Dow Chemical and Westlake Chemical announce 2nd quarter earnings
Dow Chemical Company
Dow Chemical reported sales of $11.5 billion for the second quarter of 2005, a 16% increase compared with the same period in 2004. Net income rose 85% to $1,265 million, and earnings per share were $1.30, an increase of 81% compared with $0.72 per share in the second quarter last year.
Price improved 20% compared with the second quarter of 2004, with double-digit increases. Volume was down 4%, principally due to the negative impact of divestitures of certain businesses during 2004. Excluding those divestitures, volume dipped less than 1% from a very strong quarter in 2004, reflecting reduced demand early in the quarter and the Company’s continued focus on price/volume management.
With significantly improved cash flow and a continued focus on financial discipline, Dow was able to reduce debt by more than $1 billion during the second quarter. By the end of the quarter, the Company’s gross debt to total capital ratio was approximately 43 percent, 10 percentage points lower than at the end of the same period in 2004. The Company’s net debt to capital ratio is now less than 35%.
In the Performance Plastics segment, second quarter sales of $2.8 billion were 22% higher than the same period last year, with a strong increase in revenue across most businesses. Volume fell 2%, negatively impacted by the divestiture of the DERAKANE business in the fourth quarter of 2004, while price increased 24%, led by Polyurethanes, Engineering Plastics, and Epoxy Products and Intermediates. Engineering Plastics also saw increased volume, with continued demand for polycarbonate across a range of applications, most notably for optical media, sheet and security products.
Second quarter sales in the Performance Chemicals segment were $1.9 billion, 19% higher than the same period in 2004. This improvement was driven by a 23% increase in price, while volume was down 4% from the particularly strong levels of a year ago. Emulsion Polymers also posted healthy revenue growth, despite the negative impact on latex sales caused by a seven-week strike in the Finnish paper industry. During the quarter, the business completed the successful start-up of its second styrene-butadiene latex line at Zhangjiagang in China. Specialty Polymers reported another solid quarter, posting record sales, with volume rebounding soundly after a slow start.
The Plastics segment reported 19 percent increase in sales from $2.3 billion in 2004 to $2.8 billion in 2005. The Polystyrene and Polypropylene businesses each reported a slight downturn in volume, but demand for both polymers saw a marked improvement in June. Price and volume trends are now favorable across all three major polymers. The Plastics segment reported EBIT of $575 million for the second quarter, compared with $399 million in the same period in 2004, which included a gain of $124 million from asset divestitures associated with the formation of Equipolymers.
Sales in the Chemicals segment declined slightly in the second quarter of 2005 compared with the same period in 2004, dropping 1 percent to $1.4 billion. Price was up 18 percent, but volume was down 19 percent due to asset divestitures associated with the formation of the MEGlobal joint venture a year ago. Excluding these divestitures, year-over-year volume was down 3%.
Westlake Chemical Corporation
Westlake reported net income of $48.5 million and income from operations of $82.8 million on net sales of $580.7 million for the second quarter of 2005. The improvement in net sales and income from operations was primarily the result of increased sales volumes and increased selling prices, which outpaced higher feedstock and energy costs.
Second quarter 2005 net income decreased $12.6 million, or $0.20 per diluted share from the $61.1 million net income, or $0.94 per diluted share, reported in the first quarter of 2005. Second quarter 2005 income from operations and net sales decreased $18.9 million and $37.9 million respectively, from the income from operations of $101.7 million and net sales of $618.6 million reported in the first quarter of 2005. These decreases were due primarily to lower selling prices for ethylene and polyethylene and higher raw material costs, which were partially offset by higher sales volumes in both segments and higher selling prices in our Vinyls segment.
The company generated strong cash flow from operations of $143.7 million in the first six months of 2005 and repaid $30.6 million of its senior secured notes during that period, leaving it with $109.7 million of cash and $267.5 million of debt on the balance sheet as of June 30, 2005.
