Polyolefin producers announce first-quarter earnings

Dow Chemical

Dow Chemical Company reported total sales of $11.7 billion for the first quarter of 2005. The sales were 25% higher compared to the first quarter of 2004.

Net income climbed to $1.4 billion from $469 million in the first quarter of last year and earnings per share were $1.39, up from $0.50 a year ago. Both of these results are more than 175 percent higher than the same period in 2004 and represent new quarterly records for the Company. Earnings for the quarter included a gain of 5 cents per share related to the sale of a 2.5 percent interest in the EQUATE joint venture.

Sales in plastics and performance plastics increased to $3.0 billion (35% increase compared to 1Q 2004) and 2.7 billion respectively. Although the Company saw good volume growth in all three major polymers compared with the same quarter last year, volume for the segment overall was marginally down – impacted by the divestiture of the Company’s PET/PTA business as part of the formation of the Equipolymers joint venture in the second quarter of 2004. On a global basis, demand for both polyethylene and polypropylene in the first quarter increased by 3 percent compared with the same period last year, while polystyrene volume was up 8 percent. Including a gain related to the sale of an interest in the EQUATE joint venture, the Plastics segment reported an EBIT of $800 million for the first quarter, more than 150 percent higher than the $307 million reported in the same period last year.

ExxonMobil

ExxonMobil reported first-quarter results. Net income of $7,860 million ($1.22 per share) increased by $2,420 million from the first quarter of 2004. First quarter net income included a $460 million positive impact (Downstream — $310 million; Chemical — $150 million) from the sale of the Corporation’s stake in China Petroleum and Chemical Corporation (“Sinopec”). Excluding this gain, earnings of $7,400 million ($1.15 per share) increased by $1,960 million.

Downstream earnings were $1,143 million, an increase of $139 million from 2004, with improved worldwide refining conditions partly offset by weaker marketing margins.

Chemical earnings were a record $1,282 million, up $718 million from the first quarter of 2004 reflecting higher margins.

Nova Chemicals

NOVA Chemicals reported a net income of $94 million ($1.06 per share diluted) for the first quarter of 2005. This compares to a net income of $162 million ($1.78 per share diluted) in the fourth quarter of 2004, which included $131 million of after-tax gains related to a tax settlement and an asset sale.

Olefins/Polyolefins – Net income of $112 million in Q1 of 2005 compares to $82 million in Q4 2004. The Corunna, Ontario flexi-cracker co-product volumes and margin contributed significantly to the net income improvement.

Styrenics – Net loss of $21 million in the first quarter versus a net loss of $17 million in Q4 2004.

Comments: It is an undeniable fact that we are at the beginning of the growth cycle. This growth cycle will be the most effective for organizations with a global vision with success being measured based on new global metrics victory will not be for the organizations that are short-sighted and emphasize only U.S Gulf Coast, North America, or the American continent – but to those who are willing to step out of the regional boundaries and think Globally – be it China, India, Middle East, Africa or Middle Asia. The whole world is “Su Casa”

Iran’s NPC is the front-runner to acquire Basell

Iranian firm National Petrochemical Co. is the leading contender to acquire Basell. Mohammad Reza Nematzadeh, president of state-owned NPC and Iran’s deputy oil minister, recently announced that BASF and Shell are expected to approve the winning bid in less than a month. NPC is “the winner,” according to all the documents the company has received, Nematzadeh says.

NPC offered to pay EUR4.4 billion ($5.72 billion) for Basell, more than the bids of Chatterjee Group (New York) and Ineos. The acquisition price would include Basell’s EUR2-billion debt. As a result, BASF and Shell would each receive EUR 1.2 billion, minus pension costs and other liabilities. They say they want to exit Basell by mid-year and originally were considering a sale or stock market listing for Basell.

Basell’s asset base in the US could, however, hamper the acquisition because of the US trade embargo against Iran. NPC would be willing to exclude Basell’s US assets from the deal to overcome any objections.

Comments: The remains of the famous polyolefin innovators Montedison and BASF have been looking for a home for the last two-three years – victim of oil company management issues, Wall Street types’ profits over innovation, and of course the cultural differences between the owners – The Germans, Dutch, Italians and the Americans.

Basell started de-emphasizing its involvement in North America and new product development in the last 6 years. Nothing came out of the historically innovative group except for the multizone reactors???. in addition to shutting down facilities and dismantling the world-class TS&D and Product R&D center in Elkton, MD.

