Chemical Industry Summary
Chemical companies are currently releasing quarterly and full-year 2015 earnings results. Thus far, earnings reports have been a mixed bag as viewed with last year’s results. All companies are reporting year-on-year decreases in revenue as a consequence of the global energy price deflation. However, different sectors of the industry are reporting earnings dependent on their product mix and geographic exposures. Paint companies are reporting positive year-on-year earnings comparisons as cost declines have generally outpaced product pricing movements. Agricultural companies have seen the impact of demand softness and price deflation and earnings are down significantly. Commodity chemical producers’ earnings have declined, but only modestly, as feedstock price declines have been ahead of polymer declines, especially for oil-based producers. Many chemical companies announced aggressive cost-saving goals in 2016 based on restructuring plans and workforce reductions. The completed Olin/Dow Chlorine Products acquisition and the Dow Chemical/DuPont proposed merger have major implications for changing the structure of the industry. The recently announced a proposed acquisition of Syngenta by ChemChina, a $43 billion deal, has similar implications for consolidation and globalization of the Ag chemical sector.
Macroeconomics and Geopolitics
In mid-December, the Fed raised the US short-term interest rate by 0.25%, the first increase in 10 years. While the effective rate is still near zero at below one-half point, this action was another increment of negative economic news that sent the stock market in a tail-spin signaling the worst January performance in some time. While the US economy is relatively stronger than other regions, some signs of US economic slowing are being observed. In January, only 151,000 jobs were added, down over 40% from last year and the prior three-month average. The January US PMI Manufacturing index improved slightly to 52.4, up from the 38-month low of 51.2 recorded in December. The US GDP casein at a disappointing level of 0.7% growth in Q4.
US housing starts were 1.15 million in December, with the year-ending at an average of 1.11 million starts, up 11% from 2014. This final result is somewhat below the consensus forecast there was in the area of 1.2 million starts. For 2016, the NAR (National Association of Realtors) is forecasting starts of 1.24 million (up 11.8%), and for 2017 it is forecasting 1.34 million starts (up 7.8%).
Sales of existing US houses increased 15% in December, up significantly from a poor November showing. Average prices were up slightly to $224,000.
In January, US auto sales of cars and light trucks were 17.5 million, on a seasonally adjusted annualized basis, up 5.5% from last year. For the full year, US auto sales averaged 17.3 million, up 5.6% over 2014. For the last three years, US auto sales have been up an average of 6.2% per year.
Europe’s manufacturing activity slowed a bit at the start of 2016 with the reported PMI index at 52.3, down from the December result of 53.2. This result is in modest growth territory. Results of individual countries were mixed with Spain showing the strongest growth and Greece and France at a neutral 50.0 index. According to the IMF, Europe’s GDP is expected to grow at about 1.5% in 2016, similar to the result seen in 2015.
China’s manufacturing sector continues to deteriorate with a PMI result of only 48.4 recorded in January. This was the 11th consecutive month in contraction territory. The contraction of Brazil’s manufacturing sector is beginning to slow, but activity is still in negative territory. The January PMI came in at a level of 47.4, in modest contraction territory. Brazil is in a recession and its GDP shrank by around 3% in 2015. It is projected to only moderately recover in 2016 to a range of negative 1.5% to negative 2%.
Feedstock – Crude Oil
For the week ending January 29, US crude oil stocks surpassed 500 million barrels for the first time, as reported by the EIA. High global crude inventories and the specter of new Iranian supplies adding incrementally to the global supply glut have pushed benchmark prices to multi-year lows. The week of February 8 saw WTI benchmark prices dip briefly below the $25 per barrel mark. Brent crude dropped below $30/bbl at mid-week. Oil prices have bounced slightly, and oil stock prices rallied slightly late in the week of Feb 8 as reports surfaced that some global producing countries might try to coordinate production. However, most industry observers see little prospect for a significant near-term fix for the current situation.
