My Turn –Rumors, Rumors & More Rumors – Dr. Balaji B. Singh
I gave an interview to a Global magazine at the end of January 2007, in which the reporter asked me if anything was exciting happening in 2007 – is it the end of all the M&As for now?
I told him – it is just the beginning – just wait a few weeks and all the excitement will be back – So right I was.
Globalization has increased activities worldwide. The rumors indeed provide fodder for the hungry reporters – but serve two critical functions – free advertising for companies and increase stock prices (at least for now).
All in all, The Global Petrochemicals Theater is always at a point deserving continuous applause by all the observers – now really knowing whether the curtain is rising or falling – Always something exciting happening.
Reliance and Dow Chemical in advance stages of negotiations for a joint venture – A rumor? Reality?
Reliance Industries (RIL) and Dow Chemical are said to be in the advanced stages of negotiations to form a joint venture valued at about $20 billion. No one has confirmed the speculation from Dow or Reliance.
The Indian newspapers that started/printed the rumor have taken the stance of associating Reliance with everything and anything – soon a time will come – their professionalism/ credibility will be in question.
According to the speculation, Dow Chemical will hive off its basic chemicals and plastics businesses into a separate company. The combined valuation for these businesses, which contributed about 35% to Dow’s $49 billion turnover last year, is about $20 billion. Post-demerger, RIL will pick up a 59% stake in this company for about $12 billion while Dow Chemical will hold the balance 41% stake, valued at about $8 billion.
Comments: The Indian newspapers that started/printed the rumor have taken the stance of associating Reliance with everything and anything – soon a time will come – their professionalism/ credibility will be in question. We hope they are right this time around.
Dow Chemical plans full-scale manufacture of INFUSE™ Olefin Block Copolymers
Dow Chemical Company announced its plans to construct the first global-scale production facility for INFUSE™ Olefin Block Copolymers (OBCs) at a plant in Freeport, Texas. Dow recently completed its first trial manufacturing run at the facility and is planning full-scale manufacturing of INFUSE OBCs in the third quarter of 2007.
Unveiled in June 2006, INFUSE OBCs feature unique block architecture that allows for new-to-the-world combinations of performance and processing enhancements. This material innovation was created using INSITE™ technology, which enables olefin elastomers to expand into a wide range of potential market applications for converters and manufacturers of flexible goods and products. INFUSE market applications include flexible molded goods, profile extruded products, hoses and tubes, elastic fibers and films, foams, coated fabrics, adhesives, and tapes.
The large-scale production facility will be located at a Dow manufacturing plant which can also produce other Dow product innovations including AFFINITY™Polyolefin Plastomers and ENGAGE™ Polyolefin Elastomers.
Dow recently completed a large-volume production campaign for INFUSE™ OBCs at the facility, during which it manufactured sufficient volumes to satisfy large-scale developmental customer trials.
Comments: Dow’s technology finally overcomes the many obstacles in commercial production by paving an economical route to novel OBCs with superior properties/performance profiles and product attributes that are unattainable to date.
These products will enable olefin elastomers to further expand into a wide range of market applications including flexible molded goods, profile extruded products, hoses and tubes, elastic fibers and films, foams, coated fabrics, adhesives, and tapes in a diverse range of industries.
PetroChina licenses Dow’s UNIPOL™ PP process technology for its new plant in Guangxi
Dow Technology Licensing, a business group of The Dow Chemical Company and its consolidated affiliates (Dow), announced that its world-leading UNIPOL™ PP Process Technology has been selected for a new 200 KTA polypropylene (PP) facility to be constructed at the PetroChina GuangXi Petrochemical Company complex in Guangxi Province, The People’s Republic of China.