The sale of Basell – is an extension of Shell’s overall plan to limit themselves to “cracker+2”. We agree the idea is right for a new and developing oil company, but whether is it right for a company that already achieved an unparallel leadership position is, at best debatable.

Most of the organizations lump polyolefins along with other commodity plastics like PVC, Polystyrene, and Engineering Thermoplastics – which had no technological developments to speak of in the last forty-fifty years. Polyolefins are different – a factor that many cannot appreciate.

The recent Global mergers and acquisitions in the polyolefin industry have essentially limited the potential candidates and regions for Basell. The three final contenders; (1) NPC of Iran, (2) Haldia-Chatterjee-ICICI of India and (3) Ineos of Europe are at best “unconventional” with little or no experience in polyolefins.

The most recent information is that the NPC of Iran is the front-runner of the three. This essentially raises a lot of new issues. NPC is ideally located in Middle-East the future raw material and derivative manufacturing and is closer to the future processors of the world – India, China, and Africa. NPC has an excellent raw material position. Just like DSM provided a good entry for Sabic into Europe, Basell would do the same for NPC.

Iran is part of President Bush’s “Axes of Evil”. Basell’s largest facilities in the U.S. are in Texas and Louisiana and the Texas facility is a stone’s throw away from Tom Delay (Republican House Leader)’s precinct, presenting new critical issues. It is our understanding that most of the U.S. employees of Basell have been pulled off the project.

One of the major possibilities of this situation will be an independent sale of Basell facilities in North America. If the North American PP facilities and the PE idle plants are for sale, several people can benefit – the leaders being Dow Chemical Company and ExxonMobil both in their quest for being the ideal Global polyolefins and elastomers companies.

National Petrochemical Co. was founded and began operating a small fertilizer plant in 1963. During the first period of expansion, which lasted until the mid to late 1980s, NPC concentrated on building the domestic market. Besides fertilizer, NPC branched into basic chemicals and petrochemicals during the period. Little activity took place between the late 1980s and early 1990s due to the political climate of the region. NPC began what it refers to as the restoration and renovation stage in the mid-1990s, in which it established several complexes and increased its export activity. During the period NPC managed to increase yearly production from 2.4 to 11 million tons. Today, NPC is the second largest producer and exporter of petrochemicals in the Middle East. The acquisition of Basell would provide access to global markets as well as technology, both being important strategic initiatives for NPC. The story of NPC seems to parallel that of SABIC, which went from begin a regional player to one of the top polyolefins players in the world. Like SABIC, NPC has an advantaged feedstock position, which may prove to be strategic to Basell in the long run. 

SABIC to construct two new HDPE plants using Basell’s Hostalen technology

Saudi Basic Industries Corporation (SABIC) announced the selection of Basell’s Hostalen technology for two new high-density polyethylene plants to be built in Europe and Saudi Arabia.

One of the plants, to be built by SABIC’s affiliate, Yanbu National Petrochemical Company, will be part of a new petrochemical complex in Yanbu, Saudi Arabia. The plant will have an annual capacity of 400 KT, with start-up planned for 2007. The other plant, to be built by Sabic Europe at one of its European sites, will have an annual capacity of 220 KT, with start-up scheduled in 2008.

The license agreement includes an option for Sabic to enter into an additional five license agreements to build Hostalen process plants.

The Hostalen process is a dual reactor, low-pressure slurry technology for the production of HDPE. The two reactors can be operated in parallel or in series to customize product properties, especially for bimodal HDPE.

Comments: The proliferation of bimodal HDPE resin has greatly increased the success of dual reactor cascade processes. The Hostalen process is a dual reactor, low-pressure slurry technology for the production of HDPE. The two reactors can be operated in parallel or in series to customize product properties, especially for bimodal HDPE. Over the past few years, the usage of bimodal PE80 and PE100-rated pipe-grade resin in the construction industry has increased significantly. Film and blow molding applications are other areas where bimodal grades are used. The Hostalen process mainly competes with Mitsui’s CX and Equistar-Maruzen technology platforms. Univation has also started to make inroads into the bimodal HDPE market via its Prodigy line of catalysts that enable the production of bimodal resins in a single reactor. However, the Hostalen technology is commercially proven and has been practiced by many for well decades. Refer to CMR’s New Generation Polyolefins Bimonthly Review for a detailed analysis of Bimodal Processes and Markets.

