My Turn – Commentary on Global Polyolefins and Elastomers – Dr. Balaji B. Singh
The FlexPO conference, again was a bittersweet success. We worked all year to bring the best possible speakers, well thought program, most thought-provoking presentations. Everyone who comes to attend the conference is highly complimentary of the program and tells us it is one of the best conferences around. Someone mentioned it is like a THINK TANK for new polyolefin product development.
Still, what is bitter about it??? The attendance. We know the subject of polyolefin new product development is narrow and appeals to a selected elite within the organizations, and is often underfunded since more resources go into shareholder value enhancement in the name of innovation than the innovation itself.
Maybe it’s time organizations take a moment to make a special effort to encourage professionals to attend the THINK TANKS… Just …..THINK…
Chemical Market Resources completes its annual conference FlexPO 2006
September 20-22 marked the 12th annual FlexPO conference hosted by Chemical Market Resources. The conference covered a variety of topics ranging from new regional trends in the polyolefin end-use markets to various polyolefin technologies and licensing issues. All in all, the conference provided a solid picture of the polyolefins landscape for the year ahead.
The key technologies highlighted included a session on metallocene catalyst and olefin block copolymer technology. The catalyst session also included felicitation for Dr. Steve Chum of Dow Chemical for his achievement in the polyolefins industry. He was also the first Asian to be placed in the Plastics Hall of Fame. Dr. Steve Chum presented a paper on the status of product development technology in the polyolefin industry. Chemical Market Resources was honored to have Dr. Walter Kaminsky of the University of Hamburg present a paper on the overview of the polyolefin catalyst industry in the past 50 years and his contributions in this field. The olefin block copolymer session included papers presented by Dr. Tim Diephouse and Ms. Seema Karande of Dow Chemical. Dr. Tim Diephouse highlighted Dow’s recently developed olefin block copolymers while Ms. Seema Karande presented the market opportunities for olefin block copolymers. Dr. Armen Dekmezian of ExxonMobil presented a paper on branched olefin block copolymers. Prof. Minoru Terano of Japan Advanced Institute of Science and Technology presented a paper on the development of olefin block copolymer by the Stopped-Flow Method.
Other papers presented in this session included: (1) New Developments in polyolefin film packaging by Doug Lilac of Pliant Corporation, (2) New Polyolefin Hybrids-Development of functional polymers by Dr. Shingo Matsuo of Mitsui Chemicals, (3) Utilizing HMW-PE’s with Machine Direction Orientation to produce films with unique properties for flexible packaging by Mr. Stephen Imfeld of Equistar Chemicals, (4) Recent advances in controlled copolymerization of olefins and acrylates to linear high molecular weight random copolymers by Dr. Brain Goodall of Rohm-Hass and (5) Polyolefins patents innovation by Mr. Bruce Story of Dow Chemical.
The changing global polyolefin end-use markets and catalyst technologies were emphasized throughout the conference. Ms. Tina Ong of the Singapore Economic Development Board illustrated the role of Singapore in bridging the east-west opportunities for global players. Chemical Market Resources, Inc. explored the role of Saudi Arabia and China in shaping the polyolefin market. Dr. Steve Arbogast of the University of Houston presented the importance of emerging South American Markets in the polyolefin industry. Dr. Deen Chundry, of Ferro Corporation, presented the compounder perspectives and use of raw materials in compounding, taking polyolefins to the next level. Dr. Seetha Coleman of Nextlife LLC presented a paper on sustainable development, an opportunity for growth, and higher ROI in the chemical industry. Ms. Donna Davis, President of SPE presented the role of SPE and its position in the global plastics migration. Mr. Paul Ruwe, of Mustancil Dow, delivered his perspective on the global status and the impact of energy issues on petrochemicals and the plastics industry. This session was concluded by a comprehensive panel discussion on the status of the US Gulf Coast industry and its approach to competing with the low-cost manufacturing regions.
The final day included papers presented by Dr. Walter Ramirez of Innovante Corporation on New Materials Development using High throughput and Conventional Methods, Extrusion Grade TPOs by Dr. Nadeem Bokhari of Basell, Metocene for Compounding application by Mr. Stan Bialowass of Basell and the effect of global automotive trends in the plastics and elastomers industry.