The PetroChina GuangXi plant will be the second in China to utilize the UNIPOL PP Process Technology. Consistent with its drive to provide licensees with comprehensive and top-quality services to aid in project execution, Dow is collaborating on this project with Aker Kvaerner, a leading global provider of engineering and construction services that has designed and/or built numerous UNIPOL PP lines around the world. Aker Kvaerner will provide the basic engineering design and certain offshore equipment for the new plant, which is expected to come online in 2008. The process design package provided by Dow has been delivered, and Aker Kvaerner is in the final stages of delivering the basic engineering design.
There are more than 40 UNIPOL PP production lines that are either being constructed or are fully operational around the world. These lines account for more than 6,500 KTAs of global polypropylene production.
Comments: Unipol® PP with an estimated base of around 6,500 KT, has its largest installed capacity base in Asia-Pacific (37%), North America (31%), and Middle East/Africa (19%). The Unipol PP technology is less widely used in Japan and South America. Union Carbide extended the utility of the Unipol process by adapting it to produce polypropylene in the mid-1980s by utilizing Shell’s SHAC catalyst.
As is usual for multi-reactor sequences, homopolymer or random copolymers are produced in the first stage, and the second stage is used to add an ethylene/propylene rubber component to homopolymers produced in the first state to make impact copolymers.
In recent years, the polypropylene licensing arena has been dominated by news of Basell’s licenses. Producers have been looking at other licensors to differentiate themselves from other players. This will be the second PP plant based on Unipol PP technology in China.
ExxonMobil to decide on the second cracker in Singapore
ExxonMobil announced that it will make a final decision on the second Singapore cracker shortly. According to the company, negotiations over project financing and discussions with the Singapore government are in their final stages. If the decision is to go ahead with the cracker, then the project will take roughly three years to complete.
Comments: ExxonMobil has been extremely successful in running its first cracker in Singapore. The current cracker provides the company with economies of scale and proximity to Asian markets.
As Asia is projected to be a growth center, ExxonMobil could put another cracker in the region to address regional demand. Jurong Island in Singapore provides an excellent opportunity in terms of infrastructure and integration.
Lukoil starts the polypropylene unit at OOO Stavrolen
Lukoil commissioned a polypropylene production unit at OOO Stavrolen. The polypropylene production unit with a capacity of 120 thousand tons per year is the first facility of its kind in the LUKOIL Group petrochemical complex. Propylene, which is the main crude product for the unit, is produced at OOO Stavrolen and transferred to the unit via the pipeline. The design of the unit is based on the operational process of Dow’s Unipol® technology.
Construction of the polypropylene production unit at OOO Stavrolen was launched in 1986. OAO Stavropolpolimerprodukt was set up in 1992 to continue construction and start the operation of the unit. However, in 1995 due to the termination of government financing, all operations were suspended. To complete the project, the LUKOIL Group acquired 87.42% of OAO Stavropolpolimerprodukt assets from State Unitary Enterprise Moscow Industry and Trade Center of Integration and Development for USD 32 million. Construction of the facility was resumed in January 2005. The petrochemical plant Stavrolen was commissioned in 1981. It is one of the largest Russian enterprises for polyethylene and other petrochemical production. OOO Stavrolen alongside OOO Saratovorgsintez, OOO Karpatneftechim (Ukraine), and AO LUKOIL Neftochim Bourgas (Bulgaria) are the basis of the LUKOIL Group’s petrochemical complex.
Comments: Over the last few years, Lukoil has made investments to improve its petrochemical products to European and WTO standards. ZAO Lukoil-Neftekhim, a management company, currently controls OOO Stavrolen (Budennovsk), OOO Stavroplast (Mineralniye Vody), OOO Saratovorgsintez, OOO Vars (Ventspils, Latvia), and OOO Stavrokem (Hungary).
This will be the second polypropylene plant for Lukoil. The company has a 100 KT per year manufacturing facility in Bulgaria.
