BP licenses Innovene technology for Sasol Polymers polypropylene expansion
BP and Sasol Polymers announced the signing of an agreement to license BP’s Innovene polypropylene process technology for the expansion of Sasol’s polypropylene facilities located in Secunda, Republic of South Africa. The new plant will have an annual capacity of 300,000 MT/year, produce homopolymers, random copolymers, and impact copolymers, and start up in 2006. Sasol will use BP’s proprietary high-activity CD catalyst to realize the full benefits of the technology.
Comments: BP has been very successful at licensing its Innovene technology in the last couple of years having recently licensed to China, the Czech Republic, and the Netherlands. As the second largest polypropylene producer in the world, BP has more than 2.3 million tons of annual capacity including plants under design or construction.
The BP Innovene PP technology provides several key performance benefits including (1) simple and efficient process design and operation (2) a high-performance CD catalyst support system with high catalyst yield, and no need for pre-polymerization, and (3) rapid product transitions due to plug-flow type flow characteristics. As a result of the high-performance CD catalyst and unique plug flow reactor, manufacturers can produce products that allow for a larger processing window, further downgaugability, excellent balance of impact and stiffness, and lot-to-lot consistency. The process has also been making inroads into the reactor TPO markets for automotive applications. The uniform rubber distribution has allowed licensees to move towards higher modulus materials while maintaining properties such as paintability, ductility, and durability.
Sasol has also been active in the polyolefins industry in the last few years having licensed ExxonMobil’s LDPE and now BP’s PP technology. Sasol operates plants at Sasolburg and Secunda to produce ethylene, propylene, LDPE, LLDPE, and PP. They also have an equity interest in Optimal Olefins and Petlin in Malaysia which produce ethylene, propylene, and LDPE.
Dow unveils VERSIFY® plastomers and elastomers – specialty propylene-ethylene copolymers
Dow Chemical Company has introduced VERSIFY® Plastomers and Elastomers, a new range of specialty propylene-ethylene copolymers. The polymers are designed to improve optics, sealing and hot tack performance, elasticity, flexibility, and softness for flexible and rigid packaging producers, manufacturers of thermoplastic elastomers and olefins, and converters in the consumer products sector.
New catalysts will be combined with Dow’s proprietary INSITE® Technology and Solution Process to produce Versify Plastomers & Elastomers.
According to Dow, VERSIFY Plastomers and Elastomers have a unique molecular architecture, and their structure differentiates the new range of polymers from typical Ziegler-Natta catalyst-based and metallocene catalyst-based copolymers of propylene.
The VERSIFY Plastomers and Elastomers have several advantages including (1) low modulus, (2) good heat resistance, (3) excellent optics, (4) create a soft-touch feel, which is dry and non-rubbery, (5) low-noise characteristics, (6) excellent adhesion to ethylene and propylene polymers, (7) provides low heat seal initiation and others. These polymers can be used in several applications including (1) film, (2) rigid packaging, (3) coated fabrics, (4) artificial leather, (5) soft-touch grips, (6) flexible roofing membranes, (7) consumer products, and others.
Comments: The advent of metallocene and single-site catalysts has spurred the development of a variety of polyolefin-based materials with lower flexural modulus characteristics. ExxonMobil Chemical Company and The Dow Chemical Company introduced polyolefin plastomers and elastomers in the early 1990s based on ethylene copolymers with α-olefins, made using metallocene catalysts that have densities below ca. 0.91 g/cm3. Since then both companies have introduced elastomeric products based on propylene copolymers.
At FlexPO+ 2001 Dr. Douglas M. Selman, Vice President, Technology, ExxonMobil Polymers, discussed in passing a novel set of materials to which he referred as propylene plastomers. Since then ExxonMobil has commercialized the Vistamaxx™ product line. At FlexPO2003, Diane Sexton, Global R&D Director of Dow, presented a paper on New Directions for Polypropylene, in which she discussed Dow’s development of new families of propylene-based elastomers & plastomers, resulting in the newly commercialized VERSIFY product line. Some of the traditional technology gaps in the elastomer/plastomer markets have been (1) processability, (2) higher clarity, (3) higher heat resistance, (4) higher modulus products, and (5) compatibility with polypropylene, thus warranting the need for elastomers/plastomers based on propylene as the backbone.
ExxonMobil Chemical announces start-up of new metallocene plant expansion at Baton Rouge, Louisiana
ExxonMobil Chemical announced the completion and successful start-up of its new commercial metallocene ethylene elastomer manufacturing facility in Baton Rouge, Louisiana. The facility, the first of its kind in the world, is operational and will add a capacity of more than 90 thousand tons of product annually.