Income from operations for the Olefins segment decreased by $6.5 million to $32.0 million in the second quarter of 2005 from $38.5 million in the second quarter of 2004. This decrease was primarily due to higher raw material costs for ethane, propane and benzene, higher energy costs and lower sales volumes for ethylene and polyethylene, which were partially offset by higher selling prices and higher styrene sales volumes.
Income from operations for the Vinyls segment increased by $22.9 million to $51.0 million in the second quarter of 2005 from $28.1 million in the second quarter of 2004. This increase was primarily due to higher selling prices and higher sales volumes for all of the company’s vinyls products.
Second quarter income from operations for the Vinyls segment increased by $9.3 million from the $41.7 million income from operations reported in the first quarter of 2005. The increase was primarily due to higher selling prices for caustic, PVC pipe and other PVC fabricated products and higher sales volumes for VCM and PVC pipe. These increases were partially offset by higher raw material costs.
Income from operations for the Vinyls segment increased by $67.8 million to $92.6 million for the six months ended June 30, 2005 from $24.8 million for the six months ended June 30, 2004. This increase was primarily due to higher selling prices and sales volumes for all of our vinyls products. These increases were partially offset by higher raw material and energy costs.
BASF and Shell complete sale of their stakes in Basell to Nell Acquisition
BASF and Shell Chemicals have completed the sale of their 50-50 joint venture Basell – to Nell Acquisition S.a.r.l., an affiliate of New York-based Access Industries. The sale price totals EUR4.4 billion, including debt. The relevant merger control approvals had already been granted.
Access Industries, founded by company Chairman and President Len Blavatnik in 1986, is a privately held, US-based industrial holding company with investments worldwide. Access has long-term strategic interests in the oil, aluminium, coal and telecommunications sectors.
Comments: After months of speculation BASF and Shell complete its sale to Nell Acquisition, an entity formed by Access Industries for the acquisition of Basell. For some time there were talks between The Chatterjee Group (TCG) and Access Industries to jointly acquire Basell but due to various factors the two companies were not able to form a JV. After TCG’s exit from the deal there was speculation that other buyers aspiring to stake a claim in Basell might emerge. However, it seems that Access Industries ended up as the sole buyer of Basell. There haven’t been any announcements regarding restructuring/change in strategy at Basell.
The industry is waiting to see if the new owners will initiate change or continue with Basell’s former strategy.
There are rumors that Reliance Industries Ltd, the largest producer of polypropylene in India, is in the final stages of negotiations to acquire a stake in Basell.
Basell’s Lupotech technology licensed by two companies – NPC affiliate and PTT Polyethylene
Kurdestan Petrochemical
Kurdestan Petrochemical Company, an affiliate of Iran’s National Petrochemical Company (NPC), selected Basell’s Lupotech T technology for a new LDPE plant it intends to build in Sanandaj in Kurdestan province, Iran. The plant will have an annual capacity of 300 KT and start-up is planned for 2008. Tecnimont of Italy was selected as the EPC contractor for the new plant, together with PIDEC of Iran. The new plant will be part of NPC’s 11th Olefin project. Ethylene feedstock will be supplied from an ethane gas cracker located at Al Assaluyeh. A 1500 kilometre pipeline will connect the cracker with five petrochemical sites located in the western provinces of Iran. In addition to the new Lupotech T plant, the 11th Olefin project includes a 300 KT per year HDPE Hostalen plant licensed by Basell, as well as two 300 KT per year LLDPE / HDPE plants.
PTT Polyethylene
PTT Polyethylene Company Limited (PTTPE) has selected Basell’s Lupotech T technology for a new LDPE plant it intends to build in Map Ta Phut in Rayong, Thailand. The plant will have an annual capacity of 300 KT and start-up is planned for the fourth quarter of 2008.
PTTPE’s Lupotech T plant will be one of the largest LDPE plants in the world when it is operational in 2008. Earlier this year, three new Lupotech T plants, each with an annual capacity of 200 KT, started up in the People’s Republic of China.