Oman to get new polypropylene producer, Oman Polypropylene LLC

Oman Polypropylene LLC (OPP), a new polypropylene producer is soon to join the growing list of petrochemical companies being set across the Gulf region, which is rapidly emerging as a petrochemical center.

The company is constructing a PP plant that is expected to come on stream in the third quarter of 2006 and will be producing 340,000 metric tons per annum.

The OPP with a capital of approximately $340 million of which 60 per cent is owned by the Government through Omanoil, 20 per cent by Gulf Investment Corporation (GIC), and 20 per cent by LG Chemical.

Comments: This will be the first polypropylene plant in Oman. The countries in the Middle East are witnessing a massive inflow of capital as companies try to invest in the feedstock advantage regions. The total polypropylene capacity in the Middle East is 2,065 KT. This new facility in Oman will increase the polypropylene capacity in Oman by 16%.

Isreal, Kuwait, and Turkey account for the majority of the polypropylene capacity in the Middle East. This plant will make Oman one of the important polypropylene producers in the region. There are other polypropylene expansions planned in the Middle East as well. The other planned expansions combined with the project in Oman will bring the total polypropylene capacity in the Middle East in 2006 to 3,370 KT.

Basell develops new Moplen® PP resin mainly for melt-blown textile applications

Basell announced the development of a new high-fluidity polypropylene grade to address customer requests for more demanding resin performance in melt-blown textile applications.

The resin, Moplen HF1005, is a very narrow molecular weight homopolymer with a melt flow rate (MFR) of 1500 and is the latest addition to Basell’s comprehensive nonwoven grade range.

According to Basell, the resin can offer particular advantages in the production of ultra-thin melt-blown fibers. It also has improved barrier properties such as hydro head that can be achieved at much lower processing temperatures with significant cost savings in the melt-blown process compared to standard high fluidity resins. The lower processing temperature is expected to be beneficial during the production of colored melt-blown nonwovens, as it can minimize organic pigment degradation and improve processability.

Comments: Meltblown process is used for producing fibrous webs from polymers or resins using high-velocity air to attenuate the filaments. The process involves converting resins to nonwoven fabrics in a single step. Generally, the resin is passed through the extrusion orifice and high-velocity air is blown through at high temperature. The air streams stretch molten polymer while solidifying it into a random array of discontinuous sub-denier fibers. The fibers are then separated from the air stream as a randomly entangled web and compressed between heat rolls. This process allows the production of discontinuous microfabrics that have diameters ranging from 2 to 4 microns and as large as 10 to 15 microns. Differences between polypropylene melt-blown nonwoven fabrics and other fabrics include the degree of softness, cover or opacity, and porosity.

Meltblown processed non-wovens are most commonly used in filtration media which includes applications such as surgical face mask filters, liquid, and gaseous filtration which are found in cartridge filters, clean room filters, medical applications including the disposable gown and drape market, sterilization wrap segment, feminine sanitary napkin, disposable adult incontinence absorbent products. Meltblown is also widely used as a sorbent to pick up oil from the surface of the water, such as encountered in an accidental oil spill.

The North American market for meltblown was 109 KT in 2004 and is growing at 5% annually. The introduction of Basell’s new grade will allow it better compete in non-woven applications such as medicine where a better barrier property is crucial.

BASF sells its North American polystyrene business to INEOS Americas, LLC

BASF announced the selling of its polystyrene business in the United States and Canada, including its Joliet, Illinois, production facility, to INEOS Americas, LLC, the North American subsidiary of INEOS.

The sale of the polystyrene business is part of BASF’s successful implementation of its North American restructuring program. As part of the agreement, BASF will transfer approximately 140 employees to INEOS. The Joliet polystyrene facility has a total capacity of approximately 385,000 metric tons per year and produces general-purpose polystyrene (GPPS) and high-impact polystyrene (HIPS).

