Huntsman selects ExxonMobil’s tubular LDPE technology for its UK plant
ExxonMobil Chemical announced the signing of an agreement with Huntsman Petrochemical to license ExxonMobil’s tubular process technology for Huntsman’s new low-density polyethylene (LDPE) plant. The 400 KT per year plant, to be built in Teesside, England, will be the world’s largest LDPE reactor. Work is expected to start on the new facility in January 2005 with completion expected in late 2007.
ExxonMobil Chemical’s advanced high-pressure tubular LDPE process technology will enable Huntsman to benefit from the efficiencies of the world’s first 400 LDPE plant. In addition to Huntsman, ExxonMobil has six licensees of its proprietary LDPE process technology around the world.
In September 2004, Huntsman announced its plans to build the plant at Teesside at an estimated cost of £200 million.
Comments: High-pressure LDPE process technology leaders continue to focus on design enhancements to drive down the cost of LDPE. The key enablers have been (1) reduction in capital costs, (2) increased reactor efficiency or increased per pass conversion, (3) reduction in downtime, (4) extending the period between scheduled maintenance, especially compressor maintenance, and (5) increased single-line capacity. The largest single-line capacity available before 1960 was restricted to 80-100 million pounds per year due to reactor design issues, compressor operation, and extruder size limitations. Incremental enhancements allowed single-line capacity to increase to 130-150 million pounds per year by the 1970s. By the mid-1980s, single-line capacity had reached 330-370 million pounds. The real breakthroughs in high-pressure technology occurred in the early to mid-1990s, thrusting capacity to 550 million pounds or more.
The new Huntsman plant represents the largest single-capacity line in the world. CMR cost models suggest that as single-line capacity increases from 110 MM Lbs to 880 MM Lbs the cost of production decreases by 20-25%. This new facility will offer Huntsman significant cost advantages due to economies of scale. However, pricing for LDPE in Europe could be affected when this plant comes online due to overcapacity unless small, less efficient plants shut down.
Australian polyolefins producer Qenos Plastics to license Univation’s metallocene technology
Australia’s Qenos Plastics announced its plans to license Univation’s Easy Processing (EZP) Metallocene Technology for the production of new, higher-value PE products. The technology is trade-named XCAT-EZ and will be used by Qenos at their Botany Bay, Australia UNIPOL™ PE plant.
The 100 thousand MT/year UNIPOL line is expected to be producing EZP mLLDPE in the first half of 2005 due to the relative ease of retrofitting an existing UNIPOL PE line. The Qenos XCAT-EZ metallocene LLDPE products will be able to perform in applications traditionally served by LDPE. Until recently, the largest growth segment for mLLDPE has been in markets served by conventional LLDPE. However, mLLDPE resins made from XCAT-EZ technology will have a significant impact on traditional LDPE markets and applications because they exhibit processability approaching LDPE, but with improved performance. The application possibilities for EZP resins in the realm of LDPE replacement include blown film, shrink film, and form-fill-&-seal applications.
XCAT-EZ-based mLLDPE resins allow for significant down gauging with better performance properties than LDPE such as superior toughness, enhanced processability, extrusion versatility, and enhanced bubble stability. These resins process well on either high-pressure LDPE or LLDPE extruders, with the extrusion characteristics of high-pressure LDPE, but with film properties that easily exceed LDPE in tensile, tear, and toughness. XCAT-EZ-catalyzed resins also offer end users the ability to reduce film thickness without sacrificing end-use performance. In many film applications, for example, EZP mLLDPE has been downgauged by up to 30 percent – with no decrease in performance.
Comments: Metallocene-based catalyst offerings for unimodal polyethylene resins by Univation have focused on what it calls Type II and Type III polyethylene grades using EXXPOL catalyst in the UNIPOL process. Type I resins is already available in the form of the EXCEED line of so-called enhanced-performance LLDPE grades. This line, which features a narrow MWD, a narrow composition distribution, and no long-chain branching, processes well on conventional LLDPE film equipment.
Type II resins have a broader MWD and a narrow composition distribution; these products are referred to as “easy processing” LLDPE resins. Their processability compares closely to that of an LDPE/LLDPE blend, and the mechanical properties of the resulting film are superior to those of the blend. Type III resins have MWDs ranging from narrow to broad, a narrow composition distribution, and rheological characteristics suggesting long-chain branching. These resins are referred to as “enhanced toughness LDPE” resins. The process is similar to conventional LDPE resins, yet their mechanical properties surpass those of the conventional material.