Comments: High pressure LDPE technology continues to grow steadily. Although the growth in North America, Western Europe and Japan has leveled off, other regions of the world are experiencing healthy growth.
On a per capita basis, the developed regions of the world consume in excess of 25 pounds per capita on average compared to less than 5 pounds per capita for some developing nations. Middle East and Asia are expected to show the highest growth for LDPE over the next five years, prompting many domestic suppliers to increase capacity. These new capacities consist of state of the art tubular technology with single line capacities pushing 400 KT on a design basis and 300 KT on a practical basis. The largest single-line capacity available prior to 1960 was restricted to 35-45 KT per year due to reactor design issues, compressor operation, and extruder size limitations. Incremental enhancements allowed single-line capacity to increase to 60-70 KT per year by the 1970s. By the mid-1980s, single-line capacity had reached 150-170 KT. The real breakthroughs in high-pressure technology occurred in the early to mid-1990s, thrusting capacity to 250 KT or more.
For a detailed analysis of high pressure polyethylene markets please consult CMR’s multi-client “Worldwide HP-LDPE 2002-2007 – Markets, Technologies & Trends”.
Saudi Aramco and Sumitomo Chemical progress on construction of petrochemicals complex in Saudi Arabia
The Saudi Arabian Oil Company (Saudi Aramco) and Sumitomo Chemical Co., Ltd. (Sumitomo Chemical) signed an agreement to become joint venture partners in the development of a large, integrated refining and petrochemical complex in the Red Sea town of Rabigh, on the Kingdom’s west coast. The joint venture agreement follows the successful completion of a joint feasibility study, during which both companies performed front-end engineering design and verified the viability of the project. The joint feasibility study began on May 9, 2004, when Saudi Aramco and Sumitomo Chemical signed a memorandum of understanding to launch the effort.
The new company will be called the Rabigh Refining and Petrochemical Company, for short Petro-Rabigh.
The project has moved to an early phase of execution with the recent award of multiple engineering, procurement and construction (EPC) contracts. When completed in late 2008, the Rabigh project will be one of the largest integrated refining and petrochemical projects ever to be built at one time. A total of 2.4 million tons of petrochemical solids and liquids, along with large volumes of gasoline and other refined products, will be produced. Also, this project has created third-party investment opportunities in Saudi Arabia’s private sector for utilities and other related infrastructure.
The following olefin derivative units are included in the project configuration:
1.Sumitomo’s proprietary Easy Processing Polyethylene (EPPE) unit,
2.An LLDPE unit,
3.An HDPE unit,
4.Two polypropylene units, producing a full range of polypropylene polymers – homopolymer, block copolymer, random and terpolymer,
5.A propylene oxide unit utilizing Sumitomo’s proprietary technology,
6.A Monoethylene Glycol (MEG) unit, and
7.A Butene-1 unit.
The companies have awarded several EPC contracts for the major process plants and the utilities facilities, as well as retaining a Project Management Services Contractor and other necessary advisors to proceed with the execution of the project on an expedited basis. Construction will commence during the first quarter of 2006.
Comments: Through this joint venture, Sumitomo Chemical, a major producer of polyolefins, will have access to reliable and stable supply of feedstock to strengthen its medium- and long-term competitiveness.This project will be Sumitomo Chemical’s second large investment outside Japan. Sumitomo Chemical has been operating a large-scale complex in a petroleum-refining center, Singapore, since 1984.
The Rabigh project is the company’s first step to establish a foothold in an oil and gas-producing country, thereby assuring stable feedstock supply for its operations.
Reliance Industries to invest in petrochemicals expansion in India
Reliance Industries announced its plans to invest about Rs 47,000 crore for expansions including doubling of Jamnagar Refinery capacity, and acquisitions to spur growth.
The company plans to invest Rs 3,000 crore for increasing polyester capacity to 2,000 KT/year another Rs 1,100 crore for hiking polypropylene capacity to 1,430 KT/year by March 2006.