Included in the product slate is the recently announced family of Vistamaxx® specialty elastomers which ExxonMobil Chemical launched in June 2003 at NPE. The new facility will serve as the global supply point for metallocene ethylene elastomer products, enabling ExxonMobil Chemical to take advantage of existing organizational infrastructure and feedstock availability.
These products are expected to be commercially available in the early second quarter of 2004. Mitsui Engineering and Shipbuilding, Inc. and its subsidiary Engineers and Constructors International, Inc., known for international expertise in commercial design and construction, were contracted for the construction of the new plant.
Comments: Please see the comments above and for more information refer to our Global PO&E – SNA Vol 1, Iss 14 & New Generation Polyolefins Bimonthly Review Vol 7 Iss1.
SABIC to start 800,000 MT/year polyethylene complex in Al-Jubail in March
Sabic announced its plans to start up its two new 400,000 MT/year polyethylene plants in Al-Jubail in March 2004.
The start-up of the plants was delayed since December 2003 due to various mechanical snags and a serious shortage of butane feedstock. The shortage has hindered Sabic’s petrochemical production in Al-Jubail and Yanbu by 20-30%, since Q4 2003. The plants would be able to produce linear low-density polyethylene and high-density polyethylene.
Comments: Since 2002, SABIC has taken great strides in the polyolefins industry increasing its presence from the 7th largest polyethylene producer in the world, with production capacity based primarily in Saudi Arabia to the 3rd largest PE producer in the world with a capacity of over 11 billion pounds per annum spread across Europe and the Middle East. The acquisition of DSM in mid-2002 has not halted grass-roots expansions. Recently, SABIC announced the construction of a new plant complex to be located at the Yanbu industrial site, on the Red Sea coast of Saudi Arabia. The expansion includes a new cracker, which is expected to come on-stream in 2007, with an annual production capacity of 1.3 million tons. In addition, other new plants will be constructed with capacities of 800,000 MT/year of polyethylene; 700,000 MT/year of ethylene glycol; and 350,000 MT/year of polypropylene. To complement its polyethylene expansions, SABIC also continues to expand α-olefin capacity via its affiliate PETROKEMYA. The new facility will be constructed at Al-Jubail Industrial City on the eastern coast of Saudi Arabia and is scheduled for completion by the first quarter of 2005. Plant capacity will be 130,000 MT/year of butene-1.
The two existing butene-1 plants at PETROKEMYA already produce 100,000 MT/year.
Basell to shut down three HDPE sites and one PP unit by 2005
Basell announced its plans to close down three of its older high-density polyethylene plants, and possibly one polypropylene unit, in Europe, by 2005.
The shutdown would affect about 300,000 MT/year of HDPE capacity and would take place once its two new world-scale HDPE plants come on stream. The two new HDPE plants–located at Wesseling, Germany, and at Plock, Poland is currently being built and capable of producing 320,000 MT/year each.
Comments: Since 2000, Basell has taken various measures to control the supply-demand balance of polyethylene and polypropylene, replace existing facilities with newer technologies, and realign assets in demand-driven regions. In 2000 Basell shut down 500 KT worth of capacity at Wesseling, Germany; Carrington, UK, and Bayport, Texas, USA. A couple of years later, Basell streamlined its Lake Charles facility which included mothballing polyethylene capacity and selling its UHMW-PE plant. In 2002, they also sold the Gahanna, Ohio compounding facility to Alloy Polymers. To compensates for some of the shutdowns and to take advantage of regions experiencing higher demand for polyolefins and compounded materials, Basell has added or is in the process of adding capacity in Saudi Arabia, Germany, Poland, Spain, Brazil, and China. Basell currently is a European organization with a North American division. Most of the R&D product development activity has been discontinued with the shutting down of their Elkton facilities.
Basell is currently going through a major re-organization and asset reallocation program.
National Petrochemical (NPC) subsidiary, Jam Petrochemical to invite PP private investors
NPC subsidiary, Jam Petrochemical is seeking local private investors willing to invest in its 300,000 MT/year polypropylene (PP) project. The planned project would produce 82 grades of PP, which should be attractive to potential investors.
The PP project is part of Jam’s cracker complex in Assaluyeh, Iran, which will produce 1.32 million MT/year of ethylene, 300,000 MT/year of high-density polyethylene, 300,000 MT/year of LLDPE/HDPE and 440,000 MT/year of mono ethylene glycol.
