My Turn – Dr. Balaji B. Singh – Have a Merry Christmas
Comments: The coming year, 2008 will be different than any in the past. Everyone including the organizations, people, and government – are bracing themselves for “CHANGE”. The fear of the Unknown will dominate all our discussions in 2008.
Excitement and growth are omnipresent for organizations willing to explore and adapt. May your 2008 be more successful than any other in the past.
Dow Chemical forms JV with Kuwait Petroleum subsidiary, PIC
The Dow Chemical Company (Dow) and Petrochemical Industries Company (PIC) of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corporation (KPC), announced plans to form a 50/50 joint venture that will be a market-leading, global petrochemicals company.
The joint venture, to be headquartered in the United States, will manufacture and market polyethylene, ethylene amines, ethanolamines, polypropylene, and polycarbonate. The JV is expected to have revenues of more than $11 billion (pro forma) and employ more than 5,000 people worldwide.
The new venture will build upon PIC’s feedstock position and commitment to global petrochemicals growth, KPC’s position as one of the world’s top-10 energy/hydrocarbons companies, and Dow’s technology and market leadership – including its number one position in polyethylene, ethylene amines, and ethanolamines. Dow will also maintain its world-class security, environment, health, and safety standards in the new venture. Customers, in turn, will benefit from an even stronger supplier having feedstock integration, a global supply chain, advanced technologies, resources to grow with customer demand, and an ongoing commitment to the future of the petrochemical industry.
To form the new company, Dow will sell to PIC a 50 percent interest in the business assets included in the transaction. In turn, both PIC and Dow will place their share of the assets into the joint venture, with each party taking a 50 percent equity interest in the new company. The value of the five Dow global businesses that will form the joint venture is approximately $19 billion. Dow will receive approximately $9.5 billion (pre-tax) from PIC for the 50 percent interest.
Polyethylene (PE) and polypropylene (PP) comprise more than half of the world’s polymer demand. PE is the most widely used of all plastics and can be found in everyday products from food packaging, milk jugs, and plastic containers to pipes and liners. PP is a versatile plastic used in fibers, packaging films, non-wovens, durable goods, automotive parts, and consumer applications. Polycarbonate is an engineering thermoplastic used in applications such as optical media, electrical, and lighting. Amines are a family of chemicals with a broad range of properties, used in various applications from wood treating and pharmaceutical processing, to coatings and consumer products.
Comments: Dow Chemical has been implementing its strategy to retain synergies of integration and diversification. The company’s overall goal is to:
(1) Expand global footprint
(2) Strengthen market-facing Performance businesses (3) Shift to a joint venture Basics model
(4) Accelerate technology and innovation
(5) Drive financial discipline and maintain operational excellence. Dow Chemical has been investing in regions such as China, India, and Eastern Europe to increase its global presence. Its non-US sales have increased from 55% to 65% since 1995.
The joint venture formation is part of implementing its overall strategy. This will also reduce cyclicality from earnings. The next steps from Dow could be one large acquisition or a series of small ones to utilize the cash received from this transaction.
For more information on the joint venture please read our upcoming analysis on the Dow-PIC joint venture.
Basell joins NGC, NEC, and Lurgi to construct an integrated polypropylene complex in Trinidad and Tobago
Basell, the National Gas Company of Trinidad and Tobago, Ltd. (NGC), and the National Energy Corporation of Trinidad and Tobago, Ltd. (NEC) announced today that they have entered into a Memorandum of Understanding (MOU) confirming their intention to construct and operate a fully integrated polypropylene complex in Trinidad and Tobago.
The MOU includes the construction of a methanol plant, which will exclusively supply a methanol-to-propylene unit at the complex. The propylene produced at the complex will be the feedstock for a world-scale 450 KT per year polypropylene plant based on Basell’s Spherizone technology. Start up is tentatively scheduled for 2012. The whole project will be undertaken in conjunction with Lurgi AG, the industry leader in methanol and methanol-to-propylene (MTP) technology. The polypropylene complex is one of the cornerstones of the country’s strategy to promote downstream diversification and to build the foundation for a value-adding local plastics industry.
