My Turn – By Dr. Balaji B. Singh The Mood in Polyolefins Elastomer Organizations
As a part of our work, we continue to keep our fingers on the pulse of the Global Polyolefins and Elastomers industry. The current mood in the industry, especially in the top Global organizations in North America, Europe, and Japan is undoubtedly DEPRESSING. Every organization, without exception, has scaled down innovation, product development, and fun, in favor of cost-cutting and busily hitching their barges to the fast tugboat to China. Every organization’s top management is giving the same message to the middle management and line workers… “We are undergoing a major reorganization to realign our businesses to optimize our services and serve the customers in a most efficient…blah…blah…blah… blah”
We sincerely offer our heartfelt sympathies to the employees, the real architects of the organization’s successes, constantly caught in this quagmire of uncertainty and lack of direction…? Hope things will get better soon…
Comments: I, Dr. Balaji B. Singh have been active in the polyolefins and elastomers trend analysis and new product developments for the last 22 years and had a chance to independently observe the industry through thick and thin and have earned the right to comment as I see them.
Please note, these comments should not be construed as those of Chemical Market Resources Inc. as an organization – Thanks.
PetroChina and Kuwait Petroleum plan petrochemical complex
PetroChina and Kuwait Petroleum Corp are conducting a feasibility study for a refinery and petrochemical complex. Kuwait and China have signed an agreement to study setting up the oil refinery, which would have a capacity of 200,000-400,000 barrels per day and a petrochemical plant in Guangdong province at an estimated cost of $5 billion.
According to the Kuwait Energy Ministry statement, Kuwait Petroleum International and Petrochemical Industries Company will represent KPC in the venture. The ministry said the approval was expected to be secured in 2006 and that the project execution period would be four years.
Comments: This joint venture between Chinese and Middle Eastern petrochemical companies is catalyzed by the surging demand for oil/gas and downstream chemicals in China and the abundance of low-cost feedstock in the Middle East. The trend will continue in the next decade and will impact the global petrochemical competitive landscape.
However, a little surprise is about the location and the partners. Over the last few years, Sinopec has dominated Southeast China including Guangdong province where the plant will be located. PetroChina has focused on the North and West of China. Among the 30-plus provinces in China, Guangdong tops the demand for plastics due to its export-oriented industry. The local supply was not able to meet the local demand. However, it is expected that the competition will become more intense. Sinopec already has two subsidiaries in Guangdong province, Sinopec Guangdong and Sinopec Maoming.
SABIC plans YANSAB IPO by early 2006
SABIC announced its plans to launch a 2 billion riyal ($533 million) public share offering in its planned YANSAB subsidiary by early 2006. SABIC will offer investors a 35 percent share in the Yanbu National Petrochemicals Company (YANSAB), which will have a paid-up capital of 5.625 billion riyals. It will keep a 55 percent stake and offer the remaining 10 percent to partners in two of its subsidiary companies, Ibn Rushd and Taif.
Only Saudi investors are eligible to subscribe to IPOs in the kingdom. The exact timing of the IPO, one of the largest upcoming issues in Saudi Arabia, will depend on approval from Saudi authorities, SABIC said.
YANSAB — located in the industrial city of Yanbu on the kingdom’s Red Sea coast — will produce four million tons per year of ethylene, propylene, polyethylene, and other petrochemicals. It is due to start production in 2008.
Comments: When completed, YANSAB will be one of the world’s largest petrochemical plants. It will produce 1.3 million MTY of Ethylene; 400,000 MTY of Propylene; 900,000 MTY of High-Density Polyethylene (HDPE) and Low-Density Polyethylene (LLDPE); 400,000 MTY of Polypropylene (PP); 700,000 MTY of Mono Ethylene Glycol (MEG); 250,000 MTY of Benzene, xylene, and toluene compound. It will also have butene-1 capacity based on SABIC/IFP technology to supply its polyethylene operations.
The announcement to float a 35% share of YANSAB was made earlier in 2005. SABIC has stated that the IPO will commence the start of business on Saturday, December 17, 2005, and last until the closing of business on Tuesday, December 29, 2005.
The starting price per share will be its listed par value of SR 50, with minimum and maximum share quantities set at 10 and 5000 shares, respectively.
Basell launches new Moplen polypropylene resin for spun-bond textile applications
Basell developed a new resin, Moplen RP1669 for applications that require the soft touch and cloth-like feel for nonwoven materials in a variety of hygienic, personal care, and medical apparel applications.
