Basell’s PE process technology licensing activity on the rise
Basell announced that Salavatnefteorgsintez, a Russian petrochemical company controlled by Gazprom, has signed a licensing agreement to use Basell’s Hostalen technology for a new 120,000 MT/year high-density polyethylene plant at Salavat, Republic of Bashkortostan, Russia. The plant is scheduled to be completed in 2006.
In a separate deal, Basell and PetroChina Company Ltd. have signed a licensing agreement for PetroChina to use Basell’s Lupotech T process for a new 200,000 MT/year low-density polyethylene plant in Lanzhou, China.
The agreement is PetroChina’s second contract for a Lupotech T process license. A license agreement for a 200 KT per year plant at Daqing was signed in 2002.
PetroChina is the largest integrated oil and gas producer in China and is engaged in refining and the production and sale of chemical products. In March 2003, PetroChina awarded Basell the largest single contract ever for a license for polypropylene plants; three new PetroChina plants with a total capacity of 800 KT per year will use Basell’s Spheripol process technology.
Comments: Basell continues to be successful in licensing its polyethylene technologies in Europe and Asia. Basell has at its disposal a variety of process technology platforms to meet the ever-increasing demands of the polyethylene industry including Spherilene® (gas-phase), Hostalen® (bimodal slurry), Lupotech G® (fluid-bed), and Lupotech T® (high pressure tubular).
The Hostalen process was developed in 1965 and since then has become one of the leading low-pressure slurry cascade processes for the production of monomodal and bimodal polyethylene resin, including PE 100 pipe and high tenacity film grades. Approximately 3.5 million tons of capacity has been licensed (16+ plants in operation). Over 35% of the Hostalen capacity is centered in Asia and 25% in Europe. Demand for bimodal products in Europe and Asia, particularly pipe and film-grade resin, has been one of the main drivers for its success in recent years.
Basell has also had success in licensing its high-pressure polyethylene technology. LupoTech T is a high-pressure tubular reactor process for the production of LDPE and EVA copolymers. The process was first licensed in 1953, and through steady improvements in technology, the capacity has grown to 3.6 million tons, including a 320 KT line in Europe. The steady increase in single-line capacity has enabled many producers of LDPE to lower production costs and compete more effectively with low-pressure processes.
Total considering spinning Atofina’s assets under its restructuring plans
Total announced its plans to restructure its subsidiary Atofina. Under the restructuring program, Atofina will spin off its PVC, acrylics, engineering polymers, and plastic additives business. The businesses will become part of a Chlorochemicals, Intermediates, and Performance Products Division.
The new business Chlorochemicals, Intermediates, and Performance Products will be formed by the end of 2004 and will have sales of about EUR5 billion/year ($6.3 billion).
According to the company, the move will result in 132 job cuts, of which 95 will be at the company’s Paris headquarters and 37 at its Lyon, France technical center.
Comments: Atofina is the chemical branch of Total. The company’s sales accounted for about EUR 17.25 billion in 2003. The sales were highest in its Basic Chemicals & Polymers division accounting for about EUR7.91 billion (46% of total sales). Exhibit 1 shows the major product groups of Atofina Chemicals. Atofina’s portfolio consists of petrochemicals, intermediates and performance polymers, and specialties.
The company’s Chlorochemicals segment consists of the production of major products such as vinyl chloride monomer, PVC, caustic soda, chlorinated solvents, and chloromethanes. Atoglas, a subsidiary of Atofina is one of the largest producers of acrylics in the world. The company has PMMA production sites at several locations worldwide. Atofina is one of the leading producers of engineering polymers with specialty polymides (trade name: Rilsan®), thermoplastic elastomers (trade name: Pebax®), and fluorinated polymers (trade name: Kynar®).
In 2002, the company had undergone restructuring to focus mainly on petrochemicals. Atofina has been divesting its stake in PVC over the last few years. Recently the company sold its 43% stake in Mexican PVC producer Mexichem to GICSA. In 2002, the company sold its 35% stake in Spanish firm Martorell to Solvin. The company is one of the leading producers of PVC in Europe. The major producers of PVC in Europe include (1) EVC, (2) Solvin, (3) Vinnolit, (4) Norsk Hydro, (5) Shin-Etsu, (6) Atofina, and others.
Petroleum Authority of Thailand (PTT) subsidiary Thai Olefins considers buying Bangkok Polyethylene
Petroleum Authority of Thailand (PTT), a Thai oil & gas conglomerate, and its unit Thai Olefins PCL is negotiating to take over Bangkok Polyethylene Co.
Thai Olefins PCL supplies ethylene to Bangkok Polyethylene for the production of high-density polyethylene. Bangkok Bank, which owns the majority of its stake in Bangkok Polyethylene wants to sell the petrochemical business to focus on its core banking business.