The scheduled completion date for its PP plant is May 2005, and the unit will be on stream in August 2005.
Comments: Jam Petrochemical is a subsidiary of National Petrochemical Co (NPC) which had earlier transferred the ownership of a 160,000 MT/year PP project in Bandar Imam to private company Navid Zar Chimie. The project will source feedstock from NPC subsidiary Amir Kabir Petrochemical. There are various new projects in Iran due to the availability of cheaper feedstock.
In global markets with continuously increasing feedstock prices, producers are trying to add new capacities in regions having cheaper feedstock. Total polypropylene capacity in Iran is 310 KT while consumption is approximately 290 KT. The operating rates in Iran are in the higher 90% range. The major suppliers of polypropylene in Iran include (1) Amir Kabir Petrochem, (2) Arak Petrochemical, (3) Bandar Imam Petrochemical, (4) NPC, and (5) Polynar.
Slovnaft to invest in the construction of the PP unit
Slovakian company Slovnaft has announced its plans to invest between Sk8 – 8.5 billion (€197.7 – 210.05 million) in 2004 towards the construction of a polypropylene unit and desulphurization unit.
The company plans to bring the polypropylene unit on stream in the third quarter of 2004. The company also plans to build a transport terminal in Bratislava’s river port with an annual capacity of several million tons to enter Austrian markets.
Comments: Slovnaft is Slovakia’s largest oil company, which is majority owned (98.5% ownership) by Hungarian company MOL. Slovnaft has a current polypropylene capacity of 70,000 MT/year at its manufacturing site located in Bratislava, Slovakia.
The demand for PP is expected to grow at about 5% per annum for the next five years. Hence, the companies are adopting the strategy to capitalize on the growth by investing in the market. The major producers of polypropylene in Eastern Europe include (1) Chemopetrol (Czech Republic), (2) TVK (Hungary), (3) Neftochim (Bulgaria), and others.
Solvay Engineered Polymers acquires Thermoplastic Rubber Systems, Inc.
Solvay Engineered Polymers Inc. has acquired the assets of Thermoplastic Rubber Systems Inc (TRS). TRS is a developer and manufacturer of elastomeric thermoplastic compounds and related products. Its headquarters, manufacturing, and research operations are in Shirley, Massachusetts.
Solvay Engineered Polymers acquired TRS by exercising its option under an agreement dated June 2002, whereby the company assumed near-global responsibility for marketing TRS products to the automotive industry.
Comments: TPVs have expanded into a large number of automotive applications, with particularly high growth in the weather-seal market. At this juncture, Solvay Engineered Polymers (SEP), North America’s largest TPO producer entered the TPV market via an alliance with TRS in mid-2002. Solvay thus became the exclusive distributor of TRS’s TPV products worldwide, except in Asia. This enabled Solvay to offer a line of materials with common benefits as their products. Per the option that was a part of the deal, Solvay now acquires TRS.
TRS offers a variety of thermoplastic vulcanizates that are replacing traditional thermoset rubbers in most automotive applications like under-the-hood-, chassis and suspension, and weather-seal parts. TRS compounds also won approval from Ford Motor Co. and Daimler Chrysler AG. The alliance with SEP to distribute their NexPrene® brand TPVs further expanded the TRS business. Respond® is the second family of TPVs offered by Solvay based on their proprietary peroxide curing technology. With these two products, SEP targets niche areas in the automotive sector and aims to compete against AES, which dominates the market.
Toray to expand polypropylene spun bond capacity in South Korea
Toray announced its plans to expand polypropylene spun bond capacity in Asia at its South Korean joint venture Toray Saehan (TSI). The company plans to increase the capacity from 7,000 MT/year to 50,000 MT/year. The completion date for this project is scheduled for 2005.
Upon installation of the new capacity, TSI will be able to produce five-layer products instead of the current capability for four layers.
Comments: Toray Saehan is a 70-30 joint venture between Toray Inc., Japan, and Korea Saehan Inc., Korea, and was established in 1999. Toray Saehan has three major business areas including (1) polyester base film and film processing, (2) polyester filament, and (3) polypropylene & polyester spunbond nonwoven fabric. The polypropylene operations were started in 1990 and the plant has since undergone 3 capacity expansions in 1994, 1998, and 2000.
