AMERICAS
LyondellBasell ending business relationships in Iran, Sudan, and Syria
LyondellBasell Industries is ending its business relationships in Iran, Sudan, and Syria. The decision is the result of a business review that began more than a year ago and was affected by both an increased number of American executives on LyondellBasell’s management team and by the firm’s upcoming listing on the New York Stock Exchange (NYSE).
Much of the company’s business in the three countries involves licensing technology for polymer production. This decision means it will stop all licensing of its proprietary technology and services to Iranian petrochemical companies, which have depended heavily on technology from European concerns to produce plastics and other high-value products derived from natural gas.
Comments: The U.N. sanctions against Iran were detailed in the UN Security Council Resolution 1929, which was passed on June 9, 2010, with 12 out of 15 votes. The main items included in the sanctions are mostly militarily related such as ballistic missile equipment/parts, nuclear reactor-related materials, etc. However, the scope of the multi-national sanctions (such as U.S. and EU) is broader and they include financial services, economic, energy sectors, technologies, etc. Iran’s petrochemical industry will undoubtedly be hampered by the sanctions at least in the near future but is unlikely to come to a halt as Iran could still source supplies from some countries friendly to the country. The sanctions not only affect polyolefins catalyst technology but also impact some chemical conversion technologies developed and supplied by U.S. and EU nations.
Mexichem given go-ahead for two acquisitions
Mexico’s antitrust authority has given qualified approval of Mexichem SAB de CV’s acquisition of plastic pipe maker Plásticos Rex SA de CV and PVC resins producer Policy SA de CV after an appeal process lasting 15 months.
Approval of Mexichem’s purchase of Policyd SA and Plasticos Rex SA is subject to certain conditions. Mexichem will have to exclude a plastic pipes plant from the deal or sell one of its factories. The company also will not be able to request that the government limit resin imports from foreign producers for 10 years.
Mexichem agreed in April 2008 to buy the units for as much as USD 125 million, but Mexican antitrust authorities previously rejected the acquisition. The company has 30 business days to accept or appeal the agency’s decision.
Comments: Mexichem has been aggressively acquiring a number of companies since 2007. To leverage on increasing demand for PVC in Latin America, Mexichem has acquired several companies including Petroquimica Colombiana (PETCO) in Columbia, one of the region’s largest PVC producers, and Amanco, a Brazilian PVC pipe producer.
Due to the rapid growth of the construction sector in Mexico, the demand for PVC in the pipe industry has been amplified in recent years. The acquisition of Plasticos Rex SA de CV and PVC resin producer Policy SA de CV is synergetic as it will enable Mexichem to increase its market share in the pipe market and participate across the PVC value chain.
Mexico City leaders may modify plastic bag ban
Explaining and applying the Mexican capital’s anti-plastic bag legislation has proven to be difficult, and the law may be modified sooner than the plastics industry anticipated. The city’s environment minister is leaning towards recycling to solve the capital’s excess garbage problems. The ministry is expecting to publish norms for the plastic bags used in Mexico City by end of 2010. Since Aug. 18, all commercial outlets in the city that give away plastic bags that are not biodegradable are liable to heavy financial penalties and jail.
Comments: Mexico, like several regions in the world, has recently implemented regulations to reduce the number of plastic bags that are consumed in the region. The law has been difficult to regulate as the government can only monitor large chain stores such as Walmart. Mexico has numerous flea markets that commonly use plastic bags, which amounts to a sizable volume of the total consumption and this sector can easily escape unnoticed under the regulatory radar.
EUROPE
La Seda de Barcelona to halve PET capacity by divesting non-core plants
Spanish PET producer La Seda de Barcelona SA plans to halve its PET capacity by disposing of non-core polymer and raw material plants in Italy, Portugal, Greece, Turkey, and Spain as part of a radical restructuring plan. The vertically integrated group that saw rapid growth with a series of major European acquisitions has decided to hive off non-strategic operations sells excess land and reduce the overall workforce by another 300 to adjust to the planned reduced PET capacity.
With this, the company will reposition itself as a leading PET solutions company, and focus largely on its PET packaging business. The company has started to negotiate layoffs at its PET and raw material plants at El Prat de Llobregat and Tarragona in Spain. Plans are being considered to close its PET plant at La Roque, Spain unless it gets agreement to a plan resulting in a considerable reduction in labor costs as well as savings in the cost of raw materials and energy to ensure its future viability.
