AMERICAS
Nova selling its stake in Ineos Nova joint venture
Nova Chemical Corporation has sold its 50 percent stake in the Ineos-Nova polystyrene joint venture to its partner Ineos Group for an undisclosed price. Nova confirmed the sale on November 12 in its third-quarter earnings report. Nova and Ineos already had a similar JV in Europe when they expanded it to include North America in early 2007. Ineos now ranks as North America’s largest PS maker.
Nova, a fully owned subsidiary of the IPIC family, is a major North American polyethylene maker — expects the sale to close in the first quarter of 2011. Nova does not expect to record a material gain or loss related to the transaction.
Comments: The polystyrene business has been suffering for some time with the raw material pricing increases and competition from other materials gaining market share. With Nova selling its PS business the company will be able to concentrate on its polyethylene business which has been showing good growth and is expected to continue for the next few years. Nova Chemical Company is a major player in the PE business in North America.
LyondellBasell pays down loan; buys back debt
LyondellBasell will repay a USD 500 million term loan and buy back about USD 277 million worth of outstanding debt. The debt carries an 8% interest rate and is due in 2017, and the buyback covers about 10% of the outstanding bonds. The term loan has an adjustable interest rate. Both moves are expected to occur before the end of this year.
Comments: LyondellBasell (LBI) has undergone a series of major transformations since its formation in December 2007. It filed Chapter 11 bankruptcy in January 2009, hired a new CEO in mid-2009, received approval of its reorganization plan from the government, and eventually emerged out of bankruptcy in April 2010 after resisting takeover bids from Reliance Industries.
LBI then went on to show good financial performance in Q3 2010. It continues to strive for business “normalcy” by repaying its bank loan and buying back the debt. Meanwhile, the company continues trimming down its workforce and streamlining its operations.
Reynolds acquires Pactiv
Pactiv stockholders voted to approve the acquisition of Pactiv by Reynolds Group Holdings. Pursuant to the agreement, a subsidiary of Reynolds will merge with and into Pactiv and Pactiv will become an indirect wholly owned subsidiary of Reynolds. Subject to the satisfaction or waiver of the remaining closing conditions, Pactiv expects the transaction to close on or about November 16, 2010.
Comments: Reynolds’ acquisition of Pactiv will broaden its product portfolio and improve its market share globally. Both companies are major players in packaging for food and beverage applications. Reynolds, based in Auckland, New Zealand is a wholly owned subsidiary of Rank Group Limited, which is owned by Graeme Hart.
Indorama acquires two PET plants from Invista
Indorama Ventures has agreed to acquire Invista’s polyethylene terephthalate and resin manufacturing plants at Spartanburg, SC, and Querétaro, Mexico for USD 420 million less certain assumed liabilities. The purchase price includes USD 229 million for the net fixed assets and equity interests, and USD 174 million for the net working capital of the business. All associated staff will be included in the acquisition, including administrative workers at Charlotte, NC, and Santa Fe, NM. The deal is expected to close in the first quarter of 2011. The deal does not include Invista’s Wilmington, NC polymer and resins facility, nor its related assets in Germany. Invista will retain certain intellectual property related to its polymer and resin business.
Comments: Indorama, now the largest PET producer in the world, has been actively building on expanding its platform globally. These recent two acquisitions in North America are expected to form a synergistic fit with Indorama‘s incumbent PET operations in Asia, Europe, the Middle East, and the Americas.
EUROPE
Gazprom offshoots plan polyolefins joint venture
Two offshoot companies of Russia’s oil and gas major Gazprom are expected to be planning a longer-term polyolefins joint venture in the country’s semi-autonomous Bashkortostan Republic.
In the 50:50 venture, Petrochemicals Salavatnefteorgsintez and Sibur Holding are to launch a 700 KTA pyrolysis unit to produce the monomers for polyethylene and polypropylene in the city of Salavat. The complex will also turn out ethylene oxide and mono-ethylene glycol oxide. The scheme, to be based on the existing Salavatnefteorgsintez petrochemicals site, is not scheduled to be completed until 2016.
Comments: As Russia continues to improve its economy, the polyolefin demand continues to grow. The current growth for polyolefin in Russia is over 6%. This has prompted the installation of new capacities in Russia. This new JV will leverage this sustained growth and would aid the local polyolefins producers by enabling them to secure the raw material supply.
Bulgaria plans to impose eco-tax on plastic bags
Bulgaria is the latest country to take a stand against the proliferation of retail packaging waste with a plan to impose an eco-tax on plastic bags. The country’s environment ministry is drawing up legislation to make carrier bags more expensive in order to restrict their use and gradually eliminate them from the market.
Environment minister Nona Karadzhova has finally reached an agreement on the move with the Bulgarian Polymers Association (BAP) and several large retail chain stores. Initially, the BAP and suppliers opposed the measure, claiming it would encourage the import of plastic bags.