Toray Saehan’s polypropylene nonwoven product offering includes: (1) spunbond/spunbond fabrics (SS), (2) spunbond/melt blown/spunbond (SMS) fabric, and (3) spunbond/melt blown/melt blown/ spunbond (SMMS) fabrics. These fabrics are used across a wide range of applications which include: (1) hygiene, (2) household goods, (3) bedding, (4) furniture, (5) apparel, (6) industrial materials, (6) medical, and (7) agriculture.
The demand for polypropylene nonwoven fabrics in Asia Pacific was 1.065 million pounds in 2003 with an associated growth rate of 6.5%. Japan, China, Korea, and Taiwan account for about 85% of the Asian production capacity.
Shenyang Chemical plans PVC unit
Shenyang Paraffin Wax Chemical, a subsidiary of Shenyang Chemical announced its plans to construct a PVC plant having a capacity of 300,000 MT/year in China.
The company intends to produce ethylene and propylene through the catalytic pyrolysis process (CPP). The planned units, which would be located in Shenyang, Liaoning, China, have yet to receive central government approval.
The total investment for this project would be about Rmb4bn (US$483.3 million). The company plans to bring the units onstream at the end of 2006.
The CPP process has not been commercialized. It has been developed by Stone & Webster and China’s Research Institute of Petroleum Processing, an affiliate of Sinopec. The process uses heavy hydrocarbons such as vacuum gas oil as feedstock.
Comments: CPP process is an extension of the fluid catalytic cracking (FCC) and deep catalytic cracking (DCC) processes, enabling producers to change the ethylene/propylene ratio by altering operating conditions. Other advantages of the CPP process are higher ethylene yields than the FCC and DCC processes and lower feedstock costs compared with conventional steam cracking.
Shenyang Chemical is the largest producer of specialty PVC in China. It has a current PVC capacity of about 45,000 MT/year. The demand for specialty PVC in China in 2003 was about 250,000 MT/year, with imports accounting for about 100,000 tons.
A new report from Tufts University concludes vinyl isn’t cheap
The report, “The Economics of Phasing Out Vinyl” concludes the economic advantages of vinyl or PVC are overstated, and that substituting vinyl with safer alternatives is cost-effective and practical. Vinyl may have a cheap look and feel, but cost-wise, it’s no less expensive than alternative materials that are safer for people and the environment, reveals a new report released today by Tufts University researchers.
The report compares the cost of common vinyl products, including roofing, flooring, pipes, medical devices, and siding. In many cases, a vinyl product that looks cheaper than alternatives, based on the price tag alone, is more expensive based on life cycle costing – that is, the total cost to the user for purchase, maintenance, and disposal over a fixed number of years.
For example, vinyl flooring, which has the lowest first cost among the 12 flooring products examined in the Tufts report, is the most expensive flooring option based on a life cycle basis, due to its relatively short lifetime and high maintenance requirements. Thus, the initial cost savings from vinyl are swamped by high costs over the life cycle of the flooring.
Comments: The economic comparisons between PVC and competing materials have always been debatable due to the complex cost issues associated with PVC formulations. Comparing resin to resin cost is an inaccurate approach as there are various other factors such as compounding cost and systems cost. The cost of PVC resin is very low but it needs to be compounded with expensive additives such as plasticizers, impact modifiers, processing aids, lubricants, and others. The overall systems cost over the life of the product might also be different compared to the initial cost.
However, PVC has dominated the flexible materials industry due to its versatility and lower cost compared to some of the competing materials. A detailed analysis of end-use applications indeed shows some of the advantages offered by PVC.
Chemical Market Resources Inc., has done a thorough and detailed analysis of PVC compounding costs and inter-material substitution issues both on a proprietary basis and in multi-client studies. CMR’s global multiclient study titled, “Intermaterial Competition of Flexible PVC, TPEs, and EPDM Rubbers versus New Generation Polyolefins” discusses these issues in detail.
Chemical Market Resources, Inc. is planning on organizing a session in the upcoming FlexPO2004 conference Sept 15-17, 2004 titled “PVC Issues and Opportunities – A Decade in Review”
Ensinger/Penn Fibre introduces the first line of thermoformable polyphenylene sulfide sheet
Ensinger/Penn Fibre introduced the first line of thermoformable polyphenylene sulfide (PPS) sheet and roll products for applications needing high thermal and chemical resistance and inherent flame retardancy.
The targeted applications of these products include (1) stationary and mobile chemical tanks, (2) under-the-hood automotive parts, and interior panels, and (3) other large, thin-walled elements in buses, planes, and trains.
