My Turn – Dr. Balaji B. Singh – The year for Specialty Polyolefins SPO-FlexPO2008, June 25-27, 2008 Houston/Galveston, TX

Comments: The start of the New Year heralds a new race for Specialty and value-added polyolefins.

Chemical Market Resources focused on technology and value-added polyolefins since 1990 and has conducted over 40 multiclient studies on various specialty polyolefins.

We wish you the best year ever and Hope you all have peace and fun – Prosperity will automatically follow.

NOVA Chemicals to increase polyethylene capacity in North America

NOVA Chemicals Corporation announced plans for a series of polyethylene plant modernization and expansion projects in the Sarnia, Ontario, region. The projects will add a total of up to 250 million pounds per year of new polyethylene capacity in stages over the next two years.

The projects include:

Upgrading products, improving reliability, and expanding the low-density polyethylene unit at Mooretown, Ontario Optimizing the high-density polyethylene unit at Mooretown to increase throughput rates and improve product quality Debottlenecking high-density polyethylene and linear low-density polyethylene production at the St. Clair River site at Corunna, Ontario.

The projects are now feasible because the Corunna flexi-cracker modernization completed in 2007 has successfully delivered: greater ethylene capacity, increased energy efficiency, improved plant reliability, and global cost competitiveness. The total cost of the projects will be approximately $80 million, which will not result in a material change in the company’s overall capital program. The projects will require appropriate Board of Directors approvals as they proceed.

Comments: NOVA Chemicals is planning the capital investment to increase the LDPE capacity at its Mooretown site and make modifications/optimization for HDPE and LDPE facility at Mooretown and Corunna. NOVA has a total of 250 KT of HDPE capacity in Sarnia and 230 KT of HDPE capacity at Joffre. The Sarnia site also has 145 KT of LDPE capacity. The operating rates for polyethylene have been increasing in North America as there has not been much investment in capacity. NOVA with its “Alberta Advantage” has a competitive cost position to compete in the North American markets. These upgrades and expansion will help NOVA improve its bottom line and cater to the North American market that is projected to become a net importer in the next few years.

Total Petrochemicals USA forms polyolefins business unit

Total Petrochemicals USA, Inc. (TPI) combined its Polyethylene and Polypropylene Business Units into a new Polyolefins Business Unit effective January 1, 2008.

Bill Campbell, currently TPI’s vice president of Polyethylene, will become TPI’s vice president of Polyolefins. Scott McEwen, currently vice president of Polypropylene, will become executive vice president and joint representative director of Samsung Total Petrochemicals Co. Ltd., effective February 1, 2008. TPI owns and operates a 900 million pound per year high-density polyethylene (HDPE) plant in Bayport, Texas. HDPE is typically sold in pellet form and is a plastic used in everyday items such as milk bottles, detergent containers, grocery sacks, crates, automotive fuel tanks, pipes, crates, totes, garbage bags, panels, and bottles. TPI owns and operates a 2.35 billion pound per year polypropylene facility in La Porte, Texas, which is the world’s largest polypropylene facility. Polypropylene is a plastic used in food packaging, tapes, carpet yarns, absorbent products, small appliances, outdoor furniture, and toys.

Comments: Reorganization, consolidation, and asset optimization are essential for continued success in the chemical industry. As the industry moves from one cycle to another these tools are used to maximize returns. The majority of the chemical producers are using all or one of these tools to prepare for competition from the Middle East. It is projected that the next downturn in the petrochemical cycle will be when all the announced capacity in the Middle East comes on-stream.

This announcement by Total is in-line with the trend in the industry to streamline operations for decreasing costs and increasing profitability. Other tools used by players include focusing on specialty products and differentiated commodities and research in the alternative feedstock to decrease reliance on conventional feedstock such as oil and natural gas.

Sunoco Chemicals to acquire full ownership of Epsilon JV

Sunoco Chemicals announced that it has purchased the 50% stake held by its joint venture partner in Epsilon Products, giving it full ownership of the JV’s 750- million lbs/year polypropylene plant (PP) and related propylene splitter in Marcus Hook, PA.

The sale is part of a resolution of litigation involving Sunoco, Epsilon, and the Epsilon joint-venture partners. Epsilon was formed in 2000 as a jv between Sunoco and BAR-L, an affiliate of Washington Penn Plastics (Washington, PA). Epsilon was unable to repay a $120 million term loan due in September 2006, as well as $31 million of borrowings under a revolving credit facility, according to Sunoco’s regulatory filings. Lenders made a demand on Sunoco, as guarantors of the loans, and Sunoco satisfied its obligations in the third quarter of 2006. Sunoco subsequently made a demand for payment of the outstanding amounts, but Epsilon was unable to make payment.