Two themes are emerging for the oil industry this year. Oil producers are announcing steep cuts in CAPEX and drilling investments in their year-ending earnings reports. Another significant trend is sector job cuts that have cost over 280,000 jobs in the exploration sector and many additional cuts in the service and related sectors. Exploration companies that had taken on debt during the oil boom are making deep cuts in spending to preserve cash, as some observers see as many as one-third of US exploration/production companies facing bankruptcy by mid-2017. Oil futures on NYMEX have seen prices slip to below $40/bbl for December of 2016.
Feedstock – Natural Gas & NGLs
After firming about 10% in early January, US Henry Hub natural gas spot prices have returned to December levels of $2.00 to $2.20 per million BTUs. With crude oil prices softening, the widely watched oil-to-gas price ratio is now in the area of 13:1 to 15:1. The relative convergence of prices has eroded, but not yet eliminated, North America’s competitive advantage in the ethylene chain.
The EIA reports that for the week of Feb 5, 2016, natural US gas inventories were 2,864 billion SCF, 25% above last year and 23% above the 5-year average. Current levels are very near the historic 5-year maximum of 2,852 billion SCF. However, the recent trend of cold weather in the Northeast US has resulted in a modest decline in inventories that were at historic highs. Monthly average production from shale formations has begun to drop.
Global liquefied natural gas prices have come under pressure and East Asian gas is currently in the US$8.00 to US$8.20 per million BTU range. Prices for spot gas to Japan are near this range, down 40%-45% from last year. The recently completed Cheniere Sabine Pass LNG export terminal is now scheduled to make its first liquefied natural gas shipment early in the summer of 2016, approximately six months behind the previously announced target date. This is the first liquefaction train and LNG facility to be activated in the US.
On February 15, Royal Dutch Shell announced the closing of its US$50 billion acquisition of BP Group PLC. This acquisition places the company as a leading global LNG supplier. Shell’s proposed Kitimat, Canada LNG project was indefinitely postponed on February 4.
In February, the EIA reports that US propane/propylene inventories have eased to nearly 84 million barrels, down 9% from last month and down from the record of 106 million barrels set last November. This is due to higher seasonal demand and the start-up of a new LPG terminal capacity in December.
US Olefins & Polyolefins
In early February, US contract ethylene prices for January settled down 1.0 cents/lb to 24.75 cents/lb on a net transaction price basis. This figure represents a 13-year low for a contract settlement. Spot ethylene prices have also moved down and have recently traded in the range of US$0.16/lb to US$0.18/lb ($350-400/MT). Margins for US crackers have converged for all feedstock and are now in the US$0.10 to US$0.17 per pound area, roughly half of the levels seen a year ago.
US propylene prices settled down by a half-cent per pound in January. The chemical grade contract price is 30 cents/lb with polymer grade at 31.5 cents/lb. The February contract price negotiation, expected to be concluded this week, is considering a proposed decrease of 1 cent/lb, although spot prices suggest a 2-3 cent/lb decrease is possible. Dow Chemical successfully started up its new 750k TPA PDH unit in Freeport in December and has been since ramping up rates. The propylene-to-propane spread is now about US$0.22/lb, about half of the level seen in mid-2014. Proposals for February called for contract propylene price decreases of one to five cents per pound, depending on the producer. We believe contract prices are near 24 cents/lb. Contract prices have slipped US$0.15 per pound since July of last year.
In January, US PEcontract prices declined by 3 cents/lb. Declining oil prices and feedstock costs have put pressure on PE prices. Previously, in December US PE prices rolled over for a third consecutive month. Initial reports for February indicate a potential drop of 2 cents/lb to 3 cents/lb.
Total PE exports from the US finished 2015 at a total of 9.5 million tons. This was 42% ahead of last year and at a record level. Net exports of 5.3 million tons were the second highest on record.
In January, US PP prices were up 3 cents/lb, despite the slight easing of contract monomer prices. This increase was equivalent to one-half of the nominated amount of 6 cents/lb but was pushed through despite the easing monomer price. PP supply is reportedly tight.
