Dow Chemical to exercise option related to DuPont Dow Elastomers joint venture
DuPont and The Dow Chemical Company (Dow) announced that Dow has elected to exercise its option to acquire certain assets relating to ethylene and chlorinated elastomers, including assets of the Engage®, Nordel®, and Tyrin® businesses, from DuPont Dow Elastomers LLC (DDE), a 50/50 joint venture between DuPont and Dow, through an equity redemption transaction involving Dow’s equity interest n DDE. As a result of this option exercise, DuPont will purchase Dow’s remaining equity interest in DDE for $87 million immediately after the asset transfer has been completed.
DuPont had previously announced on April 8, 2004, that Dow and DuPont had executed several agreements relating to the future management of DDE. As part of those agreements, Dow was granted the option to acquire certain assets relating to ethylene and chlorinated elastomers.
These transactions are subject to customary conditions, including applicable regulatory approvals. DuPont and Dow expect to close these transactions on June 30, 2005. After the transaction, DDE will change its name and become a wholly owned subsidiary of DuPont that will include the Neoprene, Hypalon®, Kalrez®, and Viton® businesses.
Iran’s Gharb Petrochemical Complex selects Basell’s Hostalen® technology for a new 300 KT HDPE plant
Gharb Petrochemical Complex announced the selection of Basell’s Hostalen® technology for a new 300 KT per year high-density polyethylene plant. The plant will be built in Kermanshah, Iran, with a start-up planned for 2007. The new plant will be part of the National Petrochemical Company (NPC)’s 11th olefin project.
Uhde GmbH of Germany was selected as the engineering contractor for the new plant, together with Sazeh of Iran.
Hostalen is a dual reactor, low-pressure, slurry process for the production of HDPE. The two reactors can be operated in series or in parallel, to customize product properties.
Comments: To date, five Hostalen licenses have been granted in Iran. This current license is part of NPC’s 11th Olefin project. The facility will be located in Pars Special Economic/Energy Zone on 112 hectares. NPC will have 75% of the ownership. The remainder will belong to Petroleum Ministry Retirement & Welfare Fund. The product slate for the facility will consist of (1) Ethylene intermediate – 1,200 KT, (2) HDPE – 300 KT, (3) LLDPE/HDPE – 300 KT, (4) Ethylene glycols – 700 KT, (5) Styrene – 600 KT, (6) Toluene – 13 KT, and (7) C3+ – 70 KT. The products will serve as feedstock/raw material for downstream industries, textile industries, in the production of fiber, solvents, paints, motor oil lubricants, anti-freeze, adhesives, and plastics (including cables, films, containers, and pipes).
Indian Oil Corp. to construct 600 KT polypropylene plant using Basell’s Spheripol technology
Indian Oil Corporation has selected Basell’s Spheripol technology for a new 600 KT per year polypropylene plant. The plant is to be built in Panipat, India, with start-up planned for 2007.
This is the first entry of IndianOil into polyolefins, and the company plans to further expand its petrochemicals business.
The IndianOil license is the 12th overall signed by Basell this year. The 12 licenses represent a combined annual capacity of more than 3.6 million tonnes of polyolefins. Other technologies licensed by Basell in 2004 were the Spherilene, Hostalen, and Lupotech T polyethylene processes and Spherizone, the newest polypropylene technology, which has already achieved 1 million tones of licensed capacity since it was commercialized in late 2003.
Comments: This project represents Indian Oil’s diversification into the petrochemicals 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 dedicated HDPE unit. The polypropylene unit is estimated to represent 8% of the $1.4 billion investment into the integrated complex. This investment will make Indian Oil the second largest polypropylene producer in India. Reliance continues to be the leading polypropylene producer in India with a capacity of 1,500 KT.
Solvay to construct a polyethersulfone production plant
Solvay Advanced Polymers announced its plans to build a new sulfone polymers production unit. The cost for the project is estimated to be over USD 50 million and will nearly triple the company’s existing polyethersulfone (PES) production capacity. The new unit, whose location has not been disclosed, is expected to be commissioned in 2006.
The new plant will be able to produce the full suite of RADEL® products, which include RADEL® A polyethersulfone and RADEL® R polyphenylsulfone. The properties of these products – including chemical and heat resistance, toughness, transparency, and dimensional stability – allow their use in a variety of demanding applications in the aerospace, automotive, electronic, electrical, and consumer goods sectors.