Moplen RP1669 is a copolymer based on Basell’s Spherizone polypropylene technology. Due to its fluidity (MFR 25) and narrow molecular mass distribution, Moplen RP1669 resin can allow for the production of fine denier titre combined with excellent spinnability at standard productivity levels on all spunbond technologies. The material’s nonwoven mechanical properties are comparable to a standard homopolymer grade.
According to Basell, customers have satisfactorily tried Moplen RP1669 in the production of soft continuous filament applications and for the production of PP-based undergarments.
Comments: Polypropylene is the material of choice for nonwovens application due to its ability to thermal bond to materials. This would eliminate the need and cost of chemical binders. Nonwoven polypropylene is widely used in various applications with the largest end-use market being personal care and hygiene, with applications such as adult and baby diapers. The North American demand for nonwovens in 2004 was about 1,780 million pounds with close to 36% of the total demand being consumed by the personal care and hygiene market. This application is growing at 5.1% and is expected to grow at this rate for the next 5 years.
The Moplen RP1669 resin will allow Basell to expand to markets where skin contact is required due to the new products soft touch soft feel properties in applications such as adult and baby diapers, medical drapes, surgical masks, and hospital gowns.
Borealis develops Bormed™ polyolefins for healthcare applications
Borealis developed the Bormed™ family of polyolefins for healthcare applications.
The Bormed range, which is successfully growing in sales, comprises polypropylene (PP), low-density polyethylene (LDPE), and high-density polyethylene (HDPE) grades precisely tailored for the injection and blow molding of medical devices as well as pharmaceutical and diagnostics packaging.
Bormed polyolefins display the complete spectrum of properties and characteristics required by the healthcare market. These range from radiation resistance, transparency, and chemical inertness to sterilisability at 121°C and high Environmental Stress Cracking Resistance (ESCR).
These performance features, combined with ease of shaping and processing, open up the broadest range of applications. Medical devices include single-use syringes, needle hubs, catheters, and the housings of artificial kidneys and inhalers.
In pharmaceutical packaging Bormed materials meet the needs of blow, fill and seal containers such as bottles, bags, and ampoules for IV sterile liquids as well as blow and injection molded packaging such as bottles, containers, and closures. Bormed materials also deliver contamination-free quality and are pre-qualified to relevant industry standards e.g. USP, EP & ISO 10993. Moreover, the continuity of their long-term supply is assured globally. Bormed products enable production without the disruption of the time-consuming and costly process of having to re-qualify reformulated or new products for our applications.
Comments: The use of polyolefins in medical applications has maintained steady growth over the past decade. Traditional applications include pump tips, grommets, stoppers, and gaskets in blood collection systems, syringe caps, medical bags, medical and surgical tapes, tubing and catheters, and medical ware. Besides, rigid applications, polyolefins have also started to make inroads into flexible/soft applications, which historically have been dominated by flexible PVC. The major technical requirements include (1) flex strength, (2) autoclavable, (3) radiation sterilization, (4) chemical resistance, (5) UV resistance, (6) tensile strength, (7) biocompatibility, (8) abrasion resistance, (9) RF sealability, (10) clarity, (11) processability, (12) nontoxicity, (13) ESCR, and (14) crush resistance. Polyolefins are cost-effective solutions in many medical applications providing the needed chemical inertness, radiation resistance, and clarity/transparency. Not all polyolefins players compete in the medical segment due to smaller volumes, more specialized products/services, and longer approval times.
Suzano Petroquimica starts production at Riopol
Suzano Petroquimica S.A., one of the major polyolefin producers in Latin America announced the start of polyethylene production at Riopol.
Suzano Petroquimica S.A. is a joint controlling shareholder of relevant players in the petrochemical sector — Rio Polimeros S.A., Petroflex Industria e Comercio S.A., and Politeno Industria e Comercio S.A. — aims at keeping the market updated on the initial operation of Riopol. Suzano Petroquimica announces that Riopol has initiated its polyethylene production and has already concluded its first polyethylene sale.
After the start-up of the industrial facilities and stabilization of its operations, Riopol restarted its polyethylene production process in its first production line last week, which has a total production capacity of 270,000 tons of polyethylene per year, and will be dedicated to the production of linear, low-density polyethylene (LLDPE), which is already being produced within the required specifications.
Almost 1,000 tons of polyethylene have been produced, and Riopol’s first sale, amounting to 50 tons, was made to a film producer in the state of Sao Paulo. Riopol is also selling polymer-grade propylene to Suzano Petroquimica’s polypropylene unit located close to Riopol, and hydrogen to Petrobras’ Refinery in Duque de Caxias, Rio de Janeiro.
