My Turn – Commentary by Dr. Balaji B. Singh
Some good reasons to attend Flexpo2006 in Houston, Sept 20-22, 2006 – Just see the program.
INEOS Technologies to license Innovene S Process to China Petrochemical International Company
INEOS Technologies announced that it has licensed its ‘Innovene S Process for the manufacture of HDPE and MDPE to China Petrochemical International Company Limited for use at Sinopec Tianjin Petrochemical Company, Tianjin, China.
The 300-ktpa plant will produce a full range of Ziegler and Chrome monomodal and bimodal products for the Chinese market.
This is the second time that INEOS has licensed this process in China during the last year. In September 2005 INEOS licensed an ‘Innovene S’ 300-ktpa unit, including a downstream pipe compounding facility, to PetroChina International Company Limited, for their new major expansion project at Dushanzi, Xinjiang
Comments: Almost 10% of the total installed HDPE capacity is based on INEOS (Innovene) technology. The leading licensors for HDPE include Unipol and Phillips each accounting for over 20% of the total HDPE capacity licensed. Innovene has its largest installed capacity base in Asia-pacific accounting for over 55% of the total capacity licensed by Innovene. North America is the next largest accounting for 18% of installed Innovene capacity. The least successful regions have been South America (0%) and Japan (5%).
The HDPE/MDPE plant is part of the one million-ton ethylene cracker complex of Sinopec Tianjin. The project was approved by the State Council in December 2005, and the construction started on June 26, 2006. It is expected to complete in three years or so. Sinopec Tianjin is a wholly owned subsidiary of Sinopec. Currently, it has 200kt/ethylene, 14kt/LLDPE, and 7kt/PP. Sinopec decided to start the cracker on its own after its years of negotiation for a joint venture with Dow Chemical failed.
Recently, the former Innovene that INEOS acquired from BP has been officially renamed INEOS Technologies. It is expected INEOS Technologies will continue the licensing activity, if not more aggressively.
Total Petrochemicals to end elastomer production in Antwerp
Total Petrochemicals announced its intention to end elastomer production at its Antwerp facility in Belgium after several years of operating in increasingly tough economic and competitive conditions. Located in the port area close to other Group plants, the Antwerp facility produces synthetic thermoplastic rubbers.
Despite refocusing its sales on Europe in December 2004 in an attempt to restore the financial equilibrium of the business and studying partnership structures able to guarantee its viability, Total Petrochemicals is now forced to consider the end of the elastomer production due to economic conditions made particularly difficult by the relocation to Asia of both consumption and production process.
The plan would lead to the loss of 144 jobs – 134 in Antwerp and 10 in Brussels. In line with its social policy, Total Petrochemicals would do its utmost to ensure that there are no layoffs. Total Petrochemicals is committed to offering every employee affected an employment solution, principally redeployment elsewhere in the company or early retirement. A career transition unit would be set up to supervise the process.
Comments: The elastomer plant which started in 1967 in Antwerp has been producing SBS under the trade name Finaprene® and Finaclear®. The plant has a total capacity of 100KT. Finaprene products are more elastomeric typically containing more than 60% butadiene. These resins are commonly used for bitumen modification, footwear, adhesives, compounding, and as polymer impact modifiers.
Finaclear products typically containing more than 70% styrene are commonly used as impact modifiers for crystal polystyrene, where clarity is an essential requirement.
The markets for SBS have been changing in recent years with competition from APAO for modified roofing applications and adhesives; and TPO for single-ply roofing. SBS has also seen a decline in growth rates in Western countries for applications such as footwear due to the manufacturers moving their facilities from North America and Europe to low-cost manufacturing regions such as China.
Brazilian petrochemical company Ipiranga to produce PE-100
Brazilian petrochemical company Ipiranga Petroquímica announced its plans to produce PE-100, high-density polyethylene whose main characteristic is its resistance to high pressure, in Brazil. Ipiranga will be the first company in Latin America to produce the material.