Comments: Solvay Advanced Polymers is a wholly-owned subsidiary of Solvay America Inc. It was formed in November 2001 by combining Solvay’s existing line of engineering polymers with those acquired from BP Amoco. Solvay Advanced Polymers’ product line consists of amorphous, semi-crystalline, and ultra-high-performance polymers. The amorphous materials include UDEL polysulfone, RADEL A polyethersulfone, RADEL R polyphenylsulfone, ACUDEL polyphenysulfone blends, and MINDEL modified polysulfone resins.
Sulfone-based polymers are high-performance polymers with superior high-temperature properties. Polyethersulfone is a transparent, high-performance engineering thermoplastic. Its key properties include the ability to withstand exposure to elevated temperatures in air and water for prolonged periods and to be processed by conventional thermoplastic techniques on standard equipment. Both unfilled and glass-filled grades are used for high-temperature electrical multipin connectors. Other electrical applications include coil bobbins, integrated circuit sockets, edge and round multi-pin connectors, terminal blocks, and printed circuit boards. Polyphenylsulfone offers extremely high impact strength and excellent chemical resistance that allows it to successfully withstand repeated steam sterilization and harsh boiler additives. Therefore it is used in medical applications such as medical trays and containers, surgical instruments, binocular ophthalmoscopes, and bellow housing for anesthetics. Polyphenylsulfone can be injection molded, vacuum formed, or machined.
Sulfone-based polymers due to their high performance properties have seen steady growth rates and have enjoyed decent margins. This expansion by Solvay is to match the growing demand for these materials.
Westlake Chemical starts VCM and PVC operations in Geismar
Westlake Chemical announced that in late December 2004, it successfully started up its vinyl chloride monomer (VCM) and polyvinyl chloride (PVC) facilities in Geismar, Louisiana. As previously announced this phased start-up will result in approximately 300 million pounds of PVC production per annum.
Westlake Chemical Corporation is a vertically integrated international manufacturer and supplier of petrochemicals, polymers, and fabricated products Another Unique Service From Chemical Market Resources, Inc. 1120 NASA Parkway, Ste 340, Houston, TX 77058 USA; Tel: 281-333-3313 Email: POE-SNA@CMRHouTex.Com Copyright © 2003 Page 5/18of Issue 01 – Volume 3 with headquarters in Houston, Texas. The company’s range of products includes ethylene, polyethylene, styrene, EDC, VCM, PVC and PVC pipe, and PVC windows, fences, and decking components.
Comments: Westlake is an organization on the move with a regional presence and historically a carefully followed strategy – Just watch them grow!
Mexican PVC producer Primex was acquired by Mexichem
Mexican conglomerate Grupo Carso sold Primex, Mexico’s leading maker of PVC, to another PVC producer Mexichem and its parent Grupo Camesa.
The transaction was carried through Xignux SA and Condumex, units of Grupo Carso. Primex was set up by cable manufacturers Condumex and Xignux to meet their need for plastic used in electrical cables and wires.
Primex has the capacity to produce some 140,000 MT/year PVC at its plants at Altamira, on Mexico’s northern Gulf Coast.
Comments: Grupo Carmesa had purchased Mexichem earlier in 2004. The addition of Primex’s PVC capacity brings Carmesa’s total PVC capacity to about 240 KT. Mexichem was formed in 1998 as a joint venture between Elf Atochem and Mexican private investors including Quimica Pennwalt SA de CV and Polimeros de Mexico SA de CV. Mexichem has a PVC capacity of 100,000 MT/year at Coatzacoalcos, Veracruz.
Dow to cease production of Questra® polymer
Dow Chemical announced its plans to withdraw its Questra® engineering thermoplastic from the market after an eight-year effort to turn it into a commercial success. The company has informed customers of the move in a letter regretting the decision.
The people and assets working on the program will be redeployed and the 36,000 MT/year Questra plant at Schkopau in Germany will be idled in the middle of 2005.
Questra is syndiotactic polystyrene based on metallocene catalysts and is one of the few genuinely new polymers of recent years. Dow developed the material in partnership with Japan’s Idemitsu Petrochemical before launching its product on an individual basis.