Ensinger/Penn Fibre products in this line are based on Fortron® PPS from Ticona, the technical polymers business of Celanese AG. The new line encompasses neat, glass-filled, and modified grades containing impact modifiers, tougheners, and other ingredients.
The grades are sold as monolayer sheets and roll in widths to 48 inches (122 cm) and thicknesses between 0.010 and 0.25 inches (0.25 and 6.4 mm). They are available with optional backings of glass fiber, polyester fabric, and other materials that create a gluing surface for strong adhesion in multilayer structures.
Comments: The family of thermoplastic resins can be broadly classified into the following three categories: (1) volume thermoplastics, (2) engineering thermoplastics, and (3) high-temperature engineering thermoplastics. Volume thermoplastics include materials like ABS, polyolefins, PVC, and PS. Engineering thermoplastics include materials like nylon, polyesters, polycarbonate, polyphenylene oxide, and others. High-temperature engineering thermoplastics include materials like fluoropolymers, liquid crystal polymers, polysulfone, Polyphenylene sulfide, cycloolefin copolymers, and others.
Polyphenylene sulfide (PPS) is a semicrystalline material that offers an excellent balance of high-temperature resistance, chemical resistance, flowability, dimensional stability, and electrical properties. PPS provides good heat resistance, chemical resistance, dimensional stability, impact strength, and electrical properties. PPS is inherently flame-resistant because of its chemical structure of 70% aromatic compounds and 30% sulfur.
The total demand for PPS in North America in 2003 was 40 million pounds. Injection molding constitutes almost 95% of the total PPS demand. The biggest application for PPS is in electrical and electronic parts. The primary use of PPS is electrical connectors and compounds because of the material’s high heat deflection temperature, flame retardancy, and ability to fill long, thin sections. PPS is also used in automotive applications such as engine sensors and halogen lamp sockets. Other applications for PPS include appliance applications such as small switches, heater internal housings, electric motors, end bells, and brush holders.
Chevron Phillips (Ryton®), Ticona (Fortron®), and Dainippon Int. and Chemicals (DIG) (Ryulex-C®) are the global suppliers for PPS.
DuPont’s HPF Polymer to be used by Dunlop in golf ball covers
Dunlop-Slazenger Manufacturing LLC will use DuPont Co.’s HPF polymer in the golf ball covers in its LoCo Bite and Super LoCo distance balls. Dunlop-Slazenger is the first company to use this product for golf ball covers. Dunlop-Slazenger’s goal is to provide players with a ball with the soft feel of a polyurethane-coated ball but the resilience and durability of those covered with DuPont’s Surlyn thermoplastic polymer.
DuPont Packaging & Industrial Polymers introduced DuPont HPF, a high-performance polymer based on significant technology advancement in 2003 at the PGA merchandise show. DuPont HPF is the first in a series of new products that are specifically designed to provide golf ball manufacturers the ability to meet the demands of golf pros and amateurs alike. The polymer can be used in all layers of the golf ball.
Comments: The golf ball market is complex and has various design aspects associated with it. The major types of golf balls available in the market include (1) two-piece golf balls, (2) three-piece golf balls, (3) hybrid golf balls, and (4) multilayer golf balls. All the above types of golf balls have a cover that can be made of ionomer, balata, or urethane. The majority of commercially available golf balls have an ionomer cover. An ionomer is the material of choice for golf ball covers because of the following reasons: (1) very strong resistance to cutting, (2) good processability, and (3) there is nothing else (except balata) that will perform as well in terms of flight and durability, impact resistance, and paintability.
The major suppliers of ionomers in this market include DuPont and ExxonMobil. In United States DuPont is the largest supplier of ionomer in this market. Currently, DuPont has introduced a new high-performance polymer HPF to compete in the premium urethane-coated golf ball market as well as a material that can be used in all the layers of the golf ball. Ionomers supplied by DuPont were only used in the cover of golf balls but these new materials can be used in all the layers. With the introduction of this new product, DuPont will further strengthen its dominant position in the golf ball market.
The major golf ball suppliers in North America include (1) Spalding, (2) Titleist, (3) Maxfli (Dunlop), (4) Wilson, and others. The top four suppliers account for almost 90% of the golf ball market.
For more information on golf ball technology and markets refer to CMR’s article titled “Metallocenes in Golf Balls” published in New Generation Polyolefins Volume 3 Issue 4.