The company said that it will continue to evaluate opportunities for acquisition in petrochemicals domain, adding increase in scale, overseas forays and acquisitions and exports will enable the company to become a global petrochemicals major.
RIL plans to invest Rs 25,000 crore to double refining capacity in Jamnagar to 60 million tonnes per annum by 2008-09. RIL would invest Rs 17,600 crore in 4-5 years for upstream oil and gas exploration and production.
Comments: Reliance Industries Limited recently went thorough a bitter seven-month ownership feud that split the company in two parts. After resolution of the dispute in June both the companies can now focus on expanding their respective businesses. Mukesh Ambani, the chairman of Reliance Industries Limited, has a reputation of creating capital intensive mega projects and this announcement falls in line with his reputation. The total investment is projected to be in excess of $10 billion. Majority of this investment is for upstream operations.
The company will invest $250 million dollars for increasing polypropylene capacity to 1,430 KT.
Currently Reliance Industries Limited is Asia’s largest manufacturer of polypropylene with a combined capacity of about 1,000 KT. The company started its first PP plant with a capacity of 350 KT in Oct’96 at Hazira Petrochemical Complex. This was followed by the commissioning of two lines of 200 KT each at its Jamnagar Petrochemical Complex in April/May’99. The third line at Jamnagar of 200 KTA was commissioned in Dec’99. Reliance uses Unipol process for all its manufacturing facilities. The company has not announced the technology for its planned expansions.
Meanwhile there are speculations that Reliance Industries is in the final stages of clinching a deal to pick up a stake in global petrochemical company Basell. The company has not verified these rumors but if the deal comes through then it will further strengthen Reliance’s dominant position in the Indian petrochemical industry.
CNPC subsidiary Daqing Chemical started operation of a 300 KT PP unit
Daqing Refining & Chemical Company, a subsidiary of PetroChina announced the successful start-up of a 300 KT polypropylene unit. The plant had started construction in 2003 and the total investment amounted to RMB 1.36 billion. The PP unit is the largest in terms of capacity of a single production line.
Comments:This new plant of PetroChina Daqing employs Basell’s Spheripol process. It is one of the three Spheripol processes that PetroChina licensed. The other two are PetroChina Dalian (200kt) and PetroChina Lanzhou (300kt), which are scheduled to come on stream Oct. 2005 and Dec. 2006, respectively.
This new Daqing PP facility will be able to produce 103 PP grades including many performance grades such as high impact grades for automotive bumper and PPR pipe grades.
The successful startup of this plant is the first step to realize Daqing’s vision of becoming “a world-scale PP manufacturer”. There are discussions to expand their PP capability to 600KT in the second stage.
Metro Alliance sells its stake in Bataan Polyethylene
METRO Alliance Holdings & Equities announced the selling of its 60% stake in Bataan Polyethylene to a foreign investor. The name of the foreign investor was not disclosed.
Metro Alliance has been looking for a strategic partner to provide bridge-financing for the $15 million rehabilitation of the Bataan Polyethylene Corp. Metro Alliance unit Polymax Worldwide Ltd also signed the share purchase deal. Polymax is a company incorporated in the British Virgin Islands and was used as the acquisition vehicle in the purchase of the plant in 2004 from BP Holdings, Malaysia’s Petronas and Japan’s Sumitomo Corp.
Comments: Bataan Polyethylene Corp. (BPC) was formed in 1999 as a joint venture between BP, Sumitomo, Petronas, and several Philippines’ firms. BPC’s stakeholders included: (1) Bataan Polyethylene Holdings Corporation (consisting of Profinda, All Asia Capital and Trust Corporation, and Wellex/Plastic City) with 45% stake, (2) BP with 30% stake, (3) Petronas with 20% stake, and (4) Sumitomo with 5% stake. Later, BP and Petronas had increased their stake in Bataan Polyethylene to 38.6%. Metro Alliance purchased BP and Petronas’ stake in the company in 2004, increasing the stake to 80%. Polymax Worldwide was the agreement partner for Metro Alliance in the deal, and the company is seeking out partners for financing.
