ADI Chemical Market Resources Newsletter
July 26, 2010

AMERICAS

Dow to test plastic waste as a fuel source

Dow Chemical Co. will run a one-day pilot test to analyze if plastic waste can be used as fuel in its operations. The trial will take place by the end of July at Dow’s headquarters site. Plastics of all shapes, sizes, and resin types will be burned to recover their energy.

Waste used in the test has been provided by Dow employees, customers, and partners. Most of the waste will be composed of polyethylene and polypropylene, and items that already are recycled commonly — such as PET and high-density PE bottles and PE stretch film —won’t be used in the trial.

Dow’s process is expected to use the waste itself directly as a fuel, instead of pyrolysis methods, in which plastic waste is heated and converted into a chemical liquid or fuel, which is then re-used.

Dow researchers will measure the amount of energy created by the plastic waste used in the test to see how much it would reduce Dow’s use of natural gas.

Comments: Dow researchers’ approach is to use plastics as a combustion fuel. All plastics contain C and H and have a certain energy. The major issue in this process, compared to the alternative of pyrolysis is that the other organic elements SP COHN X – all except C, H, and O are not environmentally friendly.

Hence, the process of using waste plastics as fuel is essentially dictated by energy balance. For example, cement kilns; use all types of plastics (including tires for incineration to generate heat. The processes are dictated purely by thermal value recovery only.

See the next comment..,

Natural State Research Inc technology to be used for the plastic-to-fuel plant in California

A pilot plant using plastic-to-fuel technology supplied by Natural State Research Inc. will open in California by the end of 2010.

The pilot plant will be located in Orange County. NSR said that the licensee signed the agreement in August and will pay a $5 million advance fee while paying its construction costs. Royalties from high-octane fuel produced by the process are expected to be between $3 million and $5 million annually. The technology is a thermal cracking process that is different from pyrolysis-type plastic conversion methods being marketed by several firms. The NSR process has lower energy inputs and produces a high-octane liquid fuel that can be used in any internal combustion engine. Every ton is expected to produce about 8-9 barrels of Fuel.

Comments: The pyrolysis processes extend the steps to re-formulate the plastics into useful fuels that can be used for portable energy creation through internal combustion engines.

These processes, pyrolysis, and just controlled oxidation were tried during the 80s, mainly for power generation. Essentially, these are dictated by the fuel price issues and not by the environmental impacts…

Bag ban to take effect in Mexico City

The plastic Industry in Mexico is still waiting for Mexico City lawmakers to obtain some concession from legislation banning plastic bags from all commercial organizations.

In February 2010, the industry was optimistic that it could persuade the legislators to amend the law, passed in March 2009 when the assembly introduced heavy fines for retailers who give away plastic bags after Sept. 1, 2010.

One of the industry’s other worries is that, if the ban and accompanying penalties are adopted in Mexico City, other states will follow suit and that could impact severely to the plastics industry in Mexico

Comments: Mexico City, like many cities in the world, has banned the use of plastic bags. The city banned the use of plastic bags in March 2009 with a one-year grace period during which no fines would be levied for violation. The law has affected all stores, production facilities, and service providers within the Federal District, which encompasses the city limits that has a population of nearly 19 million including surrounding communities.

Mexico City has joined San Francisco, which started the ban in March 2007. China has adopted a strict limit, reducing the use of 40 billion bags. Tanzania carries a maximum six-month jail sentence and a fine of 1.5 million shillings. Mumbai, India, outlawed the bags in 2000, and similar moves in Australia, Italy, South Africa, and Taiwan.

A total ban on the use of plastic bags will affect the Mexican film-converting industry especially if the ban spreads throughout the country. Plastic bags represent nearly 14% of LLDPE consumption. This is a major issue for bag manufacturers, resin producers, consumers, and public organizations that have the responsibility for waste consequences. Like most good things, the producers and consumers have to take life cycle responsibility – resin and bag producers also have to accept some responsibility to solve this all-encompassing issue.

Teknor Apex expands PVC compounding capacity

Teknor Apex Co. is adding a new compounding line in Fountain Inn (South Carolina) and is diversifying the output of a line in Brownsville (Tennessee).