Chemical Market Resources, Inc. extends its sincere gratitude to all of you who made this year’s FlexPO such a success.
Huntsman to sell its European commodities business to SABIC and plans to focus on differentiated chemicals
Huntsman Corporation announced that Huntsman has signed a definitive agreement with Saudi Basic Industries Corporation (SABIC), under which SABIC will acquire Huntsman’s European Base Chemicals and Polymers business.
Under the agreement, SABIC will acquire the business for a purchase price of US$700 million in cash, subject to certain adjustments at closing. The transaction further allows Huntsman to reduce its UK pension liabilities in the amount of approximately $126 million. The transaction will not include Huntsman’s Teesside-based Pigments division or the Wilton-based aniline and nitrobenzene operations of its Polyurethanes division.
After giving effect to the announced divestiture and the recently completed sale of Huntsman’s U.S. butadiene and MTBE business, total revenue from Huntsman’s differentiated businesses (including the Textile Effects division recently acquired from Ciba), will equate to nearly 80% of Huntsman’s revenues for the twelve months ending June 30, 2006. Total net debt, on a pro forma basis for the same period, is expected to drop to approximately $3.5 billion after the application of the proceeds from the announced divestiture—a greater than 40% reduction from approximately $6.0 billion in net debt at year-end 2004.
Subject to customary regulatory approvals and other closing conditions, including merger control and UK Pension Regulator clearance, the transaction is expected to close by the end of 2006.
Comments: Earlier this year, Huntsman had announced its plans to sell its commodities business and after going back and forth with its decision, the company sold its commodities arm.
Huntsman plans to focus on specialties such as ethylenediamine, textile agents, and others. The company purchased Ciba’s specialty chemicals’ textile effects business in July this year, increased capacities for specialty amines, and pigments, and signed ethanolamines licensing deal with a Thai producer.
As the company becomes more specialty based, it will: (1) reduce the volatility in earnings associated with bulk plastics and petrochemicals, (2) generate more stable cash flows which will help with debt reduction, (3) reduce its annual Capex requirements by as much as 25%, and (4) improve EBITDA margins to 16-18% in 2-3 years vs. 11% in 2005.
Huntsman’s strengths include (1) its exposure to the rapidly growing Asian markets which already account for 20% of total company sales, (2) the $225 MM in fixed cost reductions achieved since 2002, (3) the strong growth and healthy margins of polyurethanes, driven by increased usage of MDI in many diverse applications, including the global insulation market in which MDI-products command only an 8% share.
SABIC entered the polyolefins market in Europe by acquiring DSM’s business. The acquisition of Huntsman’s commodities business will give SABIC the world’s largest LDPE plant.
Basell expands its catalyst plant in Ferrara, Italy
Basell announced the successful completion of an expansion of its catalyst manufacturing facility located in Ferrara, Italy.
The capacity of the plant, which produces Ziegler polyethylene and Ziegler-Natta polypropylene catalysts, has been expanded by 40%. The plant can now supply catalysts for the production of 30 million tons of polyolefins.
According to the company, new catalyst capacity was added to support the many new polypropylene and polyethylene licensees to whom Basell has granted polyolefin process licenses in recent years. The new capacity will also be used to supply Basell’s catalyst customers who produce polyolefins with non-Basell processes, especially gas-phase polypropylene technologies.
The Ferrara plant can produce 3rd, 4th, and 5th generation Ziegler-Natta catalyst systems. These catalysts are sold under the Avant trade name:
• Avant ZN – Ziegler-Natta catalysts for polypropylene
• Avant Z – Ziegler catalysts for polyethylene
• Avant C – Chromium catalysts for polyethylene
• Avant M – Metallocene catalysts for polypropylene
Basell’s Ferrara plant is the largest polyolefin catalyst manufacturing facility in the world. When combined with its Edison, NJ, catalyst plant, and other catalyst manufacturing facilities in Ludwigshafen and Frankfurt, Germany, Basell is uniquely positioned to serve the global polyolefins catalyst market.