Research began in 2001 and was completed last March. Up to the moment, PE-100 used in Brazil was imported. In the country, the polymer is used to make pressure cylinders for natural gas and in mining, water and sewage networks, underwater pipelines, and water mains.
Comments: PE-100 was first introduced in Europe in the late 1980s and is also referred to as third-generation polyethylene. They have improved pipe performance significantly and are widely used for the water- and gas supply. This resin is increasingly used in all applications that require higher performance properties. In pipe application, it exhibits high tensile strength with long-term performance properties such as fatigue and cracks growth resistance. PE 100 has the advantage of higher design stress allowing operation at higher pressures, even wall thinning, and greater fracture resistance for the large-diameter pipe.
The major advantages of PE100 include (1) low weight (2) outstanding flexibility (3) good abrasion resistance (4) corrosion resistance (5) good chemical resistance (6) impact resistance even at low temperatures and others.
Ipiranga Petroquímica’s production of its PEI00 will allow it to better serve the increasingly growing South American markets specifically the high-growth regions such as Brazil and Argentina where Ipiranga currently supplies.
GS Caltex acquires PP compound producer in China
South Korea’s second-largest oil refiner GS Caltex Corporation announced the acquisition of a Chinese compounder to make inroads into the country’s potentially lucrative downstream market.
GS Caltex acquired a 100% stake in Langfang Jiashi Chemical Co for US$4.3 million. The maker of polypropylene compounds, widely used in products such as textiles and car components, is based in China’s special economic zone of Langfang, located between Beijing and the northeastern Chinese port city of Tianjin.
The Chinese company has been a supplier of polypropylene to local production units of major South Korean firms such as Hyundai Motor Co, Kia Motors Corporation, and LG Electronics Inc.
Comments: In a sense, Langfang Jiashi is not a Chinese company—it is a Korean company located in Langfang, China. It was established in 2004 by BIO-ONE, a subsidiary of LG. It completed the first stage of construction and started production in Oct. 2005. Its designed capacity is 15kt of polypropylene compound or 3.3 million pounds.
Established in 1967 as a joint venture between GS Group and Caltex Corporation, GS Caltex is the second-largest refiner in South Korea.
Its petrochemical business was started in the late 1980s. The company has an annual production capacity of 1,200,000 tons of para-xylene and 770,000 tons of benzene. It has licensed a Unipol polypropylene process with an annual capacity of 180 KT. This new acquisition provides GS Caltex with a first step into the fast-growing market of China.
NOVA Chemicals creates separate STYRENIX units to reduce costs
NOVA Chemicals Corporation announced its plans to restructure to better align resources and reduce costs. NOVA Chemicals’ styrene monomer and solid polystyrene assets in North America and the company’s interest in the European 50:50 Joint Venture with INEOS will operate as a separate unit that will be known as STYRENIX.
Companywide costs will be reduced by a total of at least U.S. $65 million per year, which represents an additional $50 million in annual cost savings beyond the previously announced savings of $15 million per year from the Chesapeake, Virginia, site closure. In total, approximately 375 positions will be eliminated. The STYRENIX unit will include (1) The Bayport, Texas, and Sarnia, Ontario, styrene monomer production facilities, (2) Solid polystyrene manufacturing facilities at Decatur, Alabama; Springfield, Massachusetts; and Montreal, Quebec, and (3) NOVA Chemicals’ interest in the European Joint Venture with INEOS, NOVA Innovene.
Comments: Over the last few quarters, Nova Chemicals’ styrene business has been losing money. This move from Nova reflects its strategy to reduce costs and better align resources. This could be the company’s strategy for a possible spin-off or sale of its styrene business.
Solvay to launch specialty polymer production in China
Solvay announced its plans to build a new world-class polytetrafluoroethylene (PTFE) Micronized Powder production unit in the People’s Republic of China, to serve the local demand for innovative and high-performance materials. Pending authorization from the relevant authorities, Solvay would initiate production in the second half of 2007.