The new line in Fountain Inn will have an annual capacity of 14 KTA and will be operational in August. The line will use high-efficiency mixing technology to produce flexible PVC compounds with improved melt elasticity for profiles, film, sheet, and wire insulation.

In Brownsville, Teknor is converting a flexible PVC compound line into one that can make both rigid and flexible PVC compounds. The resulting swing line will allow Teknor to serve a growing number of customers who buy both materials and want to source them both from a single facility.

Comments: Teknor may be able to significantly increase its customer base by having a product family that can be suitable to many markets and applications. Rigid PVC also known as uPVC (Unplasticized Polyvinyl Chloride) has advantageous properties such as alkali and acid resistance, UV resistance, high level of tensile strength, good vapor barrier properties, and is also suitable as a flame retardant. A disadvantage, which would make flexible PVC a more favorable option for a particular application, is that it can be very brittle. Major applications of rigid PVC include pipe and fittings, construction, blow molding, film and sheet, and others.

Flexible PVC is produced by adding plasticizers such as phthalates to uPVC. The addition of these plasticizers can make the PVC compound toxic. The main difference as mentioned before is that flexible PVC is not as brittle. Applications of flexible PVC include film and sheet, floor coverings, synthetic leather, wire and cable, and others such as clothing and upholstery, and footwear.

Rigid PVC has a significantly larger demand in the markets today. The demand for PVC overall in 2009, was approximately 30,000 KTA. The demand for rigid PVC accounts for approximately 60% of this total consumption while flexible PVC demand accounts for nearly 40%. A few major producers of flexible PVC include (but are not limited to) Formosa Plastics Corporation, Mitsubishi Chemical Corporation, Westlake Chemical Corporation, Polimeri Europa, Ineos, and Arkema.

Styron to set up Headquarter in Philadelphia area

Styron LLC will set up its headquarters and global operations center in the Philadelphia area. Its global operations center will employ 40-50, including executive management, finance, and legal, the company announced on July 21.

The firm will base its North American operation center in Midland, Michigan, where several Styron research labs and a number of Styron factories are located. The company expects to retain about 180 jobs in Midland and has leased office space in the downtown area there to house business management, functional services jobs, and customer service for North America.

Styron President and CEO elected to be Mr. Chris Pappas. The Philadelphia area aids in good travel connections to Styron’s global operations because of the area’s ability to attract and retain top talent.

Styron generates almost 60 percent of its sales from plastics — including PS, ABS, and polycarbonate — with the remainder coming from emulsion polymers such as latex and synthetic rubber. Key end uses for Styron products include appliances, consumer electronics, information technology equipment and packaging.

 Ford to use Sustainable Materials

Ford is close to using polypropylene reinforced with 30 percent sisal fibers for injection molding. The fiber is expected to be 30 percent sisal-fiber, based on reinforced parts, which have already passed Ford crash and head impact test requirements. A center console made using the material weighs 20 percent less than talc-filled PP. Other advantages include a 20 percent lower melt temperature and a 10 percent faster cycle time.

Further work is expected to be in on the sisal material, as there are issues to be solved in terms of odor, color matching with parts made with non-natural fibers, etc.

Comments: The move for Ford Focus to use Sisal fiber incorporated polypropylene for some of their application will reduce the cost and weight of the automotive part. Fibers generally cost less than synthetic polymers and have lower density. The trend to incorporate cellulosic natural fibers into thermoplastic composites has increased in the past years, a push mainly by government regulations to promote the use of renewable and recyclable materials.

Sisal fiber is one of the natural fibers used most in the automotive industry because it is renewable, nonabrasive, and biodegradable. These fibers have high strength and stiffness and have already been used effectively with a thermoplastic resin to make useful structural composite materials.

EUROPE

Ineos sued for €200 million (USD 258 million) by Vinyls Italia buyer

Mr. Fiorenzo Sartor, the Italian businessman who bought the former Ineos Vinyls Italia in early 2009 is suing Ineos for €200 million (USD 258.4 million) for misrepresentation.