Comments: This is good news for the polyolefins producers licensing Basell’s process technologies for a steady supply of catalysts. This will further strengthen Basell’s catalyst supply chain and enhance supply security for its customers. It seems that Basell is doing the right thing to maintain its leadership position. Basell is already commanding a lion’s share of the polyolefins catalysts market in the world, > 29%. Also, Basell is a leading licensor of polypropylene and polyethylene technologies. It has granted more than 200 polyolefin process licenses worldwide. Basell is the world’s largest producer of polypropylene and advanced polyolefin products, a leading supplier of polyethylene and catalysts, and a global leader in the development and licensing of polypropylene and polyethylene processes. Basell, together with its joint ventures, has manufacturing facilities around the world and sells products in more than 120 countries.
It will be interesting to see what other catalyst suppliers – BASF Catalysts LLC (heritage-Engelhard Corporation, runner up in the catalysts supply race, > 20% of the market share, Toho – a third place with > 9% market share, Auda – 4th place with 9% market share will do keep their competitive position. It seems there may be some more consolidation in the polyolefins catalyst supply chain to keep the low-cost edge among the competition and as well meet the emerging markets needs of China and the Arabian peninsula.
Total Petrochemicals to re-organize its activities in France to ensure its competitiveness
n order to secure the Company’s competitiveness – and in particular that of its Styrenics activity – the management of Total Petrochemicals France presented its 2006-2011 industrial project to the Central Works Council.
The company plans to invest EUR 400 million in the next five years at Carling (Moselle) and Gonfreville (Seine-Maritime) sites. The project would entail the loss of 300 jobs by 2011.
This project is vital for the long-term future of Total Petrochemicals France and in particular its styrenics business (styrene and polystyrene) under threat from growing over-capacities as well as sluggish demand in Europe. This industrial project aims to improve Total Petrochemicals France’s ability to ride out periods of unfavorable economic conditions in particular. It would benefit from major investments of some 400 million euros in the two industrial sites concerned, Gonfreville (320 million euros) and Carling (80 million euros).
Total plans to center its styrene production in Gonfreville where production capacity would be increased to 600 KT per annum. Total plans to close styrene production in Carling, resulting in the shutdown of the smallest of the two steam crackers.
In addition, a polystyrene line in Gonfreville, no longer running, would be closed definitively, the other five lines in Carling and in Gonfreville being bolstered. In Gonfreville, the production of low-density polyethylene and EVA would be reorganized. Logistics and rail infrastructures at both sites would be upgraded to improve safety and environmental performance through major investments of some 60 million euros. This project would entail the loss of 300 jobs at the Gonfreville and Carling sites by 2011.
Comments: This move by Total Petrochemicals to consolidate styrenics production is to improve its sustainability in the business. This is a common move adopted by most of styrenics producers especially polystyrene to help reduce overcapacity and improve margins in the business.
Lanxess forms separate polymers unit Lustran Polymers
Lustran Polymers is the new name of the LANXESS Styrenic Resins business unit, reflecting the importance attached by the business unit to its top brand Lustran®. The change of name is a result of the repositioning of the business to place greater emphasis on ABS specialties and pre-colored grades. The name Lustran Polymers visualizes the color-intensive new beginning of the Styrenic Resins business unit. Lustran Polymers will make its debut as a distinctive and independent brand on October 1, 2006.
The unit will have about 1,640 employees worldwide, with production sites located at Tarragona (Spain), Dormagen (Germany), Addyston (United States), Map Ta Phut (Thailand), and Vadodara (India).
The unit’s main brands and products include ABS grades: Lustran®, Novodur®, and Absolac™, SAN grades: Lustran® and Absolan™, ABS/PA blends: Triax®, and ASA and AES polymers: Centrex®.
Lustran Polymers has pre-eminent market positions in Europe and Latin America, North America, and India and is number three in the global ABS market. Lustran Polymers offers a well-balanced portfolio of leading high-quality products with a strong focus on specialty ABS.
Comments: Lanxess was formed in 2003 as a spin-off of Bayer’s chemicals & MaterialScience division, which was initially called NewCo and later renamed Lanxess. The division was then spun-off and was listed on the stock market as a separate company.
The company has been constantly investing in engineering thermoplastics and expanding its capabilities. The company posted better than expected earnings and hence to further enhance its profitability, the company has organized its styrenics business unit. There may be more reorganization and investments planned by the company in the near future.
Arkema to Double high-performance polyamide capacity in China
Arkema announced its plans to double its high-performance polyamides capacity at its Changshu site, in China. This increase will come on stream by September 2007.