PTFE Micronized Powders, marketed under the brand name Polymist®, are used in a variety of complex applications, such as the manufacturing of cosmetics, high gloss inks, high-performance lubricants, and heat-resistant materials. The demand for micronized PTFE in Asia and particularly in China is fuelled by both the fast development of a local customer base as well as by the creation of local production facilities by several of Solvay’s global clients.
This latest move materializes Solvay’s geographical expansion strategy into fast-growing markets, with a particular focus on Asia. Other recent initiatives in Asia include the acquisition of the ultra-performance polymers activities of Gharda Chemicals in Panoli, India; the creation of a high-performance materials R&D and marketing platform in Shanghai, China; setting up a joint venture for the development, production, and marketing of High Purity Hydrogen Peroxide in Suzhou, China and the commissioning of a new production facility for fluorinated chemical specialties in Onsan, South Korea.
The new Polymist ® facility would be located in the Jiangsu High-Tech Fluorochemical Industrial Park in Changshu some 100 kilometers west of Shanghai – and operated through Solvay Specialty Polymers Changshu, a newly created and fully-owned subsidiary of the Solvay group. The location was selected because of its proximity to Shanghai and the dedication of the Industrial Park to complex technologies in specialty chemicals and polymers – and particularly in the area of fluor technologies. In the first stage of development, the Changshu unit would occupy a surface of some 50,000 square meters. However, Solvay has also signed with the Park Authorities a Land Reservation Agreement for a total surface of 350,000 square meters to make Changshu the Solvay industrial base in China for further investments in Specialty Polymers.
Comments: Polytetrafluoroethylene (PTFE) also known as Teflon (DuPont trade name) has the lowest coefficient of friction compared to any known solid material. Micrometer-sized PTFE particles are used in many cosmetics to provide a smooth feeling. PTFE has excellent heat resistance—can be used up to 260°C and very good chemical resistance. Due to these properties, it is often used as protective and lubricant coating in cookware, containers, and pipeline for reactive chemicals. Its great dielectric properties and flame retardancy make it a material of choice in some wire and cable and other electrical applications.
As many other companies do, Solvay is also looking for new opportunities in the growing market of China and other Asian countries.
Chevron Phillips Chemical’s Ryton changes name to Engineering Polymers
Chevron Phillips Chemical announced a name change for the “Ryton” organization. The new name is “Engineering Polymers,” which reflects the group’s growing portfolio. The name change will encompass the well-known products sold under the Ryton® polyphenylene sulfide (PPS) and Xtel® PPS alloys brands.
A lightweight alternative to metal, Ryton® PPS can easily be molded or extruded. It’s minimal moisture absorption and low coefficient of linear thermal expansion make Ryton® PPS an excellent option when molding complex parts in tight tolerances. Additionally, Ryton® PPS provides ease of processibility that enables manufacturers to integrate multiple components into one, reducing time and costs. This versatility makes Ryton® PPS a preferred choice in automotive, electronic, industrial, and appliance industries worldwide.
In 2003, Chevron Phillips Chemical introduced Xtel® PPS alloys. These alloys offer similar resistance and stability as Ryton® PPS with the added benefit of elasticity. In addition to its flexible traits, Xtel® PPS’ excellent flow in thin walls translates to low flash characteristics and fast cycle times.
Arkema to increase Kynar® production capacity in the US
Arkema announced its plans to increase the production capacity of its fluoropolymer Kynar® at its Calvert City KY facility by over 2,000 tons a year. The investment is expected to be $12 million.
Scheduled for completion in early 2008, this capacity increase will make Kynar® unit production in Calvert City one of the largest PVDF plants in the world, strategically placed to supply both American and Asian markets. Like Arkema’s PVDF plant in Pierre-Benite, France, the Calvert City plant benefits from integrated monomer feedstock, efficient technology, and experienced manufacturing personnel.