Chi Mei Corp. increases its stake in the polycarbonate joint venture with Asahi Kasei to 90%
Chi Mei announced that it has agreed to increase its stake in polycarbonate (PC) joint venture Chimei-Asahi Corp. from existing 51% to 90%, by the end of March 2004.
Asahi Kasei Chemicals will transfer a portion of its holding in Chimei-Asahi to Chi Mei reducing its stake to 10% and increasing Chi Mei’s stake to 90%. Chimei-Asahi operates a 65,000 MT/year PC plant in Tainan, Taiwan.
Comments: Polycarbonate resins are tough thermoplastics produced from bisphenol A and phosgene. In general, polycarbonates have become established in applications that utilize a combination of properties, particularly impact resistance and/or clarity. The largest markets for polycarbonate resins are electrical/electronic (including computer and business equipment and optical discs), glazing and sheet usage, the automotive industry, and appliance and power tools.
Environmental concerns about the highly toxic nature of phosgene, methylene chloride, and about by-product sodium chloride have resulted in considerable interest in manufacturing ways that do not use phosgenation. The first commercial-scale plant using a nonphosgene route came onstream in Japan in 1993.
The process used by Chimei-Asahi is the world’s first to use carbon dioxide as a starting material and enables the synthesis of PC without the intermediate phosgene or the solvent methylene chloride. The process brings high efficiency and yield and generates no waste of process water. The ecoefficiency of the process has been recognized by a Green and Sustainable Chemistry Award by Japan’s Minister of Economy, Trade and Industry, a Japan Chemical Industry Association Technology Award, and a Technology Award from the Society of Chemical Engineers, Japan.
Asahi Kasei announces the commercial start-up of a new styrene monomer plant
Asahi Kasei Chemicals began commercial operation of a new 330,000 ton/year styrene monomer line at its Mizushima Works on February 2, 2004. Construction was completed in December 2003. In addition to the 450,000 tons/year capacity at two other lines in the same complex, the new line raises the total capacity for styrene monomer to 780,000 tons/year.
Comments: The styrene plant brought on-stream by Asahi Kasei was built using Lummus/UOP technology. The plant is a conventional ethylbenzene/styrene monomer (EB/SM) plant that employs EBOne and Classic SM processes.
The EBOne process employs liquid-phase zeolitic catalysis for benzene alkylation with polymer-grade ethylene. The Classic SM process employs adiabatic deep vacuum EB dehydrogenation to achieve high SM selectivity at high conversion. The Mizushima site will supply styrene for a polystyrene (PS) unit built by Styron Asia, a joint venture between Asahi and Dow Chemical in Zhangjiagang, China.
Toyobo plans the production of polylactic acid-based polymer
Toyobo announced its plans to start the commercial production of polylactic acid-based biodegradable polymers at its Iwakuni (Yamaguchi Pref.) works.
The company cites the growing market for polylactide polymer film, and the increasing demand for auxiliary materials with good compatibility such as polylactide polymer paints and adhesives as the reason for this decision.
Comments: In recent years there has been increasing activity in the field of biopolymers. Dow-Cargill was the first company to commercially produce polylactic acid-based polymers. Several companies such as Toyota, and Ajinomoto have invested in pilot plants and developing new processes to produce bio-plastics. Companies including Dow-Cargill, and Vertec Bio solvents produce ethyl lactate for use as bio-solvent in electronics applications.
Celanese board recommends Blackstone bid
Celanese’s management board formally endorsed the Blackstone Group’s E32.50/share-friendly takeover offer.
According to the board, the offer contains a fair price, and the premium offered recognizes what has already been a successful increase in Celanese’s market value. Blackstone’s offer is a premium of 13% over the three-month weighted average share price before the announcement of its offer in December and represents a “more than a doubling” of Celanese’s price since the company went public in 1999, according to Celanese.
Comments: Blackstone had announced its intention to launch a friendly take-over of Celanese AG in December 2003. The Blackstone Group is a leading global investment firm. The takeover offer is conditioned on the receipt of antitrust clearances. The other condition is that a minimum acceptance of 85% of the issued ordinary shares (excluding the treasury shares) is also required.
For more information, please refer to our “Global PO&E – Strategic New Analysis” – Vol. 1 – Iss. 26.
Asahi Kasei & Idemitsu launch study for olefins production
Three companies including (1) Asahi Kasei, (2) Idemitsu Petrochemical, and (3) Idemitsu Kosan (Idemitsu’s parent refining company) announced that they have agreed to study ways of “strengthening the international competitiveness” of their respective operations at Chiba, Japan.