Comments: Sunoco with the acquisition of Epsilon has a total capacity of 1124 KT in North America. The company has close to 13% of the total North American capacity. The polypropylene market in North America is growing steadily with production running almost at capacity. The main application for polypropylene is in injection molding applications with just over 50% of its total consumption; other applications include film, fiber, blow molding, and other smaller applications.

UAE’s IPIC signs MOU to build a petrochemical complex in Kazakhstan

UAE-based company The International Petroleum Investment Co. (IPIC) has signed a memorandum of understanding with Kazakh state company KazMunaigas to build a petrochemical complex in western Kazakhstan.

IPIC invests in oil-related projects for the government of Abu Dhabi, which controls more than 90 percent of the oil reserves of the United Arab Emirates. The UAE is the world’s fifth-largest oil exporter.

IPIC gave no further details on the cost of the Kazakh project. The UAE company had earlier announced its plans to increase its investment portfolio to $20 billion from $11 billion over the next five years and was eyeing deals in the Caspian. IPIC holds shares in Korea’s Hyundai Oilbank, Spain’s Cepsa, Austria’s OMV, and several other companies overseas.

Comments: KazMunaygas is the state-owned oil and gas company of Kazakhstan. The company recently acquired a 75% stake in Romanian oil company Rompetrol. This decision to develop a petrochemical complex is similar to some of the strategies that oil companies (such as Saudi Aramco, and ONGC) in other countries have been adopting over the last few years.

IPIC was created in 1984 as a 50-50 venture between ADIA and the Abu Dhabi National Oil Co. (ADNOC) to focus on oil-related acquisitions overseas.

ADNOC is one of the ten largest oil companies in the world. The company is engaged in the exploration and production of oil and gas, oil and natural gas processing, chemicals, and petrochemicals, maritime transportation, and refined product distribution. The company has three oil and gas exploration and production companies, three exploration and production services companies, three oil and gas processing companies, two chemicals and petrochemical companies, two maritime transportation companies, and one refined products distribution company.

The primary purpose of this project is to add value to its natural resources through petrochemicals & chemicals.

SABIC enters into an MoU with OSOS Petrochemicals for a PBT joint venture

A Memorandum of Understanding has been signed by and between the Saudi Basic Industries Corporation (SABIC) and OSOS Petrochemicals (currently under formation). Subject to this MoU, SABIC will enter as a partner in the OSOS Petrochemicals project at Yanbu industrial city. According to this agreement, SABIC will complete in no more than 2 months, the exploration and review of all works, studies, and agreements before updating the respective economic feasibility study. A final agreement will then be signed, should the two parties agree on the study.

The total value of this project is estimated at US$ 1 billion. SABIC will hold 35 percent of the joint venture. Products will include the following: Polybutylene terephthalate (PBT), 60 KT; Butanediol (BDO), 50,000 tons; Tetrahydrofuran (THF), 3,500 tons; Malic anhydride acid (MAN), 85,000 tons.

Comments: Polybutylene Terephthalate (PBT) is a crystalline, high molecular weight polymer with an excellent balance of properties and processing characteristics. Because the material crystallizes rapidly, mold cycles are short and molding temperatures can be lower than for many engineering plastics. The advantages of PBT include (1) good dimensional stability, (2) high heat resistance, (3) chemical resistance, and (4) good electricals. In general, PBT materials exhibit higher tensile, flexural, and dielectric strengths and faster, more economical molding characteristics than many thermosets.

The major applications of PBT include: (1) automotive, (2) electrical and electronics, (3) blends & alloys, and others. PBT is used in several automotive applications such as air cleaner/signal lamp/air bag housings, windshield washer switches, snap-together windshield wipers, brake system parts, and window and door hardware. Exterior applications in automotive include cowl vent grills, front-end panels, grill support panels, grille opening reinforcements (GORs) headlamp support panels, fender extensions, and rear/side louvers.

PBT was originally developed and introduced by Celanese in 1970. The material was intended to replace thermosetting materials such as diallyl phthalate (DAP), alkyd, and phenolic resins, which had been used particularly in automotive electrical systems and interconnections. PBT has successfully competed against and replaced these materials in high-performance transportation applications.