Comments: Questra is syndiotactic polystyrene (SPS), a semicrystalline polymer synthesized from styrene monomer using a single-site catalyst such as metallocene. First synthesized by Idemitsu, the polymer has been under joint development by Dow and Idemitsu since 1997. Because of its semicrystalline nature, SPS exhibits properties different from conventional amorphous polystyrene polymers. SPS for instance has a high melting point, good chemical and moisture resistance, and a much more dimensional stability than conventional polystyrene. Premium applications include automotive, electronic, and electronic markets.
Questra’s original market or value proposition was based on the polymer’s superior properties allowing it to be priced above polystyrene but not as high as the engineering polymers above it like ABS/SAN. This higher price value was an advantage and also a necessity because SPS metallocene costs more to produce than commodity polystyrene. Another way to look at Questra’s plight was that it was supposed to have broad market appeal as an upscale polystyrene based on superior properties but instead, it became limited as a “poor man’s” ABS/SAN. Questra did find success in a number of small niche applications. Because of the narrow market position squeezed between high-end polystyrene and low-end ABS/SAN, Questra could not find a broad market appeal.
Questra may have a more limited life after Dow however through partner Idemitsu. Even though Dow will idle their 36,000 MT/year Schkopau production site in Germany, Idemitsu will still have a production capacity of 5-10,000 MT/year in Japan which could be used to optimize the highest value end of the SPS market. Instead of SPS becoming a differentiated “specialty” commodity, it will remain a true niche specialty polymer if Idemitsu follows this course. At the present time, there have been no comments made by Idemitsu whose trade name for SPS is Xarec®.
Mitsui Chemicals to commercialize breathable films in Thailand
Mitsui Chemicals announced its plans to commercialize breathable films for diapers in Thailand. The company will establish a new manufacturing unit, Mitsui Hygiene Materials (Thailand) responsible for the production & sale of nonwoven fabrics for disposable diapers.
The manufacturing plant will be located in Rayong, Thailand having a total capacity of about 6,000 tons per year. Completion of the facility is planned for early 2006.
Comments: The disposable diapers market in Japan is decreasing due to a declining child population. However, in Asia due to the increasing need for physical comfort, the growth of the market for disposal diapers using breathable film is projected to expand by some 50% by 2007 in East and Southeast Asia.
Mitsui Chemicals currently operates a 7,500 MT/year plant in Japan. With the addition of the facility in Thailand, the company will be better poised to serve the growing East & Southeast Asian markets. Mitsui Chemicals produces and markets breathable films under the trade name Espoir®. In diapers, these films are used as exterior backing sheets. Other applications of breathable films include (1) filtration, (2) apparel, (3) medical membranes, (4) industrial, (5) electronics, and (6) others.
Teknor Apex buys UK compounder Chem Polymer
Teknor Apex purchased the UK & US engineering thermoplastics compounding business of Chem Polymer. Chem Polymer will maintain its existing management and remain a distinct entity under Teknor Apex.
Until now a member of the UK-based Chem Polymer Group (formerly BIP Group), Chem Polymer produces reinforced, filled, and specially modified compounds of nylon 6 and 66, acetal, PBT, and PET for automotive, appliance, electrical, electronic, and other applications. It operates two plants in the UK and one in the USA, with a combined annual capacity of 30 thousand metric tons.
Comments: Teknor Apex is one of the leading compounders in the United States and now this acquisition will give the company its first manufacturing facility in Europe. This acquisition broadens Teknor Apex’s geographic scope as well as its product line. In 2001, Teknor acquired Singapore Polymer which marked its entry into Asian markets.
China lowers import duties for HDPE, and LDPE by 1.3% to 10.3%
China has lowered its import tariffs for high-density and low-density polyethylene by 1.3% to 10.3% from Jan. 1, 2005. The cut would reduce import prices by about $11/MT, with value-added tax and exchange rates unchanged.
Meanwhile, a special 3% import duty on LDPE sales with a value above $1,500/mt CFR China continued to be in place since its introduction in early 2004. China’s import tariffs for PE, which started at 14.2%, were reduced by 1.3% annually from 2002. The reductions are expected to continue until 2008 when the import tariff for PE would be reduced to 6.5%. The tax reductions are in line with the guidelines set when China entered the World Trade Organization.
Comments: In November 2001, China ended its 15-year quest to enter the 142-member World Trade Organization (WTO). As China entered the WTO rest of the globe expected changes in its political and economic policies. During its entry into WTO China had agreed to lower tariffs on various imported chemical products. In its tenth five-year plan China had mentioned that import tariffs for polyethylene and polypropylene will be reduced and abolished for some other petrochemicals.