Comments: Thai Olefins is the largest producer of ethylene and has 800 KT of ethylene capacity at Map Ta Phut, Rayong in Thailand. The company is planning to forward integrate by acquiring Bangkok PE which has 250 KT of HDPE capacity at the same location. As Thai Olefins is the supplier of ethylene to the HDPE plant the transition should be easier.
Thai Olefins’ parent company PTT is a fully integrated gas company. PTT is involved in the refining, marketing, and trading of various crude oil and refined petroleum products. PTT’s petroleum and refining group has invested in four refining and petrochemical companies: (1) Thai Olefins, (2) Rayong, (3) Star Petroleum, and (4) Bangchak. If this acquisition goes through PTT will expand its reach in the downstream industry.
Chilean firm Petroquimica San Julio acquires 33% stake in PP joint venture Petroquim
Chilean firm Petroquimica San Julio acquired Ipiranga Petroquimica’s (São Paulo) 33% stake in the polypropylene (PP) joint venture Petroquim.
The deal raises Petroquimica San Julio’s stake to 77%; the other major stakeholder is the state oil company Enap (Santiago). Petroquim produces 120,000 MT/year of PP at Talcahuano, Chile.
Comments: Ipiranga Petroquimica is the only major supplier of PP in Chile. Ipiranga has two PP plants in Central & South America (Brazil and Chile). Both plants are based on Speripol’s bulk loop technology. The plant in Brazil is similarly sized with a total annual capacity of 130 KT. Most of the PP capacity in South & Central America is in Brazil accounting for almost 70% of the total capacity.
The total capacity of polypropylene in South & Central America is approximately 1,600 KT and 2,000 KT respectively. The company might have decided to increase its stake in light of higher growth rates for PP in this region.
Indian company, Gas Authority of India Ltd. (GAIL) in talks with DuPont on joint marketing of HDPE
Gas Authority of India Limited (GAIL) announced that it is in talks with DuPont for joint marketing of the high-density polyethylene compounds. GAIL intends to sell the HDPE compounds, developed at its Pata petrochemical complex in Uttar Pradesh in international markets, particularly in Turkey, Iran, and China.
The company has used a three-layer coating of HDPE compound on the Dahej-Vijaipur pipeline in India, which will carry the country’s first liquefied natural gas (LNG) imports.
Until recently, the HDPE compounds – which comprise 97.5% resin grade and 2.5% carbon black – were being imported by Indian pipe coating contracts.
In 2003, GAIL explored the possibility of indigenously producing the basic resin grade. GAIL successfully developed the grade at its petrochemical complex at Pata in Uttar Pradesh.
Comments: GAIL is one of the major suppliers of HDPE in India with a total HDPE capacity of 180 KT. The total capacity for HDPE in India is 1,020 KT. The major suppliers for HDPE in India include (1) GAIL, (2) Haldia Petrochemicals, (3) IPCL, and (4) Reliance. Haldia Petrochemicals is the largest supplier of HDPE with a total capacity of 410 KT followed by IPCL, GAIL, and Reliance Industries. Reliance Industries owns a stake in IPCL.
The total demand for HDPE in India is 820 KT. The major end-use markets for HDPE include: (1) blow molding, (2) film, (3) woven sacks, (4) pipes, (5) injection molding, (6) monofilaments, and others. Blow molding is the largest end-use market accounting for 23% of the total demand. The film is the second largest market accounting for 20% of the total demand.
The projected growth rate for HDPE in India is 7.9% annually, reaching 1,131 KT by 2007. Pipes are the fastest growing market for HDPE with a projected growth rate of almost 12% followed by film applications that are projected to grow at more than 10% annual rate for the next five years. GAIL with this marketing agreement is trying to take advantage of the fastest-growing pipes market.
Al Zamil Group founds a new petrochemical company, Sahara Petrochemical
Al Zamil Group forms a new company called Sahara Petrochemical, which is capitalized at 1.5 billion Saudi Riyals (US$ 400 million).
The private placement of shares for the founders invited by the Al Zamil Group was greatly over-subscribed; shares allotted to them amounted to 1 billion Saudi Riyals. The remaining share of the capital amounting to 500 million Saudi Riyals will be offered to the public next month in a public offering managed by The Consulting Center for Finance & Investment in Riyadh.
Sahara Petrochemical will invest in two petrochemical projects in Jubail. The first project will be a PDH 1 polypropylene project in partnership with Basell. The second project will be an ethylene complex including low-density and high-density polyethylene production in partnership with international and local companies.
Comments: Zamil Group is an international conglomerate with diversified industrial and commercial interests ranging from air-conditioning manufacturing to food processing, plastics to steel fabrication, and stained glass production to travel services. The Group is also involved in banking and industrial investment, petrochemicals and paint, fencing systems, and packaging through its affiliations with numerous international organizations.