Germany revises standards for PP pressure pipes
In 2006, the German standards for polypropylene (PP) pressure pipes have been revised. The designations PP-H100, PP-B80, and PP-R80 have been withdrawn as they did not reflect the required behavior at elevated temperatures and were changed to PP-H, PP-B, and PP-R. Also, pioneering PP-RCT has now been officially recognized as a category under the new German standards DIN8077 and DIN8078 for PP pressure pipes. The creation of a new PP-RCT class means that these solutions can now be tested according to a widely accepted quality standard.
According to EN ISO 1043 designations, PP-RCT is a PP random copolymer with a special crystalline structure. This structure gives improved pressure resistance particularly at elevated temperatures, offering more than a 50% improvement in long-term strength at 70°C over 50 years compared to standard PP-R materials. As a result, pipes based on this material can be produced with thinner walls thus with larger internal pipe diameters, delivering a range of benefits to the plumbing industry and homeowners.
A wider internal diameter gives pipes a higher hydraulic capacity, thus benefiting systems distributing large volumes of water, such as in high-rise buildings. The capacity increase can also serve to overcome the problem of low water pressure from a supply network.
Environmental and cost-saving advantages can be generated for both extruders and installers. Thinner wall pipes allow for higher extrusion speed with reduced material usage, while a higher percentage of smaller pipes leads to smaller insulation, fittings, and faster installation times. Weight reduction eases transportation and handling for the plumbing industry.
Comments: Europe is still in the process of replacing its metal pipes with plastic pipes utilizing the advantages that these pipes bring. Plastic pipes have several advantages that include lower weight, ease of installation due to flexibility, recyclability, and avoiding problems such as corrosion.
The growth in the pipe industry comes from central and Eastern European countries and with an increase in construction activity. The consumption of plastics in the European pressure pipe market is over 1.2 billion pounds and caters to many application that includes industrial processes, heating and cooling installations, gas distribution, irrigation, and water supply and distribution. Other areas are in potable water applications including cold water transportation from wells or water mains, as well as hot and cold water distribution piping within buildings.
The approval of new materials will give pipe manufacturers a wider choice of materials for pressure pipe applications.
DSM acquires technology to add to Dyneema® business
Royal DSM NV announced the acquisition of Pamako AG in Zurich (Switzerland) from FMS Enterprises Migun Ltd. The acquisition includes Pamako’s technology for the production of UHMWPE (Ultra High Molecular Weight Polyethylene) based products. DSM will further develop and improve this technology, and incorporate it into its existing business for Dyneema® fiber and Dyneema® UD (UniDirectional bullet resistant sheet). According to DSM, the acquisition is fully in line with DSM’s Vision 2010 strategic aim of investing in innovative technologies and supports the growth ambitions of Dyneema®.
Comments: DSM has been investing in its Dyneema® fiber business. The company has made several capacity expansions and now this acquisition. Through this acquisition, DSM will be able to gain a technological advantage. Located in Israel, FMS Enterprises was established in 1986 and is a manufacturer and supplier of lightweight ballistic armor materials.
Dow Polyurethanes to acquire Hyperlast UK and Autothane from British Vita
Dow Polyurethanes, a business unit of The Dow Chemical Company, announced that it plans to acquire Hyperlast Limited, a leading United Kingdom polyurethanes elastomers systems business, and Autothane Limited, a leading manufacturer of advanced automotive suspension components, pending regulatory approval.
Hyperlast UK and Autothane Limited, subsidiaries of British Vita, specialize in the development of innovative polyurethane elastomers for the marine, engineering resins, oil and gas pipelines, and automotive industries.
Dow PU Systems is a leading global polyurethanes solutions provider, with 26 facilities located across Europe, Asia, the Middle East, and North and Latin America, where it develops high-performance, differentiated polyurethanes system solutions for customers in a broad range of industries. Dow is also a leading producer of PO/PG, MDI, TDI, and polyols, the raw materials used in the production of polyurethane systems, coatings, adhesives, sealants, and elastomers, as well as rigid and flexible foam.
