AMERICAS
LyondellBasell Updates
LyondellBasell could emerge from Chapter 11
LyondellBasell Industries (LBI) has reached an agreement that could help it emerge from Chapter 11. LBI’s unsecured creditors swapped sides after being offered an extra USD150 million worth of shares. Unsecured creditors, including bondholders, are estimated to hold around USD 3 billion of debt and had unfalteringly supported Reliance Industries Ltd (RIL) as it contested with LBI management to take control of the company. The unsecured creditors, organized under the ‘Creditors’ Committee’ had alleged that the management and secured creditors had wrongfully brought about a cross-Atlantic merger that was ‘engineered to fail.’ Management won over most secured creditors in December 2009 by promising to convert all of their USD 18 billion debt into company equity.
LBI will now file a third amended plan of reorganization, which will give USD 150 million worth of shares in the post-bankruptcy company to the unsecured creditors. The new agreement increases the amount that will be distributed on the effective date of the Plan to the holders of general unsecured claims from USD 300 million to $US450 million. As part of the new agreement, the Unsecured Creditor’s Committee, substantial holders of senior and bridge debt, and the 2015 Notes Trustee have agreed to support LyondellBasell’s Plan.
Interestingly, the USD 150 million worth of shares to be handed over to the unsecured creditors will be appropriated from the portion allocated to secured lenders. LBInow expects to emerge from bankruptcy protection as none of the material stakeholders are expected to oppose its reorganization plan. Under US laws, the company’s reorganization plan must win the approval of all classes of debtors.
RIL may bid over $14.5 billion for LyondellBasell
Reliance Industries Ltd (RIL), is working on a higher bid for LyondellBasell Industries (LBI) that could include cash and stock options for shareholders and creditors. The enterprise value of the Dutch company is now pegged at a minimum of $14.5 billion, and RIListrying is to tweak its bid to meet new challenges.
This may quell some market speculation that RIL may withdraw from the race for LBI’s assets as it could turn out to be an expensive deal.RIL had previously put in a non-binding bid of around $13.5 billion, but will now have to bid close to $15 billion to stay in the race.
RIL is working on several options and is expected to be ready with a changed plan by the end of February. Apart from a higher financial bid, RIL is also exploring other options, including stock and cash options. The bankruptcy court will hear the present management’s reorganization plan on March 1.
Dow to shut down Freeport TDI plant
Dow Chemical Co will permanently shut down its 100 KTA toluene diisocyanate (TDI) production plant in Freeport, Texas, in the second quarter, since manufacturing TDI at this location was no longer proving to be economically viable. However, Dow Polyurethanes has secured an alternative supply source for TDI-details regarding the new supplier have not yet been disclosed.
Dow’s nearest TDI plant to Freeport is a 60 KTA plant in Camaçari, Brazil. In mid-2008, Dow was considering the expansion of this unit and intended to carry out a study to assess the potential expansion.
Dow’s Freeport TDI plant was closed for nearly a month in October because of equipment breakage, forcing the company to declare force majeure on supplies.
Comments: TDI, or toluene diisocyanate, is a key raw material used to produce flexible polyurethane which is manufactured by reacting the TDI with polyol. Polyurethane foams are commonly used in various applications that include furniture cushions, automotive and airline seats, and other common household applications. In recent years the demand for polyurethane has been declining in North America as a result of lower automotive production, lower consumer spending, and higher imports of products such as furniture. With this market condition, it makes economic sense for Dow Chemical to close its TDI Freeport plant and look for an alternate supply of raw materials.
Chemtura files for new $450 million loan facility
Chemtura Corp. is seeking approval for an amended $450-million debtor-in-possession facility to allow the company to execute its business plan
Chemtura filed a motion on Feb. 4 with the U.S. Bankruptcy Court in New York for the approval of the new DIP agreement, which will refinance the company’s existing $400 million DIP facility, provide improved financing and credit terms, additional financial flexibility, and permit necessary capital expenditures.
Citibank, NA, Bank of North America NA, Barclays Bank plc, Wells Fargo Foothill LLC, and other lenders will be part of the new DIP facility.
The company filed for approval of its original $400 million DIP facility and protection under Chapter 11 in March 2009.
BP, Caterpillar, and ConocoPhillips Leave USCAP
BP, Caterpillar, and ConocoPhillips will not renew their memberships in the U.S. Climate Action Partnership (USCAP; Washington), leaving Shell as the sole oil major left in the group. USCAP, a coalition of environmental groups and companies, supports legislation mandating a cap-and-trade program for limiting U.S. greenhouse gas emissions. Chemical firm members include Dow Chemical and DuPont.
ConocoPhillips intends to redirect its efforts to better protect the interests of domestic refineries and transportation fuels.
Coca-Cola aims to make PET more environmentally sustainable
Coca-Cola Co.’s new PlantBottle seeks to define the future of sustainable packaging for the global beverage manufacturer.
The PlantBottle debuted in late 2009 and is currently available for Dasani-brand water on the U.S. West Coast and in Denmark. Dasani Plant bottles also are being used at the Vancouver Winter Olympics.