The lowering of tariffs indicates that China is continuing to implement the changes it had promised during its entry into the WTO. These changes were planned to enhance the competitiveness of foreign chemical products in the Chinese markets. The lowering of tariffs will help foreign chemical companies become more competitive but it will also help the local end users in China as China is a net importer of resins. Lowering resin prices due to lower tariffs will eventually make China’s finished goods industry even more competitive. This will allow China to increase its exports of finished goods while satisfying the need for resin via imports.
Dow Chemical and Symyx Technologies commence alliance agreement
Dow Chemical and Symyx Technologies announced a five-year strategic alliance agreement to enhance research and development activity within Dow through high throughput experimentation technologies and informatics solutions provided by Symyx. This expansion of the two companies’ relationship builds upon a six-year history of collaborative research that resulted in the discovery of innovative catalysts now used in the manufacture of Dow’s VERSIFY® plastomers and elastomers launched earlier in 2004.
Under the terms of the agreement, Symyx will perform research in a number of exclusive areas, develop and provide Symyx Discovery Tools®, and license Symyx’s Renaissance® suite of software as well as certain intellectual property.
Dow will make payments to Symyx over the five-year term of approximately $120 million. Symyx expects that approximately 40% of this revenue will be service revenue, 30% product revenue, and 30% license revenue. In addition, Symyx will also receive royalties on commercialized discoveries resulting from collaborative research.
Comments: In 2004, the agreement between Dow and Symyx was extended from July 1 through December 31, 2004. Now the alliance between Dow & Symyx has been extended for another five years. This alliance agreement enables a company-wide commitment by Dow to high throughput research and R&D informatics solutions.
For more information on High Throughput Experimentation, please refer to our Issue 14, Vol. 2 in Global Polyolefins & Elastomers.
JPMorgan Partners to Acquire PQ Corporation
PQ Corporation, privately-held chemicals and engineered glass materials company, announced the signing of a definitive agreement to be acquired by JPMorgan Partners, the private equity arm of JPMorgan Chase & Co.
The acquisition is subject to approval by PQ’s shareholders and the satisfaction of customary conditions. It is anticipated that the transaction will close in the first quarter of 2005.
Credit Suisse First Boston LLC acted as financial advisor to PQ Corporation, and Harris Nesbitt Corporation provided a fair opinion to the board of directors in connection with this transaction. UBS Securities LLC and J.P. Morgan Securities Inc. acted as financial advisors to JPMorgan Partners.
Comments: PQ was founded in 1831. It is a privately held company and was known as the Philadelphia Quartz Company from 1864 until 1978. It has operating units in 19 countries with annual revenues of approximately $500 million. PQ is a producer of silicate, zeolite, and other performance materials and serves in the detergent, pulp and paper, chemical, petroleum, catalyst, water treatment, construction, and beverage markets.
Since PQ Corporation is family-owned capital preservation was important for PQ Corporation. It seems that PQ Corporation hopes to grow via acquisition after the infusion of outside capital. In September 2004, PQ announced that it was putting itself on the auction block. The announcement attracted a lot of attention from private equity firms as PQ Corporations’ cash flow is relatively unaffected by oil prices. Eight private equity firms were invited to the second round of auction but two or three dropped out due to intense competition. Bain Capital Partners, Permira, and Ripplewood Holdings LLC were among the final bidders. Credit Suisse First Boston LLC acted as financial advisor to PQ Corporation, and Harris Nesbitt Corporation provided a fair opinion to the board of directors in connection with this transaction. UBS Securities LLC and J.P. Morgan Securities Inc. acted as financial advisors to JP Morgan Partners.
JP Morgan won the final bid, but the sale is subject to approval by PQ’s shareholders. The price of this purchase was undisclosed but the industry estimates that the deal was valued at around $700 million. A lot of private equity firms have been looking to buy into the chemicals industry as its industry cycle is expected to peak in the next few years. Specialty companies are more attractive as they enjoy higher margins and market shares. Last year J.P. Morgan Partners and Texas Pacific Group bought another specialty chemical company, Kraton Polymers, for $770 million. This deal suggests that JP Morgan is continuing to look at the chemical industry and buying specialty companies when opportunities arise.
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