Type III films show promise for use in shrink-film applications, something impossible for standard LLDPE films. Many UNIPOL operators are evaluating these catalyst technologies to further differentiate their products. The utilization of more sophisticated catalysts such as XCAT-EX and PRODIGY has been increasing over the past couple of years.
Cargill to acquire Dow Chemical’s interest in Cargill Dow
Cargill announced that it has agreed to acquire Dow Chemical Company’s interest in Cargill Dow LLC, the 50:50 joint venture formed in 1997 to commercialize polylactic acid biopolymers. The transaction is subject to regulatory approval in Europe.
Cargill is the original inventor of polylactic acid (PLA), a polymer derived from natural plant sugars and marketed by the joint venture as NatureWorks® PLA and Ingeo™ fibers. NatureWorks PLA is used in a broad range of packaging applications for companies seeking plastics made from an annually renewable resource. Ingeo fibers are used in fiberfill applications including pillows, comforters, mattress pads, blankets, and apparel.
Comments: Please read our analysis of Cargill’s decision to acquire Dow Chemical’s interest in Cargill Dow LLC.
DuPont Dow Elastomers to resolve polychloroprene and EPDM litigation matters
DuPont Dow Elastomers LLC (DDE), a 50/50 joint venture between DuPont and The Dow Chemical Company (Dow), reached a plea agreement with the U.S. Department of Justice (DOJ) that includes an $84 million fine that resolves all criminal charges against it related to a DOJ investigation of the polychloroprene industry.
DDE has also agreed to settle a federal class action antitrust lawsuit related to purchases of ethylene propylene diene monomer (EPDM), which is another form of synthetic rubber.
As a result of agreements reached between DuPont and Dow that were announced on April 8, 2004, DuPont agreed to fund 100 percent of any related DDE antitrust liabilities and costs, up to $150 million, with DuPont also funding more than 75 percent of any excess. DuPont recorded a first quarter 2004 pre-tax charge of $150 million for costs associated with ongoing DDE antitrust investigations and related litigation in the synthetic rubber markets.
Following the resolution of these two litigation matters by DDE, DuPont will increase its consolidated litigation reserve by $118 million on a pre-tax basis. DuPont said that the impact on its fourth quarter 2004 results would be a special charge of approximately $100 million pre-tax, or $.09 per share, after reflecting payments to be made by Dow as provided for in the April agreements.
Comments: Please refer to our article on “DuPont Dow to be Dissolved” published in “Global Polyolefins & Elastomers – Strategic News Analysis” – Volume 3, Issue 1.
Dow Chemical to stop production of polyethylene waxes in Sarnia
Dow’s Specialty Plastics business announced its plans to cease production of polyethylene waxes at the Sarnia Product Development Plant. This followed the recent news that Dow Canada had terminated the supply agreement with its customer for the products, HRD Corporation of Houston, Texas. The plant in Sarnia will be ‘mothballed’ (idled) while Dow investigates other options for the Product Development Plant.
Mothballing of the Product Development Plant will affect 24 jobs directly aligned to the plant in addition to related support services. The company will review its on-site infrastructure and could eliminate up to a total of 80 jobs being affected.
Comments: In the first quarter of 2003 Dow Chemical Company decided to discontinue the development and sale of ESI. At that time Dow decided to use the Sarnia ESI facilities to manufacture INSITE-based PE waxes. At the same time, Dow Chemical Company entered into a commercial agreement to supply PE waxes based on INSITE technology to Marcus Oil and Chemical, Houston Texas. Under the agreement, Marcus was to market and sell 100% of the PE wax produced by Dow. The companies believed that metallocene technology brought major improvements to PE waxes – traditionally considered recovered products. During that time Marcus Oil had an 8-10% market share of the North American PE waxes market. The companies were hoping that their ability to supply PE waxes based on Insite® technology will enable them to compete effectively with leading suppliers such as Honeywell and Eastman.
In May 2004 Dow started the production of PE waxes at the Sarnia location. The company announced that decisions around future world scale plans dedicated to exclusively making PE waxes would be made after the assessment of market conditions in the next 1-2 years. During that time the demand for PE waxes for expected to grow at a steady rate and producers were bringing on purpose production capacities for PE waxes. In July 2004 Mitsui Chemicals announced its plans to launch a new product line of metallocene-catalyzed PE waxes under the trade name Excerex®.