According to the company, the expansion of its Changshu site confirms the company’s long-term commitment to our customers and the market in China and Asia.
Moreover, and without waiting for this increase in capacity, Arkema announced that it will start the production of Rilsan® on this site in September 2006 to meet the increase in local demand.
Comments: China is driving the demand for not only commodity plastics but also specialty plastics. Global players and Chinese domestic players are starting new plants or expanding the capacities of existing plants for polyamide, polycarbonate, and polyacetal… Right now, most of the value-added specialty plastics markets are dominated by foreign companies. Domestic players are also trying to catch up through technology licensing and internal technology development.
Chevron Phillips Chemical to close its Querétaro, Mexico pipe plant
Chevron Phillips Chemical announced it is closing an affiliated pipe manufacturing plant in Querétaro, Mexico. The plant, in operation since 1998, manufactures polyethylene pressure pipe used in the municipal, gas distribution, conduit, energy, and industrial markets. The Querétaro plant’s existing production will be relocated to Chevron Phillips Chemical’s other pipe manufacturing facilities, operated by the Performance Pipe division.
Approximately 68 employees will be impacted as a result of this closure. Most of the impact will occur by the end of September and the affected employees will be offered severance packages.
According to the company, this closure will allow its piping business to take advantage of improved economies of scale while maintaining manufacturing capability to supply the pipe market in Mexico.
Comments: Performance Pipe was formed from Plexco formally a division of Chevron Chemical Company and Driscopipe a division of Phillips Petroleum Company to form North America’s largest producer of polyethylene piping products for gas, industrial, municipal, mining, oilfield, and utility applications. The company was formed when Chevron Corporation and Phillips Petroleum Company announced the combination of their worldwide chemicals businesses into a joint venture, Chevron Phillips Chemical Company LP. Currently, Performance Pipe has been operating for more than forty years with pipe and fitting manufacturing facilities throughout the United States and Mexico. The company has 10 manufacturing facilities in 8 states and had 1 manufacturing facility in Mexico.
The demand for polyethylene pipes in Mexico is close to 45 KT and growing at 8.2 percent. This demand is expected to continue for the next 5 years. The closure will leave Chevron Phillips with no manufacturing facility in Mexico. The supply to the Mexican market will come from their locations in the United States.
DSM plans to increase production capacity for Dyneema®
Royal DSM N.V., the largest manufacturer of high-performance polyethylene (HPPE) products in the world, announced its plans to invest in new production capacity for Dyneema® fiber. The new unit will be built at DSM’s facility in Greenville, North Carolina (USA).
The investment will amount to several tens of millions of USD and will bring the total number of fiber lines for the company to ten. The expansion of Dyneema® fiber capacity is a response to the continued strong demand in all its application areas. The new unit is expected to come on stream in early 2008. Construction is planned to start by the end of this year.
Comments: DSM has been constantly investing in the expansion of Dyneema-related production capacity. In 2004, DSM Dyneema opened its first yarn production line at the US Dyneema facility in Greenville, North Carolina, having a capacity of 600 to 750 tons per annum, depending on the product mix. DSM produces both fiber and unidirectional bullet-resistant material in the US. The company has been also increasing the applications for Dyneema®. It constructed a production line for Dyneema® Purity, a high-performance fiber for use in medical applications, such as strong orthopedic sutures and other surgical implants.
Dyneema is the ultrahigh-molecular weight HDPE fiber similar to Honeywell’s Spectra high-strength fiber. Its unique properties make them a valuable fiber for most high-strength applications including ropes & Cordage and fiber reinforcement applications.
Borouge and Borealis announce world-class Innovation Centre in the UAE
Borouge and Borealis, leading providers of value-creating, innovative plastics solutions, today announced the establishment of a major innovation center in the UAE. The center represents a significant investment in Borouge’s research capabilities to meet customer needs in the Middle East and Asia Pacific regions.
The innovation center, jointly developed by Borouge and Borealis, will concentrate on developing practical solutions for plastic material applications and be fully operational in 2009. It will be located in Abu Dhabi City and is expected to employ up to 45 technical staff in the initial phase.