Tecnimont & Linde awarded Middle Eastern polyolefin plants construction projects
SABIC affiliate, Eastern Petrochemical Company (SHARQ), award contracts to Linde, Germany, to construct its Linear Low and High Density Polyethylene plants with a production capacity of 800,000 MT per annum, which will increase polyolefins production at SHARQ to reach more than 1,600,000 MT per annum.
Tecnimont, an engineering and construction company of the Edison group, signed a EUR218 million agreement with Iranian company Kurdestan Petrochemical to build a polyethylene production plant in the Kurdish city of Sanandaj.
Comments: Due to the recent increase in capacity additions in the polyolefins industry, mainly in the Middle East and China, this is an upward cycle for most of the engineering and construction companies. The key driving factors for these capacity additions are availability of cheaper raw material in the Middle East and nearly double-digit growth rates in the polyolefins industry in China.
Kuraray to increase stryrenics capacity in US
Kuraray announced its plans to expand the production facilities of hydrogenated styrenic elastomers at its US subsidiary, Septon Company of America.
Kuraray will invest US$12 million in the elimination of bottlenecks in manufacturing processes, which will increase annual production by 6,000 tons, to a total of 18,000 tons. Construction is scheduled for completion in March 2007.
The thermoplastic elastomers SEPTON / HYBRAR are synthetic rubbers developed and commercialized by Kuraray in 1990. These materials have excellent elasticity and can be extruded and molded like ordinary plastics. These properties are desirable for automobile interiors, parts for electronic components, consumer non-durables where flexible materials are required, industrial machinery, etc. Worldwide demand for hydrogenated styrenic elastomers is growing at a rate approaching 10% per year, primarily as substitutes for vulcanized rubber and flexible PVC, with the bulk of the expansion in the U. S., Europe, and Asia.
Thermoplastic elastomers are one of Kuraray’s core businesses. The Company is moving forward with the expansion of its thermoplastic elastomer business, and will be expanding its total annual production capacity in Japan and the United States to a combined total of 50,000 tons.
Comments: Kuraray’s decision to expand its Septon/Hybrar capacity is in line with the continuing growth of demand for hydrogenated SB copolymer. Consumers has shown preference for applications with soft touch, soft feel characteristics finding more end-use products that can utilize these properties.
Hydrogenated SB copolymers are saturated triblock polymers manufactured by hydrogenating SBS or SIS. These copolymers have higher tensile strength and service temperatures than SBS and SIS. Hydrogenated SB Copolymers mainly competes with other elastomers such TPO, TPV, and TPU. Hydrogenated SBC applications include (1) polymer modification, (2) adhesives (3) fibers (4), viscosity index mod, (5), consumer products (6) automotive (7) film applications (8) wire & cable and others.
This increase in capacity will allow Kuraray to meet the growing demand for hydrogenated SB copolymer in automotive and consumer applications. For more information on SB Copolymers, please refer to our multiclient study on “Worldwide Overview of SB Copolymers”.
BASF introduced new grade of polystyrene in Europe
During the launch of the new business model for their standard styrenic plastics, BASF developed a new, multifunctional polystyrene type that unifies the various properties of earlier types in the range. The new material, named PS 454 C (new) has several advantages including: (1) excellent flow properties, (2) improved impact strength and, (3) gloss.
Between the middle of 2003 and the middle of 2004 BASF streamlined its polystyrene product range, reducing it from 400 types to only 10 in order to utilize the advantages of very efficiently structured production and fast logistics. One of these ten polystyrene types, which are suitable for universal applications, is the new PS 454 C, with a gloss value of around 88 at a melt temperature of 240 °C.