The bottle contains up to 30 percent plant content in the form of sugar cane and molasses used to make the mono-ethylene glycol molecule needed to make PET resin.
Like a standard PET bottle, the PlantBottle is 100 percent recyclable; however, the PlantBottleisnot biodegradable.
Coke researchers are currently studying ways to use plant waste in PET production, with the aim to eventually yield a bottle that is 100 percent based on plant waste.
EUROPE
Growth in the EU bioplastics market defies recession
The market for bioplastics is defying the economic downturn as brand owners worldwide continue to invest in the technology.
Coca-Cola has been one of the organizations championing the cause for the use of Bio-plastics. The company has introduced a new PET PlastBottle, which contains 30% plant-based material, in certain countries. Samsung has introduced a mobile phone made partly of biodegradable plastics, Hyundai is using PLA for the interior of its next-generation hybrid car, while Frito-lay is using bioplastics in their SunChips packaging.
Growth in European BioPlastics is expected to continue over the next four years. Total global production capacity currently stands at 568 KTA, a figure that will grow to 964 KTA tonnes in 2011, 1440 KTA in 2012, and 1460 KTA in 2013.
Correspondingly, manufacturers are continuing to invest in plants. Nature Works just doubled its production capacity of PLA and Braskem made big investments for this year’s start-up of bio-based PE.
Clariant Downsizes Swiss Site as Part of Major Capacity Restructuring
Clariant will cease production of textile dyes and chemicals, as well as paper chemicals, at Muttenz, Switzerland as part of a major restructuring of the company’s production capacity over the next three years. The company will also partially close a textile chemicals plant at Resende, Brazil and close a pigments plant at Thane, India. Textile dyes and chemicals production will be transferred from Muttenz to locations in Asia, and paper chemicals production will be transferred from Muttenz to Clariant’s site at Prat.
The measures will result in 1,000-1,100 job cuts, including 400 job cuts at Muttenz, and will be effective in 2011-13. Clariant, meanwhile, aims to transform the Muttenz site into an industrial park and invite other companies to establish production there.
MIDDLE-EAST & AFRICA
Carbon Holdings Selects Univation’s UNIPOL™ PE Process
Carbon Holdings has elected to license Univation Technologies’ UNIPOL™ PE Process for three 450KTA lines representing a total design capacity of 1350KTA. The licensed facility will be located in Ain Sokhna, Egypt.
One 450KTA line will be dedicated to HDPE and use Univation Technologies’ single-reactor PRODIGY™ Bimodal Catalyst. Two 450KTA swing lines will manufacture LLDPE/HDPE and include XCAT™ Metallocene Catalyst technology.
Yansab is to start commercial production on March 1
Yanbu National Petrochemical Co (Yansab) has announced plans to start full commercial production at all its units on March 1, the biggest and first output addition of 2010. Since its inception four years ago, Yansab, 51% owned by Saudi Basic Industries Corp., has spent about 18.9 billion riyals (UA$5.04 billion) in the petrochemical complex, with a total production capacity of about 4000 KTA, including 900 KTA of polyethylene, 400 KTA of polypropylene and 700 KTA of mono ethylene glycol.
ASIAN-PACIFIC
Honam inBig Expansion of Yeosu Petchems Complex
Honam Petrochemical Corp. plans to spend KW530 billion ($456.2 million) to expand its Yeosu, Korea petrochemical complex. The company will hike the capacity of its cracker from750 KTAof ethylene to 1000 KTA and build new polyethylene (PE) and polypropylene (PP) plants at the site. Completion of the projects is scheduled for the beginning of 2013.
The Yeosu cracker is based on Lummus’s technology and, on completion of the expansion, will co-produce about 500 KTA of propylene. Honam currently makes 380 KTA of PE at Yeosu, all high-density polyethylene (HDPE) grades. It also produces 380KTA of PP at the site. The expansion in cracker capacity will allow Honam to build a 250KTAPE unit, probably an HDPE plant, and a 200KTA PP facility.
Honam also owns a petrochemical complex at Daesan where it recently completed a major expansion, raising ethylene capacity by 350 KTA to 1000KTA. The Daesan project also involved the construction of a 390,000-m.t./year ethylene glycol plant, based on Shell Chemicals’ Omega technology, and a near doubling of linear low-density polyethylene capacity at the site to 300KTA. Honam also constructed a 250KTAPP plant, raising the site’s total to 500KTA of PP. On completion of the Yeosu project, Honam’s ethylene capacity will rise to 2000 KTA.
Dow India ExpandsPolyurethane Systems House
ONGC Petro-Additions Selects Ineos’s Polyolefin Processes for Dahej Complex
Ineos Technologies has been selected to provide process technologies for a previously announced multi-billion dollar petrochemical complex planned by ONGC Petro-Additions (Opal) at the Dahej Special Economic Zone of Petroleum, Chemical, and Petrochemical Investment Region (PCPIR) in the Indian state of Gujarat.
Ineos will provide its Innovene PP technology to be used in a 340KTApolypropylene (PP) plant and its Innovene G process, which will be applied in two 360 KTAunits producing linear low-density polyethylene and high-density polyethylene. The PP complex will be designed to produce homopolymers, and random and impact copolymers. Start-up is expected in December 2012.
