: Dow unveiled its family of VERSIFY Plastomers & Elastomers in February 2004. In September 2004, Dow opened the first commercial unit for VERSIFY in Tarragona, Spain with an annual nameplate capacity of 57 KT. The main target markets for VERSIFY resins include film, rigid packaging, consumer durables, and thermoplastic elastomers/olefins. VERSIFY resins have been shown to demonstrate unique qualities for stretch hood applications. Like shrink-wrapping technology, stretch hood pallet wrapping employs a blown film, with capabilities of wrapping different pallet sizes and load heights up to 180 pallet loads per hour. In operation, the film is opened up by the four film grippers and stretched to a size equal to the circumference of the pallet load, applied over the pallet load, and slowly slipped under the pallet allowing the film to snap back underneath the pallet, essentially, locking the pallet and load securely together. The typical film thickness in the stretch hood is 4 mils (30-40% pre-stretch). One of the unmet needs for the stretch hood includes even snap-back/elasticity memory. Other properties that could be improved include (1) tear strength, (2) clarity, and (3) puncture resistance. There is also a further downgauging need to improve the pre-stretch ratios (toward 60%).
Basell negotiating with BASF & Shell to buy cracker and propane dehydro units
Basell has plans to acquire Shell Chemical’s 50% stake in the company’s steam cracker joint venture Societe du Craqueur de l’Aubette in France.
The cracker has a total capacity to produce 460 KT/year of ethylene. Basell is also negotiating to buy BASF Sonatrach PropanChem. The company is a joint venture between BASF and Sonatrach producing 350 KT/year of propylene in Tarragona, Spain.
Comments: It is no question that Basell is net short feedstocks. In Basell’s total global operations, about 6,000 KT/year of propylene is required, and over 3,000 KT/year of ethylene including joint ventures. The acquisition of the Berre, France ethylene cracker producing 460 KT/year of ethylene is part of Basell’s plan to further back integrate into light olefins production. The cracker facility also reportedly produces over 200 KT/year of propylene. The propane dehydro in Spain is reportedly based on a cost-advantaged North African propane contract and this will undoubtedly make a good contribution to Basell’s propylene supply and feedstock cost imbalances with its supply of 350 KT/year of propylene that is committed to the Tarragona polypropylene facility. The company has also let a contract with Linde to upgrade their light olefins capacity at Wessling, Germany which will debottleneck the smaller cracker at the site and add approximately 280 KT/year of ethylene and associated propylene. These integration steps will take Basell further away in an improved cost position from the reported market-based feedstock contracts still in place from their former parents Shell and BASF.
Dow CEO testifies before Senate Energy & Natural Resources Committee on the impact of hurricanes and US natural gas crisis
Andrew Liveris, president and chief executive officer of The Dow Chemical Company, testified before the U.S. Senate Committee on Energy and Natural Resources – during a committee hearing in Washington, DC on the impact of Hurricanes Katrina and Rita on the nation’s energy infrastructure. Representing Dow and the American Chemistry Council, Liveris commented on the chemical industry’s hurricane recovery efforts — and discussed the longer-term challenge of high and volatile U.S. natural gas prices.
During his oral testimony, Liveris noted that Dow has made great progress toward recovering from the recent hurricanes, remarking that Dow employees “came to work, kept our plants safe – and worked around the clock to bring them back online — to make products that are essential to restoring our communities.”
However, he emphasized that while the disruption caused by Hurricanes Katrina and Rita will be short-term for Dow and the U.S. chemical industry, the recent hurricanes emphasized the nation’s tight natural gas supply/demand balance, which continues to contribute to extremely high and volatile prices and to threaten the global competitiveness of the U.S. chemical industry and the nation’s manufacturing sector.
Liveris commented that the price of U.S. natural gas, which was approximately $2 / million BTUs only six years ago, had exceeded $6 by February of this year, increased to $10 in the days just prior to Hurricane Katrina – and then jumped to $12 immediately after Katrina struck the U.S. Gulf Coast. “The price of natural gas, once $2.00 per million BTUs, is now $14.00, which is the equivalent of $7.00 per gallon for the gas we put in our cars,” Liveris said. “This renders the U.S. chemical industry – which uses natural gas as both a fuel and a raw material — simply uncompetitive with the rest of the world.”
Liveris added that Dow and other U.S. chemical manufacturers have been forced to take aggressive action to mitigate the impact of high and volatile energy and feedstock costs, including: implementing aggressive cost-cutting measures, focusing on energy efficiency & conservation, shutting down some inefficient plants in North America, and investing in regions of the world such as China and the Middle East, where energy is more affordable.
