My Turn – Commentary on Global Polyolefins and Elastomers – A New Revolution Coming up in Polyolefins – Olefin Block Copolymers – Dr. Balaji B. Singh
Olefin Block Copolymers – The Next Product Offering from the Polyolefin Innovators?
The concept of olefin copolymers (random, and/or block, segmented, reproducible, homopolymer-based, copolymer based, stereospecific, etc.,) has been around for the last 20 years. This has always been the Hotly Grail incessantly perused by Global polyolefin organizations aspiring to incorporate elasticity into polyolefin backbone without compromising the crystallinity and/or temperature characteristics.
The types of potential olefin block copolymers and the approaches to reaching the goals are as numerous as the number of organizations themselves – starting from APP-APAOs to Stereo Specific to Segmented Blocks to the current development for Dow Chemical Company of shuttling polymerization using diethylzinc chain transfer agents.
This essentially represents a new horizon for polyolefin organizations – Just watch for a few more announcements globally on more products by more organizations … Soon!
Researchers at Dow Chemical develop catalysts to produce tailored block copolymers
Dow Chemical researchers have identified a pair of catalysts, with substantially different monomer selectivities, that permit formation of block copolymers by passing the growing polymer chains back and forth in a continuous process. This “chain-shuttling polymerization,” which utilizes the common polymer-chain-transfer reagent diethylzinc, is expected to make tailored olefin block copolymers available on a commercially viable scale for the first time.
The team tested the dual-catalyst system by synthesizing a series of ethylene-octene copolymers. These elastomers have a useful combination of a “hard” crystalline polymer with low octene content and a “soft” amorphous polymer with high octene content for high-temperature applications. The rate of chain transfer, and thus the “blockiness” of the product, can be controlled by the concentration of the monomers and diethylzinc.
The continuous process has many advantages, the researchers say. For example, it leads to a better quality polymer than random copolymers or two polymers that are physically blended, and it does so in a more efficient, economical, and potentially greener way than current commercial copolymer batch production processes do.
Comments: Combining two types of catalysts to tailor make the molecular structure of polyolefins is an innovative area of the catalyst field. (See our cartoon from almost two years ago – Zetallocene Catalyst).
The novelty here is to extend the polyolefin block copolymer in a continuous process, overcoming some of the past difficulties to develop products with significant commercial potential.
Dow’s newer material moves polyethylene one step closer to making polyolefins more elastic with balanced properties similar TPOs, TPVs, and other block copolymers including SBCs, but do it in a reactor. As is the case with most block copolymers the potential applications will be in two major areas: (1) elastic; (2) polymer modifications – to sheet, adhesives, compatibilization, etc.,
In the June issue of New Generation Polyolefins (NGP), we will write a full-length article to elaborate on this new polyolefin shuffling technology and its potential applications along with a review of olefinic block copolymer technology.
Tasnee & Sahara Olefins Company and Basell sign joint venture agreement
Basell signed a joint venture agreement with Tasnee & Sahara Olefins Company for the construction of a new integrated ethylene and polyethylene complex at Al-Jubail Industrial City in the Kingdom of Saudi Arabia. The complex will include a gas cracker and two 400 KT per year polyethylene plants. One plant, based on Basell’s latest generation Hostalen process, will produce high-density polyethylene; the other plant, based on Basell’s Lupotech T technology, will produce low-density polyethylene. Scheduled to start up in 2008, the units will be the largest Hostalen and Lupotech T process plants in the world.
Basell will have a 25% equity share in the project, while Tasnee & Sahara Olefins Company will hold the remaining equity. Tasnee & Sahara Olefins Company is a recently established joint stock company. Its main shareholders are Tasnee Petrochemicals and Sahara Petrochemical Company with a minor shareholding by the Saudi Arabian General Organization for Social Insurance (GOSI).
Comments: Prior to this joint venture, Basell had relationships with both Tasnee Petrochemicals and Sahara Petrochemicals. Basell and Tasnee Petrochemicals have another joint venture, Saudi Polyolefins Company, which includes a 450 KT per year polypropylene plant in Saudi Arabia. This will be another joint venture for PE manufacture. Sahara Petrochemical Company and Basell are currently developing a new 450 KT per year Spherizone polypropylene plant and propane dehydrogenation unit in Al-Jubail.
