My Turn – Commentary by Dr. Balaji B. Singh
Some good reasons to attend Flexpo2006 in Houston, Sept 20-22, 2006 – Just see the program.
Basell to license Spherizone technology to Lotte Daesan for a new 250 KT per year PP plant in Korea
Lotte Daesan Petrochemical Co. Ltd. has selected Basell’s Spherizone technology for a new 250 KT per year polypropylene plant to be built at Daesan, South Korea. Start-up is planned for the fourth quarter of 2008.
The Spherizone process is an advanced manufacturing process for the production of polypropylene. It uses a unique, state-of-the-art, multi-zone circulating reactor system. Spherizone plants can produce the full range of polypropylene grades and new families of propylene-based polymers.
Comments: The development of the Spherizone process started in the mid to late 1990s. In 1999 Basell scaled up a pilot plant in Ferrara (0.5 t/h), and later in 2002, started the first commercial Spherizone plant in Brindisi with a capacity of 160 KT. Over the past few years, Basell has licensed several Spherizone units to its joint ventures: Indelpro in Mexico 350KT/yr (2006- 2007), Sahara in Saudi Arabia – 450KT/yr (2008), HMC Polymers in Thailand – 300 KT/yr (2009).
Other units include Samsung Total in Korea 250KT/yr (2007). The technology has the capability to produce products with unique properties as a result of the multi-zone reactor configuration. Many polypropylene producers are looking into this technology as a way to further differentiate their products.
Basell is working hard to establish the Spherizone process as a competitive PP platform, leveraging its relationship with its joint venture partners as well as some third parties. Time will tell if the Spherizone process will follow the tremendously successful path of the Spheripol process.
Saudi Aramco and Dow to enter into negotiations on new petrochemical complex at Ras Tanura, Kingdom of Saudi Arabia
The Saudi Arabian Oil Company (Saudi Aramco) has selected The Dow Chemical Company as its potential partner to engage in exclusive negotiations concerning a joint venture company to construct, own and operate a world-scale chemicals and plastics production complex at Ras Tanura, in Saudi Arabia’s Eastern Province.
This joint venture would encompass an array of world-scale facilities producing a very broad portfolio of plastics and chemical products.
The proposed petrochemical project would be integrated with the existing Ras Tanura refinery complex, which is one of the world’s largest refinery complexes. When fully operational, the new petrochemical complex would be one of the largest plastics and chemicals production complexes in the world and be ideally situated to access most major world markets. The joint venture would produce an extensive and diversified slate of chemicals, and introduce new value chains and specialty products to the Kingdom. The availability of these chemicals in the Kingdom would facilitate the development of downstream conversion industries and the further industrialization of the Kingdom.
Comments: This is the first venture for Dow in the Kingdom of Saudi Arabia, however, Dow has had a presence in the Middle East via its Equate venture. EQUATE was established in 1995 as a joint venture between the Government-owned Petrochemical Industries Company of Kuwait and Union Carbide Corporation, which is now a wholly-owned subsidiary of Dow. Each holds 45% ownership with the additional 10% held by Boubyan Petrochemical Company a publicly traded company on the Kuwait Stock Exchange.
This announcement further strengthens Dow’s raw material position. Saudi Aramco had made announcements regarding its intentions to expand downstream operations. This JV has a huge potential for success. Saudi Aramco can offer its experience in the Middle East and access to cost-advantaged raw materials and Dow can offer its experience and strength in the chemical industry.
CMR is planning to participate in the Saudi Energy Forum in November in the session featuring “Leveraging Petrochemicals to Develop the Manufacturing Industries”.
BASF and SINOPEC sign $500 million agreement to expand Nanjing site
BASF and China Petroleum & Chemical Corporation (SINOPEC Corp.) signed a $500 million (4 billion RMB) agreement to expand their joint chemical Verbund site in Nanjing.
According to the companies, the expansion of BASF-YPC Co. Ltd. is the result of their continuous successful cooperation during the first phase of the project, and fits the development of both parties, while further strengthening the cooperation between Sino-German enterprises.