Comments: Mr. Andrew Liveris is to be commended for presenting an insightful overview of the US Natural Gas Crisis in terms everyone can understand. In addition, he detailed what can be done to abate the situation rather than being one of the choruses of alarmists who always say there is a problem without addressing the solutions. Over the past 6 years, volatile natural gas prices have upset the US manufacturing sector including the price-sensitive chemical sector. Dow, to offset the extremely negative impact of skyrocketing US natural gas and to remain globally competitive, has already been forced to:
– Implement an aggressive cost reduction plan;
– Shift some production overseas to countries with inexpensive natural gas;
– Shut down non-competitive plants across the US;
– Form a partnership to build an LNG import terminal in Texas;
– Raise product prices to counteract the margin squeeze caused by inflated energy and feedstock costs;
– Implement aggressive energy conservation and efficiency programs.
Mr. Liveris’ statement explained the impacts and progress to these goals such as a further 15% painful reduction to an already lean workforce. Dow will plan for growth overseas where energy prices are more competitive unless something is done here in the US and may be forced to shut down more than the 23 facilities already shuttered in this agenda. Additional work must be done to promote LNG by streamlining the terminal permitting process and exploring alternative and renewable fuel sources. We must also implement aggressive energy conservation and efficiency programs and reach for new limits of what we can and must do without help from our government.
Liveris concluded his testimony by recommending specific actions that Congress can take to further address the U.S. natural gas crisis.
France bans plastics packaging in 2010 and biodegradable bags will be the only option
The French Assembly unanimously voted through legislation banning the sale and distribution of all plastic bags and plastic packaging from 2010, unless they are biodegradable.
The legislation has now to go to the French Senate. Some members feel that there is still a chance to block it, but the battle will be tough. According to them, this is completely unrealistic and they hope the plastic bag will not be the sacrificial victim of this whole story.
Comments: There is a lot of activity in the last two decades around using biodegradable polymers for environmental reasons. Thus far the success has been limited. In the last few years countries such as Australia and other European countries have tried to pass legislation requiring the use of environmentally friendly materials. It seems unlikely that legislation requiring a complete ban on plastic packaging will be successful. Partial replacement seems a more likely scenario. The use of ‘sustainable development’ has also been promoted for the efficient use of natural resources.
The Nobel Prize in Chemistry 2005 awarded to metathesis scientists
he Royal Swedish Academy of Sciences has decided to award the Nobel Prize in Chemistry for 2005 jointly to (1) Yves Chauvin – Institut Français du Pétrole, Rueil-Malmaison, France, (2) Robert H. Grubbs – California Institute of Technology (Caltech), Pasadena, CA, USA and (3) Richard R. Schrock – Massachusetts Institute of Technology (MIT), Cambridge, MA, USA for the development of the metathesis method in organic synthesis.
This year’s Nobel Prize Laureates in chemistry have made metathesis into one of organic chemistry’s most important reactions. Fantastic opportunities have been created for producing many new molecules – pharmaceuticals, for example. Imagination will soon be the only limit to what molecules can be built!
Organic substances contain the element carbon. Carbon atoms can form long chains and rings, bind other elements such as hydrogen and oxygen, form double bonds, etc. All life on Earth is based on these carbon compounds, but they can also be produced artificially through organic synthesis.
In 1971 Yves Chauvin was able to explain in detail how metatheses reactions function and what types of metal compound act as catalysts in the reactions. Now the “recipe” was known. The next step was, if possible, to develop the actual catalysts.
Richard Schrock was the first to produce an efficient metal-compound catalyst for metathesis. This was in 1990. Two years later Robert Grubbs developed an even better catalyst, stable in air that has found many applications.
Metathesis is used daily in the chemical industry, mainly in the development of pharmaceuticals and advanced plastic materials. Thanks to the Laureates’ contributions, synthesis methods have been developed that are more efficient (fewer reaction steps, fewer resources required, less wastage), simpler to use (stable in air, at normal temperatures and pressures), and environmentally friendlier (non-injurious solvents, less hazardous waste products).
Comments: Olefin metathesis was first discovered in the 1950s. In 1956, DuPont scientist, Herbert S. Eleuterio, obtained a propylene-ethylene copolymer from propylene passed over a molybdenum-on-aluminum catalyst. Further analysis of the products showed a mixture of propylene, ethylene, and 1-butene, typically metathesis products.
Scientists at companies like Standard Oil Co (Indiana), Phillips Petroleum (Bartlesville, OK), and others produced ethylene and butanes from propylene in the presence of molybdenum oxide on alumina treated with triisobutyl aluminum. In 1964, Robert L. Banks and Grant C. Bailey, produced ethylene and butylenes from propylene using molybdenum hexacarbonyl catalyst supported on alumina.
