Basell and Braskem sign Spherilene® process development agreement
Basell Polyolefine GmbH and Braskem S.A. announced the signing of a cooperation agreement for the development of polyethylene grades produced using Basell’s proprietary Spherilene gas-phase technology.
Under the agreement, joint development of new and improved Spherilene polyethylene resins will be carried out in Brazil at Braskem facilities and in Europe at Basell sites. Both parties will have the right to use the jointly developed products.
Braskem is a licensee of Basell’s Spherilene process technology and has just completed an investment in a Spherilene pilot plant close to its Technology and Innovation Center in Triunfo.
Spherilene is a swing gas phase, the modular process for the production of linear low-density and high-density polyethylene. The process can be operated with a single gas phase reactor for LLDPE production or with two reactors in cascade mode for the production of bi-modal HDPE.
Comments: Basell’s Spherilene process received a lukewarm review when it was first introduced in the early to mid-1990s. The process was intended to take advantage of the design flexibility of dual/cascade reactor processes with the cost advantages of gas-phase operation. Although the coupled catalyst and process combination provided a broad product portfolio including VLDPE, LLDPE, MDPE, and HDPE, the operability of the plant was deemed difficult. Only a few licenses were awarded, one of which was Basell’s Lake Charles plant. In 2002, Basell began restructuring its PE business in North America which resulted in the closure of the Lake Charles Spherilene facility. The Spherilene process went through a dry spell since its initial licensing activity in the mid-1990s. The joint development agreement with Braskem should allow Basell to make the necessary improvements to the technology and revive its licensing activity. Although Spherilenelicensing has been slow, the pace seems to be picking up with additional capacity coming on-stream in the Middle East during the 2007-2009 time period.
Rumors of Reliance Industries bidding for BP’s Innovene
There have been rumors about Reliance Industries bidding for BP’s subsidiary Innovene. In April ’04, BP announced plans to separate its olefins and derivatives business into a separate company to enable a possible sale through an IPO sometime in the second half of ’05. That company, Innovene, was formally established in April ’05 with about $15bn in revenues, $9 billion in assets, and 8,500 people across 26 sites throughout the world.
It is not known whether BP has begun a formal process to sell its stake in the company. The stock market increased 0.34% from the previous close to Rs 696.35 on Friday.
Financially, Reliance is very strong, with a net profit of Rs 7,571.7 crore in ’04-05. It has cash on hand of over Rs 3,600 crore and a debt-equity ratio of 0.46:1. This should make it easier for Reliance to raise large amounts of debt, if it, indeed, is serious about bidding for Innovene.
Comments: Reliance has been evaluating the possibility of a big global acquisition for some time now. The company has been reported to be bidding for Australian polyolefins producer, Qenos and ICI’s Pakistan operations.
The acquisition of Innovene by Reliance will significantly enhance its position in both North American and European polyolefins markets. Reliance is already the seventh-largest producer of PP globally. There have been rumors by treasury market insiders that Reliance has been quietly liquidating its market investments to free up cash.
This could be an indication of some sort of acquisition in the pipeline.
BASF to invest EUR200 million in the expansion of ethylene capacity via its naphtha cracker at Antwerp
BASF announced its plans to expand the capacity of its naphtha steam cracker at its site in Antwerp, Belgium. The expansion project will be conducted during the next regular turnaround of the plant scheduled for the fall of 2007 to avoid any additional shutdown. The investment of about EUR200 million will raise ethylene capacity from 800,000 metric tons per year to 1.08 million metric tons per year – making the plant the largest single-train steam cracker in Europe.
The expansion will thus further secure the competitive supply of BASF’s internal value chains with the whole range of cracker products.
Mainly based on naphtha as feedstock, BASF’s steam crackers produce a wide range of petrochemical base products, such as ethylene, propylene, butadiene, and aromatics. These products are then used as raw materials in numerous downstream plants, where they are converted into intermediates for a vast array of industries and consumer products.
