Private equity firms Access Industries and The Chatterjee Group to acquire Basell
The long protracted and much-speculated sale of Basell was finalized. The investment group led by New York-based The Chatterjee Group, along with the New York-based Access Industries acquired the assets and operations of Basell for approximately $5.7 billion US Dollars.
It is expected that the transaction will become final and the ownership of Basell formally transferred to the new shareholders in the second half of 2005, upon receipt of any necessary regulatory approvals.
Comments: Please refer to our CMR, Inc’s in-depth analysis published last week regarding Basell’s sale to The Chatterjee Group and Access Industries.
To obtain a copy of the article, please call or email us at 281-557-3320 or poe-sna@cmrhoutex.com
FLEXPO2005 to highlight the future of polyolefin innovations from Dow, ExxonMobil, and Ferro Corporation
FlexPO2005 to be held September 21-23, 2005 in Houston/Galveston will highlight the future direction of polyolefin technologies that could revolutionize the polyolefin industry
Dow’s product and technology platform for the future in bridging the gap between polyolefins and performance materials based on innovative technologies and planned product slate roll-out will be the subject of the keynote address by Dr. Kurt Swogger, Vice President of Technology at Dow.
ExxonMobil’s most significant development “Plasticized Polyolefin” – PP copolymer that can be plasticized with conventional plasticizer to produce flexible tubing, films, and profiles will be presented with commercial and technical details. Dr. Dean Chundury will present the most innovative approaches to the role of compounders in taking polyolefins to the next level.
Please see the program enclosed. Look forward to seeing you at this intellectual encounter.
Dow’s UNIPOL® PP process was selected for the world’s largest single-train polypropylene plant
Dow Chemical Company announced that its UNIPOL® PP Process has been selected by a leading global petrochemical company for two polypropylene production facilities of 400 KTA and 500 KTA. The 500 KTA facility, which will produce homopolymers and random copolymers, will be the largest single-train polypropylene plant in the world.
The UNIPOL Process is a world-leading process for the production of polypropylene. Since first being advanced by Union Carbide Corporation in 1985, this process technology has been licensed successfully for use in more than 80 plants in 15 countries, accounting for more than 6 million metric tons of polypropylene production annually. The UNIPOL Process has been awarded the Kirkpatrick Chemical Engineering Award for its innovative design technology and significance to the chemical process industry.
Comments: The world of PP licensing consists of Union Carbide’s Unipol (now Dow), Basell (now Acess/TCG), Amoco (now BP-Innovene), and BASF (now a split between Equistar/ABB Lumus).
These four technology licensors, especially the top two, Unipol and Basell developed Global Licensing organizations that are very successful. With metallocene technology in hand and no licensing experience, Exxon opted to join hands with Unipol to form Univation Technologies, only to be split apart by the famous Dow’s acquisition of Union Carbide. Basell maintained its licensing group intact in spite of changes in revolving door ownerships.
Amoco, which specialized in homopolymer grades carved a niche in fiber markets and became a part of BP’s Innovene polyethylene technology, now parked in the new holding –organization Innovene.
BASF’s Novolene, because of its small to medium plant sizes, and emphasis on specialties was a great success in Japan/Far East Asia (Basell being blocked by Mitsui). Unipol technology’s emphasis was never on specialty grades or small/medium plants. Without a doubt, large capacity plants, requiring simple-to-operate, commodity markets prefer Unipol. This selection of a Unipol license for the World’s largest PP plant is both fitting and deserving.
Like its polyethylene cousin, Unipol PP is expanding the performance envelope. Unipol PE broke the single-line capacity barrier when ExxonMobil constructed its Singapore Polyolefins plant with a 480 KT PE and 315 KT single-line polyethylene and polypropylene plant, respectively. Until now, single-line capacities for polypropylene production platforms have been limited to less than 400 KT. Larger capacity polypropylene facilities are dual-train with a single-line capacity of less than 200 KT. When constructed, the 500 KT polypropylene facility should provide best-in-class manufacturing economics. Although operators can take advantage of better economics, larger trains can also cause higher losses as a result of unplanned shutdowns. Therefore, it becomes increasingly important to closely monitor the operations of such lines.