US PVC contract prices were down an additional 1 cent/lb in January for the sixth consecutive month of decreases. In total, decreases of US$0.07/lb put contract prices in the US$0.65-70/lb range before discounts, with spot prices at a significantly lower level.
European Olefins & Polyolefins
For February, European the contract ethylene price softened by an additional €70/ton to a level of €830/ton. This decline was primarily due to recent crude oil price declines and lower naphtha pricing. European ethylene prices have seen declines in seven of the last eight months, totaling €470/ton.
Film grade HDPE is currently €1,300/ton on a spot basis, down €100/ton from levels seen at the beginning of the year.
European contract polymer grade propylene settled down €60/ton in February, to a level of €560 per ton from December. Contract butadiene prices for February settled at€495 per ton, down €60/MT from last month and down €95/MT from December.
Asian Olefins & Polyolefins
The Asian market is emerging from the Chinese Lunar New Year holidays with the market trying to establish a direction with limited trading. The recent decline in global crude prices is counterbalanced by tightness in some markets and the prospects for capacity decreases in 2016. This year, Asian polyethylene prices will be supported by permanent shutdowns including the Ashai Kasai plant in Mizushima. This shutdown is scheduled for February. In total, about 10% of Japanese capacity will be unavailable in 2016.
Prices for polyethylene are currently in the range of US$1,050 to US$1,150 per metric ton depending on grade and region. Spot ethylene prices in Asia have easedabout$200 per metric ton from the beginning of the year, and bidders are capping offers in the US$900 per ton area. The bid/ask spreads are necessarily wide as the market seeks direction.
Global Chlor-alkali
The Chlorine Institute reported that effective operating rates in December were 84.3%, nearly flat with November. In October, a significant number of turnarounds resulted in an operating rate of only 76%. US chlor-alkali producers announced a US$65/ST price increase for caustic for the fourth quarter. It appears that the industry was able to achieve a caustic price increase of between US$40 and US$45/ST late in the year. In November, the industry announced an additional US$40/ST increase for caustic. However, no portion of this increase has not been successfully implemented either in the late Q4 or the early Q1
Chlorine prices eased up about US$10/ST in Q4 in response to shortening supplies and the US$35/ST increase proposed in May. ECU margins for the industry have improved modestly from trough levels at near US$150 per ton at mid-year to closer to US$200/ST due to price improvement and lower gas prices.
In October, Olin Chemical completed the Dow Chemical chlorine products acquisition and is now the largest global producer. The company has announced that it will shut down North American capacity in the range of 250 to 400 thousand tons per year, and the final number will likely be in the high side of this range. Additional shutdowns of chlor-alkali capacity totaling nearly 500,000 tons/yr are being seen in Europe as the deadline to get out of mercury-based technology approaches.
European chlor-alkali operating rates in December were 79.1% of industry capacity, flat with last year. For the year, industry operating rates were near 80%, up 3% from last year. Year-ending caustic stocks of 238 thousand tons were 4.4% lower than last year.
AMERICAS
Canada’s Alberta government to subsidize new petrochemical projects
lberta has launched Petrochemicals Diversification Program to encourage petrochemical companies to build downstream facilities that would utilize Alberta’s abundant gas resources, thereby diversifying the local economy. The incentive of CA$500 million (US$365 million) is an attempt to attract two to three petrochemical projects, each of which is eligible to receive up to CA$200 million credit for purchasing ethane and propane. These credits would be received only once a facility is up and running.
Comments: Alberta is the energy hub of Canada with 223 trillion cubic feet of natural gas proved reserve. However, Alberta has been suffering from oversupply and high transportation costs to end-user markets including the United States and Asia. Therefore, converting the abundant but low-priced natural resources into high-value-added petrochemicals, such as ethylene and propylene, emerges as viable options for local producers to keep profitable. Canadian Williams plans to build DPHunit in Alberta and has a propylene supply agreement in place with Goradia capital for a nearby proposed polypropylene facility. The subsidy program is expected to shorten the transition of having more value-added petrochemical production locally, thereby boosting the local economy without limitation from its geographic disadvantage.
