My Turn – Comments on Global Polyolefins & Elastomers Innovations – Where’s The Beef??? – Dr. Balaji B. Singh
Reminiscent of the early 80s Wendy’s commercial, the polyolefins and elastomers industry seem to be settling down with China, India, and commodities with very few significant innovations – There’s nobody back there with new stuff.
Just a thought – is this an expected outcome of all the mergers and acquisitions we experienced in the 90s ??? Would we have had as much activity in Metallocenes if we had the current players/situations back in the 90s???? Just think.
Kraton Polymers for Sale…Again!
The rumors are floating that Kraton Polymers is going on sales block again. Ripplewood Holdings purchased Kraton – a division of Shell for a premium price and sold it to TPG (Texas Pacific Group) at a higher premium. Currently, TPG is going through a major restructuring and is planning on divesting Kraton since it did not meet the expected performance requirements in the last five years.
Basell purchases Münchsmünster, Germany cracker from BP-PdVSA joint venture
Basell announced the purchase of the cracker at the Münchsmünster, Germany petrochemical site from Ruhr Oel GmbH (ROG), a joint venture between Deutsche BP and PdVSA, the Venezuelan state-owned oil company. The transaction, which includes sales agreements and assets associated with the cracker, has been approved by the European Commission.
According to the company, this is a strategically important acquisition for Basell because it secures the supply of ethylene for the new Hostalen Advanced Cascade Process (ACP) high-density polyethylene (HDPE) plant we are building at Münchsmünster and also strengthens Basell’s position in propylene and other cracker products.
Basell’s new HDPE plant in Münchsmünster, which is scheduled to start up in early 2009, will replace the plant that was damaged by an explosion and fire in December 2005. The new plant will have an initial capacity of 120 KT and will accommodate future expansion to 150 KT.
Comments: Basell has followed the strategy of strengthening its feedstock position throughout 2006 and seems to be continuing to follow that strategy in 2007. Basell’s feedstock position changed after its sale in 2006. It made sense for Basell to strengthen its feedstock position after losing its oil parents. The new ethylene capacity will be useful for the new HDPE capacity planned for start-up in 2009. These strategic initiatives will help Basell improve its profitability.
Huntsman completes sale of its businesses
Huntsman announced that Huntsman Chemical Company Australia Pty Ltd (HCCA), has completed the previously announced sale of its Polyester Resins (composites) business assets to Nuplex Industries Ltd (Nuplex) for A$9.6 million (approx. U.S.$7.5 million) in cash plus the value of inventory and other stock in trade at the completion date, for a total transaction value of A$20.3 million, subject to post-closing adjustments. The assets sold include polyesters, vinyl esters, and gel coat manufacturing assets. Annual sales from the business total approximately A$53 million.
Huntsman completed the sale of its UK-based European commodity chemicals business to Saudi Basic Industries Corporation (SABIC). SABIC acquired the business for a combination of cash plus the payment of pension liabilities. The transaction provides that Huntsman receive $685 million in cash (subject to post-closing adjustments) plus the assumption by SABIC of $126 million in net pension liabilities, resulting in a total divestment value to Huntsman Corporation of $810 million.
Huntsman’s Teesside-based Pigments division and the Wilton-based aniline and nitrobenzene operations of its Polyurethanes division were not included in the transaction.
Comments: This is pretty much-expected news from Huntsman in line with their earlier decision of selling the commodity polymers businesses to generate more cash in paying off the debt. This transaction marks a significant milestone in their previously stated strategy to create additional shareholder value. Through positive operating cash flows, funds raised in their IPO, and the proceeds from this transaction and the previously completed sale of their U.S. Butadiene and MTBE business, the company has generated funds sufficient to reduce the net debt by $2.6 billion over the past 2 years. They now derive over 80% of the sales from their differentiated chemical products, which are significantly less cyclical, less energy dependent, and higher margin businesses than commodity chemicals. This ongoing execution of strategy to dramatically reduce debt and focus on such differentiated businesses as the Textile Effects business acquired from Ciba earlier this year provides Huntsman with both a higher-margin portfolio of products and a much stronger balance sheet going forward.
It seems that Huntsman continues to make progress toward the sale of the North American Polymers and Base Chemicals businesses. We’ll not be surprised to see the completion of such a deal by Huntsman in the near future.
OMV and IPIC plan to consolidate their chemistry activities into subsidiary Borealis
OMV, Central Europe’s leading oil and gas group, continues to focus on its core business: Exploration & Production, Refineries & Marketing, and Gas. In this context, OMV, together with its core shareholder International Petroleum Investment Company (IPIC), is planning on incorporating AMI Agrolinz Melamine International GmbH (AMI), one of the leading international producers of melamine and plant nutrients, into Borealis. OMV and IPIC each hold 50% of AMI. The final decision will be made in the course of the first half of 2007.