Comments: Most of the activity related to cracker projects, either new builds or expansions, has been taking place in the Middle East where the feedstock is advantaged, and/or in Asia where the domestic demand is growing in the double digits. Besides the announcement by BASF, no major cracker expansion projects are expected in Europe over the next five years.
Typically major cracker projects invariably have associated downstream polyolefins units; BASF’s situation is somewhat different since its divestiture of Basell. It is anticipated that BASF will internally use part of the additional olefins and aromatics products and sell the remaining to the market or swap for other necessary raw materials. Besides Belgium, BASF also has major cracker complexes in the US, Germany, and China.
This expansion will help BASF further strengthen its raw materials position to maximize its value chain integration. The company will be able to market part of the ethylene output of the cracker either directly or preferably via heterogeneous swap arrangements for other chemicals.
Several companies contribute towards hurricane relief efforts
In response to the devastating effects of Hurricane Katrina on communities in Alabama, Louisiana, and Mississippi, several companies donated funds to the disaster relief effort. Dow announced that it will contribute $3 million to the hurricane relief efforts.
The donation will consist of (1) $1 million in an immediate cash donation to the American Red Cross, (2) $1 million match to employee and retiree donations to the American Red Cross, and (3) $1 million in products and technology donations for the longer term reconstruction effort.
BP announced that the BP Foundation has donated $ 1 million to the Red Cross and will also match the contributions of BP employees to the disaster relief effort. The BP Foundation donation will be dedicated as follows: (1) $500,000 for Louisiana, (2) $250,000 for Mississippi, (3) $100,000 for Alabama, and (4) $150,000 at the discretion of the Red Cross.
DuPont announced that it will donate $1 million in cash to agencies supporting Hurricane Katrina relief and recovery efforts in Mississippi, Louisiana, and Alabama. The company will focus its aid on particularly hard-hit communities, such as those surrounding the DuPont DeLisle and Pascagoula sites, both in Mississippi.
ExxonMobil Corporation announced that it is contributing $7 million to the American Red Cross Disaster Relief Fund to assist relief efforts arising from Hurricane Katrina. The Disaster Relief Fund provides food, shelter, counseling, and other assistance to the victims of this disaster and thousands of other disasters across the country each year.
Comments: Please read our analysis on the Impact of Hurricane Katrina on the Petrochemicals Industry coming soon.
LG Chem signs VCM/EDC license partnership with Mitsui Chemicals
LG Chem Ltd., one of the largest chemical companies in Korea, announced the signing of a license partnership agreement with Mitsui Chemicals Inc., for the use of their VCM/EDC technology.
The partnership grants LG Chem the exclusive rights to sublicense Mitsui’s VCM/EDC technology. The partnership will not only be beneficial for LG Chem but also advantageous to Mitsui as well.
The exclusive rights enable LG Chem to develop new clients and further generate additional sales by promoting the technology with a full vinyl chain. LG Chem had already obtained a full vinyl chain technology by applying Mitsui’s VCM/EDC technology with its existing PVC technology.
Mitsui stopped its VCM production several years ago and has continued only to sell its technology license. Through the partnership, Mitsui provides its existing licensees with more valuable technical assistance by utilizing the wealth of LG Chem’s manufacturing know-how.
Comments: LG Chemical is one of the leading producers of PVC both globally and in China. The company is ranked the seventh largest PVC producer globally in terms of capacity. Its PVC capacity in China is the third largest. LG is also constructing a VCM plant via the ethylene process in China scheduled for completion in 2007. With this agreement with Mitsui Chemicals, the company will be able to gain a better advantage from the technology and place itself in a position to compete with other PVC producers mainly in China.
Lubrizol subsidiary, Noveon expands chlorinated PVC capacity in Peachtree City
Noveon, a subsidiary of The Lubrizol Corporation announced its plans to expand chlorinated polyvinyl chloride (CPVC) at its new TempRite Products facility in Peachtree City. This facility will be an integrated CPVC and cross-linked polyethylene manufacturing location and is designed for multiple capacity expansions.