Distributed under the trade name Kynar®, PVDF is a technical polymer that offers valuable surface characteristics and resists weathering and corrosive chemicals. It has many applications in chemical engineering and construction as the basis for high-performance paints used to protect metal surfaces.
Comments: It seems that Arkema, the second-largest producer of polyvinylidene fluoride (PVDF) in the world is trying to strengthen its position right behind the industry leader, Solvay Solexis. Both Solvay Solexis (a new organization created by the Solvay Group following the acquisition of Ausimont, a global manufacturer of fluorinated specialties, in 2002) and Arkema (a new name for Atofina Chemicals Inc., in the USA as born out of the reorganization of Total’s Chemicals business in 2004) are the two major producers of PVdF in the world except some minor players – Central Glass Co., & Daikin Industries Ltd from Japan and Shanghai 3F New Materials Co., Ltd from China. Unlike the largest volume fluoropolymer – polytetrafluoroethylene (PTFE), PVdF is one of the melts processable but relatively small volume resins. Compared to PTFE, it has greater mechanical strength, toughness, and creep resistance but less chemical inertness, anti-stick, lubricity, and dielectric properties. PVdF, being very expensive, is used in applications requiring the highest purity, strength, and resistance to solvents, acids, bases, and heat. It is available as piping products, sheets, plates, and insulators for premium wire. It can be injection molded and welded as practiced by chemical, semiconductor, medical, and defense industries. Of its unique piezoelectric/pyroelectric properties, PVdF is used widely in sensor and battery applications. Commercially, it is available as Kynar® from Arkema and Hylar® from Solvay Solexis, and Dyneon® from 3M.
DuPont to introduce nanocomposites in 2007
DuPont Engineering Polymers is developing thermoplastic nanocomposites that promise to open new opportunities for the design and production of parts delivering higher performance, lighter weight, and/or increased molding productivity.
At the NPE 2006 plastics exhibition week, Dr. Nandan Rao, vice president, of technology for DuPont Performance Materials, announced that DuPont Engineering Polymers plans to introduce its first nanocomposites in 2007 and gave a preview of their potential benefits and underlying technology.
According to the company, its new materials are based on advances flowing from fundamental research on the behavior of nanomaterials in polymers. The company is researching nanomaterials with unique properties and better ways to disperse them in polymers.
Thorough dispersion of nano-sized particles in the polymer matrix can produce exponential increases in the interfacial area between polymer and particles and a large interfacial area produces major improvements in mechanical properties, high-temperature performance, barrier properties, and processing characteristics.
With proper dispersion, small amounts of a new DuPont nanomaterial called DNM in a polymer can produce substantial property improvements, according to Dr. Rao. He cited an example in which the addition of only 1.5 percent by weight of DNM in glass-reinforced PET material produced improvements in heat deflection temperature (HDT) of 10 to 15 degrees Celsius over typical glass-reinforced PET.
Comments: After years of heavy investment in the research and development of nanomaterials by the government and private sector, we have started to see some commercial progress. For example, General Motors used 7 lbs of nanocomposites in each of its 2005 models of Hummer H2. GM also used nanocomposites in its Impala line.
The nano clay typically could improve the performance of nanocomposites in (1) mechanical properties, (2) barrier properties, and (3) flame retardancy. A carbon nanotube is used to improve the conductivity of plastics. The single largest barrier to the large-scale commercial application of nanocomposite is still its high cost. GM as the largest end-user of nanocomposite only consumes nanocomposite on the scale of one million pounds a year (If we do not count the tire industry which consumes far more nanometer-sized carbon black). It is not big news that DuPont is entering the nanocomposite business. It will be big news if they could cut down the cost dramatically to the extent that would allow billions of pounds of application.
EU to impose tariff on plastic bags from China and Thailand
European Union announced its decision to impose tariffs on the polyethylene bags imported from China and Thailand.