After Basell’s break-up with Shell, the company lost its advantage of having access to feedstock. Through these joint ventures, Basell is securing a low feedstock position to compete effectively in the polyolefins industry. This JV will also help Basell expand its geographic presence with attractive feedstock conditions in close proximity to target markets.
LupoTech T is a high-pressure tubular reactor process for the production of LDPE and EVA copolymers. The process was first licensed in 1953, and through steady improvements in technology, the capacity has grown to over 5 million tons, including a 320 KT line in Europe. The steady increase in single-line capacity has enabled many producers of LDPE to lower production costs and compete more effectively with low-pressure processes. Over the last few years, Basell has signed several licensing agreements for Lupotech T with companies such as PetroChina, Amir Kabir, Sinopec, Kurdestan Petrochemicals, PTT Polyethylene, and others.
Basell was in talks with Tasnee Petrochemicals for this complex. The companies had signed an agreement in 2005 intending to build a PE complex in Saudi Arabia. This agreement to form a joint venture is one step ahead in their plans.
ExxonMobil Chemical and Mitsubishi Chemical to dissolve Mytex joint ventures
Affiliates of ExxonMobil Chemical (EMC) and Mitsubishi Chemical Corporation (MCC) have announced their plans to terminate certain joint venture agreements for Mytex Polymers Asia Pacific Private Limited (Mytex AP) and Mytex Polymers Partnership (Mytex US), as of June 1, 2006.
Under the terms of related agreements, ExxonMobil Chemical will transfer its interest in Mytex Polymers Inc. to a MCC affiliate in the United States and ExxonMobil Asia Pacific Private Limited will transfer its interest in Mytex AP to Mitsubishi Chemical Singapore PTE Ltd.
Mytex Polymers was formed in 1987 in the US as a joint venture between Mitsubishi Chemical and ExxonMobil Chemical. Mytex Polymers Asia Pacific Pte Ltd was formed in 2000 as a joint venture between affiliates of ExxonMobil Chemical and Mitsubishi Chemical Corporation. The company produces specialty polypropylene-based plastic compounds for automotive use that are ultimately fabricated into instrument panels, bumpers, and other strong, lightweight components.
Comments: Mytex Polymers was formed in 1986 during the hay days of unique TPOs for automotive bumper applications – and the invasion of Japanese automakers into the U.S.
The Japanese automakers coming into the U.S. during the late eighties were used to specific grades of TPOs from Japanese suppliers. To save time and save quality issues, most Japanese automakers insisted on TPOs from Japanese suppliers like Mitsubishi. ExxonMobil (before they grounded the Pegasus) formed Mytex to supply Mitsubishi’s reactor TPO for automotive applications. Exxon at that time could not sell the Europe-based Trefsins their version of reactor TPOs in the U.S.
Currently, the MCC group conducts the PP business mainly through Japan Polypropylene, a joint venture with Chisso Petrochemical.
Mytex Polymers produces PP-based automotive compounds and is a major supplier to the big three motor companies – General Motors Crop, Chrysler Cor, and Ford Motor Co – and Japanese automakers operating in the United States. The company had an initial capacity of 8 KT per year which was gradually expanded to about 40 KT per year. Mytex Polymers along with Chemtrusion, Inc., a subsidiary of InterSystems, Inc. constructed an advanced color thermoplastics compounding facility in Jeffersonville, Indiana. The joint venture also started a PP compounding facility in Louisville, KY in 1996.
In 2000, Mitsubishi and ExxonMobil formed another joint venture, Mytex Polymers Asia Pacific to sell polypropylene resin and colored polypropylene products.
The acquisition of Mytex Polymers by Mitsubishi will allow the company to improve the integration of the automotive PP compound business. Over the last few years, Mitsubishi Chemical has expanded its PP compounding business in several regions including China and Thailand.
Huntsman Port Arthur, Texas olefins facility sustains fire damage
Huntsman Corporation’s Port Arthur, Texas olefins manufacturing plant experienced a major fire on Saturday, April 29th. The fire was contained and the facility is not operational, pending an investigation and assessment of the damage. Though investigators are in the very early stages of assessing the impact of the fire, it appears that the damage is significant and the plant could be offline for several months.
The fire began in the propylene refrigeration unit. The 50 employees and contractors working at the facility at the time of the incident were safely evacuated. None of Huntsman’s other Jefferson County, Texas sites were impacted and these facilities remain operational.