According to Asahi, the company will identify ways to diversify its use of feedstocks for olefins production, leading to a possible increase in propylene yields from its plant.
GE Plastics, PolyOne & Noveon resign from American Plastics Council (APC)
Three companies including GE Plastics, PolyOne, and Noveon have resigned from the American Plastics Council and its parent organization, American Chemistry Council (ACC).
As a result, APC officials have said the group faces significant cuts in its $37 million budget, including in its $19 million advertising program. The departures leave APC with 17 dues-paying member companies, and its Vinyl Institute unit, which also pays dues.
Comments: With GE, PolyOne, and Noveon leaving APC/ACC, the number of companies leaving the council jumps to six in a few months. Last year, Huntsman Corp., Lyondell Chemical Co., and Chevron Phillips Chemical Co. announced their decision to leave last year that they were leaving both groups.
There are two ways to look at the departure: (1) the sign of tough economic times and (2) the relevance of the organizations to the business. The tough economic times make the big budgets for these activities a low priority. With the government already favoring the industries, additional activities by the organizational groups via lobbying is redundant.
The organizations’ main activity revolved around public relations and political lobbying and not on the employees.
Natural gas costs hurt US firms – Wall Street Journal – February 17, 2004
High natural gas prices in the US are taking an increasing toll on a range of companies, forcing them to change how they operate and even shift work to parts of the world where energy prices are lower. After decades of being cheap and plentiful, US natural gas prices left the range of $2 to $3 per million British thermal units (BTUs) of the latter 1990s and hit two sharp peaks recently before settling into an average weekly spot price above $4 per million BTUs, where they have remained for an unprecedented 15-month run. US natural gas is the most expensive in the industrialized world, averaging $5.50 per million BTUs for the past year.
At Amazon, Inc. of Seattle, higher natural gas prices have raised the price of bubble wrap for its products in transit. The wrap make3 up 40% of the packaging cost of each product, up from 30% the year before. The bubble wrap is polyethylene whose cost is a direct relation to natural gas.
The root of higher natural gas prices is a federal policy that promotes the use of clean-burning fuel without providing incentives for producers to increase production. The chemical industry, which uses natural gas as a fuel and as a raw material, has been hit hardest. US Chemical companies have lost an estimated 78,000 jobs since natural gas prices began to rise in 2000. Most new production of chemicals and plastics will take place in the Middle East and Asia where natural gas is inexpensive, producers say.
Charles O. Holliday, Jr. chairman, and chief executive of DuPont Company, told investors in December that high Energy costs will force the company to shift its “center of gravity” overseas.
Comments: The commentary does not stop, of course, with DuPont. Other significant chemical industry companies; Dow, Owens Corning, Eastman, Rohm Haas, and many others are calling on the President and Congress for action. Key Senators like Orrin Hatch of Utah have also voiced concern that the American Industrial and our way of life are threatened.
The CEO of one major chemical company was also quoted in the Wall Street Journal recently as saying; “Unless something is done, an industry (chemicals) that has taken over 35 years to build, will be wiped out overnight”. Not an overstatement. How bad could it be?
Global Insight, the Lexington, MA, Econometrics Consulting Firm that runs major simulations on the economy and the annual 350+ page DOE Energy Outlook Study has recently issued a focused study on this issue called; Demand Destruction; The Impact of Rising Natural Gas Prices, 2003”. The study looks at REALISTIC cases; (1) Basis Today, (2) With LNG Setting the Natural Gas price Floor, (3) Short Term Pain, and (4) U S Policy Shift. By the End of this decade, the difference in Natural Gas Cost between the highest and lowest is $2 per million BTU. The fastest impact but perhaps not the best is a policy shift.
The study is far-reaching. Fundamentally, it shows that if the US basic chemical producers follow the current trend, they will lose 20-30% of the production base now and much more lately. The silver lining is, there are some solutions, a portfolio of them, discussed in the study. This is a good study from a high level to take directional readings. CMR will cover Global Insight’s Study in more detail in a later issue. For the time being, contact Jim Osten, Principal, Natural Gas (781) 301-9420, or Mary Novak, Managing Director, Energy Services (781) 301-9402.
Also, this study will be featured at the upcoming conference “New Global Sourcing of Feedstocks, Olefins & Derivatives – Crisis in Petrochemicals” to be held in Galveston, TX on May 12-14th. For information, contact James Madden or Sid Sen at CMR (281) 333-3313.