NOVA Chemicals and Innovene announce catalyst license agreement with Westlake Petrochemicals
NOVA Chemicals International S.A. announced it has entered into a license agreement with Westlake Petrochemicals LP for NOVACAT™ polyethylene catalysts. NOVACAT catalysts are a series of proprietary, advanced Ziegler-Natta catalysts co-developed by NOVA Chemicals and Innovene, formerly BP Petrochemicals, for gas-phase polymerization processes. Westlake Petrochemicals, a leading manufacturer and supplier of petrochemicals and polymers, will use the catalysts for its linear low-density polyethylene operations.
NOVACAT catalysts deliver numerous advantages compared to other commercially available polyethylene catalysts, including higher throughput, lower usage of additives and co-monomers, and improved particle morphology. NOVACAT catalysts enable gas-phase polyethylene producers to manufacture a full range of butene and hexene resins that deliver improved performance for a variety of polyethylene end-use applications.
Comments: Until about a few years ago, Innovene PE licensees had limited catalyst options. Innovene, formerly BP, developed the process around its SDX (and its variants) catalyst technology. Although the catalyst was effective in making many grades, BP looked externally to further expand the technology portfolio. Eastman Chemical, an Innovene licensee, had been successful in developing its catalyst for the Innovene process, and in 2001 BP and Eastman agreed to collaborate in the marketing and licensing of Eastman’s proprietary Energx polyethylene technology. Also in 2001, BP and NOVA Chemicals announced an agreement to jointly develop and commercialize NOVACAT catalysts, which NOVA had initially developed for its Novapol (Unipol) process, for BP’s Innovene PE process. The NOVACAT catalysts work exceptionally well with the Innovene process; so well that Innovene uses NOVACAT catalysts in its plants in Grangemouth.
The catalysts should allow Westlake to better its position in LLDPE/HDPE by taking advantage of NOVACAT’s higher activity, better co-monomer incorporation capabilities, improved particle morphology, and increased flowability.
Shell joint venture, CSPC, and Basell work together to serve China market
CNOOC and Shell Petrochemicals Company Limited (CSPC), the largest Sino-foreign joint venture and Basell Polyolefins are working together to meet the needs of the fast-growing polyolefins market in China. The companies will co-exhibit at ChinaPlas 2005, June 21–24 at the Guangzhou International Convention and Exhibition Centre (GICEC). The booth location is E802.
CSPC is constructing a world-scale petrochemicals complex in Guangdong Province that will include three polyolefin facilities utilizing Basell state-of-the-art process technologies. The three plants will have an annual total capacity of 690 KT — 200 KT of high-density and medium-density polyethylene based on the Lupotech G process, 250 KT of low-density polyethylene based on the Lupotech T process, and 240 KT of polypropylene based on the Spheripol process. The plants are scheduled to come on-stream at the end of this year.
Basell will provide sales and marketing services for the polyethylene and polypropylene resins produced at the CSPC plants during the pre-production phase and for an initial period after the plant start-up.
The Spheripol technology produces polypropylene homopolymer, random and heterophasic copolymers; Lupotech T is a high-pressure tubular reactor process for the production of LDPE and EVA copolymers, and Lupotech G is a low-pressure gas phase process for the production of HDPE and MDPE. These Basell technologies produce high-performance polyolefins for applications in markets ranging from packaging and textiles to automotive and industrial.