Borealis, a leading provider of innovative, value-creating plastics solutions, is headquartered in Vienna, Austria, and is Europe’s second-largest producer of polyolefins. AMI’s headquarters will remain in Linz (Upper Austria) and, as a holding company, Borealis will provide full support to the company’s further international expansion.
Comments: AMI (Agrolinz Melamine International) GmbH, headquarters in the Linz Chemiepark is jointly owned by OMV (Österreichische Mineralölverwaltung Aktiengesellschaft) and IPIC (International Petroleum Investment Company), both having 50% ownership. The company manufactures high-end agricultural and industrial raw materials. AMI’s main products include melamine and plant nutrients. AMI is the market leader in Europe for melamine and a major producer of plant nutrients in the Danube region
. The AMI group has 54% of its sales concentrated in the plant nutrient market, 35% in the melamine/urea market and the rest include resins, glues, bulks, and additives. The company’s main market is in Austria with 27% of its sale and Germany with 20% of its sales. Other major market regions for AMI include Italy and Hungary with 12% and 11%.
Borealis, headquartered in Vienna, Austria is a major supplier of polyethylene and polypropylene with main production sites located throughout Europe and the Middle East.
The company’s products are consumed in various applications that include automotive parts, appliances, power cables, and utility distribution pipes.
IPIC’s and OMV’s move to incorporate their 50% share of AMI into Borealis will strengthen their marketing position in Europe, both companies are well-positioned in their respective markets and are in the process of increasing their presence in the Middle East.
Peru to attract $1.2 billion investments in the petrochemical sector
The Peruvian Government expects to attract $1.2 billion in investments with the promotion of various projects in the petrochemical sector.
Brazilian state-owned oil company Petrobras and the local petrochemical giant Braskem were the first two foreign companies, which contacted Peru’s Ministries of Energy and Mines and of Production, as well as Peru’s state-owned oil company Petroperu, to inform them about the opportunities to develop projects in Peru. According to the government, there are several Peruvian companies interested in operating in the petrochemicals sector, individually or in consortia.
The petrochemical projects will allow to generate additional investments for the development of the transport infrastructure, such as motorways and ports, which to improve the operations of the petrochemical plants.
Comments: The South American economy is one of the growing economies in the world. Brazil is the most developed country in South America in terms of the petrochemicals sector and Peru has decided to follow the same.
Shaw Group joins consortium to construct propane dehydrogenation plant in Thailand
The Shaw Group Inc. announced that a consortium of its Shaw Stone & Webster unit and CTCI Corporation of Taiwan, Republic of China, has been awarded a contract to provide engineering, procurement, construction, and commissioning (EPCC) services for a new propane dehydrogenation (PDH) plant in Thailand.
The plant, a project of HMC Polymers Company Limited, is located in Map Ta Phut, Rayong, and is expected to be completed in the summer of 2009, with planned production of 300,000 metric tons per year of propylene. The value of Shaw’s contract was not disclosed.
Shaw will manage the main process unit engineering work from its Houston, Texas, office with offices in Baton Rouge, La., and Mumbai, India, providing support. Shaw is participating in the project as part of a consortium with CTCI Corporation, which will perform the balance of plant engineering as well as the procurement and construction of the whole facility.
HMC Polymers Company Limited is a joint venture of Basell Polyolefins of the Netherlands and a group of leading Thai companies, including PPT Public Company Limited of Thailand. HMC Polymers Company Limited established the first polypropylene manufacturing facility in Thailand in 1987. With a capacity of 450,000 tons, it is today one of the largest and most advanced facilities in Asia.
PPT Public Company is a leading Thai energy corporation, operating integrated oil and gas businesses, which encompasses gas-based petrochemicals and total energy services. Basell Polyolefins is the world’s largest producer of polypropylene and advanced polyolefins products, a leading supplier of polyethylene and catalysts, and a global leader in the development and licensing of polypropylene and polyethylene processes.
CTCI Corporation’s principal activities are EPC services for the refining, petrochemical, general industrial, power, environmental protection, energy, and transportation industries.
Italy passes law to phase out non-biodegradable carrier bags
The Italian government has included in its 2007 budget a clause that should see non-biodegradable plastic carrier bags phased out by 2010. An original amendment to the bill, calling for the banning of non-biodegradable bags by 2010, had been declared inadmissible by a vetting committee in October, but a second, slightly modified, amendment was later submitted and accepted.
This calls for “an experimental nationwide program for the progressive reduction in the commercialization of carrier bags that are not considered by technical norms to be biodegradable.”
The program, set to begin before the end of April, has the scope of identifying measures that will enable non-biodegradable bags to be banned by the beginning of 2010. The government has allocated a budget of “not less than one million euros” to the program.