The company will soon start the second polyethylene production line with a total production capacity of 270,000 tons per year and will be dedicated to the production of high-density polyethylene (HDPE).
Comments: The polyolefin industry is witnessing a large growth in emerging markets such as the Middle East, China, India, and Brazil. The industry is always skeptical about the planned expansions in these regions due to possible delays in the construction of the facilities. The selling of polyethylene marks the end of one such journey.
Rio Polimeros was established to develop, build own and operate an integrated ethylene and polyethylene complex. The new complex will be the first fully integrated facility of its kind in Brazil. The ethylene cracker is also the first in Brazil to be based on natural gas feedstock. The project has been in the pipeline since 1998 but delays occurred while financing was finalized and antitrust concerns were looked into.
During the second half of 2001, Vinmar International announced that it had finalized a long-term off-take of PE from the new RioPol plant. The deal meant that Vinmar would market 150 KT per year of PE for the first four years and subsequently between 100 KT and 150 KT of PE for a further six years. The company would have the right to market the material globally, except in the Brazilian market. Vinmar had said that the deal is worth $1 billion. Vinmar is a global company involved in the marketing and distribution of chemicals and polymers.
During the second half of 2002, ABB Automation Technologies was awarded a contract to deliver a substation for the RioPol gas chemical complex. The order comprised technical, commercial, and financial support as well as installation, commissioning, testing, and training services.
Cegelec was awarded a contract, valued at â‚ ¬6.5 million, to provide the electrical installation on the RioPol petrochemical complex. The scope of the work includes supervision, labor services, equipment, and pre-commissioning for the PE and ethylene plants. Work began in May 2003 and is scheduled to be completed within 15 months.
In January 2004, 55% of the construction phase had been completed and almost all equipment was on site. Earlier in June 2005 the Integrated Complex of Rio Polimeros S.A. had been inaugurated. After 8 years of investing the Riopol Project has left the drawing board to become a reality.
Dow Names Jim Fitterling Business Vice President of Polyethylene
Jim Fitterling has been named business vice president, Polyethylene. Fitterling will report to Mike Gambrell, executive vice president, of Basic Plastics and Chemicals Portfolio.
Fitterling, currently CEO of The Optimal Group of Companies until year-end 2005, will transition to this new role over the next several months and relocate to Midland, Michigan. He will temporarily retain his role as regional general manager, of Southeast Asia/Australia. Reporting to Fitterling are Chris Gann, business vice president for High-Density Polyethylene/Low Density Polyethylene, and Roger Schwartz, business vice president for Solution Polyetheylene. In addition, the four regional commercial directors for Basic Plastics also will report to Fitterling: Pedro Suarez, Marcus Wildi, Isidro Quiroga, and Peter Sykes.
Fitterling joined Dow in 1984. After serving in a variety of Sales, Marketing, and Supply Chain positions in Liquid Separations, he was named commercial director for Liquid Separations, Dow Pacific in 1994. In 2000, he was named general manager for Dow Thailand and managing director for the SCC-Dow Group of joint venture companies. In 2002, he was named CEO of The OPTIMAL Group, affiliates of Petroliam Nasional Berhad (PETRONAS), Malaysia’s state-owned oil corporation, and The Dow Chemical Company. He added responsibility for the Southeast Asia and Australia region in February 2004.
Technip awarded polypropylene contract for PetroChina Dushanzi complex with Innovene technology
Technip, in association with Innovene as licensor, has been awarded by PetroChina International a contract for two lines of polypropylene for PetroChina Dushanzi Petrochemical Company’s new complex in Xinjiang Province, China.
The contract, over $50 million for Technip, covers the basic and front-end engineering, the procurement of key equipment and material, and the technical assistance for construction and commissioning.
The plant will be designed based on Innovene technologies to produce 550, 000 tons/year of polypropylene. The plant is scheduled for completion at the end of 2007 for commissioning in early 2008.
Comments: Recently due to the increase in engineering and construction projects, Technip has been awarded several contracts for the design of polyolefins plants and this is one of them.
ABB Lummus metathesis technology selected for Borouge 2 olefins conversion unit
ABB Lummus Global announced its selection by Borouge (Abu Dhabi Polymers Co., Ltd) to provide technology and engineering services for an ethylene dimerization and olefins conversion unit to be located downstream of theplannedBorouge 2 Project in Abu Dhabi, U.A.E. The plant’s production capacity will be 752,000 metric tons per annum (MTA) and is expected to go on-stream in 2010.