The National Gas Company of Trinidad and Tobago (NGC) was founded in 1975 and plays a key role in the development of the natural gas-based energy sector through its core responsibility, that is the purchase, transmission, sale, and distribution of natural gas in Trinidad and Tobago. The National Energy Corporation (NEC) is a fully autonomous entity within the NGC Group with the mandate to promote new gas-based and associated downstream energy industries and the development and management of industrial estates, ports, and marine facilities for the gas-based energy sector.
Comments: There has been a large build-up of methanol capacity in regions with access to stranded gas or coal. It was anticipated that some of this methanol will be used in a methanol-to-olefins plant. Trinidad seems to be a good choice for building a polypropylene plant as it can serve both North America and Latin America.
North America is witnessing very high capacity utilization rates due to a lack of new capacity and demand growth. The region is anticipated to become a net importer in the next few years. Latin America has been exhibiting robust growth and the region is a net imported of polypropylene. Therefore this facility will be ideal for polypropylene supply.
Basell will be able to avoid some of the raw material price fluctuations as the propylene will be sourced from the less volatile methanol. Methanol in Trinidad & Tobago must be based on stranded gas that usually sells at a fixed price. This will bring a second Spherizone plant to this region – the first being the plant in Mexico.
National Gas Company of Trinidad and Tobago, Ltd. (NCG) is wholly owned by the Government of the Republic of Trinidad and Tobago. NCG was established in 1975 and is a diversified natural gas company. The core business of NCG is the purchase, transport, and sale of natural gas to the local downstream natural gas-based industries (excluding the liquefied natural gas, or LNG, industry). The company markets the natural gas primarily to local petrochemical producers of ammonia and methanol, power generation facilities, and iron ore reduction facilities.
PetroChina Selects Univation Technology for three new PE Lines
PetroChina selected Univation Technologies’ UNIPOL PE Process to manufacture polyethylene at new facilities to be constructed at Daqing (Heilongjiang Province), Fushun (Liaoning Province), and Pengzhou (Sichuan Province), representing over 1 million tons/yr of PE capacity. Each facility will be designed to produce linear low-density polyethylene (LLDPE), high-density polyethylene (HDPE), and bimodal HDPE using Univation’s advanced PRODIGY™ Bimodal Catalyst technology.
Upon completion of these projects, PetroChina will operate nine UNIPOL PE Process lines with a total capacity of nearly 2.5 million tons per year. PetroChina’s Daqing affiliate has been operating China’s first UNIPOL PE Process line for nearly 20 years, and the selection of the UNIPOL PE Process for its new facilities demonstrates PetroChina’s confidence that Univation will meet its product quality and production requirements well into the future.
Comments: No surprise here! This is somewhat expected development based on the existing business relationship between the two companies – PetroChina and Univation Technologies. As proven worldwide already, the Unipol process is suitable for manufacturing large-volume commodity PE products – HDPE, and LLDPEs. Building on its (mainly from ExxonMobil Chemical) catalysts assets, Univation Technologies has developed the advanced PRODIGY™ Bimodal Catalyst technology to manufacture the bimodal HDPEs. The selection of the UNIPOL PE Process for its new facilities demonstrates PetroChina’s confidence that Univation will meet its product quality and production requirements well into the future.
Basell to set up a second compounding plant in China
Basell has begun construction of its second polypropylene compounding facility in China at Guangzhou Nansha. The new facility, to be operated by Guangzhou Basell Advanced Polyolefins Co. Ltd., will have an initial annual capacity of 15 KT and will supply polypropylene composites and alloy materials to the South China automotive and appliances industry. The Nansha facility is scheduled to come on-stream in September 2008.
Basell is the global leader in polyolefins technology, production, and marketing. It is the largest producer of polypropylene and advanced polyolefin products; a leading supplier of polyethylene and catalysts, and the industry leader in licensing polypropylene and polyethylene processes, including providing technical services for its proprietary technologies.