Comments: The demand for PET in packaging is still strong but the abundant supply has made the competition among producers very intense. The Middle East has the advantages of economical feedstock from both natural gas (a source of ethane, which is subsequently cracked to ethylene) and crude oil (a source of ethane and paraxylene for pure terephathalic acid or PTA). The development of high-end products for specialty applications can potentially prove to be the best way to compete under the circumstances.
Polymer-Chemie adds PVC capacity in Russia
Polymer-Chemie has expanded production of PVC compounds at its Russian LLC – Tula Polymer factory.
The new production capacity at the plant, which is located in the Leninsky area of the Tula region, is about 20 KTA of PVC compounds per year.
The company is also planning a significant increase in production capacity at the plant next year when it will also broaden the product range. The bulk of future production will be sold in the Russian market and neighboring countries.
Comments: Russia, in recent months, has shown signs of growth in PVC demand, which slowly seems to be returning to 2008 levels. Russia, like several other countries, experienced a sharp economic slowdown during 2009. The growth in PVC is mainly due to the construction market for applications such as plastic window production. The expansion of Polymer-Chemie’s PVC compound production will help meet demand and benefit from the expected optimistic market conditions over the next few years.
LyondellBasell starts Münchmünster HDPE unit
LyondellBasell (LBI) has started up a new 320 KTA Hostalen HDPE plant at its Münchmünster facility in Germany. The new plant, which uses the company’s Advanced Cascade Process (ACP) technology, joins the wholly owned LyondellBasell ACP HDPE production facilities at Wesseling and Frankfurt in Germany (320 and 110 KTA respectively).
LyondellBasell intends to expand its abilities to supply advanced HDPE grades to the European and Middle East markets.
Comments: Tracing the ownership change over the years, the Münchmünster plant was acquired by Elenac SA from Hoechst, after which it was inherited by Basell before eventually becoming a part of LyondellBasell (LBI).
The original facility at the Munchmunster site, built in 1977, was equipped with the Hoechst slurry process. In December 2005, an explosion severely damaged the then 120 KT HDPE facilities, prompting them to be shut down permanently and rebuilt. The new 320 KTA HDPE plant, which utilizes the more sophisticated Hostalen ACP technology, was originally slated to come on stream in 2008-2009 but was faced with delays owing to the onset of the global economic slowdown.
The latest capacity addition has reinforced LyondellBasell’s position as the leading HDPE producer in Western Europe. With the start-up of this Munchmunster unit, LBI’s overall Western European HDPE capacity has been boosted to about 1,500 KT accounting for roughly about 25% of regional HDPE supply. In West Europe, LyondellBasell has all its HDPE production sites located in Germany. The facilities are located in Wesseling, Frankfurt, and munchmunster, of which Wesseling accounts for about 65% of LyondellBasell’s total West European HDPE capacity.
MIDDLE EAST/AFRICA
Chinese consortium to invest USD 1 billion in petrochemical projects in Iran
ASIA-PACIFIC
Coal-to-olefins plant starts up in China
China Shenhua Coal Liquefaction Chemical Co. Ltd. has started production of polypropylene resin made from coal-generated olefins. The plant is the first in China to manufacture PP from coal and has licensed Unipol® technology.
Shenhua’s 300 KTA plant in the Inner Mongolia Autonomous Region came online in early August.
Comments: With the continual rapid economic development in China, the imbalance between oil supply and demand is expected to become increasingly more pronounced. China, therefore, decided, decades ago, to pursue coal as a substitute for oil and natural gas. The “coal-to-olefin” is a major strategic measure and is also a key component in China’s petrochemical revitalization plan. Companies actively engaged in coal-to-olefin technology include UOP, LURGI, Dalian Institute of Chemical Physics, Tsinghua University, and SNP. Other large coal-to-olefin projects and operations in China include Datang demonstrative plant, Shenhua Baotou Coal Chemical Industry, and Ningxia Coal Industry Group. There are challenges ahead but this 300 KTA PP plant, utilizing propylene monomer made from the coal mined at Shenhua, is indicative of the progress made thus far.
Shell Chemicals completes first turnaround at Nanhai JV with CNOOC
Shell Chemicals has completed its first turnaround at the CSPCL – “Nanhai” petrochemicals JV complex in Guangdong, China.
The turnaround was completed while simultaneously carrying out the debottlenecking of an ethylene cracker and process units. Both were finished ahead of time and within budget. Debottlenecking the ethylene cracker, ethylene oxide/ethylene glycols, and styrene monomer/propylene oxide process units will improve the site’s competitiveness by increasing capacity and reducing unit costs. After the debottlenecking, the annual ethylene capacity went from 800 KTA to 950 KTA, with the total petrochemical production capacity at the plant increasing from 2,300 KTA to 2,700 KTA.