Comments: The property of high flow in polystyrene has not been a problem for impact grades. The remarkable issue here is a high impact material with extremely high gloss. Usually, to build impact in polystyrene, polybutadiene rubber in solution is added to the reactor in the range of 4-8%. The particle size off the rubber is such that it causes the surface of the resulting rubber modified polystyrene with new impact properties to be dull or loose its shine. Different manufacturers have devised ways around this problem from gloss additives (silicones to mineral oils for instance) to the use of more expensive block type styrene rubber additives that are more compatible with the general polystyrene phase. The problem is that the gloss on these older materials just wasn’t that good. BASF has probably learned how to build impact with much smaller rubber particles that are functionalized into the styrene continuous phase. Other manufacturers have failed at this approach for applications in white refrigerator doors (inside) for instance.
The market for high flow, high gloss molding grade materials into such areas as appliance parts is huge (exceeds 25% of the polystyrene market) where it can compete with other higher cost materials such as ABS. ABS costs up to 20% more than straight polystyrene.
By consolidating grades into one high gloss, injection molding high flow grade such as PS 454, BASF will indeed have less manufacturing complexity and be able to therefore optimize and lower costs. The impact on PS 454 exceeds a 12 Izod which does make it competitive with many grades of ABS and a universal material for the consumer product molding market place. This material apparently will be available only in Europe since BASF sold its polystyrene business in the US recently to INEOS.
Another fire at BP’s Texas City refinery
There was a second fire at BP’s Texas City refinery on 28th July, 2005. No injuries were reported in Thursday’s blast, which occurred about 6 p.m. in a part of the sprawling 1,200-acre complex far removed from the unit that exploded in March.
The explosion occurred along a hydrogen line in a part of the refinery called the Resid Hydrotreating Unit, which removes sulfur from heavy crude oil. The unit — one of 30 at the 1,200 acre site — was completed in 1984 built by Amoco with a capacity of processing 60,000 barrels of oil per day.
British researchers develop new self-reinforced polymers for automotive components
British scientists have developed a new type of plastic which, if used in the construction of cars and other vehicles, could make a big difference to their impact on the environment. Self-reinforced polypropylene (SrPP) is created through by manipulating plastic at the molecular level.
The two-year Foresight Vehicle programme-supported RECYCLE research project has developed new polymers that are six times as strong as normal, yet are light and 100 per cent recyclable.
A consortium of engineers and scientists working on the RECYCLE programme under the SMMT-managed Foresight Vehicle initiative was looking at new ways of working with self-reinforced polypropylene (SrPP), which is much stronger than normal polymers. But adding in different materials makes recycling a complicated, time-consuming and expensive operation – ruling out all the other advantages of the polypropylene. If panels made from polypropylene were simply made thicker, or strengthened with extra ribs, it would make the parts too heavy and again defeat the automotive industry’s quest to find strong and light alternatives to metal components.
Self-reinforced polypropylene (SrPP) is made by stretching and aligning molecules within the plastic itself by a complex heating and weaving process to achieve high mechanical strength. But until now this new, much stronger material, has proved difficult to shape, join and paint for mass production.
RECYCLE engineers say they have perfected techniques that will allow mass-production of parts using SrPP, and have already produced trial parts for the Lotus Elise which are 57 percent lighter than those they replace. Lotus Engineering is one of the partners in the RECYCLE project.
Comments: Polyolefins have become the material of choice for the automotive industry. They are replacing engineering thermoplastics in applications such as bumpers. The concept is that using a single material family would significantly facilitate recycling. However, in many applications, PP has to be reinforced with other materials such as glass fiber. This makes recycling very difficult. Therefore, people try to develop new technology to circumvent the disadvantages.
For example, one idea is to replace glass fiber with PP fiber to reinforce PP material. This self-reinforced polypropylene (SrPP) evolves along the same line of thinking.