Comments: Bulgaria, like many countries in the world, has started to look at ways to curb waste and take measures to reduce the usage of plastic carrier bags. Governments in different countries have taken a variety of measures, from charging for each bag to outright ban of plastic bags.
Cepsa to acquire PET plant from La Seda
La Seda de Barcelona has agreed to sell its polyethylene terephthalate plant at San Roque, Spain to Cepsa Química for an undisclosed amount. The deal is expected to close within the next few weeks.
The San Roque plant has a capacity for 175 KTA of PET and was off-stream several times this year due to poor demand. The plant is expected to be operational again in early 2011.
The deal marks Cepsa Química’s entry into the PET market. The company operates a purified terephthalic acid plant at San Roque that supplies feedstock to the PET unit. Selling the San Roque PET plant forms part of a major restructuring by La Seda that was announced in 2009. The company divested an ethylene oxide-ethylene glycol business in Tarragona, Spain in mid-2010 as part of the program. La Seda has one other PET unit in Spain: a 255 KTA at El Prat de Llobregat.
Comments: PET is one of the major volume thermoplastics with key applications in textiles, bottles, and films. The supply/demand off-balance, the costs of raw materials, and the down-gauging and recycling of PET bottles have made the PET industry extremely competitive. Mergers and acquisitions in PET have been rather active in the past few years and this is likely to continue.
Bioplastics firms settle the seven-year patent fight
Novamont and BIOP Biopolymer Technologies have reached a settlement agreement in a seven-year patent dispute. The dispute dates back to 2003 when Novamont sued BIOP alleging that the German firm’s Biopar biopolymer manufacturing process infringed three of its European patents. BIOP responded by filing nullity claims and last year obtained a ruling of invalidity from the Munich patent court on one of the patents involved – EP0327505.
The agreement between the two companies does not restrict BIOP from marketing its Biopar production technologies. Earlier this year Novamont suffered a patent setback in the French court when its claim of infringement against French films group Sphere and German bioplastics producer Biotec was not upheld. Novamont’s claim against the two companies went back to 2007 and alleged infringement of three patents relating to the production of polymer compositions containing thermoplastic starches – EP0327505 (also involved in the BIOP case), EP0937120, and EP0947559.
Comments: Both companies are marketing biodegradable and compostable bioplastics technologies. The bioplastics are reported to be starch-based. The starch is “complexed” with other synthetic materials in a proprietary process to generate polymeric material having performance properties similar to conventional fossil-based plastics such as HDPE.
The bioplastic materials can be made in films, injection molding, blow molding, and thermoforming applications. Novamont’s products have the brand name Mater-Bi® while BIOP Polymer Technologies carries the brand name BIOPAR®. BIOP is actively licensing the BIOPAR technology which is described as a “Bicontinuous phase process technology”. It is a single-step reactive extrusion technology with the use of its proprietary VT40 catalyst.
SKC Ltd. completes construction of polyurethane plant in Poland
South Korea’s SK Chemicals Ltd. (SKC), has completed a polyurethane plant in a special economic zone in southwestern Poland. This is SKC’s third overseas polyurethane plant. Earlier this year, in May, SKC completed its polyurethane plant in Georgia, the United States. The plant, completed after seven months of construction, is to produce 20 KTA of polyurethane, mainly for South Korean manufacturers of automotive parts and European and Russian home appliance makers. SKC plans to build three additional polyurethane plants in 2013 in India and Southeast Asia to increase its production capacity of polyurethane to 100 KTA.
Comments: SKC has been aggressively expanding its polyurethane manufacturing capabilities. In June 2010, SKC started operating its Polyurethane systems plant in Georgia, USA to cater to home appliances and the automobile industry. The new plant is part of an expansion campaign by SKC called “Double SKC”. In recent years, there has been an increased growth of polyurethane in Eastern Europe driven by growth in markets such as footwear, furniture, automotive, and increased construction market. Polyurethane demand is growing at close to 5% prompting the need for new capacity to sustain growth in these industries. SKC’s decision to set up a system house will facilitate growth and provide technical services to local consumers. Along with the PU facility in Poland, the Company is also planning to build three additional PU plants. The location of these plants is expected to be in India and South East Asia. The cumulative capacity is expected to be more than 100 KTA.
Systems houses play a major role in higher value-added flexible/rigid polyurethane foams. The systems houses essentially supply the premixed major components for foaming in specific applications including polyol, isocyanate, catalyst, and reaction systems to the end-use suppliers for foam-in-place applications. Polyurethane is used for building insulation while lightweight polyurethane components are used to reduce weight in automotive manufacturing. In other applications, PU is also used for manufacturing high-quality mattresses and furniture upholstery.