The Port Arthur facility, also known as the Light Olefins Unit (LOU), has an annual production capacity of 1.4 billion pounds of ethylene, or about 30% of Huntsman’s global capacity. It also has an annual capacity of 800 million pounds of propylene, 680 million pounds of cyclohexane, and 460 million pounds of benzene. In the first quarter of 2006, the EBITDA associated with the products manufactured at the LOU was approximately $25 million or less than 10% of Huntsman Corporation’s total Adjusted EBITDA.
Comments: This outage has a ripple effect in the ethylene industry a little beyond the 2-3% of industry capacity it impacts. Reportedly, the incident was contained in an isolated area of the facility and will keep the Light Olefins Unit (“LOU”) down for up to several months. The consolidated impact of this outage however in a tight market was a contributing factor in bringing spot ethylene prices up more than 10% in the past week to 10 days.
Huntsman continues to operate its other smaller ethylene unit at Port Neches and their other US unit at Odessa, TX. Although this outage did cause some downstream styrene outages probably due to economics more than supply shortages, the longer-term impact on the industry will be somewhat limited. A 2% share is hardly a significant factor unless there become operating problems at another industry unit. Capacity is reportedly back on stream at Formosa and Ineos from earlier plant outages. Industry sources report that ethylene conditions remain “snug” as opposed to short, mostly in response to a pick-up in second quarter 2006 demand as customers build some inventory cushion prior to the June beginning of the hurricane season. According to the company, the financial impact of this shutdown, net of insurance, will be minimal. The company did report first quarter 2006 profits of over $50mm. The bigger news is probably that it was also acknowledged that this event will not get in the way of the sale or spin-off of certain commodity assets by Huntsman which surely is indicated to be the class of the LOU assets and product slate.
On the propylene and benzene fronts, this outage had little impact in the face of crude oil rising above the $70/bbl mark again.
Saudi Aramco shortlists four companies – Reliance, Dow, ExxonMobil, and SABIC for a petrochemical complex in Saudi Arabia
Saudi Aramco has shortlisted four companies to set up a $8-billion petrochemical complex in Saudi Arabia. These include Reliance Industries, Dow Chemical, ExxonMobil, and SABIC.
The project will be located at the Ras Tanura refinery complex in the Ju’aymah industrial area. The Saudi Arabian oil giant had signed MoUs with several companies for the project. The MoU with Reliance was signed in January when a Saudi Arabian delegation, led by its King Abdullah bin Abdulaziz Al Saud, visited India.
The project will use the feedstock from the Ras Tanura refinery as an input. The refinery has a hydrocracking facility with a capacity of 325,000 barrels per day (bpd) and a 200,000 bpd condensate splitter. The petrochemical complex will have an ethane or naphtha-based cracker unit, an aromatics recovery complex, and complementary downstream derivative units to produce new secondary petrochemicals.
Saudi Aramco also plans to sign MoUs with Total and Conoco Phillips for two new refineries in the kingdom by the end of May. The new refineries, each with a capacity of 400,000 bpd, will be export-oriented.
Comments: All of the Global product migration analysts unanimously agree, Saudi Arabia will be the major supplier of feedstock, basic 6 and level I polymers and products (poyolefins, glycols, etc.,) with an eye toward the growing appetite of China for these products for further conversion.
This small economic entity “China-Middle East” is expected to continue on its own without impacting the rest of the world for the foreseeable future (next 10 years). The only consequence is that the organizations in developed countries look upon this as an opportunity to prosper through investments and increasing Global presence.
Saudi Arabian government, in the early to late 80s, essentially built the infrastructure to develop the feedstock, basic 6, and some level I products using Global oil/chemical giants – Exxon, Shell, Chevron-Phillips, Mitsui, and of course Dow the largest chemical company. After Dow backed out of the developments due to internal reasons, most developments in Saudi Arabia proceeded ahead with the help of Exxon, Shell, Mitsui, and Chevron under the SABIC umbrella.
With the new emphasis in Saudi Arabia to develop downstream value-added products, the organizations are coming back for the second round. SABIC is also opening up other homegrown investment organizations to do the same, but limiting the outsiders to technology/market swap agreements. This unique approach is the Saudi Government’s way of encouraging and improving the indigenous/organic growth of the industry.