Comments: This is a huge petrochemical complex, which has been in operation for over four years. The tasks in the turnaround and debottlenecking are massive and the results are impressive. The debottlenecking projects included both upstream (e.g. construction of an eighth liquid cracking furnace for light and heavy feedstock) and downstream chemical derivatives (e.g. four out of five derivative plants were debottlenecked by 10% to 30%). In addition to a broad range of planned maintenance activities, more than 1 KTA of pressure vessels were opened for statutory inspections. The project also included significant instrumentation work. The new capacities of petrochemicals and chemicals amount to 3,890 KTA.
DuPont and Sinopec start EVA production in Beijing
DuPont Co. and Sinopec have started production at their joint venture ethylene vinyl acetate production plant in Beijing. The facility will be DuPont’s first EVA production in China, which it said is the world’s fastest-growing EVA market.
EVA products made by the Beijing joint venture will carry DuPont’s Elvax® brand and will be marketed by DuPont. The Beijing facility is designed to provide more local support to customers there entering higher-value applications.
Comments: The EVA market in China has been growing rapidly in the past few years led by a number of applications such as adhesives, membranes for Solar panels, etc. In addition, China already has a very large market for footwear, where EVA is commonly used as foam for insoles. DuPont’s move to set up a plant in China will allow it to capture the growing regional market over the next few years. The demand for EVA in China is close to 450 and is expected to grow by more than 5% for the next 5 years.
Kraton Polymers plans a new Hydrogenated SBS plant in Asia
Kraton Polymers has initiated a project assessment for building a 30 KTA hydrogenated styrenic block copolymer (HSBC) plant in Asia. Strong growth in Kraton’s differentiated grades of HSBC has created the need for additional manufacturing capacity in the region.
Site selection is expected to be complete by December 2010, with final approval in early 2011. Construction would likely begin in the first half of 2012, with start-up occurring as early as the second half of 2013.
Comments: SB Copolymers are thermoplastic elastomers favorable for certain applications like asphalt modification, polymer modification, footwear applications, adhesives and sealants, modified bitumen roofing, consumer products, automotive industrial applications, and wire and cable applications. A few of the advantages offered by SB copolymers include recyclability, low-temperature flexibility, imparts polymer stability, elasticity, improved processability, weather ability, and ease of application.
This plant focuses on the production of SEBS or Hydrogenated SBC (HSBC). SB Copolymer producers such as Kraton Polymers have been increasing their SB Copolymer product prices by 5-10% consistently across all applications due to a shortage of raw materials, namely butadiene, and isoprene. Butadiene shortage is more acute in the regions of North America and China. China, despite being faced with a raw material shortage, is still a production hot spot due to lower manufacturing costs and cheap labor. Therefore, profit margins can be maintained. Japan has an excess capacity for styrene butadiene copolymers and is a net exporter of the material to regions like China and India.
The other benefit of setting-up-shop in Asia arises from the large volumes of regional consumption. Asia as a whole, including the large markets of China, India, Korea, Singapore, and Japan, accounts for nearly half of the global demand for SB Copolymers.
Keyuan Petrochemicals plans new SBS plant in China
Keyuan Petrochemicals has entered into an agreement with the local government of Ningbo that will result in a new styrene-butadiene-styrene (SBS) production facility. The total cost of the land was approximately USD 5.8 million. By acquiring the land, the company will be able to begin the construction of a storage facility, a raw material pre-treatment facility, and an asphalt production facility as the company originally planned.
In addition, in the third quarter of 2010, the company will also begin building a new styrene-butadiene-styrene production facility. Once completed, the new facilities will add 100 KTA of petrochemical storage capacity, a raw materials pre-treatment plant, 300 KTA of asphalt production capacity, and 70 KTA metric tons of SBS production capacity. The SBS facility and the storage capacity expansion will be completed in the second half of 2011 and the raw materials pre-treatment and asphalt production facilities to be completed in the first half of 2012.
Comments: Keyuan Petrochemicals currently has a product slate including benzene-toluene-xylene aromatics, propylene and propylene derivatives, styrene, Liquefied Petroleum Gas, MTBE & other chemicals. China has a current production capacity of 510 KTA of Styrene Butadiene Styrene. The major players in the region include Lee Chang Yung, Sinopec Baling, Sinopec Beijing, Dushanzi Petrochemical, and Maoming Petrochemical.