Comments: It is not a surprise that BASF would want to exit some of its global polystyrene business because polystyrene profitability is having such a difficult time and there is little cause for optimism that the polystyrene market will improve soon. What is a surprise here is that there is a real buyer in INEOS and the question before the house is how can they make any profit in polystyrene when BASF couldn’t? Even though Joliet is the second largest and one of the most efficient polystyrene plants in North America there has to be some other factor. Sources in the industry have often alluded to the fact that BASF was integrated into styrene monomer in Europe but not in North America but was able to swap or exchange with a partner for their large Canadian, US, and Mexican supply needs of styrene monomer. If this is the case, then INEOS must maintain this cost-advantaged position to have any chance at profitability in polystyrene because, without some kind of raw material integration, most polystyrene producers are currently losing money. It would be best if the styrene monomer exchange partner were to be integrated into benzene which could be the case if one exchange partner, in particular, were to be in the loop.

Yukos puts the Lithuanian PP project on hold

Yukos announced its plans to delay the construction of a new polypropylene unit at the Lithuanian Mazeikiu Nafta complex until a new owner can be found for the company.

Although a new PP unit would be “a good and effective investment,” the decision to proceed will have to be made by the company’s new owner.

Yukos has conducted a feasibility study for the new PP unit and concluded that the investment would be profitable. The Mazeikiu Nafta complex includes the Mazeikiai oil refinery, the Butinge oil terminal, and pipeline operator Birzu Naftotiekis.

Comments: Yukos is being tried to sell its 54% stake in Mazeikiu Nafta. TNK and Lukoil have been interested buyers of the company’s stake. Lithuanian government owns about 41% stake in Mazeikiu Nafta and has to approve the sale of Yukos’ share.

Yukos has been in financial difficulties since 2003. The company filed for bankruptcy in 2004 and was forced to sell some of its assets due to financial pressure.

Chevron Phillips to construct third petrochemicals Complex in Saudi Arabia

Chevron Phillips is planning to construct a third petrochemicals complex in Saudi Arabia via its joint venture, Saudi Chevron Phillips (SCP) with Saudi Industrial Investment Group (SIIG). The license, granted by the Saudi Arabian General Investment Authority, is for the construction of a new complex at Al Jubail.

The investment for the project will be about $3 billion which will include a cracker producing ethylene and propylene. Downstream units will produce styrene, hexane-1, polyethylene, polypropylene (PP), and polystyrene. The project is currently in the approval process by the partners.

SCP currently produces 550,000 MT/year of benzene and 280,000 MT/year of cyclohexane using the Aromax process. Jubail Chevron Phillips is building a $1.2-billion complex that will produce ethylene, propylene, and styrene. The cracker will use n-pentanes from Saudi Aramco to produce 300,000 MT/year of dilute ethylene and 200,000 MT/year of propylene. The ethylene will be supplied to an ethyl benzene unit, which will in turn feed a 775,000 MT/year styrene plant.

Comments: Chevron Phillips certainly is on a roll for major projects in the Middle East. Besides their new Saudi project in Al Jubail (plus the two existing projects), they have a major presence in Qatar with a cracker-based project. Together with the new project, this makes 4 crackers that are different in some ways from other projects. These crackers feed heavier feedstocks than ethane from Aramco than many of the other projects and also produce Aromax on purpose benzene. The result is that Chevron Phillips is building a larger base in styrene or aromatics chemistry that many in the region don’t have. The global balances need styrene and benzene and Chevron Philips is probably the leader in projects that are helping satisfy this need. Of course, others like Shell and Dow are building styrene or aromatics capacity in the region but Chevron Philips has the most capacity with heavier feed crackers and Aromax® based benzene production. With the first project at Al Jubail that started in 2000, a second expansion of $1.0B was announced in 2002 to produce more benzene, ethylbenzene, styrene, and propylene. This expansion will be completed in 2007. The third current announcement of a $3 billion investment in the cracker project along with aromatics, ethylene, cyclohexane, and polyolefins (including polystyrene) will approximately double the aromatics/styrenics base to more than 1,000 KT/year in the region and is likely start up in the 2009/2010 time frame.

This third project will make the company probably the largest producer of aromatics/styrenics in the Middle East region when the new project starts at the end of this decade.

Russian company Mosimpex to start polypropylene film plant

Russia’s Mosimpex Service Ltd. Announced its plans to launch a EUR 21.4 million polypropylene film plant in the city of Balakhna in the Nizhny Novgorod Region in July. The plant, which is to be named Biaksplen, will be a wholly-owned subsidiary of Mosimpex Service Ltd.