ABB Lummus Global will supply its ethylene dimerization and metathesis technology for the production of propylene. The 752,000 MTA facility will be the largest of its kind and will feed downstream polymer units at the site. The use of ABB’s ethylene dimerization and metathesis technologies provides a route for producing propylene from ethane feedstock. It represents the only commercially demonstrated route for propylene production from ethane feed.
ABB Lummus Global has licensed 13 olefins conversion units since 2000, accounting for 3200KMTA of propylene production worldwide. The technology allows for the efficient conversion of ethylene and butylenes to propylene at high selectivities and low capital investment. Energy consumption is lower than other routes for propylene production leading to lower operating costs and a reduction in greenhouse gases. Propylene purity is significantly better than typical polymer-grade streams.
Comments: The question with this large project for propylene production revolves around conventional metathesis where usually a byproduct C4 olefin is combined with ethylene to produce two propylenes. Most all metathesis plants have been based on a ready-made supply of C4s from either refineries or heavy liquids crackers (or a combination of the two) which is not the case generally in the Middle East where light feedstock crackers abound.
Now that this announcement has been made about the Borouge project using ethylene dimerization to produce C4 olefins the mystery is settled. The propylene to be produced by the project is completely ethylene (ethane) based and is the only such project so far in the ABB Lummus suite of process technologies dealing with metathesis where they are undoubtedly the global leader in installed capacity of this form.
To make this project’s economics work, the price of ethylene must be very low compared to the commercial market but in a world where propylene demand is forecast to outstrip ethylene demand for the foreseeable future this position or conclusion is not a reach for the project sponsors – especially in the market expected of elevated crude oil prices. The fact that this project is the largest of its kind also helps with the economy of scale economics and the purity of propylene issue should not be overlooked.
UOP LLC and Total Petrochemicals to Integrate Methanol-to-Olefins and Olefin Cracking Processes
UOP, a subsidiary of Honeywell, and Total Petrochemicals have signed agreements for a joint development program to integrate technology aimed at increasing the production of light olefins, the basic chemical building blocks for many commonly used plastic products.
Under the agreements, Total Petrochemicals will construct a demonstration plant at its petrochemicals complex in Feluy, Belgium. The demonstration plant will consist of a UOP/HYDRO methanol-to-olefin (MTO) process unit and a Total Petrochemicals/UOP Olefin Cracking process unit.
The integrated plant will feed an existing, large-scale polymerization pilot plant. The demonstration plant is expected to come on stream in 2007. The program is anticipated to allow further optimization of the combined processes that Total Petrochemicals intends to apply to a commercial plant.
The UOP/HYDRO MTO process converts methanol to ethylene and propylene along with some heavier olefins. The Total Petrochemicals/UOP Olefin Cracking process converts these heavier olefins predominantly to propylene with some associated ethylene.
By integrating the two processes, Total Petrochemicals and UOP will demonstrate a very significant increase in the production of light olefins, particularly propylene. The integration of the Total Petrochemicals/UOP Olefin Cracking Process with the UOP/HYDRO MTO Process provides a truly economical route for the production of light olefins from methanol. UOP also remains active in MTO joint development with Hydro of Norway. Hydro has successfully operated an MTO demonstration unit in Norway since 1995.
Comments: This exciting project is the marriage of two UOP joint processes that fundamentally will yield more propylene per unit of ethylene than standard units. With capacity increases over the next years in ethylene tending towards lighter feedstocks, less propylene will be produced than in historical heavier feed ethylene crackers. Something has to make up the difference since propylene is growing faster than ethylene. The UOP/Total combination of MTO (UOP/Hydro MTO Process) and the Total/UOP olefins cracking unit at Feluy, Belgium is undoubtedly a scale-up of other European process units in Norway and Antwerp to demonstrate that natural gas to olefins will play an important role in the future production of petrochemicals in the world of high priced oil.
The MTO process is usually intended for locations with inexpensive abundant natural gas reserves. This is not Feluy but the project’s location is probably taking advantage of infrastructure and olefins off-take to derivative production, all necessary for a scaled-up demonstration operation. The combination of the MTO with the olefins cracking process is one where C4+ by-product streams of the MTO are converted to light olefins.