Two potential issues here are: (1) The SrPP achieves superior strength through “stretching and aligning molecules within the plastic itself by a complex heating and weaving process”. The key question is if and how the molecular structure will be maintained during further processing such as injection molding. If the structure cannot be maintained, the mechanical properties will deteriorate. (2) Another critical issue is cost. To manipulate PP at the molecular level is a neat concept. However, if the cost is six times more expensive than traditional material, nobody is going to pay for it. This SrPP technology could become a breakthrough, if the above two issues could solved.
Sharp develops new technology to blend waste and plant-based plastic
Sharp Corporation has developed a new technology to blend plant-based plastic that uses corn as the raw material, and waste plastic recovered from scrapped consumer electronics.
The company plans to conduct tests to assess commercial potential, with the goal of using blended plastic in Sharp products from 2006. In the future, when the price of plant-based plastics is reduced to a level on a par with general plastics, it is estimated that the percentage of renewable resources (plant-based plastic and waste plastic) used in all products will increase to 30% by fiscal 2010.
Plant-based plastics have the potential to reduce the impact on the environment given that incinerating these materials does not cause the concentration of carbon dioxide gas in the atmosphere to rise. However, problems remain in terms of impact/shock resistance, thermal resistance, cost and other factors, and their adoption in the area of consumer durable goods, particularly electronic products, remains limited.
Sharp has been conducting research since 1999 on technologies to recycle waste plastic from consumer nelectronics, and in May 2003, put such a recycling technology into practical use to enable repeated re-use of polypropylene (PP) and polystyrene (PS) recovered from four categories of discarded household electrical appliances falling under the Home Appliance Recycling Law (air conditioners, TVs, refrigerators and washing machines) in components in new manufactured products in these four categories without loss of physical properties such as material strength. In blending polylactic acid (PLA) and waste plastic polypropylene, the two materials tend not to be mutually compatible, causing a gap to form at the boundary surfaces of the PLA and PP and leading to a significant loss of physical properties (such as impact resistance and thermal resistance).
The company has now developed new compatibilizer that helps blending PLA and PP in an optimal proportion, in which PLA forms an ultrafine dispersion and facilitates compatibility between the two materials, thereby dramatically improving the physical properties of the blended material.
Comments: There have been several efforts to incorporate biopolymers in various applications. Over the last few years several companies including Toyota have developed pilot plants to produce bio-plastics. This is another approach to utilize biopolymers along with plastic waste.
LG Petrochemical selects ABB Lummus’ metathesis technology for olefins conversion units in Korea
ABB Lummus announced that it has been selected by LG Petrochemical Co., Ltd. to provide technology for its new olefins conversion unit at its Yosu petrochemical complex in Korea. The unit will employ the Olefins Conversion Technology (OCT), licensed by ABB Lummus Global, to convert ethylene and butene to propylene. Propylene capacity at the site will increase by approximately 122,000 tons per year (TPA) by processing C4 raffinates from MTBE and MMA units.
ABB Lummus Global will provide basic engineering and technology license. The plant is expected to come on-stream in mid-2006 during a period of sharply increasing demand for propylene in the region. This will be the second plant installation in Korea to produce propylene using the OCT technology. OCT is based upon the principle of metathesis to catalytically produce propylene via the reaction of C4s (butene) and ethylene. Strong growth in propylene demand has generated significant interest in this low investment, low energy route.
Comments: Traditionally, propylene has been produced as a by-product during petroleum refining or ethylene production. The growing demand for polypropylene has led to an increased demand for propylene and hence technologies to produce propylene have become popular.
Several OCT units are being built in Asia, to be completed between 2005-2007. ABB Lummus is one of the leading licensors of the olefins conversion technology, currently used to produce propylene. Some of the companies that have currently licensed ABB’s metathesis technology include: (1) Nippon Petrochemicals (Japan), (2) Formosa Petrochemical (Mailiao, Taiwan), (3) PCS (Singapore), (4) LG Petrochemical, (5) Taiwan Chemicals (Pasir Gudang, Malaysia), and others.
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