Pemex’s Phoenix petrochemical project has been scrapped

Petroleos Mexicanos (Pemex)’s proposed Phoenix petrochemical and plastics project has been called off after a decision by the Mexican government not to provide financial support to the venture. The Phoenix project, to comprise a US$1.9 billion olefins and polyolefins complex based on ethane, and a US$1.2 billion cracker and aromatics complex was scheduled for completion by 2011.

Pemex’s planned 300 KT polyethylene JV with NOVA Chemicals and Mexican firm Idesa was shelved at the beginning of 2007, and only one of the two proposed cracker expansions of the company will proceed. Pemex originally was planning to increase ethylene capacity at both its Morelos and Cangrejera crackers, to 900 KT at each site. Upgrade at only the Morelos cracker will now go ahead with the capacity to increase to 850 KT. The expansion is anticipated to be completed at the start of 2010.

The implementation of the proposed aromatics expansions at Pemex’s Cangrejera and Coatzacoalcos sites has also been delayed. Work on Coatzacoalcos will require US$350 million and is anticipated to add 750 KT of aromatics by the end of 2009.

Comments: PEMEX project – at issue is the governmental financing complicated by National politics and priorities more than the energy/chemical-related issues.

Ecopetrol to acquire Colombian polyolefins producer Propilco

State-owned oil company Ecopetrol (Bogota) has agreed to purchase Propilco (Cartagena), the largest producer of polypropylene (PP) resins in Colombia, for about $690 million. The acquisition is part of Ecopetrol’s five-year, $12.5-billion expansion program.

Until now, Propilco obtained 30% of its raw materials from Ecopetrol’s Colombian refineries at Barrancabermeja and Cartagena. Ecopetrol says it will double capacity at its Cartagena refinery, which will feed petchem production at the site, including Propilco’s PP plant. Propilco has sales of about $600 million/per year.

Comments: Over the last few years, Ecopetrol has been investing capital in its refining and petrochemicals segment mainly towards new business opportunities. The company’s strategy for its refining and petrochemicals segment is to integrate the hydrocarbon transformation process to guarantee the domestic demand and consumption of fuels and petrochemicals in a profitable manner with higher quality standards.

ExxonMobil Chemical completes new compounding facility

ExxonMobil Chemical announced the completion and start-up of a new $20 million compounding facility to supply high-performance polymers to the automotive, appliance, and specialty consumer products industries.

The world-class facility, located at ExxonMobil’s integrated Baton Rouge complex, has an initial annual capacity of 40,000 tons of specialty compounded products. The facility was designed for the flexible and efficient production of high-quality and consistent products. It will manufacture a broad spectrum of products including Exxtral™ thermoplastic olefins and Santoprene™ thermoplastic compounds for interior, exterior, and under-the-hood automotive applications, and other specialty materials for the appliance, packaging, personal care, construction, and electrical end uses.

The facility includes extensive product support and a testing center to manufacture new products more quickly and cost-effectively. This new center is a key addition to ExxonMobil Chemical’s existing network of product support and automotive development centers and will help to promote collaboration between ExxonMobil and its customers.

In 2007, ExxonMobil Chemical announced the formation of a new specialty compounding business to focus on the development, production, and marketing of engineered polyolefin compounds, including a new line of automotive compounds. Products range from soft and flexible compounds to stiff, reinforced composites.

Comments: Exxon historically stayed away from compounding operations, viewing them more as the outlet for the resins rather than business opportunities. AES (Monstanto JV) changed all that. AES originally started as a jv between Exxon and Monsanto allowing Exxon and subsequently ExxonMobil to be a premier specialty TPV producer.

Based on the AES experience, ExxonMobil developed the compounding operations to address the growing need for value capturing.

Capturing the compounding value by the resin producers started in the late 80s first with the acquisition of Dexter by Sovay and Republic Plastics by the then Himont. Both of these organizations have been extremely successful in polyolefins compounding and customizing the resins for end users.

Most other organizations in the U.S. on and off evaluated their options to participate in this market. ExxonMobil finally took the plunge with the Global compounding division.

The startup of ExxonMobil’s compounding facility will allow it to further develop value-added compounds for high-end applications such as automotive. These materials are developed to acquire properties that are targeted for a specific purpose. Once developed, these products will demand premium pricing.