Comments: CSPC is a 50:50 joint venture between China National Offshore Oil Corporation (CNOOC) and Shell Chemical. CNOOC is a state-owned Chinese company, focusing on the exploration and development of China’s offshore oil and natural gas resources through cooperation with foreign partners. CNOOC is a parallel company to PetroChina which is in charge of the exploration of China’s inland oil and natural gas resources. However, unlike PetroChina, CNOOC did not have downstream cracking and polyolefins capability. CSPC is CNOOC’s first polyolefins facility and hence the company does not have an inherent sales and marketing force for the downstream products of CSPC.
Shell has vast experience in polyolefins through its joint venture Basell, which the company recently divested. Shell also holds a 30% share in The Polyolefin Company in Singapore. Basell is chosen by CSPC as the service provider of sales and marketing, considering the relationship between Shell and Basell. This arrangement could be beneficial to Basell in terms of obtaining polyolefins from CSPC for its compounding facility in China.
Borealis introduces an upgraded range of Borflow™ resins that provide improved liquid barrier solution
Borealis announced the introduction of an upgraded range of its Borflow™ low viscosity polypropylene (PP) homopolymers, for meltblown, nonwoven applications such as diapers and medical gowns.
The new products, designated Borflow HL604FB, HL608FB, and HL612FB, answer a growing demand from melt-blown producers for more process-friendly plastics and from consumers with young infants, for diaper products that provide better liquid barrier (hydrohead) properties.
According to the company, the upgrading of its Borflow polymers enables the production of a more homogenous web, thereby significantly improving barrier performance. In Spunbond-Meltblown-Spunbond (SMS) composite structures, such as diapers, the new Borflow grades have the potential to increase hydro head.
The three new advanced Borflow grades, HL604FB, HL608FB, and HL612FB, offer different Melt Flow Rates (MFR) and fiber diameters to satisfy a broad range of application needs, and specific properties required.
Comments: Borflow® is a family of low-viscosity polypropylene homopolymers mainly used for the manufacture of melt-blown nonwovens. Their advantages including high MFR and narrow molecular weight distribution ensure the production of ultra-fine fibers. These microfibers create a melt-blown web with very small pores, which enhance barrier properties in hygiene and medical applications.
Small pore size also delivers high filtration efficiency and creates high pore volumes to absorb large quantities of liquid in wipes and sorbents. Borflow products are well established in the meltblown market and producers appreciate their palletized form, which provides good product consistency and easy and safe handling.
Melt-blown PP as described in the last issues of POE continues to be in demand for applications such as surgical face mask filters, liquid and gaseous filtration which are found in cartridge filters, clean room filters, medical applications including the disposable gown and drape market, sterilization wrap segment, feminine sanitary napkin, disposable adult incontinence absorbent products. However, this grade will give Borealis added advantage for sanitary and medical applications where higher barrier resistance for extra protection is required.
Reliance Industries bidding for Qenos’ polyethylene business
Indian polyolefins producer, Reliance Industries is planning to bid for the polyethylene business of Australia’s largest producer, Qenos.
According to the company, Qenos is valued between $315-400 million and the deal is expected to be concluded by May. RIL will compete with private equity investors like Iron Bridge Capital for the Australian major.
Comments: Reliance Industries is the largest polyolefins producer in India. The company currently operates about 370 KT PE plants.
The company is adopting a strategy of increasing its global presence via acquisitions and new capacities. The company is constructing a PP and SBR unit, both scheduled to start operations in 2006. The company has so far completed the acquisition of Germany-based polyester producer, Trevira GmbH.
Started in 1999, Qenos is a joint venture between ExxonMobil and Orica. The companies have planned to sell Qenos for a long time now due to the company’s weak financial reports. Recently, Basell acquired the polypropylene business of Qenos.
Chisso to construct a long-fiber glass-reinforced thermoplastic resin plant in the US
Japanese chemicals producer Chisso Corp announced its plans to construct a plant producing 10,000 MT/ year of its long-fiber glass-reinforced thermoplastic resin, Funcster® in the US.