EU will place tariffs of 15.2 percent on plastic bags from China and 14.3 per cent on bags from Thailand after an inquiry found that they were being illegally dumped on the European market. China exports $300 million (£163 million) of plastic bags to Europe each year.
The Commission insists that anti-dumping duties are needed to protect European plastic bag makers because China and Thailand subsidize their plastic bag producers by means such as free land and tax holidays. France pressed for the tariffs, although there are also plastic bag factories in Germany and the UK.
The British Retail Consortium said the bag tariff would raise leading UK supermarkets’ costs by £61 million a year, which would be passed on to consumers.
Comments: The European Union has been evaluating the situation for the past few months to decide on increasing tariffs on bags. Retailers have opposed the tariffs and said that the duty would cut profit margins and increase the pressure for rises in shelf prices or job cuts. The cost to the big four supermarkets that import 10 billion bags a year is estimated to be £55m. This increased cost will most likely be passed on to the consumers. The decision by Brussels to impose tariffs could start a fresh trade war between Europe and China. If raised the tariffs will almost double from 6.5% to 15%.
Berry Plastics is to be acquired by private equity firms Apollo Management and Graham Partners
BPC Holding Corporation, parent of Berry Plastics Corporation, and the private equity firms Apollo Management, L.P., and Graham Partners announced their plan to acquire BPC Holding Corporation from Goldman Sachs Capital Partners and JPMorgan Partners for an enterprise value of $2.25 billion in aggregate consideration. The transaction is subject to regulatory approval and other customary closing conditions. The parties expect to complete the transaction by the end of the third quarter.
Berry Plastics is a leading manufacturer and marketer of rigid plastic packaging products. Berry Plastics provides a wide range of rigid open-top and rigid closed-top packaging as well as comprehensive packaging solutions to over 12,000 customers, ranging from large multinational corporations to small local businesses. In the fiscal year ending December 31, 2005, the company had pro forma annual sales of $1.3 billion. Based in Evansville, Indiana, the company has 25 manufacturing facilities worldwide and more than 6,800 employees.
Apollo Management, L.P., founded in 1990, is among the most active and successful private investment firms in the United States in terms of both the number of investment transactions completed and aggregate dollars invested. Since its inception, Apollo has managed the investment of an aggregate of approximately $13 billion in equity capital in a wide variety of industries, both domestically and internationally. Apollo is currently investing its sixth corporate fund, Apollo Investment Fund VI, L.P., which has total committed capital (including co-investment entities) of approximately $12 billion.
Graham Partners is a leading middle-market industrial private equity firm based in suburban Philadelphia with over $850 million under management. Graham Partners is sponsored by the privately held Graham Group of York, Pennsylvania, an industrial and investment concern with global interests in plastics, packaging, machinery, building products, and outsourcing manufacturing. Graham Partners seeks to acquire industrial companies that participate in growing manufacturing niches, often involving plastics or other synthetic materials, where Graham can leverage its unique combination of operating resources and financial expertise.
Comments: Berry Plastic was originally established in 1967 as Imperial Plastics and located in Evansville, Indiana, and has now grown into a leading US manufacturer of injection-molded plastic packaging products. The company’s plastic packaging products cater to markets such as health & beauty, dairy, industrial, food processing snacks/confection, beverages, and others. Berry plastics injection molds, thermoform, and extrudes closures, containers, tubes, and bottles. The company currently operates 23 U.S. facilities, as well as wholly owned operations and joint ventures in Mexico City; Norwich, U.K.; Milan, Italy; and Guangzhou, China.
Apollo Management, L.P. has been active in acquiring in the last few years. The company, a co-owner of Nalco bought Borden Chemical, a US supplier of resins, adhesives, and specialty chemicals, and certain products and businesses from Eastman Chemical’s, and also acquired GNC from Dutch food and nutrition group Royal Numico and Metals USA, Inc., a leader in the metals processing and distribution industry.
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