Total to construct photovoltaic panel unit in France
Total has announced the construction of a photovoltaic panel production and assembly unit at Composite Park in France’s north-eastern region of Moselle. With a surface area of 2,800 square meters, the plant will house two production lines for a total capacity of 50-megawatt peak (MWp) representing about 220,000 photovoltaic panels per year. Construction is scheduled to begin in early 2011 and the first line (25 MWp) is expected to come on stream towards the end of the year. Total is present in Moselle through its petrochemicals (Total Petrochemicals France) and specialty chemicals (Cray Valley) activities at the Carling-Saint-Avold industrial platform.
Comments: Since 1983, Total has been participating in solar energy ventures through its interests in two companies, Photovoltaic and Tenesol. Photovoltech, in which Total holds 50% interest with GDF SUEZ, produces photovoltaic cells based on crystalline silicon technology. Tenesol (Total owns a 50% stake with EDF claiming the remainder) specializes in designing, manufacturing, marketing, and operating solar photovoltaic energy systems. In recent years, Total has been looking to strengthen its solar cell business as demand for renewable energy is surging in line with the recovery of the global economy fuelled by increased awareness of environmental issues.
The construction of this plant will help Total expand its solar panel portfolio by achieving complete integration into solar markets. Fully integration, along with a location close to major European markets – France, Germany, and other European region will significantly improve the company’s competitiveness in this market.
MIDDLE EAST/AFRICA
Qatar inaugurates 700 KTA polyethylene and olefins plant at Masaeed industrial city
Qatar has inaugurated Q-Chem II – a petrochemicals plant with a production capacity of about 700 KTA of polyethylene and olefins at Masaeed industrial city. The plant has been built at an investment outlay of USD 1.3 billion. The Q-Chem II plant is expected to add more than 75% to the output capacity of Qatar Chemical Co; a joint venture between Qatar Petroleum Corp (51%) and Chevron Phillips Chemical Co. (49%).
Qatar holds the world’s third-largest natural gas reserves, estimated at more than 25 trillion cubic meters, after Russia and Iran
Comments: Due to the abundant supply of natural gas from which ethane is obtained and subsequently cracked to ethylene, Qatar has been continuously building olefins and polyethylene in the past few years. However, it seems Qatar is only focusing on polyethylene and not interested in pursuing the equivalently important ethylene oxide route which leads to important chemicals such as ethylene glycol, which is a major coolant/antifreeze material and key component of polyethylene terephthalate (for textile, bottles, and film applications). Qatar chooses to import them from neighboring Saudi Arabia and Kuwait. Qatar’s GDP (purchase power parity) per capita is ranked number two in the world.
ASIA-PACIFIC
Bayer invests in five new China operations
Honam to foray into PET film business
Formosa Plastics Group plans to invest over USD 2 billion in China
Formosa Plastics Group plans to invest USD 2.3 billion to expand its complex in China. The petrochemical project in the coastal city of Ningbo has passed the Chinese government’s environmental impact evaluation. Approval from mainland authorities is likely before the year’s end. The project is expected to start construction in 2011 and is expected to be completed in three years. The project, which still needs approval from the Taiwanese government, is part of FPG’s overseas investment plans totaling up to NT$340 billion (USD 11.2 billion) in three years, including expansion of its ethylene and propylene operations in the US, and the construction of a steel mill in Vietnam for USD 7.8 billion.
Comments: The Formosa Plastics Groups’ (FPG) Ningbo petrochemical complex started a few years ago. This second phase expansion covers FPG’s three subsidiaries: Formosa Plastics Corporation (PVC, EVA, acrylic ester, superabsorbent polymer), Nan-Ya Plastics (dioctylphthalate or DOP, bishenol A), and Formosa Chemical and Fiber Corporation (polystyrene, ABS, and purified terephthalic acid). This USD 2.3 billion project, if approved by governments in China and Taiwan soon, will start construction in 2011 and be completed in 2014.
Reliance to invest USD 10 billion on projects in India
Reliance Industries will invest about USD 10 billion on several projects in India over the next 3-4 years. The projects, which are all in their initial stages of planning, include an acetyl complex with a production capacity of 740 KTA of acetic acid and 150 KTA of acetic anhydride; a carbon black facility with a production capacity of 800 KTA; facilities producing 250 KTA of linear alkyl benzene (LAB) and 400 KTA of nonylphenol (NP).
The projects also include a previously announced butyl rubber unit with a capacity of 100 KTA at Jamnagar; a previously announced polybutadiene rubber (PBR) plant at Vadodara with a capacity of 40 KTA; a previously announced styrene butadiene rubber (SBR) plant at Hazira with a capacity of 75 KTA. Reliance will also increase the production capacity of para-xylene by 1,500 KTA, and of benzene by 300 KTA at Jamnagar.