According to the company, construction of the plant started in September 2004. In order to finance the project, the company secured a EUR18.5 million loan from France’s Natexis Banques Populaires through Gaztekhleasing, a subsidiary of Gazprombank, which in turn is owned by Russian natural gas monopoly Gazprom (GAZP). The loan matures in 2011. Gaztekhleasing is to buy equipment supplied by France’s DMT and lease it to Mosimpex Service Ltd. Mosimpex expects the plant’s annual production capacity to total 16,560 MT of polypropylene film, while its annual sales, excluding value-added tax (VAT), projected at U.S. $29.6 million and its annual net profit at $8.8 million.

Mosimpex Service Ltd. is a subsidiary of Russian mineral water producer Narzan. In the CIS, polypropylene film producers include Russia’s Polymercontainer, Belarus’ Mogilyov Artificial Fiber Plant, and Ukraine’s Kiev Polymer Plant.

Comments: This is one of the five BOPP plants planned in Russia. The first such project was announced in 2003 by NOVATEK. This was followed by the Euromet Group, the Grinn Corporation, Marta Trading, and Production Co., and Mosimpex Service Ltd. Grinn Plastik launched BOPP-film production in February when it opened its facility in Kursk.

Grinn Plastik plant will produce a three-layer BOPP film of all types (transparent, metalized, and pearl) of thickness ranging from 10 to 80 microns. The capacity for the film is 35 thousand tons. The plant is planned to have two lines of 17,500 tons capacity each. The second line is planned to come on-stream in November 2005.

In July 2005 Biaxplen Ltd., a branch of JSC Mosimpex Servis Ltd. Plans to put into operation its BOPP-line producing line. The new plant will be set on the base of the property complex of the former JSC Balakhninsky reinforced-concrete products plant. Biaxplen started working on this project in August 2004. The planned production for the plant is 16,560 tons. Currently, Russia imports a third of its polypropylene film from Germany, Hungary, the U.K., and other non-CIS countries. Russia’s dependence on imports will be minimal if all the projects are completed.

Tecnimont Bags contract to construct PP plant in Russia

Tecnimont announced the signing of a contract to build a 180,000 MT/year polypropylene (PP) plant for the Titan Group of Companies. The unit will use Basell’s Spheripol process to produce homopolymer and high-impact copolymers. Completion is expected in 2007.

Investment costs are estimated at more than $100 million. Sibneft (Moscow) will supply naphtha to the Omsk refinery to produce refinery-grade propylene feedstock. This will be the fifth PP plant to be built in Russia by Tecnimont.

Comments: Over the last few years, Tecnimont has been awarded contracts to construct several polyolefin plants. These include (1) Borealis (Schwechat, Austria), (2) PetroChina (Lanzhou, China), (3) National Petrochemical (Yanbu, Saudi Arabia), and others.

Recently there has been a wave of announcements of the construction of new polyolefin plants mainly in the Middle East and Asia.

Japanese firm Daicel Chemical develops wood fiber-based polypropylene resin

Japanese company Daicel Chemical Industries Ltd has developed and commercialized the production of reinforced plastic containing wood fiber. Typically, glass fiber is used as a strengthening agent in the manufacture of reinforced plastic. However, this can cause problems with disposal, as the glass fiber must be deposited in landfills after burning.

However, the new product combines cellulose fiber extracted from wood pulp with polypropylene (PP) resin. Containing 30% wood fiber by weight, Daicel’s product is as strong as PP containing 20% glass fiber, and 2.5 times as strong as PP manufactured without any additives, the company says.

Daicel plans to sell the plastic to automobile manufacturers, which are trying to make vehicles that can be easily recycled following on from the January 2005 implementation of Japan’s Automobile Recycling Law. The company will sell the product for about $4.60 per kilogram.

Comments: PP is a versatile material used for various applications. There are many ways in which the mechanical properties of polypropylene can be modified to suit a wide variety of end-use applications. Various fillers and reinforcements such as glass fiber, mica, talc, and calcium carbonate are added to polypropylene to attain cost-effective composite mechanical properties. Glass fiber was the second man-made fiber, next to rayon, to be of commercial importance. Glass fibers impart mechanical and thermal properties such as tensile strength, flexural strength, flexural modulus, heat deflection temperature, creep resistance, and impact strength.

Wood fiber-based plastic composites have been around for several decades. The technology became commercially viable in the early 1980s when companies such as American Woodstock started using polypropylene-based wood composites in automotive applications.