As well as benefiting existing customers, the center forms part of the strategic expansion of both Borouge and Borealis across the region, underlining their joint commitment to value creation through innovation. The innovation center will also closely complement Borouge 2, the planned multi-billion USD expansion which will see annual production at Borouge’s manufacturing site in Ruwais, UAE triple to two million tonnes. With the establishment of research capabilities of this kind, the center will make a strong contribution to the growth of downstream industries in Abu Dhabi and the UAE.
The Abu Dhabi innovation center will work with Borealis ́ innovation centers across Europe, which includes an international innovation center in Linz (Austria), a catalyst and process research innovation center in Porvoo (Finland), and a merged innovation center in Scandinavia.
Borouge and Borealis will continue to enhance their research projects through partnerships with academic institutes of excellence. Borealis’ innovation center in Linz will collaborate with JKU, the Wels Advanced Technical College, the University of Leoben, and polytechnic institutes in Austria. Now, a similar partnership between Borouge ́s innovation center and the Petroleum Institute of Abu Dhabi will be developed, supporting the creation of a favorable environment for innovation in the Middle East and Asia.
Comments: Formed in 1998, Borouge is a Borealis joint venture with the Abu Dhabi National Oil Company. Borealis owns a 40% stake in the joint venture. Since the completion of its production site in Ruwais in 2001, Borouge has become a leading supplier of value-adding specialist plastics materials for applications such as water, gas, and industrial pipe systems, power and telecommunications cables, advanced packaging, medical devices, and automotive components. This brought the company an annual turnover of $860 million in 2005. The JV is constructing an ethylene cracker scheduled for completion in 2010 as a part of Borouge 2.
The technical center located in UAE will enable the partners to better serve their Middle Eastern and Asia Pacific customers.
EVAL Company of America completes expansion of production capacity for EVAL® resins
EVAL Company of America announced the construction of its EVAL EVOH expansion was completed, increasing its nameplate capacity by 24,000 tons. Sumitomo Chemical announced its plans to expand the capacity for polyether sulfone (PES) at Ehime, Japan. The expansion will add 500 metric tons per year of capacity, increasing the site’s total to 3,000 metric tons per year. Sumitomo completed a 500-m.t./year expansion of PES capacity at Ehime last July.
Considering the current extremely high energy and raw material costs, EVALCA is commissioning 50% of the increased capacity, 12,000 tons per year, with commercial operations to be fully on stream by the spring of 2007.
This expansion is a response to the growing worldwide demand for ethylene vinyl alcohol copolymer resin (trade name is EVAL®).
The company has recently built a new R&D center to support growth, in addition to this production expansion.
EVAL is an excellent barrier to fuel vapors as well, allowing it to be used in plastic fuel tanks for automobiles. The exceptional barrier properties of EVAL resins enable a tank manufacturer to produce lighter fuel tanks than steel, while at the same time maintaining very low evaporative emissions, ensuring compliance with strict fuel vapor emission regulations.
EVAL is also used in floor heating pipe systems, chemical bottles, fuel pipes, cosmetics, wallpaper, balloons, and several other consumer and industrial applications that require a barrier to gas, good chemical resistance, or durability.
EVALCA is a subsidiary of Kuraray Co., Ltd. of Tokyo, Japan. EVALCA manufactures and markets ethylene vinyl alcohol (EVOH) copolymer resins under the EVAL® trademark. EVAL resins are characterized by their outstanding gas barrier properties, resistance to solvents, chemicals, and hydrocarbons, and excellent barrier to odor and flavor permeation. These unique polymers are ideally suited for food, medical, pharmaceutical, cosmetic, automotive, agricultural, and industrial packaging applications.
Comments: In 1971, Kuraray bought the patent for EVOH from Monsanto, and two years later launched their product under the trade name EVAL™. In the mid-1980, European and US companies began to see their potential, and demand for EVOH has steadily been increasing. Today EVALCA a subsidiary of Kuraray is the larger and one of only two producers of EVOH in the world. The company sells EVOH as barrier resins for various applications including food, medical, pharmaceutical, cosmetic, agricultural, industrial packaging, and automotive applications where a barrier to oxygen and other gases is required.
The expansion in capacity will allow Evalca to meet the growing demand for EVOH that is consumed largely in the packaging application. Currently, the global demand for EVOH is at 86KTgrowing at 7.8%.