Following last year’s smooth and successful start-up, BASF-YPC Co. Ltd. – the 50:50 joint venture between BASF and SINOPEC – plans to extend its joint operations by expanding the capacity of its steam cracker and investing in additional downstream plants to further strengthen synergies at the site. The major pillars of the investment are:
Expansion of steam cracker from 600,000 to around 750,000 metric tons of ethylene per year; Expansion of the ethylene oxide (EO) plant and development of EO derivatives to strengthen the ethylene value chain producing non-ionic surfactants for detergents and the solvent butyl glycol ether; Development of the C4 value chain including C4-specialties: Butadiene and isobutene as chemical raw materials, 2-propyl heptanol for a new generation plasticizer and polyisobutene derivatives as fuel and lubricant additives; Extension of the acrylics value chain to produce super absorbent polymers (SAP) for hygiene and industrial applications.
The new activities are expected to come on stream in 2009. Both companies also agreed to integrate their second joint operation Yangzi-BASF Styrenics (YBS) in Nanjing into BASF-YPC Co. Ltd. to increase efficiency and make full use of existing synergies.
Comments: This latest announcement of the expansion of BASF-YPC is simply a reconfirmation and finalization of the plan that has been under discussion even when the complex was officially opened in September 2005. The initial investment is $2.9 billion. Once the first phase is completed, it is much easier and cost-effective for further expansions; supposedly expansions have been under consideration from the beginning. The scale of the initial 600kt ethylene cracker is also relatively low compared to the other new crackers in China, which are typically close to one million tons. The investment for the second phase is $0.5 billion. BASF has set a goal of achieving 10 percent of its global sales in the chemical business in China by 2010. We will not be surprised if more expansions are announced after these expansions are completed.
Suzano Petroquímica completes the first phase of its polypropylene capacity expansion project
Suzano Petroquímica S.A., the Latin American leader in the production of polypropylene and a joint controlling shareholder of relevant players in the petrochemical sector – Rio Polímeros S.A. and Petroflex Indústria e Comércio S.A., announced the completion of the first phase of the capacity expansion project of Maua’s industrial site.
PP production capacity at Maua was increased by 60 KT/year, reaching a nameplate capacity of 360 thousand tons per year. Maua’s industrial site has now the biggest production capacity in a single site in Latin America. The second phase of Maua’s capacity expansion, which will add another 90 thousand tons per year, is estimated to be finished by the second quarter of 2008. Additionally, Duque de Caxias’ facility expansion, in 100 thousand tons per year, is expected to be ready by the second quarter of 2007, together with Duque de Caxias’ sea terminal. The total Capex of these investments is estimated to amount to approximately US$ 95 million, which had been pre-financed in 2005 by IFC and BNDES.
Comments: Over the last few years, Suzano Petroquimica has expanded its polyolefins (both polyethylene and polypropylene) operations. In 2005, the company acquired a 50% stake in its PP joint venture Polibrasil from Basell. The company recently started operations at its 270 KT/year LLDPE plant at Riopol.
Suzano has a production capacity of 625 KT/year of polypropylene manufacture at three different facilities including (1) Mauá (State of São Paulo), (2) Duque de Caxias (State of Rio de Janeiro), and (3) Camaçari (State of Bahia). The company has planned to increase its total production capacity by 250 thousand tons/year by 2008 with the expansion of Mauá and Duque de Caxias Units.
After this expansion, Suzano’s PP capacity will account for 45% of the total PP capacity in Brazil and 30% of the total PP capacity in South America.
BASF develops a new grade of highly transparent SBS block copolymer
BASF introduced a new, highly transparent type of Styrolux® plastic, specially developed for sophisticated applications. Styrolux 3G46 belongs to the family of styrene-butadiene block copolymers (SBS) and combines toughness and transparency so effectively that it is particularly well-suited for extruded blister packaging or visually striking presentation displays. Products such as cups and bowls, which are made by thermoforming, as well as injection-molded parts can now be manufactured with the new Styrolux with even greater transparency than has been possible so far.