Wood fiber-based PP from Diacel is an alternative product in the wood composites marketplace. This will allow the company to gain from the growth of wood composites market share and applications. The major automotive applications for wood composites include (1) ducting, (2) headliners, (3) interior panels, (4) spare tire covers, and (5) truck floors.

Indian plastics processors urge the government to reduce import tariffs

India’s small-scale plastic processors have urged the Indian government to reduce import tariffs.

According to the processors, the polymer prices have increased continuously and hence would want to have an alternative supply of polymers via imports.

India has four main resin producers: Reliance Industries Ltd., Haldia Petrochemicals Ltd., Indian Petrochemicals Corp. Ltd., and GAIL, or Gas Authority of India Ltd. Demand for polymers generally exceeds supply, which has driven up pricing. Indian resin producers have rejected the criticism of the processors, saying that prices of Indian polymers always have been lower than the prices of imported polymers.

Comments: The Indian plastics industry has undergone significant growth due to the economic boom. Reliance has always been a dominant player in the Indian plastics industry and it continues to dominate the industry even in the presence of other suppliers.

Unlike other regions, polyolefin suppliers in India have always had pricing power due to: (1) fewer suppliers, (2) the dominant position of a single supplier, (3) demand growing faster than capacity growth, and (4) tariffs. The plastic processors are trying to balance the power between end-users and suppliers by urging the government to reduce import tariffs. If the tariffs are reduced or eliminated, the pricing of the imported material would be competitive and that would prevent domestic suppliers from raising prices.

The resin suppliers in India also have some influence on government policies. It would be interesting to see if the plastic processors’ lobbying efforts would influence the government. Historically, the resin producers’ lobby has been much stronger and it seems unlikely that the scene will change shortly.

Another PVC plant construction in China

The Xinjiang Production and Construction Corps announced its plan to construct a polyvinyl chloride project with an annual capacity of 1.2 million tons in Shihezi City of Xinjiang Uygur Autonomous Region, Northwest China.

Construction of the project will start in 2005 and be completed in 2010. It will cost 15.2 billion yuan. Xinjiang is rich in coal, salt, and limestone resources necessary for the production of PVC, and also boasts cost advantages.

The new project will yield 1.2 million tons of PVC and 0.96 million tons of caustic soda annually upon completion in 2010, which will be supplied to East and South China and Central Asian markets, as well as for local supply.

Comments: PVC is a workhorse resin that is widely used in developing countries. The demand for PVC in China has been huge due to the economic and construction boom. As with other plastics, the growth of consumption for PVC in China is higher than the growth of supply. It is only natural to see the building of huge plastic plants. The total capacity for PVC in 2004 was approximately 7,400 KT. This capacity is not enough to feed the rapidly consumed PVC in China. The construction of the new plant will help China meet its PVC needs. It is safe to assume that other such announcements will follow.

Construction is the largest application of PVC in China. It is widely used in pipes, doors & windows, wire and cable, flooring, and roofing. The Chinese Ministry of Construction has made policies to encourage the use of plastic construction materials. As a result, in the last five years, the demand for PVC has been growing at around 15%, higher than the growth rate of GDP. At the same time, the Chinese domestic PVC capacity is also increasing rapidly to meet the demand. So far, there is still a shortage of PVC in China. In 2004, China imported a little over 200 million tons of PVC. This new project announced by the Xinjiang Production and Construction Corps is one of the most recent and the largest scale expansion of PVC capacity in China. As the new capacities come on stream, the gap between supply and demand will narrow down. Eventually, China will become self-sufficient in PVC supply.

 Dow and Snamprogetti to develop an ethane-based styrene process

Dow Chemical and Snamprogetti, the engineering arm of ENI are working jointly to commercialize a styrene technology developed by Snamprogetti based on benzene and ethane, rather than ethylene since 2002.

The styrene process currently used by Dow reacts ethylene and benzene to form ethylbenzene (EB), which is dehydrogenated to styrene in the presence of an iron catalyst. Snamprogetti filed patents five years ago for the process to make styrene from benzene and ethane, says Jeff Plotkin, v.p. and global director, of the process evaluation/research planning program at Nexant Chem Systems (Tarrytown, NY). Ethane, along with EB from an alkylation unit, is fed to a dehydrogenation reactor containing a catalyst composed of gallium, platinum, and potassium on alumina modified with silica, Chem Systems says. The reaction generates styrene along with ethylene, which is recycled to the upstream alkylation unit.