For the most part, Dow Chemical, ExxonMobil, and SABIC are companies with deep experience in planning and executing mega projects in the Middle East. Reliance Industries is a relative newcomer to this group but they have demonstrated exceptional project expertise and growth management elsewhere, particularly in India. The Reliance Industries connection also brings the most interesting marketing implications into India where markets for the derivative outputs of this mega project are growing more quickly than much of the rest of the world. Project netbacks into India should also be among the highest in the world due to the relatively close geographic proximity of Ras Tanura located on the South Eastern Coast of Saudi Arabia. Ras Tanura is also a well-provisioned seaport with existing facilities (and future potential facilities) that can expedite the movement of petrochemical derivatives to the closer Indian markets than either Western Europe or China.
Ras Tanura is South of the increasingly busy port area for petrochemicals at Al Jubail. Because of the large refinery at Ras Tanura, a naphtha cracker is a distinct possibility which would bring the associated wider derivative slate with the heavier feedstock – if a bet were to be placed now; it would probably be on the side of a heavier feed slate unit? The export refineries to be signed with Total and Conoco Phillips are needed in the world where the need for refining capacity is growing globally at over 2% per year. The fuel products from the new export refineries will find ready markets in West and South East Asia.
Sabic Europe to build naphtha cracker at Geleen, Netherlands
Sabic Europe announced its plans to build a naphtha cracker at its petrochemical complex in Geleen, Netherlands. This project has been approved by the government of the Netherlands and it will be operational by 2009.
The project will add roughly 1 million tons per annum of naphtha cracker capacity at Geleen. A letter of intent relating to the project is anticipated to be signed in late Apr 2006, in Riyadh, Saudi Arabia. Sabic is no longer required to pay fees of EUR 80 M for the estimated emission rates during the commercial life of the facility.
The project, called Europe 1, will produce an additional 400,000 tons per year of ethylene, 620,000 tons per year of propylene, as well as 310,000 tons per year of methyl tertiary butyl ether, and 200,000 tons per year of benzene. Also included in the plan are a copolymer plant and an LDPE unit at Geleen, which each have a capacity of 400,000 tons per year, and a bimodal HDPE plant with 250,000 tons per year capacity at Gelsenkirchen, Germany. The project is estimated to cost EUR 1.5 billion.
Comments: The majority of new crackers are in the Middle East based on natural gas.
These crackers produce a lot more ethylene than propylene. Due to this trend, it was projected that there will be a shortage of propylene by 2011.
This being a naphtha-based cracker will also produce propylene for which there is significant demand. The ethylene requirements for downstream polyethylene units will be met by the ethylene produced in this cracker. This will be the second cracker by SABIC in The Netherlands. Other companies that operate crackers include Shell and Dow.
NOVA Chemicals plans to temporarily idle the styrene plant due to the US Gulf Coast ethylene shortage
NOVA Chemicals Corporation announced its plans to temporarily idle its Bayport, Texas styrene monomer plant as a result of the ethylene force majeure declared by Huntsman Corporation and limited ethylene availability on the U.S. Gulf Coast. Through its Sarnia, Ontario styrene monomer production and other supply arrangements, the company expects to be able to meet its market obligations for both styrene monomer and styrenic polymers.
The financial impact of the outage is expected to be limited to relatively minor shutdown and startup costs.
Comments: This action is a good move by NOVA Chemicals Corporation to help bolster their styrenics business position. Prior to the force majeure, styrene margins were the same old lackluster due to high benzene and just too much styrene capacity running full. Bayport is a big styrene monomer facility at over 1B pounds per year of capacity. By taking Bayport out of action, NOVA will see styrene monomer margins increase. The fact that the company is able to replace its supply obligations to both internal and external contracts speaks that the industry needed some tightening to increase profitability.
The other factor lurking under the surface here is that spot ethylene is up over 10% after the contributory impact of the Huntsman outage (and other feedstock cost factors) and it reasons that since NOVA purchased the Bayport plant from Huntsman in the first place, it probably came with a most attractive ethylene deal which would be meaningful in the profitability of styrene monomer. Now with spot ethylene prices up, NOVA can’t replace their probable lowest-cost ethylene right now, so the reaction is to make styrene monomer exchange arrangements fast and take the plant down.
The bottom line is that NOVA probably wins on three fronts: they (1) reap some profitability increase in styrene monomer, (2) avoid purchasing higher-cost ethylene, and (3) borrow styrene now for payback at a later date from their production when the later market is tighter and justifies a restart of Bayport. In any case, we would not expect Bayport styrene monomer to be brought back online until at least several months when the Huntsman Light Olefins Unit is supposed to restart. The industry just needs to hope that there isn’t a hurricane like last year in the interim period.