SBS is the major copolymer used in China amongst the three major types of SB Copolymers i.e. Styrene Butadiene Styrene (SBS), Styrene Isoprene Styrene (SIS), and Styrene Ethylene Butadiene Styrene (SEBS), and accounts for around 90% of the total SBC demand in China. The main application of the SB copolymer is in footwear. Producers in China typically cater mostly to the large converting industry in the country. The remaining market is export-oriented, with target markets mainly including North America and Europe.
Thai Court Lifts Ban on Map Ta Phut Projects
The Central Administrative Court has lifted a previously imposed ban on 74 of the 76 suspended projects at the Map Ta Phut industrial estate in Thailand. The Central Administrative Court had ordered the suspension of the projects in September 2009 for non-compliance with environmental and health regulations, following protest campaigns by residents and environmental groups over alleged pollution from plants at Map Ta Phut.
An ethylene plant operated by TOC Glycol, a subsidiary of PTT Chemical (Bangkok), and a vinyl chloride monomer (VCM) project operated by Thai Plastics and Chemical (Bangkok) had their licenses withdrawn, as they were found to be harmful to the environment. All the other projects received clearance from the court. The projects that were halted were worth about USD 9 billion- USD 10 billion. The Central Administrative Court, earlier this year, had temporarily allowed construction to resume on seven of the projects at the industrial estate, with the remaining suspended.
Comments: In September 2009, to support the country’s growing “green” movement, a Thai Court halted the construction of 76 industrial projects in Thailand’s Rayong Province – the world’s eighth-largest petrochemical hub. The suspended projects totaled about USD 12 billion in investments, and the suspension was to remain in effect until the environmental impact of each of the projects could be assessed in full detail. Over the last few months, several projects have been shown the green light after careful evaluation by the Thai Supreme Administrative court. As suspensions have gradually been lifted on some of the projects, foreign and local investors, having a track record of operating well within international environmental regulations, have welcomed these developments. Several of these investors were getting impatient and were considering moving investments out of Thailand to other Asian countries, in the wake of these unexpected delays. Thailand is also attempting to set up a new environmental-monitoring agency to effectively assess and approve new projects and keep the investments flowing. Overall, Thailand’s chapter on project suspensions is likely to influence and encourage new industrial projects to take measures by refining their existing processes to comply with environmental standards. This will also set an example for the petrochemical-related developments amongst Thailand’s neighbors: Cambodia, Laos, Burma, and Malaysia, who have already expressed concerns over environmental problems (mostly air and water) in their respective regions.
BP sells its Malaysian petrochemical business to Petronas
BP has agreed to sell its interests in ethylene and polyethylene (PE) assets in Malaysia to its partner Petronas. Under the terms of the deal, BP will sell its 15% stake in Ethylene Malaysia Sdn Bhd (EMBS) and its 60% share in Polyethylene Malaysia Sdn Bhd (PEMSB), both of which are operated by Petronas and are located at Kerteh on the east coast of Malaysia. Petronas will pay USD 363 million in cash to BP, inclusive of a balance sheet adjustment of USD 13 million and the repayment of a shareholder loan of USD 53 million. Both partners anticipate completing the transaction by the end of 2010, subject to undisclosed conditions.
Comments: In the past five years, BP has been consolidating its global business (e.g. sale of its petrochemical business to Ineos) and at the same time has focused on the expansion of its petrochemical businesses in China and India. This sale to Petrobras is part of the consolidation plan; the oil spill in the Gulf of Mexico has only accelerated its divesture process.
Tri Polyta delays PP plant expansion
Tri Polyta is delaying the restart of its polypropylene plant from debottlenecking, by three months to April 2011. The debottlenecking program, which began around March 2010, will boost the plant’s PP capacity — across three production lines at Cilegon, Banten in west Java — from 360 KTA to 480 KTA. Tri Polyta obtains its propylene feedstock from domestic sources such as Chandra Asri and imports from Jubail Chevron Phillips in Saudi Arabia. Chandra Asri can make 260 KTA of propylene and channels all its production to Tri Polyta. The companies are affiliates, whose common majority shareholder is Barito Pacific.
Comments: Indonesia, like many other Asian countries, has witnessed increased growth in its economy over the last few years. The demand for PP has been influenced by growth in the packaging industry, as more people have begun to enjoy higher disposable incomes. However, this region has experienced a shortage of PP supply in the recent past, leading to price increases. As a result, the planned capacity increase would fulfill a dual purpose of allowing the region to meet its polypropylene demand for the next few years, as well as help insulate itself from volatility in PP supply/prices.
However, lingering concerns about the global economic recovery and its subsequent ripple effect to curtail polymer consumption, have caused Tri Polyta to push out the plant expansion to April 2011.
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