BASF, Dow & Solvay progress on propylene direct oxidation technology
BASF and Dow Chemical launched a long-term venture to produce propylene oxide (PO) at the world’s first commercial-scale hydrogen peroxide propylene oxide (HPPO) plant at BASF’s site in Antwerp, Belgium. This plant uses a new technology developed jointly by BASF and Dow. PO is a core ingredient for the $21 billion-a-year polyurethane industry. Solvay S.A. (Solvay) will be a key supplier to the new, innovative facility.
The innovative process technology offers a number of benefits over conventional routes to PO, including better economics, environmental improvements, and flexibility for locating new plants.
The HPPO plant will be fed with hydrogen peroxide (HP) from a second new plant at the Antwerp site. The HP plant will have a capacity of 230,000 metric tons per year and will be constructed by Solvay, BASF, and Dow. The 300,000 metric tons per year HPPO plant, which is being built jointly by BASF and Dow, is scheduled to start up in early 2008.
In 2003, Dow and BASF began their joint process research program to develop and commercialize the HPPO technology. This partnership allowed the two companies to combine their innovation strengths and thereby commercialize the technology more rapidly than would have been possible by either partner alone.
Dow and BASF are considering the development of additional HPPO projects in other regions, including Asia. BASF also plans to utilize the HPPO technology with a project at its Geismar, Louisiana, site in the United States.
Comments: The development of direct oxidation of propylene to propylene oxide is the “holy grail” technology to manufacture PO. Dow and BASF have been at the forefront of developing this technology using hydrogen peroxide.
Compared with conventional PO process technologies, HPPO offers unique benefits in three areas: economic, environmental, and opportunities for future growth. The economic benefits of PO plants include: (1) 25% lower capital investment, (2) eliminates the need for additional infrastructure or markets for co-products, as the process produces only PO and water, and (3) require simpler raw material integration—just hydrogen peroxide and propylene are needed as raw materials.
Some of the environmental benefits include the reduction of wastewater generation and energy usage.
In February 2006, Dow and BASF signed a manufacturing joint venture agreement to construct and operate a new PO manufacturing facility using the co-developed HPPO technology. Both companies have equal rights to the HPPO technology and receive half of the capacity of the Antwerp plant. At the same time, Solvay and BASF established a joint venture to construct a 230,000 metric tons per year HP plant at the Antwerp site based on Solvay’s high-productivity HP technology. A partnership was subsequently set up by this joint venture and Dow for the financing of the HP plant, which is scheduled to come on stream in 2008. The new HP plant will be the largest single-train HP plant in the world.
Dr. James C. Stevens of Dow Chemical Receives the 2006 Perkin Medal
The Society of Chemical Industry (American Section) has awarded James C. Stevens, Ph.D., research fellow, The Dow Chemical Company, the 2006 Perkin Medal. Stevens was the 100th recipient of the Perkin Medal, presented at the Society’s annual dinner on September 21, 2006, in Philadelphia, PA.
The Perkin Medal, established in 1906, is considered one of the chemical industry’s most prestigious awards and the highest honor that the Society bestows on an individual for outstanding work in applied chemistry in the United States. It commemorates the discovery of the first synthetic dye by Sir William Henry Perkin in 1856 and organic chemistry’s beginnings as a major segment of the chemical industry. The medalist is chosen by a jury composed of officers of the America Sections of the Society of Chemical Industry and the Societe de Chimie Industrielle, representatives of the American Chemical Engineers, the Electrochemical Society, and the American Institute of Chemists.
Stevens’ R&D work in the catalyst field began in the late 1970s when he joined Dow Central Research. He has been involved with the discovery and commercial implementation of Dow’s INSITE™ Technology and Constrained-Geometry Catalysts, which are used in the production of approximately 2 billion pounds of polyolefins per year. He is one of the primary inventors of several commercial catalysts and plastic products including a variety of INSITE catalysts.
Stevens’ work has resulted in several new Dow product lines such as AFFINITY™ polyolefin plastomers, ELITE™ enhanced polyethylene resins, ENGAGE™ polyolefin elastomers, NORDEL™ IP EPDM rubber, NORDEL™ MG EPDM, INDEX™interpolymers, VERSIFY™ plastomers, and elastomers.
His current work includes applications of combinatorial and high-throughput methods to catalyst research, solution-process polypropylene, and the relationship of catalyst structure to polymer microstructure.
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