SABIC plans a major expansion program in Asia – mainly China
SABIC announced its plans to start a major expansion program in the Asia Pacific, especially in China. As a part of its overall strategy, the company is finalizing plans to set up a fully registered company – SABIC China, and other offices in Beijing, southern China, Jakarta, Melbourne, and Ho Chi Minh City. In addition to its existing warehouse in Shanghai and storage facility in Shekou (Shenzhen), China, Sabic will also set up two new warehouse facilities in China, along with four new ones in Ho Chi Minh City, Melbourne, Sydney, and Auckland.
The company also plans to build a vertically integrated facility for producing polyethylene, polypropylene, and other plastics in Dalian, China. The plan could include a refinery and feedstock production. The project would be SABIC’s first production in China, where it plans to partner in the investment with large Chinese extrusion company Dalian Shide Plastic Industry Co. Ltd.
Comments: SABIC entered the Chinese market in the 1980s. Since then, they have been expanding their business along with the economic growth of China by supplying fertilizers, synthetic fibers, iron, steel, and plastic products to China. SABIC has long before been interested in starting a Mega refining/petrochemical project in China and has submitted a proposal to the Chinese government with their partner, Dalian Shide Group.
During his recent visit to the Kingdom of Saudi Arabia, Chinese President Hu Jintao met with Prince Saud bin Thunayan Al-Saud, the Chairman of SABIC. One of the conclusions of the meeting was that the proposed project is likely to be approved by the Chinese government. The project involves an investment of $5.2 billion. It will have 10 million tons of refinery capacity and 1.3 million tons of ethylene capacity. The complex will be most likely located in Dalian, Liaoning province, Dalian Shide Group is headquartered.
Dalian Shide Group is one of the largest PVC converters in the world. As a private company, Dalian Shide entering the refinery and ethylene market will be symbolic. Traditionally, China’s polyolefin market is dominated by state-owned companies like Sinopec, PetroChina, and CNOOC. There are signs that the government may open it to the private sector. Formosa has also submitted a proposal to the Chinese government for starting a mega complex in Ningbo with 10 million tons of refinery and 1.2 million tons of ethylene capacity. At the same time, Sinopec, PetroChina, and CNOOC are all expanding their capacities for olefins and derivatives. In the coming issue of our Next Generation Polyolefins, we will have an article on the capacity expansions of PetroChina.
Iranian firm National Petrochemical cancels Linde-Hyundai olefins contract
National Petrochemical Co. announced that it has canceled a EUR960-million ($1.17 billion) contract that it awarded in 2005 to a consortium of Linde, Hyundai, and Sazeh (Tehran), to build two ethylene plants with a combined capacity of 2.4 million KT/year at Bandar Assaluyeh, Iran.
According to the company, Iranian firms will be able to do the work for a lower price, and by using local contractors Iran will save EUR260 million. It is expected to be the main supplier of ethylene to 10 olefin derivative plants that are planned along a more than 2,000-kilometer pipeline extending from Bandar Assaluyeh, in the south of Iran, to the northwest of the country.
Construction on the ethylene pipeline, meanwhile, is in full swing. The pipeline will supply 2,800 KT/year of ethylene. The 10 derivative complexes along its route will be at Andimeshk, Boroojen, Dehdasht, Gachsaran, Hamedan, Kermanshah, Khoramabad, Mahabad, Miyandoab, and Sanandaj. Arvand Petrochemical’s Olefins 8 complex will supplement the ethylene supplies to the pipeline from Olefins 11. Bakhtar Petrochemical, another NPC subsidiary, is managing the ethylene pipeline.
Comments: Currently National Petrochemical has plans for building 12 grass-root production plants, 22 joint venture plants (with the partnership of foreign and domestic companies) and 9 are under construction. NPC’s Olefins 11 plant will be implemented by Bakhtar Petrochemical and will be located in Pars Special Economic Zone in Iran.
The joint venture partners for this project are NPC (20%), Bakhtar Petrochemical Co. (20%), Gachsaran Co. (12%), Lorestan Co,(12%), Kermanshah Polymer Co.(12%), Kordestan Co.(12%) & Mahabad Co. (12%).
