Sumitomo Chemical to convert LLDPE plant to polypropylene plant in Singapore
The Polyolefin Company (Singapore) Ltd. (“TPC”), a subsidiary of Sumitomo Chemical Co., Ltd., announced its plans to convert its linear low-density polyethylene (LLDPE) plant to polypropylene production. The new plant’s production capacity will be 200,000 metric tons/year. Construction is scheduled to be completed in the third quarter of 2006. Upon completion of the project, TPC will have a combined total polypropylene production capacity of 650,000 MT/year.
The main reason for Sumitomo’s decision is its strategy to move away from commodity products and toward higher value-added products. LLDPE, a commodity polymer used in films and other materials, is facing intensive competition from Middle Eastern manufacturers with lower feedstock costs.
The additional propylene required as feedstock for the new plant is expected to be supplied by the Petrochemical Corporation of Singapore Ltd., a Sumitomo Chemical affiliate. The company is also building a new propylene plant employing a metathesis process that will have a production capacity of 200,000 metric tons/year.
Comments: In the early 90s linear low-density polyethylene showed a lot of promise and a high growth rate. To take benefit of higher growth, a large number of producers added LLDPE capacity. By the mid to late 90s there was overcapacity and the operating rates and margins for LLDPE declined.
Polypropylene is one of the fastest-growing plastics with historical growth rates of around 7%. The capacity and demand for polypropylene almost tripled between 1990 and 2006. On average the capacity has increased at around 7% to 8% on a yearly basis. The growth in demand has also been almost similar to the growth in capacity. While the demand and supply have grown at similar rates in the past the same is not expected in the future. The global demand is projected to grow at 5% to 6% but the capacity is projected to grow at 4% – 5%. The operating rate has averaged around 88% over the last fifteen years but is expected to stay around 90% in the next few years. The main reasons for increasing operating rates include high growth and relatively controlled capacity additions. Higher operating rates will also help provide producers with some pricing power.
Sumitomo seems to be addressing this supply-demand imbalance by converting its LLDPE plant to a PP plant.
Indian Oil selects Basell’s Hostalen technology for a new 300 KT HDPE plant
Indian Oil Corporation Limited announced the selection of Basell’s Hostalen technology for a new 300 KT per year high-density polyethylene plant it will build at Panipat, India. The start-up is planned for 2007.
The Hostalen technology is a low-pressure, slurry process with dual reactors that can operate in series or in parallel to produce products with customized properties. Hostalen technology is a state-of-the-art, established process that has been in operation in India for many years.
At the end of last year, IndianOil also selected Basell’s Spheripol technology for two new polypropylene lines with a combined annual capacity of 600 KT.
Comments: This project represents Indian Oil’s diversification into the polyolefins sector. The project is currently designed to have a naphtha cracker based on captive utilization of naphtha from the Panipat, Mathura, and Koyali refineries of Indian Oil. The capacity of the naphtha cracker unit is based on 800 KT of ethylene and 500 KT of propylene per annum. The project will also include an LLDPE/HDPE swing unit and a polypropylene unit. Indian Oil also chooses to select Basell technology for its polypropylene initiatives agreeing to license two Spheripol lines amounting to 600 KT worth of capacity.
The main licensors of bimodal high-density polyethylene are Mitsui and Basell. Mitsui is more popular for pipe applications, especially in Asia. Equistar is trying to license its technology in this arena as well.
Basell announces its plans to sell share in PP plant in Spain that it jointly owns with Repsol
Basell announced its plans to sell to Repsol YPF its 50% share in the 160 KT per year polypropylene plant in Tarragona, Spain that is operated by Transformadora De Propileno A.I.E., a company jointly owned by Basell and Repsol. The parties expect to complete the transaction in the next few months following approval by the Spanish regulatory authorities.
Comments: In August 2004 BASF and Shell announced their plans to divest their stake in the joint venture Basell, either as a sale to an independent group or as an IPO. Since then Basell has had to re-evaluate its strategy and strategic partners. As a part of its ongoing strategic initiatives Basell has announced the intention to sell its part of the joint venture with Repsol. Basell and Repsol are the only suppliers of polypropylene in Spain. The total estimated capacity of polypropylene in Spain is 780 KT. In addition to the 160 KT JV plant, Repsol also has 260 KT of polypropylene capacity in Peurtollano and Tarragona. After this deal Repsol will have 420 KT of 54% of polypropylene capacity in Spain. Basell will continue to operate its 360 KT polypropylene plant in Tarragona. Spain accounts for less than 2% of the global polypropylene capacity. Polypropylene is expected to grow at 5% to 6% with the operating rates approaching 90%.