LyondellBasell was one of the companies competing to supply its process technologies for the complex.
Opal last year awarded a $1.43-billion turnkey contract to a consortium of Samsung Engineering and Linde to build the upstream olefins plant, which will be based on Linde’s proprietary technology. The olefins complex will be designed to produce 1100 KTA of ethylene and 400 KTA of propylene. The plant will also produce 150 KTA of benzene and 115 KTA of butadiene. It will consume naphtha feedstock supplied from ONGC’s refineries at Hazira and Uran, India, and ethane and propane supplied from a liquefied natural gas terminal at Dahej. The total investment cost in the petrochemical complex has been estimated at $3.1 billion.
Comments: The booming Indian economy has leveraged the growth of polyolefins. The PP demand continues to see robust double-digit growth (~10%) driven by automotive, appliance, medical, and packaging applications. Reliance, the 4th largest PP producer in the world, supplies roughly 75% of the domestic market, which is strongly skewed towards commodity homopolymer grades –with almost one-third of consumption in raffia grades for cement and food packaging. Ineos gas phase PP process is well known for commodity grades and also offers flexibility to produce ICP for auto/appliance segments and RCP for other specialty segments. The cost position is more critical than product differentiation in the Indian market mainly for two reasons: (1) the downstream converting industry is highly fragmented with weaker economies of scale and hence is very cost sensitive and (2) With recent capacity additions by Reliance and debottlenecking by Haldia –producers have to rely on export markets for nearly 40 percent of the domestic production. Innovene PP process will offer OPAL significant advantages and help them compete effectively. Although the start-up is proposed for 2012, it is expected to be delayed into 2013 when the market is forecast to be less exposed to exports.
Unlike PP, the growth in polyethylene capacity is purely driven by domestic consumption. India is currently (in 2009) a net importer of HDPE & LLDPE (roughly 350 KTA –i.e. 18% of domestic consumption) and additional capacity can be easily absorbed. In the next five years, the domestic consumption of LL/HDPE is expected to grow at nearly 11% AAGR. The market is mainly oriented towards commodity grades and gas phase processes will offer the best economics. The Innovene G HDPE line will most likely be based on chrome catalysts –given that the blow molding application is one of the fastest-growing markets. The majority of the requirements in this application segment are currently being imported.
Solvay to open three new R&D centers in Asia
Solvay is investing approximately €10m in three new research, development, and technology centers in India, South Korea, and China to help boost Solvay’s presence in Asia.
The Indian center, based in the Gujarat region, will focus on high-performance polymers, organic chemistry, nanocomposites, biotechnology, and green chemistry. The center in Korea will be driven by growth in markets such as electronics, lithium-ion batteries, and photovoltaic cells. In addition, the Shanghai, China-based center will tailor Solvay technologies to the Chinese market. The new centers will be fully operational at the end of 2011.
Solvay intends to complement this growth with further investments in its regional operating headquarters in Thailand.
Formosa invested NT$650 billion in 2010 in three major petrochemical projects
Taiwan’s Formosa Plastics Group plans to invest NT650 billion in three major petrochemical and steel projects at home as well as overseas in 2010.
These include The fifth-phase expansion of its naphtha cracking complex at Maoliao Offshore Industrial Zone in Yunlin County at an investment of NT$280 billion, a major steel refinery in Vietnam at NT$280 billion, and a stainless steel plant in Xiamen, China, at NT$90 billion.
However, uncertainty shrouds the groundbreaking of the fifth-phase expansion of the Mailiao naphtha-cracking complex, since its environmental impact statement is still undergoing review by Environmental Protection Administration.
Chandra Asri, Dow, Pertamina, Polytama, Try Polyta to invest USD 1.12 billion in Indonesia
Chandra Asri, Dow Chemicals, Pertamina, Polytama, and Try Polyta plan to invest a total of USD 1.12 billion in 2010 in Indonesia. The projects planned by the five Indonesian petrochemical companies are expected to reduce a deficit in the supply of petrochemical products.
Chandra Asri, the country’s largest producer of petrochemicals plans two projects -Indonesia’s first butadiene unit at an investment of USD 100 million and a BTX extraction plant at USD 70 million. Dow Chemicals plans to invest USD 500 million in a petrochemical project. State oil and gas company PT Pertamina plans an investment of USD 200 million in a polyethylene project in Balongan, West Java
IRPC to shift focus from commodities to specialty plastics
In a bid to gain from higher profit margins, IRPC Plc plans to change its focus from commodities to specialty plastic. This step is part of IRPC’s strategic initiative to move closer to a leading position in petrochemicals in Asia by 2014.
About two years ago, IRPC hauled its entire production line to produce just petrochemical products and sought to improve margins by focusing on niche markets served by high-value specialty or engineering plastics.
Comments: IRPC’s move to develop higher-end products will place it in a better position to compete on a global scale. Several petrochemical companies have started to focus on specialty products that would serve the developed regions and take advantage of the growing Asian markets. IRPC’s current portfolio includes HDPE, PP, PS, EPS, ABS, and others.
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