The facility will be located in Georgia at the premises of a plant of local textile maker Fiber Vision and is scheduled to start operations in January 2006. It will sell products to both Japanese-affiliated and local car makers in North America.
Chisso has already set up a wholly-owned Funcster production and sale subsidiary in Detroit, in the state of Michigan, under the name of Comusa LLC. The latter has a $3.0 million registered capital. Chisso currently produces 10,000 MT a year of the Funcster resin at its factory in Ichihara, Chiba.
Comments: Chisso introduced the Funcster resin in 1994. The product finds broad application in the manufacture of home appliances, industrial components, and cars. In Japan, Funcster is sold in domestic markets through Japan Polypropylene Corporation jointly operated with the Mitsubishi Chemical group, and sold in overseas markets by Chisso itself.
Other producers of these resins include Celanese. The company produces Celstran® long fiber reinforced thermoplastics using its proprietary technology to combine long glass, carbon, aramid, and stainless steel fibers (typically 11 mm long) with many base resins. In addition to polypropylene, these resins include polyethylene, nylon, polyurethane, acetal, polyphenylene sulfide, and polyesters. Celstran® LFRT has better strength and other performance properties compared to plastics reinforced with short fibers (2 mm or less).
SABIC recently combined their recent acquisition of Owens=-Corning JV on fiber-reinforced PP with their PE and PP operations acquired from DSM under their Sabic Europe operations.
NOVA Chemicals introduces the DYLARK® 500XT series of resins
NOVA Chemicals Corporation announced the commercial introduction of two new DYLARK® high-impact engineering resins, DYLARK 510XT, and 520XT. The DYLARK 500XT series of resins meet the increased toughness requirements of the automotive market, providing enhanced stiffness and dimensional stability for instrument panels and interior applications.
According to Nova, the new DYLARK 510XT and 520XT grades have superior impact properties — with increases of up to 60% in toughness compared to traditional DYLARK resins.
“The higher impact properties provide improved handling of finished products and, when combined with DYLARK resins’ thin wall capability, result in significant weight savings compared to other resins.” DYLARK 500XT resins are styrene-maleic co-polymers offering superior thermal properties, such as heat distortion temperature (HDT) and long-term heat aging (LTHA). These resins also provide best-in-class foam and paint adhesion performance.
Comments: The new Dylark 500xt is glass reinforced and is designed for wide use in thin wall automotive instruments panel applications such as the center compartment and dashboard. The polystyrene industry has been and is projected to be the weakest of the commodity plastics for the next few years.
The development of specialty grades based on blends and alloys with other transparent materials has been the major goal of the polystyrene industry for the last fifteen-twenty years. The transparent material product portfolio is over-crowded with new materials including PC/ABS blends, Syndiotactic polystyrene, SAN, ABS, PMMA, and other acrylics – and blends thereof – providing very limited opportunities unless they can step up and compete effectively against the king – polycarbonate which never happened.
The conventional wisdom suggests developing specialties in a low-growth commodity market is both futile and an avoidable expense. Dylark, originally developed by Amoco in the early 80s, remains a small specialty and at best a technical curiosity.
Thailand-based PTT acquires 31.5% Ownership in TPI
PTT Public Company Limited (PTT) announced its plans to acquire a 31.5% ownership interest in TPI. PTT intends to subscribe to approximately 6,143 million shares of TPI at an indicative price of THB3.30 per share, equivalent to approximately THB20.3 billion (approximately US$520 million) for the entire 31.5% ownership interest. The transaction and the indicative THB3.30 per share offer are subject to satisfactory confirmatory due diligence and the terms and conditions of the SPA to be agreed upon.
In its assessment of the proposed investment, PTT has conducted detailed due diligence on TPI’s existing operations, business plan, and projected financials to ensure that the investment satisfies its 15% rate of return threshold and other internal investment guidelines.