PolyOne restructures its polymer coating systems business

PolyOne Corporation, a leading global provider of specialized polymer materials, services, and solutions, has reorganized its Polymer Coating Systems (PCS) into two business units.

The Wilflex inks and specialty colorants businesses and the BayOne equity investment will be combined into a new operating segment named Specialty Inks and Polymer Systems. Scott Craig, who recently joined PolyOne from Cookson Electronics’ Semiconductor Packaging Materials business, will be the general manager of this new operating segment.

The remaining PCS businesses, plastisols, and coated fabrics will be integrated with the Vinyl Business segment and combined with the Specialty Resins business to form Specialty Resins and Coatings. Dan Kickel, who had served as vice president and general manager of PCS, will become vice president and general manager of this new business unit.

The number of PolyOne’s reportable segments remains at four: Vinyl Business, International Color and Engineered Materials, PolyOne Distribution, and Resin and Intermediates. All Others will now include North American Engineered Materials, North American Color and Additives, Producer Services, and Specialty Inks and Polymer Systems.

Comments: PolyOne Corporation, formed by the merger of plastic companies Geon and MA Hanna, is a global provider of specialized polymer materials and solutions. It produces and markets thermoplastic compounds, polyvinyl chloride (PVC) vinyl resins, polymer formulations, engineered films, color and additive systems, and thermoplastic resins. PolyOne serves its diversified markets, including apparel, construction, wire and cable, automotive, durable goods, packaging, electrical and electronics, medical, and telecommunications, through direct sales personnel, commissioned sales agents, and distributors.

This announcement is in line with the firm’s strategy to maximize shareholder value focusing on product specialization, globalization, operational excellence, and commercial excellence.

NOVA Chemicals’ Chris Pappas appointed President and COO

NOVA Chemicals Corporation announced that Chris Pappas, formerly Senior Vice President and Chief Operating Officer, was appointed President and Chief Operating Officer effective January 1, 2008. Jeffrey M. Lipton will continue as Chief Executive Officer.

“This promotion is a recognition of Chris’ outstanding contributions to the company,” said Jeffrey M. Lipton Chief Executive Officer. “All of us on the Board of Directors are pleased to have someone of Chris’ caliber leading our day-to-day operations.”

Comments: Chris Pappas has played a significant role in shaping Specialty Plastics and Elastomers business at Dow and later on at DuPont Dow Elastomers. Under Chris’ leadership, Dow was able to rapidly commercialize Metallocene Technology in multiple market segments, and that too globally. He was one of the founding members and part of the executive leadership at DuPont Dow Elastomers. His pioneering leadership efforts have led to significant growth in Ethylene Elastomers at Dow and at DuPont Dow Elastomers. Later on, Chris provided leadership to Nova’s Polystyrene business and now we are very pleased to see Chris Pappas getting recognized and elected for the COO role at Nova Chemicals. We are very excited and expect many more contributions from Chris in the years to come to our industry.

DSM acquires American specialty-resins producer Soluol

Royal DSM N.V., the leading Life Sciences and Materials Sciences company from the Netherlands, acquired US-based company Soluol, a developer, producer, and marketer of high-performance urethane resins that are used in a wide range of applications, with annual sales of USD 20 million.

The acquisition of Soluol enhances DSM’s specialty-resins presence in North America and adds new technology as well as a state-of-the-art production facility in Rhode Island. The acquired company will be grouped under the DSM NeoResins+ business unit, part of the DSM Resins business group.

Soluol is a leading supplier of a broad range of both water-based and solvent-based high-performance specialty polyurethane resins. Founded in 1931, their key markets include the paint and coatings sector where their products are used on concrete, metal, wood, and plastic substrates. Additionally, Soluol produces a range of polyurethanes that offer unique bonding properties for use in the adhesives sector and other specialty products used in the conversion of foils, and also in paper, plastics, and blister packaging. Soluol also offers a range of fully formulated ready-to-use polyurethane-based coatings designed to impart a wide variety of functional and tactile properties to fabrics.

Soluol has recently completed the construction of a manufacturing facility located in East Providence, RI where all of its products are now manufactured. All research and support activities are located at this location as well.

Comments: DSM has identified key businesses and is investing in them. DSM Resins is a strategically very important business in DSM’s accelerated transformation into a leading Life Sciences and Materials Sciences company. The acquisition of Soluol underlines DSM’s belief in the strong growth potential of the resins business and reinforces the company’s geographic presence in the US.

 

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