Comments: Dow Chemical is a major producer of polyurethane supplying over 3.5 billion pounds globally and having over 4 billion pounds of capacity. Dow Chemical has approximately 35 percent of its polyurethanes business in North America; 35 percent in Europe; 15 percent in Asia-Pacific; and 15 percent in Latin America.
Dow Polyurethane has 26 facilities across Europe, Asia, the Middle East, and North and Latin America. Dow Polyurethanes product caters to markets that include (1) automotive seating and instrument panels (2) automotive noise vibration, harshness, and energy absorption cushioning (3) carpet backing (4) cushioning for furniture and bedding (5) insulation for appliances, sheathing, and roofing and (6) office furniture and others.
Dow’s move to acquire British Vita’s polyurethane business will increase its exposure to the European market and improve its market share.
Akzo Nobel divests its PVC additives business
Akzo Nobel has divested its Akcros Chemicals PVC additives business to UK-based private investment firm GIL Investments. Financial details were not disclosed.
Under the terms of the deal, the company’s sites in Eccles, UK, and New Brunswick in the United States—along with all of the approximately 160 employees at these locations—will be transferred to the new owner.
An agreement has also been reached whereby Akzo Nobel will continue to operate two smaller, related production operations in Greiz, Germany, and Itupeva in Brazil. Employees at these two locations—who will provide toll production services to the new owner—will therefore remain with Akzo Nobel.
Comments: Akcros Chemicals is one of the leading producers of PVC additives including stabilizers, biocides, and bonding agents. The company produces and sells PVC-based additives under trade names such as Akcrostab®, Interstab®, Intercide®, and others. The divestment of its PVC additives business was part of Akzo’s restructuring strategy mainly in the chemical unit.
The new owner of Akcros Chemicals is a UK-based private equity firm that buys businesses worth a maximum of £100 million located in the UK and related to manufacture and product distribution and most service businesses, apart from IT and recruitment. In the chemicals industry, GIL Investments acquired the UK plastic film business of Tyco Plastics.
Chemical Safety Board determines that human error caused the Formosa blast in 2004
A report issued by the Chemical Safety and Hazard Investigation Board (CSB) concludes that human error was the cause of a 2004 explosion that killed five workers and seriously injured three others at a Formosa Plastics chemical plant in Illiopolis, IL.
According to CSB, the blast occurred when a Formosa operator mistakenly opened a valve while a pressurized vessel was making polyvinyl chloride. CSB determined that both Formosa and Borden Chemical – the company from which Formosa purchased the plant in 2002 – were aware of the possibility of serious consequences of an inadvertent release of chemicals from an operating reactor but took insufficient steps to prevent human error.
After interviewing survivors and examining physical evidence, CSB surmised that the operator became confused about which of the plant’s reactors he was cleaning. When he opened up the valve on the reactor that was in operation, according to CSB, he neglected to ask someone why the valve wasn’t opening and instead attached an air hose to override a safety interlock. As a result, vinyl chloride sprayed onto the floor and vapor filled the room, prompting the explosion.
The operator and four others perished in the blast. According to CSB, the operators had time to evacuate the building after the release but chose to remain in the area in a vain attempt to mitigate the release.
The report suggests that safeguards such as locks or other devices to secure the interlock system could have prevented critical valves from being opened when the reactor was pressurized. CSB has recommended that Formosa review the design and operation of all of its US PVC facilities.
Ciba to close the antioxidant plant in Brazil
Ciba Specialty Chemicals announced the closure of its antioxidants plant at Camacari, Brazil, effective March 6. The antioxidants were produced for use in plastic additives. Ciba says the plant employed 40 people or less than 1% of its workforce.
According to the company, the Camaçari facility did not have the capacity to sustain the productivity levels required. The company will supply its customers with the antioxidants formerly produced at Camaçari from its other global plants.
Comments: Ciba’s decision to close the antioxidants plant in Brazil is mainly to rationalize capacity and effectively compete in the market.
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