It is PTT’s objective to strengthen TPI’s existing operations by upgrading production facilities, maximizing operational efficiency, and enhancing the value of underutilized assets. PTT aims to achieve potential synergies in, among other areas, the procurement of crude and feedstock, and the marketing and trading of refined oil and petrochemical products. As the largest shareholder of TPI and given its strategic position in the petroleum and petrochemical businesses, PTT will assume management responsibility of TPI to ensure a smooth and efficient operational transition, improve TPI’s competitive position, maintain high corporate governance standards, and increase shareholder value.
Comments: This move from PTT surfaces the company’s intention to leverage TPI’s existing business platform and further expand itself into a fully integrated petrochemical business. Once this deal goes through, PTT will control 61.5% of TPI, one of the biggest and most integrated petrochemical complexes in Thailand.
TPI operates a refinery with a capacity of 215 thousand barrels per day. The company produces ethylene (360 KT/year), propylene (310 KT/year), benzene (110 KT/year), toluene (130 KT/year), mixed xylenes (120 KT/year), styrene monomer (200 KT/year), LDPE (160 KT/year), HDPE (150) and PP (475 KT/year).
SABIC in Europe simplifies its legal structure by renaming Sabic EuroPetrochemicals to Sabic Europe
SABIC’s European activities no longer present themselves as SABIC EuroPetrochemicals but as SABIC Europe. Following several intra-group mergers, SABIC’s European operating companies SABIC Polypropylenes BV, SABIC Polyethylenes BV, SABIC Hydrocarbons BV, and StaMax BV have merged into SABIC Petrochemicals BV.
Concurrently, the names of some of the other European SABIC companies have changed. SABIC Petrochemicals Limburg BV, the employer in the Netherlands, has been changed to SABIC Limburg BV, SABIC Europe BV has been changed to SABIC Holding Europe BV and SABIC EuroPetrochemicals BV has been renamed SABIC Europe BV.
All of SABIC Europe’s business relations (suppliers, customers, customs offices and tax authorities in Europe, trade registers, public registers, etc.) have already been informed about the changes.
Dynasol to invest in hydrogentation reactor at its styrenics elastomers plant
Repsol YPF is planning to invest EUR 13 million to install a hydrogenation reactor at Dynasol’s 110,000 MT/year styrenic elastomers plant in Gajano, Cantabria.
Dynasol is a 50:50 joint venture between Repsol and DESC, which produces synthetic rubber in Altamira, Mexico. The JV is the world’s second-largest producer of solution SBR with an annual production of 200 KT.
Hydrogenated styrene-butadiene block copolymers yield high-performance thermoplastic elastomers, which are typically used in polymer modification, footwear, and consumer products requiring soft touch or improved grip properties.
Comments: Dynasol is the new upcoming leader in both technology and market development in the saturated diblock development started by Shell in the eighties and stopped in the early 90s. There are a lot of new opportunities, technologies, and markets that can be developed in saturated diblocks.
These copolymers have higher tensile strength and service temperatures than SBS and SIS. SEBS copolymers compete with polypropylene/EPDM blends on a manufacturing cost economics where there is an inter-material competition in vulcanized rubbers (TPV) applications. The addition of hydrogenation units comes in line with market trends where soft touch and feel applications have been seeing high growth rates in recent years.
This will allow Dynasol to better compete in areas such as (1) polymer modification, (2) adhesives & sealants, (3) automotive, (4) wire & cable, and various other smaller applications.
Advances announced by London Metal Exchange regarding plastics futures contracts
The London Metal Exchange (LME) has confirmed the first set of approved brands and warehouses for its futures contracts for polypropylene and linear low-density polyethylene, which launch on 27 May 2005.
A list of approved producers for PP and LLDPE is included below.