Mr. Sartor acquired Ineos Vinyls Italia at the end of March 2009 and renamed it Vinyls Italia (Porto Marghera, Italy). He declared the company insolvent two months later and applied for special administration, which is still ongoing. The company, which makes polyvinyl chloride and vinyl chloride monomer, has produced no material since June 2009 and is expected on the verge of a permanent shutdown.

Sartor has turned to the courts for compensation from Ineos, citing “false and malicious representation of prices for the supply of raw materials” at the time of the acquisition.

Comments: Grown through a series of mergers and acquisitions, Ineos has emerged as the third largest chemical company in the world with annual sales of about USD 50 billion.

Its product portfolio includes petrochemical products, thermoplastic polymers (polyethylene, polypropylene, ABS, PVC, polystyrene, etc.), and some added refining capabilities. The sale of the former Ineos Vinyls Italia was one of the few divestitures resulting from its streamlining efforts.

Borealis creates an automotive business unit

Borealis AG has formed a business unit targeting automotive Tier One and OEM customers in the global automotive industry. The Borealis Mobility business unit will work with Borouge, its joint venture with Abu Dhabi National Oil Co. in the United Arab Emirates, in supplying polyolefin compounds for exterior and interior parts.

The unit is structured into automotive OEM teams with cross-functional managers and marketing managers dedicated to a specific OEM or OEM group. For Tier One suppliers to OEMs working in countries beyond Europe and North and South America, a designated sales and technical contact will coordinate all Borealis’ activities with Borouge.

Comments: The automotive sector is a major consumer of polypropylene, which is used in many applications and various forms. In most cases, it is blended with other materials for improved properties or superior performance. Automotive exterior applications typically include bumpers, exterior trims, front grills, rear hatch bands, cowl grilles, body-side molding, rockers, and wheel flares. Interior applications include door and quarter-panel trim, lower trim, doors, seat shields, pillars, headers, rib cartridges, head impact, and airbags.

The global automotive market has seen signs of growth in 2010 after the recent recession, which witnessed a dip in new car sales in 2009 from 2008 levels. The growth in automotive production is expected to continue for the next few years, led primarily by the BRIC countries.

Borealis’ move to create an automotive business unit will allow it to focus on a market where global growth potential is secure.

Sibur and SolVin begin the construction of a big PVC project in Russia

RusVinyl, an equally owned joint venture between Sibur Holding (Moscow) and SolVin, has begun construction on a previously announced integrated polyvinyl chloride (PVC) manufacturing complex at Kstovo, Nizhny Novgorod region, Russia.

The complex, with an estimated total cost of €800 million (USD 983.4 million), will be Russia’s largest fully integrated PVC plant and is planned to be operational in 2013. It will produce 330 KTA of PVC and 235 KTA of caustic soda. It will be designed for easy expansion to 500 KTA of PVC but that will depend on the possibility to develop sufficient salt deposits in the Nizhny Novgorod region. SolVin, a joint venture in which Solvay holds 75% and BASF 25%, will license its technology to RusVinyl. Technip has been selected as the engineering contractor for the project.

Comments: Russian economic growth has been increasing steadily over the past few years, consequently empowering consumers to increase their spending capacity. The PVC demand in the Russian construction industry has shown signs of healthy growth and by 2013; this industry should represent a sizeable market in terms of consumption volume. Specifically, in the construction sector, PVC profiles for window applications are expected to lead the way for renewed growth, and this trend is expected to continue for some time to come.

MIDDLE-EAST & AFRICA

Tasnee and Sabic JV create a way to utilize Rabigh propylene oxide

Rabigh Refining and Petrochemical Co., a joint venture between Saudi Aramco and Sumitomo Chemical, has signed an agreement with the National Industries Co. (Tasnee) and Saudi Advanced Industries Co. (Sabic) under which Tasnee and Sabic will build a joint venture polyether polyols plant using propylene oxide (PO) feedstock from Petro Rabigh, the recently completed multi-billion dollar complex at Rabigh. Petro Rabigh, the only producer of Polyolefins in the Middle East, has a capacity for 200 KTA of Polyolefins.