The finance act also calls for a tax of one-tenth of a euro cent to be applied to mineral water bottles made from plastic that will be used to help provide universal access to water. One Italian plastics and rubber trade association has already protested that, by applying the tax only to plastic bottles and not to glass ones, the law will cause a distortion in the market. It says the legislation is “probably unconstitutional.”
Comments: Developed countries are becoming stricter regarding plastic bags and Italy is one of them. Italy has been trying to ban plastic bags for a long time now but has not been extremely successful.
However, with the increase in demand for biodegradable plastics, there could be some replacement of traditional plastic bags.
Chemical leak at BASF plant injures 37 employees at a plant in the UK
A leak at a U.K. factory of BASF AG, the world’s largest chemical producer, injured 37 employees, three of them seriously.
Seventeen people were sent to hospitals with burns, skin irritations, and breathing difficulties and three of them are being treated for “serious burns,” the North-East Ambulance Service said in a recorded telephone message today. A further 20 staff were treated on-site and have returned to work.
Hexamethylenediamine, a chemical intermediate used in the manufacture of plastics, leaked from a nylon intermediates factory near the facility in Billingham, northeast England, BASF said. HMD is corrosive and can be hazardous in high concentrations, the Ludwigshafen, Germany-based company said.
The facility employs 203 BASF staff and about 250 independent contractors according to a spokeswoman for BASF.
Ciba Specialty to invest in a new plant for high-performance pigments in China
Ciba Specialty Chemicals signed an agreement with local authorities in Qingdao, China, to invest in a new plant that will significantly expand its production network in Asia. The company will construct a new manufacturing facility that will produce high-performance pigments and additives in Qingdao, China.
Ciba Specialty Chemicals continues its expansion in China with a major investment in a new production plant in Qingdao. The plant will manufacture high-performance pigments and additives and will serve as a regional base for Ciba’s coating effects business. Production will start in early 2008.
The new site, located in the Qingdao International Airport Industry Park, will be built in a greenfield approach with infrastructure and equipment that meet Ciba Specialty Chemicals’ high global standards of quality and environment, health, and safety. It offers space for considerable expansion, allowing flexible adaptation to business needs.
The investment complements both Ciba Specialty Chemicals’ research and development activities in Shanghai and pigment production at its existing plant in Qingdao. In a recent World Bank report, Qingdao was ranked second out of 120 Chinese cities concerning overall investment climate, local government effectiveness, and social progress. Its advantages include a large harbor, a relatively skilled workforce, numerous universities, and infrastructure improvements in preparation for the China-hosted Summer Olympics in 2008.
Comments: China is seeing a wave of new investments in supporting industries for polymers and plastics. As the domestic production of plastics increases in China, especially by global companies, there will be potential for companies such as Ciba to provide products such as pigments, masterbatches, and other additives. However, this is not the first operation for Ciba in Asia. The company has been actively present in Asian countries such as India and Singapore. Ciba has invested in antioxidants manufacturing plants in both India & Singapore and has nine production sites in China, which make dyes, polyolefin stabilizers, and paper-whitening chemicals. The company is focusing on new investments in Asia in order to capture the growing markets and divest its non-core operations. The company recently sold its textile effects business to Clariant.
Snyder Industries acquires Clawson Container’s intermediate bulk container division
Snyder Industries, a manufacturer of polyethylene tanks and containers for the storage, transportation, and processing of bulk materials, announced Tuesday its acquisition of the Asset Tank divisions of Clawson Container Co. The terms of the acquisition were not disclosed.
The Asset Tank division located in Nancelona, MI produces steel intermediate bulk containers (IBCs), as well as related rental tank fleets. Clawson Container, headquartered in Clarkston, Mich., will retain its blow-molded IBC manufacturing plants and related business units, which include IBC North America and Clean Tide Container.
The acquisition will allow Snyder Industries, headquartered in Lincoln, NB, to add stainless and carbon steel IBCs to its polyethylene line of IBC products.
Comments: Acquisitions and mergers are not new to the industrial containers industry. The trend in this industry has been “Consolidation through acquisitions” with fewer and larger players surviving in the industry. In November 2005, Mauser-Werke GmbH & Co. KG completed the acquisition of assets of Russell-Stanley Holdings, Inc. and certain of its subsidiaries. Snyder Industries has a varied product line of polyethylene tanks and containers used for storage and transportation. IBCs are the fastest-growing industrial containers with growth rates in double digits and are stealing a considerable amount of market shares from other containers. The acquisition of asset tank divisions of Clawson Containers will bolster Snyder’s position in the industrial containers market. The major players in the industrial bulk containers market include Greif, Mauser-Werke GmbH, Schultz, and others.
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