In December 2004 a storage tank explosion at Marcus Oil and Chemicals caused major damage to its operations. Soon after in January 2005 Dow Canada terminated its supply agreement with HRD Corporation (Marcus Oil and Chemicals) and decided to stop the production of polyethylene waxes in Sarnia. Since its inception, Dow did not seem to have any plans for marketing the product themselves. The company’s interest seemed to be more in utilizing the ESI facility to manufacture PE waxes. After the termination of the supply agreement, Dow decided to discontinue the production of PE waxes as the company did not have plans to directly supply polyethylene waxes to the market. In the future, Dow could restart the facility to either produce some other product or to produce PE waxes. If Dow decides to produce PE waxes at the facility then the company would have to either supply the product directly or enter into an agreement with some other player such as Marcus Oil.
In the meantime, Clariant GmbH (Sulzbach, Germany) is investing $26.7 million to build the first commercial-scale plant where waxes based on polypropylene, polyethylene, and copolymers will be produced via metallocene catalysis. The technology developed by Clariant has been demonstrated at the firm’s continuous pilot facility in Frankfurt, Germany since 1998. The site manufactures a range of metallocene products in limited quantities and markets them under the Licocene® brand name.
ExxonMobil Chemical to install two metallization lines in Europe
ExxonMobil Chemical announced its plans to install two new metallization lines at its oriented polypropylene (OPP) films plant in Brindisi, Italy. The first line is set to start producing commercially in the first quarter of 2005, with the second line due to start up a few months later.
According to ExxonMobil, the new vacuum metallizer lines provide excellent processing capability with the ability to metalize a range of gauges between 12 and 50 microns at high speeds, providing outstanding barrier properties. In addition, these lines will also increase its capacity and the company aims to reduce lead times and fluctuations in supply.
Comments: The oriented polypropylene (OPP) films can be divided into five major types: (1) co-extruded OPP films (includes metalized films), (2) homopolymer OPP film (clear OPP), (3) PVDC coated OPP film, (4) opaque BOPP film, and (5) acrylic coated OPP film. The majority of clear and co-extruded OPP films are large-volume commodity films accounting for almost 75% of the total demand. Metalized films included in co-extruded films are a specialty in nature and command premium pricing. Other specialty films include PVDC-coated, opaque, and acrylic-coated films. Metalized films are priced 20 to 25 cents higher than commodity films. The price premium for specialty films is high enough to more than offset the higher manufacturing costs. Metalized films are further divided into standard barrier, low barrier, and high barrier films. Standard barrier films are the most widely used metalized films accounting for approximately 80% of the metalized films demand. High-barrier films allow less than 1 cc of oxygen to pass through 100 square inches of film per day. A standard barrier allows about 5-6 cc of oxygen to pass while a low barrier allows about 6-10 cc of oxygen to pass through 100 square inches of film per day. Metalized films are used in both food and non-food applications. Food applications account for almost 85% of the total demand. Major food applications that use metalized films include (1) snack food packaging, (2) candy bars, (3) bakery products, (4) coffee bags, and others. Non-food applications include (1) gifts/flower wraps, (2) capacitor films, (3) tapes & labels, and others. On a global basis, metalized films account for 10% of the total BOPP film demand.
In recent years metalized films have seen higher growth rates and maintained a price premium. Due to these reasons, suppliers of OPP films have added metalizing capacity to capture market share for metalized films. ExxonMobil is also hoping to capture this high-growth premium market by adding metalizing capacity
DSM to expand US production capacity for Dyneema® fiber
DSM announced that due to increasing demand, it will add capacity for Dyneema® yarn, DSM’s high-performance polyethylene (HPPE) fiber, and Dyneema® UD (UniDirectional bullet resistant sheet) in Greenville, North Carolina (U.S.). The new facilities will increase global fiber production capacity by nearly 20 percent, and UD capacity by 25 percent. Both facilities are expected to be operational beginning in 2006.
The Department of Defense’s requirements and procurements of Interceptor Body Armor have increased greatly over the last two years, straining the domestic industry’s ability to meet its requirements for the ballistic backing material incorporated into the small arms protective insert (SAPI).
Comments: DSM is the largest producer of high-performance polyethylene fiber which is marketed as Dyneema. The product produced by the patented gel spinning process is said to be 15 times stronger than steel. Dyneema’s other properties include low weight with resistance to abrasion, moisture, UV rays, and chemicals. DSM manufactures Dyneema at plants in Greenville, North Carolina, Heerlen, the Netherlands, and via a joint venture with Toyobo in Japan.