Simultaneously, the Louisville manufacturing plant is completing an investment in a new control system to further increase CPVC resin and compounding capacity at the core facility. Further, additional resin capacity will be added to supply the new compounding assets.
Noveon CPVC compounds are sold to licensed manufacturers who produce pipe and fittings sold under the trade names of FlowGuard Gold, BlazeMaster, and Corzan. FlowGuard Gold pipe and fittings are used in potable water systems, BlazeMaster pipe and fittings are used in fire sprinkler systems, and Corzan pipe and fittings are used in industrial piping applications as well as water distribution systems in commercial applications.
Comments: Noveon is involved in the manufacture of specialty products such as CPVC and others. In 2004, Lubrizol acquired Noveon which was formerly a part of B. F. Goodrich. Specialty chemicals have a higher growth rate compared to lubricant additives markets. Along with Noveon, the company has total sales of about $3.4 billion.
CPVC is used in the manufacture of hot water piping and sprinkler systems. In 2000, California allowed chlorinated PVC for use in residential plumbing and since then the demand for CPVC has increased. Recently CPVC has been gaining some inroads in pipe markets due to inter-material substitution opportunities with PEX. PEX-based piping has been under environmental scrutiny in California since late 2004. The major producers of CPVC include Noveon, Arkema (formerly AtoFina), and others.
Dow introduces new product drying innovations for thermoplastic polyurethanes
The Specialty Plastics and Elastomers business of Dow Chemical introduced two product drying innovations that can significantly reduce customer cycle times and product color shifts to differentiate thermoplastic polyurethanes (TPUs).
Among many investments being made to enhance Dow’s TPU assets and business, a new desiccant dryer for pre-treating transfer air has been added to the drying system at Dow’s TPU plant in LaPorte, Texas. According to the company, by allowing TPU pellets to transfer from product dryers to packaging and blending systems in desiccated air, Dow is able to reduce the moisture content of finished pellets by as much as seventy to eighty percent.
In addition, Dow has converted to new foil packaging for bagged TPU products and a foil liner for boxed TPU products. The low Moisture Vapor Transmission Rate (MVTR) of these new packaging solutions minimizes the rate at which DOW TPU pellets can absorb moisture during storage.
Comments: TPUs are hygroscopic materials, which absorbs moisture rapidly and can affect the property of TPU. The presence of moisture would affect the processability of the resin and the quality of the final product. Typical problems encountered would be sticking and sinks. The advantages of TPU include abrasion resistance, processability, chemical resistance, flexibility, elasticity, low-temperature flexibility, and good tear strength. Dow’s ability to reduce the moisture content of TPU will enable their customer to have better processability for applications such as belting, tubing, cable jackets, seals, athletic shoes, casters, film, and extruded profiles.
Mauser-Werke GmbH to acquire assets of plastic drums manufacturer Russell-Stanley
Russell-Stanley Holdings, Inc. announced that it has entered into a definitive asset purchase agreement with an affiliate of Mauser-Werke GmbH & Co. KG and One Equity Partners, under which Russell-Stanley and certain of its subsidiaries would sell substantially all of their assets to Mauser. To effectuate the asset sale under the Purchase Agreement, Russell-Stanley and certain of its subsidiaries filed prepackaged reorganization cases under Chapter 11 of the Bankruptcy Code and a prepackaged Plan of Reorganization.
The Chapter 11 filing is a condition of the asset sale and was not due to operational concerns. The Company believes that its underlying business is sound and that the business will be strengthened by a combination with the financially strong Mauser organization.
Under the proposed plan, Russell-Stanley’s existing subordinated debt and equity will be canceled, and bondholders will receive their pro rata share of the sale proceeds that remain after secured claims, unsecured claims other than bond claims, and Chapter 11 expenses have been paid or reserved.
The Company will pay vendors for post-petition goods and services provided on or after the filing date in the normal course of business, which obligations are entitled to priority in payment in the Chapter 11 cases.