Film converter TrioPlast in a joint venture to produce LLDPE films in Saudi Arabia
Swedish film converter TrioPlast announced its plans to establish a cast stretch film plant in Saudi Arabia in a joint venture with Mada Group for Industrial & Commercial Investment.
The LLDPE plant, with an initial investment of $40m (E31m), is the first for TrioPlast outside Europe and the first downstream plant at the huge oil and petrochemicals complex in Jubail.
Production capacity is planned to reach 100 KT per year of the cast stretch film within five years. The initial production rate will be 25,000 KT per year and is scheduled to start at the beginning of the second quarter of 2007.
The joint venture has signed a contract with SCADO of Saudi Arabia to be the engineering consulting firm. The first two film production lines have also been ordered from Battenfeld Gloucester. The plant will cover more than 60,000 sq meters and will be fully integrated back into the oil fields and crackers. Transportation of polyethylene raw materials to the film production facility will therefore not need to involve trucking.
Comments: This is another example of the construction of an end-use-related plant in the Middle East. As more polyethylene is being produced in this region, downstream activities will develop for end-use products where shipping is easy. Until now, the capacities coming on-stream were related to the availability of cheaper feedstock. The plant in Al Jubail will have access to cheaper feedstock and also benefit from economies of scale.
Trioplast is one of the leading producers of polyethylene packaging products in Europe with total sales of about $450 million. The company has 4 main business units including (1) stretch film, (2) industrial film, (3) hygiene film, and (4) printed packaging.
The Stretch Film Division manufactures and markets packaging stretch film, mainly for pallet wrapping, as well as silage and horticulture films for the agricultural market. The company markets its products under the trade names Triowrap®, Triostretch®, and Tenospin Balewrap®.
Its sales market is mainly Europe and has manufacturing locations at plants in Smålandsstenar and Fjugesta in Sweden and Pouancé in France. The overall strategy of Trioplast is to expand its business by at least 5% per year and add further growth through new investments or acquisitions.
ExxonMobil Chemical introduces a new line of compounded polyolefins for the automotive industry
ExxonMobil Chemical introduced a line of compounded polypropylene for the automotive industry. ExxonMobil Performance Polyolefins are available from ExxonMobil Chemical facilities in North America, Europe, and Asia.
The company’s Exxpol Enhance ™ polypropylene and premium reactor thermoplastic polyolefins (TPOs) are used for bumper fascias, step pads, and pillar trim for head impact.
Work to certify ExxonMobil Performance Polyolefin grades to various automotive specifications is currently underway. These products complement ExxonMobil Chemical’s neat and impact copolymer polypropylenes to provide customers with a complete line of products for automotive interior, exterior, and underhood applications.
Comments: Polypropylene and compounded polypropylene such as TPO are increasingly being consumed in automotive applications. The current consumption of polypropylene in automotive applications is close to 800 million pounds.
The automotive industry is continuously trying to reduce the overall weight of the car to increase fuel efficiency and at the same time taking into account the recyclability issue. One of the main examples is the automotive polypropylene bumper replacing the metal bumper allowing the automotive manufacturer to lower the overall weight of the car. The use of polypropylene in the automotive application has been increasing over the years. Polypropylene used in automotive applications increased from an average of 36.2 lb/vehicle in 1994 to approx 45.5 lb/vehicle today. The most common application for polypropylene in automotive include bumpers, electrical components, engine, and mechanical components, and interior trim panels.
BASF acquires SAN business from Lanxess in Europe and South America
BASF announced its plans to acquire Lanxess’ business with styrene-acrylonitrile (SAN) copolymers in Europe and South America. The deal involves a total of approximately 14,000 metric tons of SAN per year.
The transaction involves the transfer of customer lists, licenses for patents, and know-how as well as inventory. The agreement will not involve the transfer of production sites or personnel. BASF will serve the acquired business from existing production capacities at its Ludwigshafen site. Lanxess and BASF will cooperate closely to ensure the smooth supply of products and technical services for all customers.
SAN polymers are used in many applications in the household and sanitary sectors, for packaging cosmetic products as well as for electronic and office articles. Outstanding properties of these polymers include excellent transparency, high stiffness, and resistance to fluctuating temperatures.
Comments: his acquisition strengthens BASF’s position in SAN polymers in Europe and South America.