Styrolux 3G46 shows its mettle in blends with standard polystyrene (GPPS): it remains highly transparent, even with GPPS contents of up to 40 percent, a huge improvement over the products that have been available up to now. The new SBS type imparts such cost-effective mixtures with good tensile strength while still attaining excellent stiffness.
According to BASF, in comparison to the likewise highly transparent multilayered films made of polyester, the new Styrolux is also 30 percent less dense, it does not have to be dried and it is easier to process, all of which translates into yet another cost advantage for the end users.
Comments: BASF is one of the largest producers of high styrene SBC in Europe with their Styrolux® brand having over 60% of market share. The main markets High Styrene SBC used in are (1) Injection Molding, (2) Thermoforming, (3) Films, and (4) Blow Molding. The single largest market for High Styrene is Thermoforming Application. Thermoforming includes cups, Plates, Dishes, Trays, and others. The typical property requirement for these applications include The major technical requirement for Cups application include (1) Clarity, (2) Stiffness, (3) Lightweight, (4) Scratch Resistance, (5) Organoleptic property, and (6) High flex modulus.
In Europe, the demand for high styrene SBC is close to 120 million pounds with thermoforming consuming close to 70 % of total consumption. BASF’s introduction of its new Styrolux grade will allow it to increase its product folio and expand its market.
Russian firm Nizhnekamskneftekhim to build ABS plant
Russian company Nizhnekamskneftekhim (Nizhnekamsk, Russia) announced its plans to build its first acrylonitrile butadiene styrene (ABS) plant at the company’s Nizhnekamsk petrochemical complex. The company is Russia’s second-largest chemicals producer, behind Sibur (Moscow).
Nizhnekamskneftekhim has signed an agreement with Polimeri Europa (Milan) to license Polimeri’s continuous mass polymerization technology for a 65 KT/year ABS plant to be completed in 2009.
The plant investment will be about $50. Polimeri operates a 60 KT/year ABS plant based on this technology at Mantova, Italy.
Nizhnekamskneftekhim will be the third ABS producer in Russia. Plastik (Tula) and Tokem (Kemerovo) have a combined capacity of about 16,000 m.t./year, based on old technology. Some 65% of Russia’s ABS needs are currently covered by imports.
Nizhnekamskneftekhim’s ABS investment is part of a much larger capital expenditure program. The company is adding 140 KT/year of ethylene capacity, increasing its total to 600 KT/year, and building units producing 180 KT/year of polypropylene and 230 KT/year of LLDPE.
Comments: Established in 1967, Nizhnekamskneftekhim is a key petrochemical producer in Russia. It is dominant within CIS in linear alpha-olefins, propylene oxide, polyethers, ethylene glycols, and styrene, as well as synthetic rubber–isoprene, butyl, and ethylene-propylene. The Company’s market share in the Russian Federation is polyethers – 97%, ethylene oxide – 75%, and styrene Another Unique Service From Chemical Market Resources, Inc. 560 Blossom Street, Ste C, Houston, TX 77598 USA; Tel: 281-557-3320 Email: POE-SNA@CMRHouTex.Com Copyright © 2006 Page 11/15of Issue 15 – Volume 4 – 64%, butyl rubber – 60%, isoprene rubber – 47%, ethylene glycol –40%.
The company has reviewed the ABS technology from several licensors including Mitsui, Toyo Engineering, and others. At one time, news/rumors came out that BASF was chosen by Nizhnekamskneftekhim for the ABS plant.
There are mainly three processes to make ABS: emulsion polymerization, bulk or mass polymerization, and suspension polymerization. Mass polymerization has gained popularity, mainly because of its low cost. The limitation of mass polymerization of ABS is that it is difficult to make grades with more than 20% of rubber content. The gloss of the ABS parts is lower compared to those made from emulsion ABS. It has to be painted if high gloss is required.
Treofan to invest in BOPP capacity in Mexico
One of the leading BOPP film producers, Treofan announced its plans to invest $45 million in the expansion of BOPP capacity at its North American plant in Zacapu, Mexico.