Univation, Linde sign cooperation agreement for PE technology
Dow’s Univation partners with German-headquartered Linde Group for advancing UNIPOLTM polyethylene technology, as well as cracker and PE integration. Under the cooperation agreement, these two parties will synergistically develop technology aimed at reduction in capital and operational expenses and improving quality in early-stage design to cracker and PE projects.
Comments: Univation’s Unipol PE technology is among the highest licensed PE technologies worldwide. The coming together of a technology company with an EPC company with an aim to back-integrate the PE process into cracker operations could result in a reduction of capital and operational expenses for licensees. A successful collaboration may result in better economics for existing projects via retrofitting, as well as expand Univation’s market share via potential new licensees.
Westlake to expand ethylene capacity in USA
Westlake Chemical has announced plans to boost ethylene capacity in Calvert, Kentucky, and Lake Charles, Louisiana. The Kentucky bottlenecking project will add extra ethylene capacity by 32 KTA with a scheduled start-up in early 2017. While the 115 KTA expansion at the Lake Charles facility is expected to be complete in late 2016.
Comments: The Shale gas boom has changed the competitive landscape of ethylene-derivative producers in the United States. Ethylene is an important raw material for manufacturing polyethylene and polyvinyl chloride. North American PVC producers have announced several ethane cracking projects to be built near shale gas formations to access shale gas. Westlake Chemical, as a producer of ethylene derivatives such as PE and PVC, is actively integrating its upstream cracking production into shale gas with an intent to leverage US cheap gas resources and further reduce the impact of fluctuation in crude oil prices.
PolyOne to acquire Kraton’s TPE business
Specialty material maker PolyOne Corporation to buy certain thermoplastic elastomer-related assets from Kraton Performance Polymers for US$72 million. This deal is likely to involve a long-term supply agreement where Kraton will provide raw materials used in the acquired production assets to PolyOne.
Comments: This deal will allow both PolyOne and Kraton to focus on their respective core competencies. Kraton will use the proceeds from the sale of some of its compounding business to reduce its outstanding debt and remain focused on innovating new SBC polymers. PolyOne will get access to Kraton’s compounding assets and customer list as well as a supply agreement for raw materials from Kraton.
LyondellBasell introduce two PP grades for healthcare
LyondellBasell has released two new PP grades under Purell® healthcare product portfolio -HP548N and RP315M. Purell®HP548Noffers improved rigidity and potentially higher productivity with target applications such as pill strips, medical devices, syringe plungers, and rigid containers. The Purell®RP315 M grade is designed for cast film application where a good balance of physical and optical properties are desired.
Comments: The demand for polyolefins used in medical and healthcare applications has been increasing. This polyolefin material is an alternative material with a combination of good properties and excellent value in comparison to the competitive materials. LyondellBasell formed a global team in 2009 dedicated to developing a healthcare portfolio of polyolefin resins with an intent to capitalize on demand growth in the healthcare/medical segment. With the introduction of these two Purell®grades, LyondellBasell can further expand its healthcare portfolio by better addressing the specific needs of customers.
EUROPE
Unipetrol to construct Litvinov PE facility in Q2 2016
According to its 4thquarterfinancial report, Czech-headquartered Unipetrol moves ahead with capacity expansion at its existing Litvinov PE complex. The new facility will produce 270 KTA of polyethylene using INOES’s Innovene S technology. The construction work is scheduled to begin in 2Q2016 with expected completion in 2018.