BASF is already a leading supplier of SAN polymers, which it markets under its Luran® brand. The other major producer of SAN resins in Europe is Dow Chemical. After this acquisition, BASF will have manufacturing facilities in Ludwigshafen, Germany, Antwerpen, Belgium, and Tarragona, Spain.
BASF to acquire resins specialist Johnson Polymer
BASF announced its plans to acquire resins manufacturer Johnson Polymer, a subsidiary of JohnsonDiversey Inc. of Sturtevant, WI. The price of this acquisition was $470 million on a cash and debt-free basis. The transaction, which is still subject to approval by the relevant authorities, is expected to close by the end of June 2006.
Johnson Polymer is one of the world’s leading producers and suppliers of water-based resins. Resins are important raw materials for the production of coatings in the automotive, wood, packaging, and printing industries. Johnson Polymer’s water-based product range complements BASF’s existing portfolio, which concentrates mainly on high-solids and UV resins.
The global market for water-based resins is growing at an average of 5 percent per year. In recent years, Johnson Polymer has grown faster than the market and has been profitable. Roughly 60 percent of sales, which were approximately $360 million in 2005, are generated in North America. Johnson Polymer has 430 employees and operates two production sites in the United States and one in the Netherlands, as well as technical centers and offices in Asia Pacific.
Johnson Polymer’s operations will be integrated into BASF’s Performance Chemicals division. This division produces and markets a broad range of specialty chemicals worldwide. These products include colorants and additives, which, like resins, are used for example in coatings applications. In 2005, the Performance Chemicals division posted sales of EUR2.9 billion.
Comments: The acquisition of Johnson Polymer expands BASF’s high-growth coating resins business with access to water-based resins.
For JohnsonDiversey, the sale of its Polymer business will give the company financial flexibility to pursue new opportunities for growth in its core business. The sale is one of the moves taken toward its restructuring program.
Private equity firm Charterhouse Capital scraps its plans to sell Lucite
London-based private equity firm Charterhouse Capital announced that it has abandoned plans to sell its 78% stake in acrylics manufacturer Lucite International. The key reason for this decision is the firm’s failure to receive the asking price of $2.5 billion for the sale.
Lucite is the leading producer of methyl methacrylate (MMA) with a 25% market share and is the developer and owner of the Alpha process, a technology that it says lowers MMA manufacturing costs by 40%-45%. Lucite is currently constructing a 120 KT per year MMA plant in Singapore using that technology due to be commissioned in 2008, and plans to build a second unit at an undisclosed site scheduled to go on stream in 2011.
Comments: The decision to abandon the sale of Lucite is mainly due to the failure of Charterhouse Capital to raise the asking price of $2.5 billion for Lucite. Charterhouse Capital had decided to sell its stake in Lucite mainly because the company is under investigation by the European Commission as part of a cartel that fixed prices on chemicals. In 2005, Lucite along with other companies such as BASF, Degussa, and Arkema was under investigation by the European Commission for price fixing.
The European cartel allegedly operated between 1995 and 2003.
ABB Lummus Global files for Chapter 11 reorganization
ABB Lummus Global Inc, a US-based ABB subsidiary, filed a voluntary pre-packaged Plan of Reorganization under Chapter 11 to resolve its present and future asbestos liability with a U.S. Bankruptcy Court in Wilmington, Delaware. In September 2005, claimants to the Lummus Plan of Reorganization voted 96 percent in favor of the plan. ABB expects Lummus to conclude the Chapter 11 proceedings in the second half of 2006.
In addition, the Plan of Reorganization for ABB’s U.S. subsidiary, Combustion Engineering (CE) became effective. ABB has now transferred, in accordance with the plan, the approximately 30 million shares it set aside for the CE Asbestos PI Trust.
Comments: In 2003, ABB subsidiary Combustion Engineering (CE) and Halliburton subsidiary, DII Industries filed for Chapter 11 bankruptcy protection as a part of their attempts to resolve asbestos claims. Chapter 11 bankruptcy protection is now being extended to its engineering and construction arm, ABB Lummus Global. The number of claims against Lummus is relatively small. CE has settled about 438,000 claims, many of them without payment, and has paid about $1.1 billion to claimants, from January 1990 until February 2003.
Other E&C companies such as Kellogg, Brown & Root, and Foster Wheeler have also been affected due to asbestos-related litigations. Several companies have been affected because of the asbestos claims. In 2001, W. R. Grace filed for Chapter 11 bankruptcy due to the losses related to asbestos litigation.
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