Comments: Reliance has been aggressively expanding its portfolio through mergers and acquisitions both globally and locally. Reliance, through its impeccable record, has established shareholder confidence with its ability to raise capital and expand projects – and succeed. Through these projects, Reliance intends to expand its market share in acetic acid, LAB, and more importantly in the elastomers sector.
India’s automotive industry is currently growing at over 9% with the production of over 2.6 million units in 2009. With the current growth and production rate, the country will continuously require raw materials to sustain this growth. Tire treads are commonly made from polybutadiene rubber and SBR is used in various automotive applications.
Additionally, India has recently seen increased growth in Styrene Butadiene Rubber (SBR) mainly due to the growth in the automotive industry. In India, SBR has over 80% of its use in the tire market and the rest is used in applications such as conveyors and fan belts. India imports its entire SBR requirement as it does not have any SBR production capacity; about 120 KTA to 130 KTA of SBR is imported into India. The demand for SBR is expected to grow for about 10%/year and the consumption of SBR in India is expected to grow rapidly. This expansion will further improve supply security in the country depending on imports for its elastomer requirements.
Indian Oil to invest almost USD 17.7 billion in the petrochemicals business
Indian Oil Corp. plans to invest about INR 700 billion – INR 800 billion (USD 15.5 billion- USD 17.7 billion) in its petrochemicals business by 2022. The company also aims to substantially increase the share of the petrochemicals business’ revenues in the total revenues of the company by 2022.
The petrochemicals business of IOC, which had revenues of nearly INR 38 billion (USD 0.8 billion) in the fiscal year ended March 31, 2010, accounted for only 1.6% – 1.7% of the total revenues of IOC. The company expects that by the end of the current fiscal year, the revenues from the petrochemicals business will rise to INR 90 billion (USD 2 billion) and account for about 4% of the total revenues of IOC, mainly due to the naphtha cracker at Panipat, that became operational earlier this year. And by 2022, revenues from the petrochemicals business are expected to account for 15% of the total revenues of the company.
One of the projects being planned is the second phase of the cracker complex at Paradip, India, and it will be a joint venture with a global major. The study for the mixed-feed cracker will begin in 2012, and the cracker will come online in 2016-2017. The potential partner for the project is currently being evaluated.
Comments: IOC remains the largest refiner and oil products marketer in the public sector in India. The company is undertaking expansions at two of its refineries, Haldia in West Bengal and Panipat in Haryana, which will boost total capacity by 4.5 MMT/year by the end of this year. These expansions will allow the company to become the largest refiner in India again with a total capacity of 1.29 million barrels/ day after it was overtaken by Reliance (1.24 million barrels/day) after the Jamnagar refinery startup. As the company expands its capacity, the petrochemical business of the company contributes more towards its overall revenue. In addition, The Indian petrochemicals industry has seen a growth of about 14%/year-15%/year during the last five years and is expected to stay for the next five years.
The rapidly growing demand for plastics in India is the justification for adding petrochemical capacity. A new wave of capacity was announced by all the majors in the past few years, some of which have come on stream or are expected to come on stream by 2012-13. The economic recession and the slowing demand worldwide have raised questions on the viability of capacity additions in a country with no obvious feedstock advantage and/or a weak and highly fragmented downstream converting industry. The domestic converters consume only a portion of the resin produced in India while the remaining is exported to other Asian countries, which later comes back to India as converted goods. Thus, the development and consolidation of the converting Industry will play a major role in effectively translating the explosive economic growth in India to the demand at the resin level.
India imposes anti-dumping duty on PP imports from Oman, Saudi Arabia, and Singapore for 5 years
India has decided on imposing anti-dumping duties on polypropylene imports from Saudi Arabia, Oman, and Singapore. A notification by India’s Ministry of Finance, and Department of Revenue has stated that the duty tariff will be levied for five years from the start of the provisional anti-dumping duty imposed by the government on 30 July 2009. ExxonMobil Chemical Asia Pacific, Saudi Yanbu Petrochemical Company, and Saudi Polyolefins Company are the companies affected by the duties. The duties are lower than the provisional tariffs announced last July.
Comments: India’s polypropylene needs are currently estimated at 1,500 KTA, only a fraction of which is currently met by the Persian Gulf-based producers. Last year, India (along with China) imposed tariffs on polypropylene imported from Saudi Arabia and Oman. The tariff was imposed by the Indian government claiming PP producers from these two regions dumped unfairly subsidized, cut-price products in the Indian market. The duties were eventually lifted in January 2010. The EU, China, and India have raised tariffs on petrochemicals imports, in some cases by as much as 400 per cent as a protectionist measure to support their domestic industries. The Gulf Cooperation Council (GCC) nations export 50 percent of their output to Asia and 10 percent to Europe. The petrochemical industries based in the Gulf exported more than 20, 000 KT of their products in 2009.
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