DSM’s Dyneema products are marketed for (1) bullet-proof armor, (2) ropes, cables, and nets for the fishing, shipping, and off-shore industries, (3) safety gloves for metalworkers, and (4) fine threads for sports and medical applications. DSM opened its first U.S. yarn production line in Greenville, N.C., in May 2004.
The expansion in capacity will increase global fiber production by 20% and bullet sheet capacity by 25%. Other specialty fibers available in the market include Kevlar by DuPont, Spectra fiber by Honeywell, Zylon by Toyobo, M5 fiber by Magellan, and Twaron by Teijin.
In recent years there has been an increase in demand for protective garments due to threats from terrorism and an increase in army personnel on active duty. This trend is expected to continue as the government’s main agenda continues to be the fight against terrorism.
Unlike Kevlar, polyethylene-based high-performance fibers have limited stretch qualities and are mostly unsuitable for ropes and cordage applications – hence the major applications are limited to composites and blending.
Mitsui Chemicals to increase production of cyclic olefin copolymers
Japanese chemical company Mitsui Chemicals, Inc. announced its plans to expand the production capacity of its APEL™ cycloolefin copolymer. The company’s decision was in response to the significantly increasing demand for the polymer in the main application areas comprising IT & electronics and high-performance packaging.
Expansion of APEL™ capacity by 600 tons/yr will be achieved by a modification of the existing commercial plant at MCI’s Iwakuni-Ohtake Works in western Japan, raising the total capacity to 3,400 tons/yr. Construction work will begin in October 2005, with completion scheduled for November 2005.
Applications of APEL™ range widely, centered on its use as an IT & electronics material going into pickup lenses for DVD drives taking advantage of the polymer’s excellent optical characteristics. As for applications in the high-performance packaging materials area, the polymer’s moisture-barrier characteristics are being exploited to make “press through packaging” (PTP) of medical pills, while the material’s drinkability is utilized in shrink films.
Comments: Cyclic Olefin homopolymers and copolymers are engineering thermoplastics derived from norbornene molecules. Norbornene is made from dicyclopentadiene (DCPD) and ethylene. These resins have glass-like transparency, low dielectric loss, low moisture absorption, dimensional stability, high heat resistance, and high melt-flow rates. The major producers of COC resins include (1) Ticona, (2) Mitsui, (3) JSR, and (4) Nippon Zeon.
APEL® is the trade name of COC produced by Mitsui Chemicals. It is copolymer ethylene and tetrcyclododecene produced using the Zeigler catalyst system.
For more information, please refer to CMR Inc.’s analysis of Cyclic Olefins Copolymers in New Generation Polyolefins.
Shin-Etsu to expand its PVC facilities in The Netherlands
Shin-Etsu Chemical Co., Ltd. announced that its plans to expand PVC production capacity at its Pernis Plant in The Netherlands from 350,000 tons/year to 450,000 tons/year. Shin-Etsu PVC is Shin-Etsu Chemical’s 100%-owned Group company and its European PVC production and sales base.
The expansion work will proceed in two phases after it starts shortly and is planned to finally be completed in October 2006. The investment amount required for this expansion plan is expected to be EUR 50 million.
Shin-Etsu PVC’s present production capacity is 440,000 tons/year including 90,000 tons provided by Neste Co., Finland, where production is consigned. With this expansion and improvement of its plant in Pernis, Shin-Etsu PVC will further increase its PVC production efficiency, which will result in an increase in the company’s production capacity to 540,000 tons/year.
Shin-Etsu Chemical is producing PVC using a tripolar production structure of the U.S., Europe, and Japan, and its total PVC production capacity has reached 3.23 million tons/year, making Shin-Etsu the world’s largest PVC maker. Shin-Etsu Chemical recently announced that their U.S. Group company Shintech Inc., its core PVC manufacturing base in the U.S., would construct large integrated manufacturing facilities for electrolysis, VCM, and PVC. This construction is being carried out in two phases: one in 2006 and the other in 2007 and will increase Shintech’s PVC production capacity from 2.04 million tons/year to 2.64 million tons/year.
Comments: Recently, Shin-Etsu announced its plans to increase PVC production in the US which is now followed by the expansion announcement in Europe as well.