Mitsui Chemicals licenses its HDPE technology to GAIL
Mitsui Chemicals has licensed its high density polyethylene process technology to Gas Authority of India Limited (GAIL). The new HDPE plant will have a manufacturing capacity of 100,000 metric tons per year, located at Pata, Uttar Pradesh, northern India.
Completion of the plant is expected in 2006. The agreement was signed in June 2004, became effective upon approval of the Indian government.
Comments: This is Gail’s second HDPE plant based on Mitsui’s CX process. The first plant with a capacity of 100 KT was licensed in 1993 and currently operates in Gail’s petrochemical complex at Pata. The new plant shall also have the capability to produce MDPE and PE-100 grades. With the addition, the company’s current polymer capacity of 310 KT will increase to 410 KT. GAIL has recently completed the de-bottlenecking of its LLDPE/HDPE (swing) plant at a cost of US$16 million to increase its polymer capacity to 310 KT from the earlier 260,000 TPA. The project is estimated to cost at about US$137 million.
Mitsui Chemicals to introduce new propylene-based Tafmer® elastomers series
Mitsui Chemicals, Inc. (MCI) announced its plans to launch a new series of propylene-based high-performance elastomers made using metallocene catalysts under the trade name TAFMER® XM. A family of soft polymeric materials, elastomers are used for applications such as automotive and electric appliance parts as well as food packaging materials.
The company plans to manufacture the new products at one of the existing TAFMER plants with its capacity of 30,000 MT/year. TAFMER XM Series will be commercially available in April, 2005, after minor modifications of the plant. The plant is located at the company’s Ichihara Works east of Tokyo. The new series is projected to achieve sales of at least ¥1 billion by Fiscal 2006.
Unlike the company’s existing propylene-based TAFMER produced by using conventional Ziegler catalysts, the epoch-making TAFMER XM Series high-performance polymers made under MCI’s proprietary metallocene catalyst technology are expected to find extensive applications as resin modifiers for various resins owing to their extremely high homogeneity in terms of molecular structures.
Comments: Mitsui started manufacturing its metallocene based elastomers when it modified its Ohtake facility in Iwakune in 1996. They were able to produce EP elastomers and versions of its Tafmer® grades with very low density via solution process. Mitsui later built a plant at the Ichihara site to produce Tafmer and elastomers. Mitsui has a 100 KT Tafmer plant in Chiba, Japan. In 2003, Mitsui started another 100 KT/year plant in Jurong Island, Singapore.
Mitsui’s Tafmer grades are most commonly used for impact modifying polypropylene and polyethylene. The potential target for Tafmer XM includes (1) appliances, (2) automotive applications (interiors and exteriors), (3) construction, (4) consumer products, (5) fibers and fabrics, (6) film, (7) hose, (8) industrial, (9) mechanical goods, (10) nonwovens, (11) packaging, (12) personal care, (13) roofing, and (14) wire and cable.
In recent years there has been an increase in demand for metallocene based elastomers such as Tafmer due to its higher performance capability that includes impact strength, high tensile and impact strength. The growth is mainly led by the automotive sector.
Mitsui’s Tafmers, originally started in 1987 were the benchmark for most of the metallocene product development. Mitsui’s lack of success in capturing a large Global market has more to do with the small capacity and inadequate representation in North America and Europe – This was the situation in 1988 and still remains unchanged.
Tafmers are technologically superior products, but the probability that they will succeed in marketing still remains debatable.
Bidding for Basell into next round & Basell write-off hits Shell profits
Bidders for Basell have been narrowed down to three groups. These include: (1) The Chatterjee-Soros Group (original promoters of Haldia Petrochemicals), (2) Ineos, and (3) Iran’s National Petroleum Co. (NPC).