This may be the first time that a scaled-up MTO/olefins cracking process unit has been demonstrated on a semi-commercial scale to demonstrate the enhanced economics for the production of light olefins from natural gas. The yield of methanol feed that goes on a carbon basis to light olefins for MTO augmented with olefins cracking can approach 90%.
Microsoft to discontinue use of PVC in packaging
Microsoft Corp. announced its plans to discontinue the use of PVC due to growing health and environmental concerns. Microsoft plans to complete its phase-out of PVC by the end of 2005. That move has resulted in the elimination of 361,000 pounds of vinyl since July 2005, the company said. PVC is used in the clamshell casing for some computer products.
Micosoft said cardboard will suffice as a replacement in most cases but that the company will also use PET, a polyethylene plastic used in food packagings such as soft-drink bottles that can be recycled into carpet and fleece clothing. The Vinyl Institute responds that the industry’s emissions of dioxins are a tiny fraction of the total dioxin emissions in the U.S. The group also cites EPA data that show overall emissions of dioxins in the U.S. declining by 80% between 1987 and 1995. Vinyl makers also say phthalates have been safely used as plasticizers for more than 50 years, and are among the most studied compounds in the U.S.
Comments: Several companies have moved away from using PVC in packaging applications due to their proximity to the end users. Moreover, the organization sells its products worldwide and in certain regions may face PVC-related environmental problems.
Some of them include Hewlett-Packard Co. and healthcare provider Kaiser Permanente. However, for other applications of flexible PVC such as medical bags, shower curtains, and coated fabrics garden hoses, PVC remains to be the dominant material of choice. This move will not impact the use of PVC in these applications.
European bag makers fined EUR 290 million for 20-year pricing cartel
Sixteen European bag makers have received fines totaling EUR 290 million after the European Commission uncovered a price-fixing cartel in the industrial bag sector. Finnish paper producer UPM-Kymmene received the biggest fine of EUR 56.55 million. This is related to the Rosenlew business that it sold to RKW in 2000. RKW was fined EUR 39 million.
Spanish converting company Armando Álvarez was fined EUR 42 million. Fines were also dished out to Nordenia International (E39.1m) for its former subsidiary Nordfolien; Kendrion (E34m), the former owner of Fardem Packaging; Trioplast and FLS Plas jointly fined E17.85m; Bischof+Klein (E33.11m); Low & Bonar (E12.24m); Sachsa Verpackung & Groupe Gascogne (E13.2m); Stempher (E2.37m); Cofira-Sac (E0.35m) and Bernay Film Plastique (E0.94m).
UK polyethylene films giant BPI escaped the second largest fine. Group companies were found to have been involved in “infringing activity” but because of a successful application for leniency, the penalty was reduced to nil.
Comments: Since the last few years the European Commission has been investigating the chemical industry for possible foul play. Earlier a similar price-fixing cartel was identified in the EPDM industry. The price-fixing investigation in the elastomers industry has lasted much longer as several large chemical companies were involved. In this case, it seems the investigation was done at a swifter pace.
Earlier this year the European bag makers had filed anti-dumping complaints against bag makers in China, Malaysia, and Thailand.
The Commission had launched an anti-dumping and anti-subsidy investigation into imports of polyethylene bags from China, Malaysia, and Thailand, following complaints filed by EU bag makers. In November 2005, the Association of European Union Importers for Sacks & Bags urged European Commission to drop the anti-dumping probe on Asian bag makers.
BASF uses PLA in new biodegradable material Ecovio®
BASF developed a new biodegradable plastic material that combines the company’s biodegradable but petrochemical-based, Ecoflex polyester with NatureWorks’ polylactic acid (PLA), a corn-based bioplastic. The first Ecovio LBX 8145 grade contains 45% by weight of PLA that is chemically bound to the Ecoflex. BASF said the first application will be in flexible films used for shopping bags.
In Europe, Ecovio samples will be available in December, with commercial quantities said to be available in March 2006. It is planned to introduce Ecovio in Asia and NAFTA during the second half of 2006. Apart from offering Ecovio to film processors, BASF will also supply the “basic component” as Ecovio L, so that processors can combine it with Ecoflex or PLA themselves to obtain softer or harder formulations than the first LBX 8145 grade or to modify Ecovio L to make it suitable for injection-molding or deep-drawing applications.
Comments: With the increasing prices of petrochemicals, the use of biodegradable plastics will continue to increase and this move by BASF is another example. Europe also serves as an excellent market for shopping bag-type applications due to the ongoing efforts of countries like France to ban plastic bags unless they are biodegradable.
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