The company will invest in expanding production and R&D facilities including a new state-of-the-art 8.2-meter high-speed production line to be supplied by Brueckner. This investment will almost double the capacity of its Mexican BOPP plant.
According to the company, this investment will give them a stronger competitive position in North America and allow them to expand the company’s specialty product portfolio and better serve its North American and multinational customers.
The current investment is fully financed by the company’s existing lenders and an investor group led by Goldman Sachs. Treofan is the largest producer of BOPP film in Europe, the second largest globally, and a market leader in many of the specialty product segments and geographic regions where it is active.
The Treofan Group with its headquarter in Raunheim, Germany develops, manufactures, and markets under the brand name Treofan® biaxially oriented polypropylene film (BOPP) and cast polypropylene film, as well as under the brand name Biophan® sustainable and compostable polylactic acid film. Treofan markets its products in more than 20 countries, manufacturing some 220 KT of film a year at 7 sites in Europe, North America, and South Africa.
Comments: This investment by Treofan seems to be based on: (1) improving the company’s commodity/specialty mix by participating in specialty multi-layer films and (2) optimizing its global production facilities. In late 2005 Treofan upgraded its BOPP line in South Africa to increase the speed of the line by 20%.
The line is expected to have a capacity of 36,500 tons per year with a production speed of 525 meters per minute. The main emphasis seems to be on the ability to make 5-layer films for specialty applications. The equipment has the latest twin screw extrusion for quick product changes and flexible raw material use. Treofan has announced that this facility will cater to the Americas market but it is still unclear if some products from this facility will be exported to other regions. There is no announcement on the start-up date of the plant either.
The current demand for BOPP films in Mexico is about 80-85 KT with a total capacity of about 110 KT. A plant of this size could significantly impact the operating rates.
Sekisui Voltek acquires Youngbo America and increases capacity for XLPE and XLPP roll products
Sekisui Voltek, LLC, a U. S. subsidiary of Sekisui Chemical Co. Ltd of Tokyo Japan (Sekisui Japan) has acquired 100% of the stock of Youngbo America, Inc. a California Corporation, from Youngbo Chemical Co., Ltd of Korea (Youngbo Korea). Sekisui Japan is already a 51% shareholder of Youngbo Korea. Young America’s California facility will serve as a West Coast sales office and distribution center.
In addition to this acquisition, Sekisui Voltek also announced that it has significantly expanded the capacity of both XLPE and XLPP Volara® foam production to meet predicted strong growth in their three major business sectors of Automotive, Industrial, and Tape & Healthcare.
Sekisui Voltek, LLC, a part of the worldwide network of Sekisui companies, is a global leader in the development and production of crosslinked, closed-cell polyolefin foams. For over 35 years, Sekisui Voltek’s innovative foam solutions have been used for a wide variety of applications within transportation, tape and healthcare, building and construction, sports and leisure, and general industrial markets. Sekisui Voltek has three primary foam processes; Volara® – Irradiation crosslinked polyolefin foam in roll, and laminated sheet form, Volextra® -an extrusion coated Volara composite and Minicel® – a chemical crosslinked foam in Bun form.
Comments: Sekisui Voltek, LLC, is a global leader in the development and production of crosslinked, closed-cell polyolefin foams. Sekisui is the largest producer of polyolefin foam in the world with manufacturing facilities in North America, Europe, and Japan. The North American demand for polyolefin foam is close to 450 million pounds. The major end-use markets include (1) automotive, (2) sporting and recreational goods, (3) building and construction, (4) medical, (5) industrial, and others.
Sekisui Voltek has three primary foam processes; Volara® – Irradiation crosslinked polyolefin foam in roll, and laminated sheet form, Volextra® -an extrusion coated Volara composite and Minicel(R) – a chemical crosslinked foam in Bun form.
The acquisition of Youngbo America’s California facility allows Sekisui to serve as their West Coast sales office and distribution center for that region.