Shell posted a $200-million, fourth-quarter 2004 chemicals loss which consisted of a $565-million write-off of Shell’s investment in its Basell polyolefins joint venture with BASF, which the companies plan to divest.
Comments: Basell represents probably the last state of metamorphosis for Montedison polyolefin technology. It has changed hands multiple times over the last two decades – Himont – Montell – Basell. The future is uncertain with the three potential suitors – Ineos, Haldia Group of India and NPC-Iran – none of them have a technology heritage or a rich history in polyolefins. If and when it happens, it will be a hard one to swallow.
Transitions such as the ones that Basell has undergone can be taxing on the core of the company and risks the migration of intellectual capital as well as the source of the innovation. Chemical Market Resources, Inc will present its detailed analysis soon after the official announcement
ExxonMobil Chemical to expand Santoprene TPV manufacturing site
ExxonMobil Chemical announced its plans to add a new production line at its Pensacola, FL manufacturing site. The company cites increasing demand for Santoprene® thermoplastic vulcanizate (TPV) as the primary reason for expansion. The expansion is expected to be operational by mid 2006. Santoprene TPV is a recyclable elastomer commonly used in the appliance, automotive, construction, consumer goods, electrical, fluid delivery and medical industries.
Comments: IAdvanced Elastomer Systems (AES) headquartered in Akron, Ohio, is an affiliate of ExxonMobil Chemical Company. AES is the largest global producer of TPV with their Santoprene® grade. Monsanto first commercialized TPV in 1981 under Santoprene and in 1990 Monsanto Chemical Company combined its expertise in engineered thermoplastic elastomers (TPEs) with that of Exxon Chemical Company forming Advanced Elastomer Systems (AES).
TPV are essentially TPO’s where the elastomeric phase has been crosslinked during the dynamic vulcanization process using peroxide or silane grafting. This process provides the product with higher heat resistance, oil resistance, and lower compression set. TPV’s are better positioned to compete against thermoset rubbers on a cost performance basis than non-crosslinked TPO’s and with the added advantage of being able to be recycled. The largest consumer of TPV is in the automotive application, other include (1) appliance, (2) construction, (3) consumer goods, (4) electrical, (5) fluid delivery, (6) grips, (7) medical and (8) packaging industries and other applications. The high growth rate of TPV close to 5.6% in North America is a result of consumers needing higher performance product with better feel characteristics.
DSM further increases Dyneema® production at in US & Netherlands
DSM announced its plans to invest over USD 50 million to build a new fiber line in Greenville, North Carolina (U.S.), and boost production in Heerlen (The Netherlands) by 10%. The new Greenville line will increase U.S. fiber production capacity by more than 50%. This is the fifth expansion in Dyneema® fiber capacity since 2001 and the third in Greenville since 2003. By adding the extra line in the U.S. DSM Dyneema will become the largest manufacturer of high performance polyethylene fiber in US. DSM expects to complete the new line in the third quarter of 2006. With this expansion, the total global Dyneema® capacity will rise to 2.5 times by 2006, compared to installed capacity in 2000.
Dyneema® is used among others for Small Arms Protective Inserts (SAPI), and armoring of vehicles like the Humvee. Dyneema® is also successfully applied in heavy marine mooring lines, cut resistant garments, orthopedic sutures, and fishing tackle, markets in which DSM Dyneema operates on a global scale.
Comments: DSM Dyneema opened its first US fiber line in Greenville, N.C., in May 2004. The company announced the addition of a second line last January that will be operational in early 2006. DSM’s Dyneema® fibers are based on gel-spun polyethylene technology developed by DSM and patented in 1982. Since commercialization, the company has made process improvements regarding Dyneema production and successfully increased market shares.
Dyneema fibers are highly oriented polyethylene fibers, produced by gel-spinning technology, wherein polymers having molecular weights of 1,000,000-5,000,000 are used. The ultra-high-molecular-weight polyethylene (UHMWPE) polymer is dissolved in a solvent (paraffin oil) at high temperatures of about 100-120°C and spun into gel-like filament fibers. The filaments are then exposed to a second solvent and then extruded into filaments.
The filaments are then stretched to two times their length to align the molecules into exceptionally strong, highly oriented extended chains with an almost 100% crystalline structure. For more information on performance fibers, please read our bimonthly publication, New Generation Polyolefins, dedicated to Fibers.