Comments: The ethane-based styrene process announced by Dow and Snamprogetti is a step forward in styrene monomer economics. First came the optimizations of the conventional ethylbenzene units (whether direct or co-product POSM), then there were announcements of processes using dilute ethylene which saved single-digit percentages on styrene monomer. Now a new generation of ethane-based process cracking or dehydrogenating the ethane (ethylene) component of the styrene molecule along with the ethylbenzene has been formally announced. Although some process consultants believe this new process will only apply to the Middle East where there is inexpensive ethane and the process will generate net savings on styrene monomer of 10%, others believe the savings are somewhat higher and the process could be attractive in the USGC on an incremental cost basis. The real issue here is however that styrene monomer is only about 30% ethylene and the remainder is benzene hence the real leverage is in the benzene cost side of the molecule. No matter how much is saved in ethylene, it is still not as leveraged as costs due to benzene. The Dow ethane-based process could be looked at as contributing up to $.10/lb in improved styrene monomer margins in today’s high-priced styrenic environment. This is significant, it would make most polystyrene profitable for instance. A question is however, the process will not be ready until the end of the decade so what does a styrenics producer do until then? An answer was spelled out in a paper given at a recent petrochemical conference in Houston and is to steam crack dilute benzene refinery streams which results in a benzene savings of more than 25% – not alchemy, Mr Netzer’s paper was well received and is currently being reviewed seriously by several steam cracker operators and technology firms for application. The steam cracking of dilute benzene can be done here and now and will not take the rest of the decade to develop.

BASF to increase capacity for its biodegradable plastic Ecoflex®

BASF announced its plans to start up in early 2006 a new plant for the production of its biodegradable plastic Ecoflex® at its Schwarzheide site in Germany, thus almost doubling its capacity for this product. The new plant will have a total capacity of 6,000 metric tons a year and complements the 8,000 metric ton plant in Ludwigshafen. Ecoflex is a specialty plastic, which belongs to BASF’s Styrene Plastics operating division.

Ecoflex, a biodegradable copolyester, is employed primarily in blend formulations. These are mixtures of renewable raw materials such as starch, cellulose, or polylactic acid, together with a biodegradable, synthetic polymer such as Ecoflex. Its areas of application include shopping bags, bags for organic garbage, mulching film for agriculture, and various types of food packaging.

Comments: Ecoflex are aromatic-aliphatic copolyesters based on butanediol, adipic acid, and terephthalic acid. In 2003 Ecoflex resins were granted a compostable logo by the Biodegradable Products Institute.

BASF started the production of Ecoflex copolyesters in Ludwigshafen, Germany, with an annual capacity of about 18 million pounds. Ecoflex processes easily and has other properties equal to or close to those of LDPE. Ecoflex’s high toughness and good cling properties make it possible for 10-micron cling films to replace vinyl in vegetable, fruit, and meat wraps. BASF claims its materials also make films with 50% lower MVTR than other biodegradables.

California’s health assembly panel blocks phthalates ban

California’s state assembly’s health committee blocked a bill sponsored by Assemblywoman Judy Chu (D., Monterey) that would have banned dibutyl phthalate (DBP) and di (2-ethyl-hexyl) phthalate (DEHP) from cosmetics products manufactured or sold in California.

According to Chu, phthalates have been found in animal studies to cause reproductive problems and disrupt hormone systems, and they should be banned because they have been found at high levels in women of childbearing age.

The Cosmetic, Toiletry, and Fragrance Association criticized the bill, saying “It is not only anti-business but is not even based on scientific evidence.” The bill is “a modest step to remove reproductive toxins from cosmetics and personal care products that may harm the health of women and their babies,” Chu says.

The FDA has been investigating phthalates in cosmetics since last year and has released few details about its methods or its findings. In a statement released to The Kansas City Star, however, the FDA says that “at present, FDA does not have compelling evidence that phthalates, as used in cosmetics, pose a safety risk.”

Comments: This is welcome news for the PVC industry. Over the last few years, there have been ongoing efforts to ban phthalates from PVC. The phthalate-based plasticizers under scrutiny include (1) dioctyl phthalate, (2) di-butyl phthalate, and others.

 

 

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