Comments: Unipetrol is a largely-owned subsidiary of Polish-based refiner PKN Orlen, the largest oil processor in Central Europe. The company has a combined HDPE capacity of 320 KTA at the Litvinov complex, of which 120 KTA is from the PE1 plant and 200 KTA is from the PE2 facility. The new unit named PE3 is to replace the oldest HDPE line (PE1)on-site with an improvement in the utilization efficiency of ethylene. The project will expand the company’s total HDPE capacity by 150 KTA to 470 KTA in response to increasing demand for HDPE in Europe where PE and ethylene supply are historically tight. Also, INEOS’ Innovene Swill allows Unipetrol to span its production portfolio into other value-added segments such as cosmetics and packaging.
Russia’s Siburtargets H2 2016 to complete modernization work at Tomskneftekhim complex
Tomskneftekhim LLC is a subsidiary of Russia’s petrochemical giant Sibur Holding and plans to complete the construction of modernization and technical upgrading at LDPE and PP facilities later this year. The modernization project will expand the combined capacity of LDPE and PP by 10.5% to 410 KTA while allowing Tomskneftekhim to broaden the LDPE product portfolio.
Comments: Sibur decided to upgrade the plant before international sanctions and the crude oil price decline and while the Russian polyethylene and polypropylene film markets were growing rapidly. Sibur’s new LDPE grades will offer improved durability, processing, and anti-slip properties primarily for packaging film applications, which constitute the overwhelming majority of domestic LDPE demand in Russia. The finished polypropylene expansion should help Sibur’s recently-integrated subsidiary Biaxplen with feedstock for its increased biaxially-oriented polypropylene film production.
Russia’s Kazanorgsintez launches two technologically upgraded PE facilities for pipe grades
Kazanorgsintez has completed modernization work at its two PE plants, which enables the company to boost the production capacity of pipe-grade PE. The first revamped process involved a new two-chamber ethane cracker to increase ethylene feedstock for PE production. Another modernization is a new compounding production line for carbon-black-extended HDPE pipe grade and PE 100 grade, which will increase the company’s capacity of PE pipe grade by 50% to 240 KTA.
Comments: As Russia’s largest PE producer, Kazanorgsintezsupplies over 38% of all Russian PE and is its largest PE exporter. Kazanorgsintez also produces polyethylene, phenol, acetone, bisphenol-A, polycarbonates, and other materials. Overall, the plant manufactures 170 different products. The modernization will also allow an increase in the plant’s production of pipe-grade PE. The launch of a new Coperion Company technology compounding line at the plant’s HDPE production will increase the production capacity of popular and light-stabilized carbon-black-extended PE 100 grade for pipe production by 30-50%. This investment will further strengthen the position of Kazanorgsintez the indisputable leader in the production of HDPE pipe grades in the Russian Federation.
Spain’s Repsol to launch mLLDPE facility in Q2 2016
Repsol is finalizing the construction of a metallocene linear low-density polyethylene (mLLDPE) facility in Tarragona, Spain with a scheduled start-up in the first half of 2016. No specific production capacity is disclosed yet.
Comments: Repsol has licensed the mLLDPE technology from Chevron Phillips for this plant. This project represents the first time that Chevron Phillips’ MarTECH technology has been licensed for mLLDPE outside the US. This project is expected to be the only new mLLDPE capacity addition in Western Europe until 2020. Eastern Europe producers in Russia such as Nizhnekamskneftekhim (NKNK) and ZapSibNeftekhim have also announced their intentions to build two new mLLDPE plants in Russia but it remains to be seen how much of those new plants capacities will be dedicated to producing mLLDPE.
Lanxess, Saudi Aramco target April to launch rubber venture
Germany-based synthetic rubber producer Lanxess and Saudi Aramco have announced their equally-owned JV to be named ARLANXEO scheduled to launch on April 1. Under the agreement, each partner will have equal representatives on board to oversee the JV, and the CEO of this JV will be appointed by Lanxess and CFO will be assigned by Saudi Aramco.