Solvay considers opening PVC production facility in Russia
Solvay SA announced that it is considering opening a PVC plant in Russia and is studying a site together with a Russian partner, Nikos Group. The company plans to invest about EUR 500 million for the integrated PVC complex.
The company said it is conducting a feasibility study which will be finished by the middle of the year. If the project is feasible, the plant will be operational by 2008 at the earliest.
Comments: The current total PVC capacity in Russia is about 630 KT amongst local producers. These include: Kaustik Sterlit, Plastkard, and others. Both Kaustik and Plastkard are subsidiaries of Solvay’s Russian partner, Nikos. The total demand for PVC in Russia is about 450 thousand metric tons and is expected to grow at about 10% per annum for the next five years.
In the Russian PVC project, Solvay will be participating through its joint venture with BASF and Solvin. The company has total current European PVC capacity of about 1,300 KT/year.
For more detailed information on PVC markets in Russia, please refer to our upcoming multiclient study on “Intermaterial Competition of Worldwide Flexible PVC and Polyolefins & Elastomers”, to be completed by June 2005.
GAIL and NPC plan $1.5 billion cracker in Iran
Indian state-run gas transmission and marketing giant Gas Authority of India Ltd. (GAIL) and Iran’s NPC International Ltd. will set up a $1.5 billion gas cracker plant in Iran.
The two companies will set up a 1-million-tonne-per-annum ethylene cracker in South Pars in Iran to make plastics such as low density polyethylene, linear low density polyethylene, high density polyethylene and polyvinyl chloride.
GAIL and NPC will jointly own the new company, which will receive low-cost supply from the giant South Pars Gas Field. A feasibility study is underway and likely to be completed in two months. GAIL will provide the venture with senior management staff and operational and technical expertise, while NPC will get statutory approvals and governmental clearances.
Iran is the second-largest producer of natural gas and holds 15 percent of the world’s reserves. It also is emerging as a leading producer of petrochemicals. Major Indian energy companies such as GAIL are diversifying into the petrochemical sector, given the robust 14-15 percent growth the domestic industry is seeing.
Comments: This project is a shot in the arm for cracker development in Iran where a number of state run projects have been cancelled recently for lack of funding and potential derivative demand. Upwards of 5 ethylene crackers had been placed on Iran’s project books for coming years but supposedly were delayed (cancelled) because of lack of market tie-ins. The Gail connection is a natural. India needs petrochemicals and derivatives and the formula to beat by many global firms is to build ethylene capacity where the inexpensive feedstocks reside. Iran has this position in spades. Gail’s project for domestic repatriation of polyethylene is no different than the large US multinationals building crackers in Saudi Arabia and other Gulf Coast State locations.
This is a tried and true formula of discounted feedstocks to protect the basic capital investment and a sharing of the downstream profits as an incentive for the feedstock provider. The derivative buyer (Gail) in this case also gets a good long term strategic position. Usually, feedstocks are priced based on natural gas at around $1.00/mm BTU which is a substantial discount for capital maintenance. Iran also gets one more cracker of the 5 or so in their chain of investments. Logistically, Iran is a good bet to India’s supply also; it is certainly closer than North America, China or Europe which means potentially higher netbacks. This project is a good strategic move at the right time.
Pequiven signs MoU with Braskem for polyolefins, fertilizers
Venezuela’s state petrochemical company Pequiven signed two agreements with Brazil’s Petrobras and Braskem. The companies inked memorandums of understanding for cooperation on producing polyolefins and fertilizers.
President Lula, in a speech to businessmen, said the two countries were considering a joint petrochemical venture. Chavez also said Brazil would participate in a planned petrochemical project to be located near the 940,000 b/d Paraguana refining complex.
Comments: Venezuelan state petrochemical company Pequiven has agreed with Brazil’s Braskem to carry out joint feasibility studies for the construction of ethylene, polyethylene, polypropylene and PVC plants in Venezuela all indicates the use of the country’s new natural gas positions. This is probably more than a feasibility study given the size of Venezuela’s petrochemical appetite for development plans.