Tasnee and Sabic will construct a 120 KTA polyether polyols plant at Rabigh for which Petro Rabigh will provide 100 KTA of PO feedstock. The polyols, used to make polyurethanes, will be further processed into carpets, car accessories, and other downstream products. Carpenter Company (Richmond, VA), a major producer of PU foam and polyester fiber comfort cushioning, is providing its processing technologies.

Comments: Petro Rabigh is a JV of Saudi Aramco and Sumitomo Chemical and one of the planned JVs that made much progress.

Tasnee – Sahara- Sipchem is in the process of developing several downstream value-added products for the propylene and propylene oxide stream. LyondellBasell – a third generation of PO Arco-Lyondell operations has both technology and market experience. Arco-Lyondell had a long-term over-the-fence relationship with Carpenter Chemicals to make polyols and extend to PU foams.

This new agreement helps LyondellBasell to extend its PO technology to Saudi Arabia and provides an opportunity for the Sumitomo-Sabic venture to provide the PO.

These JV discussions have been underway for quite some time but were on a backburner due to Lyondell Basell’s bankruptcy.

ASIA-PACIFIC

 Honam Petrochemical to acquire Titan Chemicals

Japan Polypropylene (JPP) to close outdated PP plants in Kashima, Ichihara

Japan Polypropylene Corp. intends to close two relatively old polypropylene plants in 2011. A 90 KTA plant at Kashima, operational since 1970, will be shut in May 2011. A 79 KTA plant in Ichihara, operational since 1967, will be shut in June 2011.

Japan Polypropylene is owned by 65:35 owned by Japan Polychem and Chisso and currently has 11 PP plants in Japan with a total capacity of 1244 KTA.

Comments: Polypropylene demand in Japan has hit a plateau for a number of years, with limited to no growth year over year.

In the face of the recent global recession, all major corporations have been re-evaluating their strategy to aim for financial improvements. The announced closure of the two PP facilities at Kashima and Ichihara makes sense, given the weak domestic growth and old/technologically obsolete production systems, which have rendered the plants all the more inefficient for polypropylene production.

Mitsui Chemicals opens second Elastomer plant in Singapore

Mitsui Chemicals commemorated the opening of its USD 280 million Elastomer plant on Jurong Island. This facility, which is the second of its type in Singapore, is also the company’s fifth and most advanced facility worldwide.

Mitsui Chemicals has made Singapore its key manufacturing base outside of Japan through investments worth more than USD 1 billion and is considering setting up more high-tech, value-added plants here. With demand picking up, the company is contemplating investment in a sixth elastomers plant in the region, but more clarity on the company’s investment strategy will be available after November this year.

Comments: Mitsui has anticipated the growth of its ethylene range of elastomers (Tafmer®) in Asia, due to the rapid growth in regional automotive and consumer markets. Mitsui’s choice in picking Singapore as a locale for plant expansion is logistically well suited, as Singapore is strategically located to reach important consumer markets in China, India, and Asian Pacific region.

Mitsui’s Tafmer® elastomeric products are typically used as resin modifiers to improve the impact resistance of polypropylene in applications such as automobile bumpers, medical, household appliances, etc.

Sinopec, Marubeni in alliance for energy and petrochemical projects in South America, Africa

Sinopec Corp and Japanese trading company Marubeni Corp have formed an alliance for energy and petrochemical projects in regions like South America and Africa. Sinopec is seeking partners with access to overseas resources and rich experience in international projects, as well as partners with expertise in marketing refinery and chemical products.

Comments: China now relies on crude imports to satisfy about half of its crude oil demand; its dependence on foreign crude will increase to 60% in five years. Currently, China has close to 50 overseas projects for oil and gas development and exploration. In early 2010, Sinopec paid ConocoPhillips USD 4.65 billion for a stake in Syncrude Canada – an oil-sands producer.

To meet China’s steep energy needs, Sinopec is thus relentlessly seeking partners who have access to overseas resources and proven expertise in executing international projects. There has been more competition for resources in the Middle East region; South America and Africa however have been less explored, and thus offer tremendous development potential.