Comments: This joint venture is a strategic cooperation between these two giants. The JV will combine low-cost raw materials with state-of-the-art technology and ‘know-how’ to make competitive SBR materials in the Middle East. Lanxess has undergone consolidation of synthetic rubber production facilities globally to cater to demand-growing regions. In partnership with Saudi Aramco, Lanxesscan access cost-competitive raw materials from the Middle East and leverage Saudi Aramco’s broad sale network. For the Saudi Arabian counterpart, the cooperation with Lanxess will allow Saudi Aramco to further integrate toward downstream production that serves clients manufacturing automotive parts and tires against its domestic rival SABIC.
MIDDLE EAST & AFRICA
Egypt awards Emerson for automation of Tahrir project
Egyptian petrochemical company Carbon Holdings has selected Emerson Process Management to provide automation and reliability technology for a US$6.9 bln Tahrir petrochemical project in Ain Sokhna, Egypt. The Tahrir petrochemical complex will include a 1,500 KTA naphtha cracker and downstream units that produce polyethylene, propylene, polypropylene, butadiene, hexene, benzene, and styrene. The complex began construction in 2015 with a rescheduled start-up in 2019.
Comments: Egypt is the second largest oil refining country in Africa with a total refining capacity of 730,000 bbl/day and a net exporter of high-quality naphtha. However, lacking downstream production capability makes the nation rely on imports for petrochemicals. Due to its strategic location between Africa &the Middle East and control of the Suez Canal, Egypt has begun to gradually build up a complete downstream production network by 2019 which will capitalize on the growing demand for plastics both in the domestic market and other African countries. Except for the Tahrir project, Ethdco also has an LLDPE/HDPE project under construction with a scheduled start-up by 2018.
A. Shulman to boost polypropylene compounding capacity in Saudi Arabia
Material supplier A. Schulman plans to build a 100KTA polypropylene compounding facility in Saudi Arabia with a scheduled start-up in mid-2017. The facility is a 50:50 JV between the National Petrochemical Industrial Company (NatPet) and A. Schulman. The compounding facility will be adjacent NarPet’s 400 KTA polypropylene plant to secure its feedstock.
Comments: A.Schulman Inc, founded in 1928 and headquartered in Akron, Ohio is one of the leading suppliers of high-performance plastic compounds and resins. A. Schulman has recently increased interest in the Middle Eastern region. The 50/50 joint venture with NatPet will allow Schulman to better supply customers in Europe, the Middle East, Asia, Africa, and India. NatPet’s PP resin plant uses LyondellBasell’s Spheripol technology and provides the joint venture with compounding capacity to enter large volume markets. With an increasing demand for durable goods, automotive, and electronics markets in the Middle East, Africa, and India regions, this new plant will equip the joint venture company to better supply its customers in these regions. The joint venture project also supports the Saudi government’s program in developing downstream projects and adding value to the intermediary petrochemical production in the country.
ASIA PACIFIC
LG Chem withdraws from Kazakh petrochemical project
Korea’s LG Chem has called off its US$4.2 bln petrochemical project in Atyrau, Kazakhstan. LG Chem formed an equally-owned JV with Kazakhstan Petrochemical Industries in 2011 and proposed to build an 840 KTA cracker and an 800 KTA polyethylene facility in the western Kazakh city of Atyrau.
Comments: Raising project costs and a plunge in oil prices have made LG Chem’s investment in the Kazakh polyethylene complex less promising than years before. This divestment is part of LG Chem’s strategy to move away from uncertain business units and focus on more promising and fast-growing businesses, such as energy storage systems, electric vehicles, and water treatment filters. LG Chem also dropped its polysilicon project, which is a key component for manufacturing solar cells, because of sluggish demand. Kazakh counterpart Kazakhstan Petrochemical Industries(KPI) is 51:49 JV between state-owned KazMunaiGas Exploration Production and privately-owned Kazakh company SAT. KPI announced the two-phase Atyrau petrochemical project in 2007 with Sinopec and LG Chem separately involved in Phase I and Phase II, respectively. Despite divestment from both of these two partners, KPI still pushes the project ahead with the government’s goal to improve the productive use of natural gas and add more value to the domestic petrochemical industry. China National Chemical Engineering Co (CNCEC)has replaced Sinopec to deliver phase I with an expected start-up no sooner than 2018. As for phase II, KPI has no backup plan released yet. Phase II is expected to be completed in 2020 time frame. When these polymer facilities finally realize, the polymer products are expected to meet the domestic PE and PP market where they currently rely on imports, mainly from Russia.