Alcan to close two plants in the UK
Alcan announced that it has begun consultations with unions and employee representatives for a proposed closure of two UK sites, one in each of its Engineered Products and Alcan Packaging groups. The Company expects to incur a pre-tax, non-recurring, charge of approximately US$40 million in the second quarter of The proposed reorganization would result in (1) the closure of the Workington, U.K. Aerospace, Transportation and Industry hard-alloy extrusion plant; and (2) the closure of the Midsomer Norton, U.K. food packaging plant.
The Workington plant produces stringers and bars for the aerospace and engineering markets. The reorganization plan is aligned with Alcan’s Engineered Products strategy of focusing its strengths on creating specialized and efficient manufacturing sites. Production from Workington would be consolidated at Alcan’s facilities in Issoire and Montreuil-Juigné, France. Workington would cease production by the end of the 2nd quarter 2007. The reorganization plan would affect all 161 Workington employees.
The Midsomer Norton site produces flexible food packaging for the U.K. snack market. The plant has been adversely affected by declining demand in the U.K. market and high raw material costs. The site is expected to close by the end of 2006 and all 218 employees would be affected. Alcan Packaging would continue to supply the U.K. snack market from its remaining European sites.
Comments: This announcement is part of the company’s strategy to maintain the competitiveness and long-term viability of its businesses. The company is the second-largest aluminum producer in the world and a leading packaging company. The company’s overall strategy has been to maintain a low-cost position in its business units. It has significantly increased its packaging revenue by closing high-cost plants and expanding into niche areas such as pharmaceutical packaging.
Lyondell-Citgo discontinue the sale of their Houston refinery
Lyondell Chemical Company announced that the company and its partner, CITGO Petroleum Corporation, have discontinued the exploration of a sale to a third party of the LYONDELL-CITGO Refining LP (LCR) partnership that operates a refinery in Houston, Texas.
While significant interest was expressed in the refinery and offers exceeded $5 billion, Lyondell has determined that these offers were insufficient to overcome the significant benefit of retaining an ownership position in the 268,000 barrels-per-day refinery. The partners continue to evaluate alternatives including Lyondell’s acquisition of CITGO’s position or continuation of the joint venture.
Lyondell’s decision regarding LCR takes into consideration such factors as:
-The strength and potential duration of the United States refining cycle;
-Earnings and after-tax cash flow considerations;
-Synergies and fit with Lyondell’s chemical holdings;
-Deleveraging potential through a sale versus continued participation in refining.
It is anticipated that a decision and announcement will be forthcoming in the near future.
Comments: The refinery sale by Lyondell-Citgo was announced recently and has been called off. Lyondell is considering the option of buying out Citgo’s share in the refinery. The benefits of being integrated into feedstock manufacture outweigh the offers that the partners received for the sale.
BP plans to sell its equity interest in Samsung Petrochemical
BP announced that it has decided to pursue a sale of its 47.41% equity interest in Samsung Petrochemical Co., Ltd. (SPC), its joint venture with Samsung located in South Korea. SPC is one of the leading producers of purified terephthalic acid (PTA) in Asia with a total production capacity in excess of 1.8 million tons per year. PTA is the preferred raw material used to manufacture polyester.
According to the company, SPC is an excellent business with a solid performance track record and is well-positioned for continued growth. BP and Samsung however have different views of SPC’s future strategy and BP believes if it can achieve an appropriate price, exiting is in the best interest of SPC and its shareholders.
The company said that it remains firmly committed to maintaining a global leadership position in PTA and is focused on the rapid deployment of new lower-cost PTA technologies.
Comments: BP inherited the joint venture with Samsung Petrochemical when it merged with Amoco. Samsung Petrochemical formed JV with Amoco in the 1970s and has been operating plants in joint ventures since then. The company is a joint venture between BP, Mitsui, and Samsung. Differences in views between BP and Samsung on SPC’s future strategy are the primary reason for this sale. BP uses PTA for the production of polyethylene terephthalate, which is one of the significant businesses for the company. This sale by BP should not impact its focus on PTA and PET. It is unclear who will acquire BP’s stake in the joint venture.
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