Comments: This news is a continuation of Basell’s strategy to expand their compounding operations and also increase their presence in growing regions. The company recently acquired Solvay Engineered Polymers, announced JV in Eastern Europe for compounding operations, and now this second PP compounding plant in China.
Solvay Indupa to produce bioethanol-based PVC in Brazil
Solvay announced that its affiliate Solvay Indupa has approved a further USD 135 million investment program to expand and increase the competitiveness of its vinyl production plant in Santo Andre, Brazil. This second stage of expansion, following the plan announced in August 2006, comprises the creation of an integrated plant to produce ethylene with ethanol originating from sugar cane. Ethylene is one of the two main feedstocks needed to manufacture polyvinyl chloride (PVC) – together with chlorine, which is produced through a salt-based electrolysis process.
Santo Andre would be the first industrial project in the Americas to implement renewable resources for the production of PVC. This innovation will prevent the emission of large quantities of C02 into the atmosphere.
Solvay Indupa’s ambition is to complete the expansion of Santo Andre by 2010. The plant would then have an installed capacity of 360,000 tons/year of PVC; 360,000 tons /year of vinyl chloride monomer (VCM), 235,000 tons/year of Caustic Soda, and 60,000 tons/year of bio-ethylene.
Solvay Indupa is also studying with Argentinean energy group Albanesi S.A. the construction of a 165-megawatt combined cycle electrical power plant on Solvay Indupa’s site in Bahia Blanca, Argentina. The project would require an investment of USD 135 million and would provide reliable and competitive coverage of the site’s entire energy needs.
To finance these investments, Solvay Indupa is considering a capital increase of approximately USD 130 million, to be placed in local and international capital markets through Brazilian Depositary Receipts (BDRs) at the São Paulo Stock Exchange (Bovespa).
Comments: This is an interesting move by Solvay Indupa – they are taking advantage of the low-cost ethanol availability in Brazil to manufacture ethylene. The cost to produce PVC will depend on the economics of ethylene manufacture, which will be lower than that when compared to traditional routes. It may also be cost-competitive when compared to calcium carbide-based PVC without losing the quality and that will give the company an edge in the marketplace.
INEOS Nova enter into a JV for EPS plant in Romania
INEOS NOVA and SEEA Polymers today announced they have signed a letter of intent to form a 50/50 joint venture to build and operate a new expandable polystyrene (EPS) plant in Romania. The proposed facility will have a production capacity of 100 KT per year and is expected to start operations by late 2009.
Growth rates for EPS consumption in the region are projected to continue to be more than 10 percent per year. The proposed plant will be located on a site owned by SEEA Polymers in Medgidia, Romania, near the Black Sea. The location will enable the new plant to enjoy reliable, low-cost logistics.
Following the completion of final market and capital plans the two companies expect to negotiate and finalize a binding agreement by the end of the first quarter of 2008.
INEOS NOVA is committed to being recognized as the global leader in styrenics. Our employees manufacture and market styrene and styrene polymers with a dedicated focus on health, safety, security, and environmental stewardship. INEOS NOVA is a joint venture of INEOS and NOVA Chemicals.
Comments: After consolidation and reorganization of its styrene assets into its joint venture with INEOS, Nova INEOS is investing in high-growth markets and high-margin PS products.
ExxonMobil Chemical adds specialty film capacity & upgrades the oriented polypropylene (OPP) film facility
The Films Business of ExxonMobil Chemical announced the successful start-up of its upgraded specialty-oriented polypropylene (OPP) film production line in LaGrange, Georgia.
The multimillion-dollar investment in upgraded production processes at the LaGrange facility has significantly increased the company’s North American capacity for multi-layer OPP films. The upgraded line is running at full design capacity in its first full week of production and will provide the company greater flexibility to meet customer expectations for a secure and undisrupted supply of specialty OPP films from its global manufacturing base.