India Oil to invest US$5bln for Paradip project
India’s largest refiner India Oil plans to launch three more downstream petrochemical facilities in the Paradip complex with a total investment of more than US$5 billion. These planned plants include a 1,200 KTA purified terephthalic acid (PTA) plant, a 350KTA petcoke-based ethanol unit, and a 700KTA polypropylene unit. Both the PTA and ethanol units are slated to be completed by 2021, while the PP plant is currently under construction with the expected startup by 2017.
Comments: The IOCL Paradip City refinery is the company’s 11th refinery being set up and is the largest public sector refinery in the country. The refinery and petrochemical complex are being set up to attract investments in the state of Odisha’s PCPIR (Petroleum, Chemicals, and Petrochemical Investment Region). Paradip is one among multiple regions selected for PCPIR. Backed by steady petroleum, chemicals, and petrochemical industry growth over the years, the Indian government plans to make PCPIR hubs for both domestic and international markets.
COAL-TO-CHEMICAL
China’s first coal-based LDPE facility in trial production
Chinese Shenhua Yulin Energy has been in a test run of a 300KTA low-density polyethylene (LDPE) facility in Yulin, Shaanxi province, using coal-based ethylene. The company is the country’s coal-to-LDPE maker with vertical integration all the way from coal to ethylene to PE.
Comments: China has been strategically developing the coal-to-chemical industry since 2005 when the 11th Five Plan came into effect. The development is to leverage its abundant coal resource to overcome the national disadvantage of lacking crude oil. With many coal producers participating, the Chinese coal-to-chemical industry mainly focuses on fuels and commodity chemicals. However, the profitability of selling coal-based commodities, such as methanol and ethylene, has been erased by a big plunge in crude price over the past year. The raising environmental concerns focused on pollution caused by coal-to-chemical processes have put the Chinese coal-to-chemical industry in a severe situation. The Chinese government has been working to address these public concerns while encouraging coal-to-chemical producers to further integrate into high-value-added downstream production. Shenhua Yulin Energy has developed its vertically-integrated coal-to-chemical production base in Shanxi since 2005 with support from the provincial government in the hope to leverage abundant coal resources in Shanxi. With this LDPE plant ready to come on-stream, Shenhua Yulin Energy now has two coal-based methanol facilities, a 600 KTA methanol-to-olefin (MTO) unit, a 600 KTA MTO separation unit, a 300 KTA PP plant, and a 300 KTA LDPE plant. It is expected to see more Chinese coal-to-chemical players integrating into downstream production with high-value addition in the future.
BIOBASED
TerraVerdae BioWorks, and PolyFerm team up for biobased polymers
Biomaterial developer TerraVerdae BioWorks has formed a strategic partnership with biobased TPE makers PolyFerm. The alliance will allow TerraVerdae BioWorks to diversify its production and technology portfolio into the fast-growing biodegradable TPE market.
Comments: The synergistic deal between TerraVerdae and PolyFerm gives TerraVerdae the rights to all of PolyFerm’s technology with the opportunity to make decisions about process optimization, scaling, and marketing. TerraVerdae currently does not have the facilities for commercial production of the elastomers but has previously shown its ability to scale bioprocesses with its microspheres for personal care and cosmetic products. PolyFerm’s polyhydroxyalkanoates (PHAs) are currently produced from the digestion and solvent extraction of biomass harvested from microorganisms growing in bioreactors containing sugars and vegetable oil. These VersaMer PHAs are targeting petroleum-based elastomers used in adhesives, plastic additives, inks and toners, paints and coatings, and biomedical applications.