Shin-Etsu acquired The Netherlands facility in 1999 from the business venture of Shell Chemical Ltd. and Akzo Nobel Chemical NV. In January 2000, production and sales of VCM and PVC began under the newly named company Shin-Etsu PVC B.V., and since then the company has been contributing to the Shin-Etsu Group’s profit growth.
Previously, in November 2003, Shin-Etsu PVC expanded its VCM (vinyl chloride monomer) production capacity from 500,000 tons/year to 620,000 tons/year.
ExxonMobil and Pequiven Stage I of Olefins project
The Pequiven petrochemical subsidiary of Venezuela’s state oil company PDVSA and ExxonMobil Chemical Company has completed the first stage of their $3 billion olefins project at the Jose petrochemicals complex in Anzoátegui state.
According to Pequiven, Project control, and integration have been defined. The next stage of the project, which is the construction of the facility will take about one year and should come online by 2009.
Pequiven and ExxonMobil Chemical are 50:50 partners in the venture, which will use olefins to produce polyethylene, glycols, and other derivates.
Comments: This mega project appears to be going well. Being now probably the largest petrochemical project in more than a decade raises its visibility. The price tag is up also, from the early estimate of $2.5B to now classified as a $3.0B project. The project is a keystone in Venezuela’s push to develop its non-associated natural gas reserves and has been one of the government’s most publicized endeavors. The President of Venezuela has even been closely involved with the partners. This project for ExxonMobil has its lineage on the Mobil side of the family. The project is drawing on non-associated gas from the 14 trillion ft3 Northern Paria Basin located in Northeastern Venezuela for domestic use and for export to the US and Mexico through other projects such as LNG where a 4mm ton/year train is expected to be finalized late this year in 2005.
Most of Venezuela’s natural gas has historically been linked to oil production but the country’s strict adherence to OPEC quotas has made the domestic natural gas supply short and some industrial production has been reduced in recent years as a consequence, the Paria Basin linkage changes this for the future.
BP selects League City, TX as a regional center for its new olefins & derivatives company
P announced the selection of League City as the regional center of BP Amoco’s new stand-alone global Olefins and Derivatives Company – bringing 150 new jobs to the area. The venture is also expected to bring $5.7 million to the Texas economy.
The new company will have its offices in Marina View Tower, a newly constructed office building adjacent to South Shore Harbour Hotel. The company will be leasing office space on the top two floors of the building from the building’s owner, American General Insurance.
The new company will have $9 billion in assets and $15 billion in third-party sales globally. Employees will be a group of people from the global headquarters of the company in Chicago, the local market, and employees currently employed at BP Solvay, a polyethylene venture.
Comments: BP-Amoco is coming home to be closer to the polyolefin industry – Welcome back!
ExxonMobil and Syntroleum sign a GTL pact
ExxonMobil Research & Engineering Co has granted Syntroleum Corp. Tulsa, OK, a worldwide license under its gas to liquids (GTL) patents to produce and sell fuels from natural gas or other carbonaceous substances such as coal.
The agreement covers synthetic gas production, Fischer Tropsch synthesis, and product upgrading to make fuels and various processes related to these areas.
Comments: Up to the present, Syntroleum has been the highest profile and best-funded independent Gas to Liquids (GTL) player of the recent era, perhaps followed by Rentech of Denver. These independents don’t count the major development efforts mounted by the Majors like ExxonMobil, Shell, Conoco/Phillips and a host of others.
There are thousands of patents and process schemes all vying to cash in on the shrinking world of crude oil supply and the burgeoning world of underexploited global remote natural gas supplies. The Financial Times recently published a technical editorial piece that said there could be potential for thousands of these GTL (or related methanol to olefins or newer methane functionalization ideas) projects based on currently accessible remote natural gas alone and more than twice the project opportunities if some remote hostile areas like Northern Siberia can be practically brought into play.
This is a global license for Syntroleum so obviously they have turned down the emphasis on their heritage projects and process and ExxonMobil believes they are an acceptable project development leader. Either way, this is a win-win. It also appears to be a departure for ExxonMobil from a historical stance to not license leveraging technology before it had been exploited on the home front and the time for broad commercial exploitation had come. It can be viewed as unusual therefore that ExxonMobil would license a leveraging technology such as their GTL at this early phase, and then of course, strategically Syntroleum has a good track record in longevity and multiple projects under its belt. Mega projects like ExxonMobil’s 154,000 BPD Qatar deal are only for significant international players. Perhaps Syntroleum’s role will be in a large number of opportunities of moderate tier projects that could keep them busy for a long time to come.
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