ExxonMobil Chemical’s white opaque OPP films, each specifically tailored for targeted applications, have earned a reputation for outstanding performance that continues to fuel growth in the confectionery and ice cream markets. OPPalyte HM film, which utilizes proprietary multi-layer technology to achieve exceptional cold seal adhesion, will be produced at the upgraded LaGrange facility. The company’s OPPalyte WOS-2 and STW films use proprietary multi-layer designs to provide optimal performance on multilane packaging machines commonly used for ice cream novelty.
Comments: ExxonMobil completed the construction of the OPP facility as announced earlier. The upgraded line helps position ExxonMobil Chemical to meet the rapid growth in demand for specialty multi-layer OPP films, including OPPalyte™white opaque film for candy cold-seal applications, OPPalyte™ WOS-2 and STW white opaque films for ice cream novelty applications and Label-Lyte™films for wet glue and pressure sensitive labeling.
For more information, please refer to our Issue 4 of Global Polyolefins and Elastomers.
DSM Dyneema to become a separately reporting business group
Following the mid-term evaluation of DSM’s strategy Vision 2010 – Building on Strengths, DSM will accelerate its transformation towards a leading Life Sciences and Materials Sciences company. DSM Dyneema fits very well in this strategy. For transparency reasons, it has therefore been decided to position DSM Dyneema as a separate business group within the Performance Materials cluster with effect from January 1, 2008.
With effect from the same date Mr. Christophe Dardel, at present Business Unit Director DSM Dyneema, will be appointed Business Group Director DSM Dyneema, directly reporting to the Managing Board of Directors.
Comments: Dyneema is one of the important business units for DSM. This reorganization by forming a separate business unit for Dyneema is part of the company’s Vision 2010. The company also plans to sell its base chemicals and materials business and focus on its core units.
Arkema announces the planned acquisition of the PMMA sheet and block production activity from the Repsol YPF group.
Arkema announced its plans to acquire the PMMA sheet and block production activity from the Repsol YPF group. Repsol YPF’s PMMA sheet and block business currently operates from manufacturing sites in Bronderslev, Denmark, and Polivar, Italy. It employs 125 people and achieves annual sales of around EUR 30 M.
Altuglas® acrylic sheet is marketed essentially for visual communication, sanitaryware, construction, and urban equipment.
Altuglas International, an Arkema subsidiary, markets 20% of PMMA (polymethyl methacrylate) world production in the form of acrylic sheets and resin. In this sector, the company operates eight production sites around the world. Its trademarks are Plexiglas® in the Americas and Altuglas® in the rest of the world.
Comments: The acquisition by Arkema will help increase the market share of its Altuglas business unit. It will allow the company to boost its leading position in the PMMA sheet in Europe. For more information on PMMA markets, please refer to our multiclient on PMMA or call 281-557-3320 to obtain a copy of the report.
Chemtura to review strategic alternatives
Chemtura Corporation announced that its Board of Directors has authorized management to consider a wide range of strategic alternatives available to the company to enhance shareholder value. In support of this ongoing initiative, a Special Committee of independent directors of the Board of Directors has been formed to oversee the process. To assist in this process, Chemtura has retained the services of Merrill Lynch & Co., which is acting as its exclusive financial advisor.
Strategic alternatives to be considered may include, among others, select business divestitures, value-creating acquisitions, changes to the company’s capital structure, or a possible sale, merger, or other business combination involving the entire company.
There can be no assurance that this review will result in any specific transaction. The company does not expect to disclose any further developments concerning the exploration of strategic alternatives unless and until its Board of Directors has approved a transaction or other strategic alternative.
Comments: Chemtura Corporation engages in the manufacture and marketing of polymer and specialty products. The Company’s products are used in various end-use markets, including automotive, transportation, construction, packaging, agriculture, lubricants, and plastics for durable and non-durable goods, including electronics, industrial rubber, and home pool and spa chemical markets.
The Company operates in six segments which include: Plastic Additives (non-flame retardant plastic additives and flame retardants); Polymers (EPDM and urethanes); Specialty Additives (petroleum additives and rubber additives); Crop Protection; Consumer Products; and Other (Optical Monomers, Industrial Water Treatment, and Fluorine Chemicals).
The company was formed by the merger of Great Lakes and Crompton Corporation.
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