Technicalissues, markets and financing for each of the plants would be studied until mid-2005, at which point Pequiven and Braskem would decide whether to go ahead with the projects. The facilities would all be built in Venezuela’s Jose petrochemical complex in eastern Anzoategui. ExxonMobil already has a major ethylene and derivatives complex underway in Venezuela who has stated there is a long range $16B petrochemical development plan slated for the country. With the large size of the committed development funding in petrochemicals, the probability of this project proceeding would appear good.
The new and ample availability of natural gas in the country’s east is undoubtedly an incentive for the new Brazilian joint ventures. Brazil is also well into significant oil and gas discoveries off shore in the North East region of the country and this production could also find a home as part of the feedslate into the new Venezuelan joint ventures. The interesting element of the new announcements is that actual derivative plans are announced along with the base projects. Markets for these polymers products will be well oriented to Mexico and Northern South America who now import large quantities of basic derivatives to supply their growing populations, among the highest population growth rates in the hemisphere. The planned petrochemical project is to be located near the 940,000 b/d Paraguana refining complex which also leads to speculation of feedstock integrations from the refinery.
Dow Chemical to invest in R&D center in China
Dow Chemical announced its plans to set up a major R&D and information technology (IT) center in China. There are plans to include other service and support facilities at a later stage, the company says. Dow says it will pick a location by the end of March, and have the IT component in place within 12 months. The IT center will provide system and work process support to Dow worldwide, and the entire facility is due to be completed within three years, and will employ about 600.
Comments: China is currently considered the unexplored pot of gold. Every major organization in the West is taking the route and Dow is no exception.
China represents a rare combination of centrally planned economy with like-ness of consumer society an odd-couple.
The apparent market of potential 1.5 billion consumer market needs to be assessed with care – less than 100-200 million customers who need and can afford Western goods. Any activity in China should be closely scrutinized in light of 80s Asian Tiger – that ended up as a mere alley cat. Caution is the name of the game.
H.B. Fuller enters into adhesives joint ventures with Sekisui Chemical in Asia
H.B. Fuller Company announced the signing of an agreement to enter into joint venture with Sekisui Chemical Company in Japan and China.
In Japan, Sekisui and H.B. Fuller will merge their Japanese adhesives businesses to create a new entity named Sekisui-Fuller Company, Ltd. Ownership in the new entity will initially be split between Sekisui and H.B. Fuller, 60 percent and 40 percent, respectively. H.B. Fuller will retain an option, exercisable after two years, to increase its equity ownership to 50 percent. The new entity will be one of the largest industrial adhesives businesses in Japan with approximately $150 million dollars in revenue and considerable strength in the assembly, packaging, and non-woven segments. Employees currently engaged in the adhesives operations of both companies will transition to Sekisui-Fuller.
With respect to China, H.B. Fuller will sell a 20 percent equity interest in its China operations to Sekisui. Sekisui will retain an option, exercisable after two years, to increase its equity ownership to 30 percent. Partnering in China will allow the joint venture to leverage its relationships with Japanese companies operating in China to augment sales growth.
The joint ventures, which are subject to regulatory approvals and customary closing conditions, are expected to close in the second quarter of 2005.
Comments: H.B. Fuller is one of the largest manufacturers of adhesives globally. The company started in 1887 and has well established markets in adhesives, sealants, coatings, paints and other specialty chemicals. Their core technologies are based on emulsion polymerization, water-based adhesives formulation, thermoplastic hot melt technology, and thermoset technology based on epoxy, polyurethane, acrylic, and silicone chemistry. HB Fuller has 58% of their sales in North America and 20% of their sales in Europe.
The joint venture will allow HB Fuller to take advantage of the fast growing Asian markets. The growth is especially strong in China, Thailand and India as companies start establishing manufacturing facilities in this region.
One primary factor behind rising demand for adhesives is the growth rate for the paper and paperboard packaging industry, which drives the hot melts and emulsions markets. Rising demand in packaging markets is due to the continuing industrial and economic development of the developing economies, particularly in Latin America and Asia.
Pliant plans to update equipment and technology
Film producer Pliant Corp. announced its plans to investing $15 million in 2005 to upgrade equipment and technology for its personal-care and food-packaging business.
Pliant will install its first seven-layer coextrusion line for cast film, two new 10-color flexographic printing presses and a sophisticated electron-beam coating process for printed film.