RIL in talks to buy a stake in Quicksilver

Reliance Industries Limited (RIL) is in talks with Texas-based Quicksilver Resources, including for a possible buyout of the US firm that develops shale gas and coal-bed methane. The talks also include buying a part stake or partnering with Quicksilver for one of its major projects called the Horn River Basin assets in British Columbia.

Quicksilver, which is estimated to have sales of USD 900 million this year, currently has two large shale basins with proven reserves of around 2.4 trillion cubic feet.

Comments: Quicksilver Resources is an exploration and production company having assets throughout the United States and Canada. In the United States, the company has operations set up in the Barnett Shale formation of the Fort Worth Basin, the greater Green River Basin, the southern Alberta Bakken Basin, etc. In Canada, exploration is centered on the Western Canadian Sedimentary Basin, and more recently the Horn River Basin in British Columbia.

In the recent past, Reliance Industries has also invested in other ventures in the natural gas industry. On April 9 of this year, RIL signed a joint venture with Atlas Energy for USD 1.7 billion for a stake in a US-based gas field, and in June, Reliance entered a 45 % JV agreement with Pioneer Natural Resources for USD 1.315 billion.

Reliance’s recent aggressive pursuit of joint ventures and acquisitions with firms such as Atlas Energy and Quicksilver Resources has underscored its intent to attain a strong bearing overseas in the energy and natural gas markets.

Vietnam’s Dung Quat Refinery sales first batch of PP

Polypropylene has now become Vietnam’s first petrochemical product to be manufactured from propylene gas in the Dung Quat Oil Refinery. The polypropylene plant rolled out its first product in the Dung Quat Economic Zone in Binh Son district, Quang Ngai province on July 15. Construction of the 150 KTA plant started in December 2007 with a total investment outlay of USD 234 million.

It is planned that its investor (the Vietnam National Oil and Gas Group) will take over the plant from contractors before August 31 this year.

Comments: Vietnam has recently accelerated its petrochemical development. In addition to this polypropylene plant, several other sizable refining and petrochemical complexes are under construction: Dinh Vu Polyester Plant (USD 325 million investment), Southern Refinery Complex (HDPE, LDPE, PP, VCM (a USD 4 billion investment)), No. 3 Refinery (a USD 6 billion investment), and the Nghi & Son Refinery and Petrochemical Complex which would cost USD 6.2 billion.

Philippines Petron acquires 40% stake in Petrochemical Asia

Oil refiner Petron Corp. has acquired, for an undisclosed amount, a 40% stake in Petrochemical Asia (HK) Ltd. (PAHL), with an option to raise its interest to 51%. PAHL is the parent firm of Philippine Polypropylene Inc. (PPI), which operates a polypropylene plant in Bataan.

The nameplate capacity at the PP plant is 160 KTA but could be expanded to 225 KTA. Feedstock will be provided by Petron’s refinery with a capacity to produce 140 KTA of propylene. As a partial owner of the PP plant, Petron will have its share of the incremental value derived from converting propylene into polypropylene.

Comments: Petron Corporation is the Philippines’ largest oil refining and marketing company, providing supplies for over one-third of the nation’s fuel demand.

Traditionally, Petron has focused its efforts on the upstream segment. Petron currently owns and operates a 180,000b/d refinery in Limay (province of Bataan), a lube oil blending plant in Pandacan (district of Manila), and a network of service stations in the Philippines.

In the recent past, however, Petron has sought to re-align its strategy by pursuing expansion in the downstream petrochemicals sector. The company is looking to strengthen its presence in this market to help stabilize company revenues and shield itself from volatility in the oil markets. This is also a bid to improve its domestic competitiveness with Shell and Caltex.

In 2008, Petron launched its ‘Refinery Master Plan’, which was the first phase of its strategic pursuit of diversity in petrochemicals. However, these expansion plans were put on hold due to the economic crisis in 2009, which had a negative impact on its capital expenditure plans.

Emerging from a rough 2009, the latest acquisition is keeping in line with Petron’s strategic roadmap of integrating their petrochemicals business, to prop up their bottom line.

 

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