Eastman Chemical settles asbestos claims
Eastman Chemical announced that it settled more than 80% of its outstanding asbestos claims. According to Eastman, more than 11,000 asbestos claims had been filed against the company, with “by far, the majority” of claims from Mississippi. The company recently reached an agreement to resolve about 90% of the claims in Mississippi, which accounts for more than 80% of the overall asbestos claims.
Eastman reported a net profit of $10 million in the fourth quarter of 2003, compared to a loss of $13 million in the same period in 2002.
Comments: Several companies have been affected because of the asbestos claims. In 2003, ABB subsidiary Combustion Engineering and Halliburton subsidiary, DII Industries filed for Chapter 11 bankruptcy protection as a part of their attempts to resolve asbestos claims. In 2001, W. R. Grace filed for Chapter 11 bankruptcy due to the losses related to asbestos litigation.
ThenThe number of asbestos claims against Eastman rose to about 7,000 in 2002 and rose to 11,000 in 2003, mostly in Mississippi, and some in Texas and Illinois. The company manufactured limited amounts of asbestos-containing plastic products between the mid-1960s and the early 1970s. Dow Chemical has also settled some of the asbestos claims filed against Union Carbide.
Rubbermaid to eliminate 300 jobs and close plant in Greenville, NC
The Rubbermaid Commercial Products division of Newell Rubbermaid, Inc announced that it will close its Greenville, NC plant by April 2004. This will result in a loss of about 300 jobs.
Empire Brush built the plant in Greenville more than 37 years ago. Rubbermaid purchased the company in 1994 and manufactured brooms, brushes, mops, buckets, and other household materials there.
Comments: The shutdown of Rubbermaid’s plant in Greenville, NC is the third in recent months. Earlier this year, the company announced its plans to close a Rubbermaid Home Products factory in Wooster, OH eliminating 850 workers. Later, its subsidiary, Little Tikes announced the closing of a blow molding plant in Sebring, OH affecting about 132 employees.
The company cited several reasons including (1) excess production and distribution capacity, (2) higher plant operating costs, and (3) a highly intense competitive environment for the closures.
Clariant, Georgia Pacific, and Visteon eliminate jobs
Georgia Pacific Corp. announced its plans to close its thermoforming facilities in Sandusky, Ohio, and Toronto by November 2004 resulting in a loss of more than 200 jobs. According to the company, the move will affect about 206 employees, entirely at the Ohio site. The Ohio plant produces several products such as Coca-Cola cups, and lids for Dixie.
Clariant subsidiary Colour-Chem (India) eliminated about 500 jobs, 38% of its total, at Thane, India. The company plans to transfer most of its production at Thane to the Roha, India site.
Visteon Corp., a Tier One automotive supplier laid off 80 employees to reduce its costs. Most of those cut were quality engineers and managers.
Linear alpha-olefins – hurt by oversupply and rising feedstock costs
Linear alpha-olefins (LAO) are facing overcapacity and poor margin issues due to lower-than-expected demand and increasing feedstock costs. Global operating rates have fallen about five percentage points in the past two years, to about 75%.
According to the producers, LAO demand was almost flat in 2003. Demand from the detergents segment declined last year because of the substitution of cheaper alternatives for alpha-olefin-based products. Demand for alpha-olefins as comonomers for linear low-density polyethylene (LLDPE) was also poor, producers say.
The prices for LAO increased by about 6 cents/lb during the second quarter of 2003, but have remained flat since then.
Comments: Linear alpha-olefins (LAOs) first became commercially available in 1966 via ethylene oligomerization. These products consist of carbon chains ranging from C4 to C30+. All LAO producers currently use an oligomerization process with modifications at different stages leading to different products and different chain lengths. The three major commercial processes to produce LAOs include (1) Shell’s ethylene oligomerization (Shell Higher Olefin Process [SHOP]), (2) Chevron’s ethylene oligomerization (Zeigler process), and (3) Ethyl’s ethylene oligomerization (modified Zeigler process).
The major applications of LAOs include (1) comonomers (C4-C8) in polymers production, (2) plasticizer alcohols (C6-C10), (3) detergent alcohols (C12-C18), (4) lubricant additives, (5) LAO surfactants, (6) alkyldimethylamines, and others.
The major producers of Laos include (1) Shell, (2) Chevron Phillips, and (3) BP Chemicals. There are several new capacities planned for LAO from producers such as Q-Chem (a joint venture between Qatar Petroleum and Chevron Phillips), Sasol, Sabic, and Idemitsu-Formosa.
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