1. The Dow Chemical Company (USA) – PP and LLDPE
2. Innovene Europe (UK) – PP and LLDPE 3. Chemopetrol (Czech Republic) – PP
4. Thai Polypropylene Co Ltd (Thailand) – PP and LLDPE
5. Reliance Industries (India) – PP and LLDPE
The approved warehouses include (1) C. Steinweg-Handelsveem BV (Rotterdam), (2) C. Steinweg-Handelsveem (FE) Pte Ltd. (Singapore), and (3) Henry Bath Singapore Pte Ltd (Singapore).
LME also announced initial margin rates for the exchange’s polypropylene and linear low-density polyethylene contracts. The PP contract would incur an initial margin of $100/mt or $2,475/contract and LLDPE will incur an initial margin of $96/mt or $2,376/contract. The initial Margin is the good faith cash or other security deposit posted by market participants on their net open position. The purpose of the initial margin is to ensure performance on financial obligations implicit in futures dealings and margin levels are set by the clearinghouse concerning price volatility in PP and LLDPE.
Comments: Compared to previous attempts the London Metal Exchange seems to have been much more successful in its attempt to trade plastic commodities.
LME has taken a systematic approach towards plastics trading and by May 27, 2005, it will reach the final stages of its initial trading plans. Both polypropylene and polyethylene trading start with predetermined initial margins. Several leading suppliers such as Dow, Innovene, and others are participating by providing their material. The successful trading of these products would help LME decide whether to introduce other plastics for trading at the exchange.
The virgin plastics so far have never succeeded in exchange settings – because of higher TS&S, too many grades, fewer customers and repeat buyers. The exchanges are meant for fungible products like – Metals.
London Metal Exchange will probably change its name to London Plastics Exchange after they succeed?????
Chemtura is the new additive company formed via a merger of Great Lakes and Crompton’s additives business
Great Lakes Chemical and Crompton Corporation announced that once their merger is complete, the new company will be known as “Chemtura” (pronounced chem-CHOOR-a) Corporation.
According to the companies, selecting a new name is an important milestone in the process of forming our new company.
As a Delaware corporation, Crompton must abide by Delaware law requires that changes to its certificate of incorporation, including a name change, must be approved by a majority of shareholders entitled to vote. Crompton shareholders will vote on whether or not to approve the Chemtura name at the same time that shareholders of both companies vote on the merger. The merger is expected to close by mid-year.
Comments: Recently, Great Lakes and Crompton merged their plastic additives business to form a new company. The organizations have named the newly formed company as “Chemtura”.
Chemtura will have combined revenues of more than $4.1 billion. It will hold leading positions in high-value specialty chemical niche businesses including plastics additives, petroleum additives, flame retardants, and pool chemicals. Chemtura will be owned 51 percent by Crompton shareholders and 49 percent by Great Lakes.
For more information, please refer to “Global Polyolefins & Elastomers – News Analysis” – Issue 06, Volume 03.
Sasol and Total cancel their waxes joint venture
Sasol and Total have abandoned plans to form a joint venture in petroleum-based waxes. The decision follows the European Commission’s recent announcement of a four-month investigation into the proposed joint venture because of competition concerns.
Comments: Sasol has a virtual dominance of Fischer-Tropsch or synthetic GTL-based waxes globally at present and is a partner in a large percentage of future projects of this type underway in future years.
The nature of the F-T of GTL waxes is that they are high crystallinity or hard type waxes that are used in premium applications like polishes or coatings, adhesives, cosmetics, and other applications. Besides Sasol at the present time, Shell is the only other synthetic wax producer. Sasol’s F-T wax plant is at Secunda S.A. and Shell’s at Bintulu Malaysia. Most of the paraffin wax in the world is currently supplied by refineries in the form of slack wax which is then further refined to into a range of products including limited amounts of microcrystalline waxes, the high end of the market. Competition for some microcrystalline waxes comes from natural sources and a flood of synthetic products into the European Economic Commission (EEC) from F-T GTL sources could overwhelm these historic or heritage markets so it is not surprising that the EEC would want more competition to be maintained into domestic European markets.
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