During the late 60s, Phillips Petroleum designed the first metathesis process, Phillips Triolefin Process, to produce ethylene and 2-butene from propylene. In 1969, Phillips Petroleum also commercialized the Neohexene process to produce neo hexene or 3,3-dimethyl-1-butene via cross-metathesis of diisobutene dimer.
From 1967 to 1971 researchers proposed varieties of modes of rearrangement were proposed to explain olefin metathesis. In 1971, Yves Chauvin, a chemist at the French Petroleum Institute, suggested that olefin metathesis can be initiated by a metal carbene. In 1975, Thomas J. Katz, a chemistry professor at Columbia University, proved the carbene mechanism for the olefin metathesis reaction with tungsten carbenes as initiators.
In the 1980s, Richard R. Schrock of the Massachusetts Institute of Technology and Robert H. Grubbs of the California Institute of Technology conducted extensive research on the catalysts for olefin metathesis and were greatly successful. In 1980 Schrock achieved metathesis of cis-2-pentene by using complexes of the type [P(CH3)3](O-tert-C4H9)2(Cl)M5C(H)(tert-C4H9) [M = Nb or Ta]. It was the first time when productive metathesis of a simple olefin starting with a well-characterized carbenoid complex had been observed. In the mid-1980s, Schrock prepared highly reactive tungsten carbene and then molybdenum metathesis catalysts. The latter was less reactive but more selective in reacting with olefins rather than with other functional groups.
Due to the achievement of these scientists enabled the development of second-generation catalysts and current technologies such as olefins conversion.
Solutia introduces new nylon 66 impact-modified product line
Solutia announced the commercialization of its new nylon 66 impact-modified product line. According to the company, this new product line, the 50 Series, provides superior performance in the following areas:
1.Excellent impact resistance, based on the latest technology;
2. Superior flow and processing due to limited material-related plate out and
3. Outstanding surface appearance as a result of better flow characteristics.
This new offering provides manufacturers and designers with better options when developing applications such as thin-walled automotive fasteners, snow ski boots and bindings, power tool housings, fire extinguisher nozzles, and bicycle safety helmets.
According to the company, customers who process impact-modified nylon resins are routinely faced with plate out in their molds, caused by high levels of lubricants, and Vydyne® 50 Series products are specifically designed to provide better flow and appearance compared to other competitive materials. Additionally, costs are often reduced due to faster cycle time due to better flow properties and reduced tool maintenance due to less plate out.
Comments: Solutia inherited the nylon business as it was spun off from Monsanto in 1997. After BASF and Honeywell swap their nylon fiber and nylon engineering thermoplastics business in early 2003, Solutia became the third largest nylon supplier in North America after Dupont and BASF. In general, nylon has excellent abrasion resistance and tensile strength. However, it has relatively low impact resistance and hydrolytic stability. Impact modifiers are used to enhance impact resistance. Typical impact modifiers include maleated PP, ionomer, and functionalized SB copolymer. Solutia has not revealed what impact modifier is being used for Vydyne 50 series.
BASF introduces plasticizers for PVC based toys application
BASF introduced Hexamoll® DINCH plasticizer for use in toys intended for children under three years of age.
According to BASF, Hexamoll® DINCH has an extremely low migration rate and hence can be used in many medical devices because in these cases, the plastic is in close contact with products that directly enter the patient’s body. Enteral nutrition administered via stomach tube, for example, involves the use of bags and tubing made of soft PVC.
Comments: Recently, the European Union placed a permanent ban on the use of 6 phthalate-based plasticizers in PVC-based toys application. Several companies such as BASF have spent lots of R&D efforts in developing phthalate alternatives in flexible PVC applications. Plasticizer is the key material for compounded PVC. The introduction of other plasticizers that are environmentally friendly and cost-effective will impact PVC demand in flexible applications in a much more positive way.
For more information on Flexible PVC and plasticizers, please refer to our multiclient report.
Suspect accused of injecting up to 1,600 people at Baytown ExxonMobil site with a fake flu shot
The owner of a home health business faces at least 10 years in the present if found guilty of Medicare fraud charges accusing him of injecting fake flu vaccine into as many as 1,600 Baytown employees of ExxonMobil.
Initial tests indicate the shorts given contained nothing more than purified water. Because the safety of the syringes is unknown, public health officials are urging the shot recipients to be tested for blood-borne pathogens such as HIV and Hepatitis C as a precaution.
Contact us at ADI Chemical Market Resources to learn how we can help.