Personal-care applications include backsheet film for diapers, feminine hygiene and adult-incontinence products, and medical hospital sheets and the food business primarily is focused on bags for bakery and frozen-food items. Pliant’s new high-speed printing presses, capable of printing digital images, will be sent to the company’s plants in McAlester, OK, and Macedon, NY.
Comments: In the last decade the packaging industry has continuously demanded films with increasing number of layers. Converters in turn have developed technology to enable 7-layer films that cater to a variety of applications. Majority of these developments have been the result of teamwork between resin producers, converters, end-users, and equipment suppliers. The newer capacity additions by major converters are for these value-added seven-layer films. These films are usually coated for superior printing properties.
The personal care and snack food packaging market has grown at higher than GDP rates in the last decade and is expected to do so in the future. Both these markets require sophisticated packaging to appeal the consumers. Packaging in these markets is linked to barrier properties and aesthetics. Plaint Corporation is addressing the needs of these faster growing and demanding packaging markets via upgrades in equipment and technology.
Dow Chemical to invest in Texas City oxoalcohols site
Union Carbide, a wholly owned subsidiary of Dow Chemical Company, announced that it will undertake a multi-year spending program to make capital improvements in support of Dow’s Solvents & Intermediates business. The modernization will improve the reliability of the Isopropanol and Oxo production facilities at the site and increase Isopropanol capacity by 40 million pounds.
This is the final authorization for a capital spending program that began in late 2002. The investment will fund capital improvements over a period of three years beginning in 2005, and will continue until 2007. The project is expected to add 200 contractor jobs during the construction period.
Comments: The overall improvements in earnings over the last year have enabled Dow to make investments in upgrading its older facilities. Upgrading the oxo-alcohols & isopropanol facilities will enable the company to compete effectively and cope with the increasing demand.
Cargill & Bayer CropScience form alliance to provide specialty canola oil
Cargill and Bayer CropScience have formed an alliance to produce specialty canola for the supply of high stability oil to Cargill’s food industry customers. This oil does not require hydrogenation and is used by food processors when there is a need to eliminate trans fat and reduce saturated fat content.
The alliance will combine Bayer CropScience’s expertise in producing high-performing, high-yielding seed with Cargill Specialty Canola Oil’s patented technology for producing and utilizing high oleic canola oil. The seed produced by the alliance will be developed from Bayer’s market-leading InVigor® line of hybrid canola. This will be an additional choice for growers who contract with Cargill through its AgHorizons™ retail business – they will have access to InVigor® hybrids with the LibertyLink® herbicide tolerance system, in addition to Cargill’s own proprietary specialty oil canola seed with Roundup Ready® technology.
Comments: The $32 billion global market for oilseed production is estimated to be growing 3 percent per year.
Two oilseed crops, soybeans and canola, account for over 70 percent of the 336 million metric ton world oilseed production capacity. Canola oil alone represents an annual market of more than $8 billion. Canola oil is lower in saturated fats than any other oil.
W. R. Grace executives face indictment
Seven current and former executives of W. R. Grace have been charged with knowingly exposing residents of Libby, MO to asbestos and concealing the danger. This is the first time a major company’s executives have faced jail terms for asbestos-related charges.
According to the Justice Department, asbestos contamination from vermiculite mine operations run by W. R. Grace from 1963 until 1990 sickened at least 1,200 residents in Libby. According to the indictment, beginning in the 1970s, Grace’s internal studies indicated health problems from asbestos at its operations, but the company concealed the information.
Comments: Asbestos causes asbestosis that destroys lung’s ability to absorb oxygen, and lung cancer, especially mesothelima.
W. R. Grace had filed for Chapter 11 bankruptcy due to the losses related to asbestos litigation. WR Grace declared the first bankruptcy in April 2001. If found guilty, the company could be charged a fine as high as $140 million. The case will absorb a great deal of management time and dilute the company’s efforts to deal with its bankruptcy.
SABIC to cut 200 jobs in Germany
SABIC (Old DSM) operations in Gelsenkirchen have remained unsatisfactory.
In order to remedy the situation, SABIC is planning a reduction of 150-540 jobs in the next two years. An additional 50 jobs will be eliminated in 2008.
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