Comments: Mauser headquartered in Germany has strengthened its North American position in plastic drums manufacturing through acquisitions. In 2004, the company acquired the intermediate bulk containers business from Hoover Materials Group. In North America, Russell Stanley is the largest producer of plastic drums followed by Greif. Following this acquisition, Mauser and Greif will be the largest producers of plastic drums in North America.
NASA scientists develop polyethylene for use in spaceships
NASA scientists have invented a polyethylene-based material called RXF1 that’s even stronger and lighter than aluminum. According to NASA, this new material is a first in the sense that it combines superior structural properties with superior shielding properties.
Protecting astronauts from deep-space radiation is a major unsolved problem. The round-trip could last as long as 30 months and would require leaving the protective bubble of Earth’s magnetic field. Some scientists believe that materials such as aluminum, which provide adequate shielding in Earth orbit or for short trips to the Moon, would be inadequate for the trip to Mars. Compared to aluminum, polyethylene is 50% better at shielding solar flares and 15% better for cosmic rays.
The advantage of plastic-like materials is that they produce far less “secondary radiation” than heavier materials like aluminum or lead. Secondary radiation comes from the shielding material itself. When particles of space radiation smash into atoms within the shield, they trigger tiny nuclear reactions. Those reactions produce a shower of nuclear byproducts — neutrons and other particles — that enter the spacecraft.
BASF acquires German compounder Leuna-Miramid and hence strengthening its position in engineering plastics
BASF Aktiengesellschaft has signed a contract to acquire Leuna-Miramid GmbH, Leuna (Germany) thus further extending its leading position in engineering plastics in Europe. Leuna-Miramid has approximately 140 employees.
Leuna-Miramid GmbH was established in 1995 and has a production capacity of approximately 30,000 metric tons per year. The company specializes in the production and compounding of engineering plastics. During the compounding process, plastic granules are melted and mixed with additives such as glass fibers or minerals to produce tailor-made engineering plastics that meet customers’ specific needs.
The acquisition of Leuna-Miramid is BASF’s third acquisition in engineering plastics in the last three years. In 2003, BASF acquired and successfully integrated Honeywell’s global engineering plastics business as well as Ticona’s nylon 6,6 business.
BASF markets nylon under the trademarks Ultramid® and Capron®. Other engineering plastics from BASF include Ultradur® (PBT: polybutylene terephthalate), Ultraform® (POM: polyoxymethylene), and Ultrason® (PSU, PES: polysulfone, polyethersulfone).
Comments: The acquisition of Leuna-Miramid is an ideal fit with BASF’s engineering plastics business. This also fits well with the company’s overall strategy of VERBUND. Combining its expertise in the field of engineering plastics will provide an advantage for its customers. As part of BASF, we will be able to develop many innovative products and new applications.
The European market for engineering plastics is expected to grow at about 5 percent per year. With its position in Europe, the company will be able to focus not only on European markets but also on Asian markets due to its relative proximity.
Earlier this year, the company has already invested in the Asian markets, in China and Malaysia.
New Citric Acid-Based Polymers for Agricultural Applications
According to the scientists at Agricultural Research Service, a biodiesel fuel byproduct called glycerol and an agricultural commodity citric acid can be chemically combined to produce biodegradable polymers that could be used in product packaging and other products.
Justin Barone, a chemist at the ARS Environmental Quality Laboratory in Beltsville, Md., discovered while studying processes for improving the effectiveness of insecticides that contain citric acid as an active ingredient. Citric acid washes away very quickly in the environment, limiting its effectiveness. Barone found that molecules containing hydrogen and oxygen–such as glycerol, sorbitol, or polyethylene glycol–reacted with citric acid to produce polymers with citric acid groups in them. The materials formed are biodegradable polyesters. Further study showed that the viscosity of the material can range from the consistency of paint to a slow-to-dissolve, glasslike product, depending on how the chemical reaction takes place.
Comments: The new biodegradable polymers may provide the biodiesel industry with a new use for glycerol, which is now disposed of after the biodiesel is made. In addition, citric acid is used in the food industry as a retardant for browning in cut fruits and vegetables. The new citric acid-based polyesters may prove useful as a packaging material.
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