In 2002, the company invested more than $1 billion to build a petrochemical complex in Al Jubail, Saudi Arabia. Al Zamil is a partner in Gulf Stabilizers, a joint venture with Great Lakes, which operates an antioxidants plant at Al Jubail; and in Gulf Advanced Chemical Industries, which is building a maleic anhydride and butanediol complex there. It is also a partner in Saudi International Petrochemicals Corp., which is planning methanol, acetic acid, and vinyl acetate monomer plants at Al Jubail. In 2003, the company signed a Memorandum of Understanding with Basell’s participation of Basell in a project established by Al-Zamil to produce 450,000 MT/year of polypropylene using Basell’s Spheripol process technology. The newly formed company, Sahara Petrochemical will be involved in PP manufacture. The availability of cheap feedstock coupled with growing polypropylene demand makes it a healthy investment for the group.
Sinopec to invest $10 billion in four crackers
Sinopec announced its plans to invest $10 billion to build four, 1-million MT/year naphtha crackers for completion between 2007 and 2010. The company says it may seek joint venture partners for the plants, but that it is capable of completing them alone.
The plants will be constructed by Sinopec subsidiaries Shanghai Petrochemical Co. (SPC) at Caojing; Sinopec Tianjin Co. (STC) at Tianjin; Sinopec Wuhan Co. (SWC) at Wuhan; and Zhenhai Refining & Chemical (ZRC) at Ningbo.
The projects would mark an entry into olefins production for STC, SWC, and ZRC. STC operates an aromatics complex and has plants producing dimethyl terephthalate and polyethylene terephthalate at its Tianjin refinery.
Comments: China has one of the fastest-growing petrochemical industries and is investing heavily in the feedstock in order to meet the requirements of the demanding downstream industry. In 2003 China had an estimated ethylene capacity of 6 million tons with plans to increase this capacity by 50% to over 9 million tons by 2007. This announcement by SINOPEC indicates that the capacity expansion will continue till 2010.
While China will use this capacity to satisfy its domestic requirements it will also have an impact on the global polyolefin industry. The ease of availability of feedstock in China will induce polyolefin suppliers to add capacities to satisfy the domestic downstream industry. The majority of new capacity building in the next decade will be in Asian countries that have a higher appetite for end-use products. Regional cost economics and supply-demand dynamics will dictate the future of the polyolefin industry and capacity additions in demand centers will have a major impact on the supply centers. As these regions show robust growth producers will move production facilities closer to demand centers.
Dow and Freeport LNG Development Reach 20-year LNG Terminal Use Agreement
Freeport LNG Development, L.P. announced that it reached a 20-year terminal use agreement (TUA) with The Dow Chemical Company. The agreement is for up to 500 million cubic feet per day (mmcf/d) of throughput capacity at Freeport LNG’s proposed liquefied natural gas (LNG) receiving terminal located in Quintana, Texas.
Under the terms of the TUA, Dow has made a firm commitment to reserve throughput capacity for 1.8 million tons of LNG per year (250 mmcf/d) and has until August 31, 2004, to exercise an option on the remaining 250 mmcf/d.
A portion of the anticipated LNG supply would be used to partially satisfy Dow’s demand for natural gas at its petrochemical facilities located along the Texas Gulf Coast. Dow facilities in Texas and Louisiana consume nearly 600 million cubic feet per day of natural gas. Portions of the natural gas resulting from the LNG supply will be marketed to other industrial consumers and key Gulf Coast natural gas hubs in Texas.
Comments: In a recent conference call by Dow senior management (1/29/04), Chairman & CEO William Stavropoulos outlined 6 initiatives for continued improvements in the Company’s performance. One particular comment by him was that Dow has a unique ability to leverage their wide global position in locations, feedstock flexibility, and product supply programs to achieve better results than most of the industry. This program must have a bias for action and Dow’s recent announcement of a 40% interest (600 mmcf/day out of an eventual 1500mmcf/day) LNG terminal in Freeport, TX shows this plan in action.
ConocoPhillips is also in the same LNG terminal project and between the two companies, the capacity is taken. Besides the pure LNG issue, this option could have direct petrochemical implications if “hot” gas containing ethane is taken into the location. Pipeline standard controls have still not been mandated clearly by FERC; is BTU control on the liquefaction end, or the vaporization/terminal receiving end? In any case, ethane from this LNG terminal could go a long way towards providing a meaningful increment of petrochemical (ethylene) feedstock supply that may have a higher benchmark cost, but it will not have the even more problematic violent swings in BTU value that are seen in the US Grid market.
Different scientific groups condemn Bush’s environmental policies
Two groups of scientists including (1) The Union of Concerned Scientists (UCS) and (2) the National Academy of Sciences (NAS) have issued separate reports criticizing the Bush administration’s environmental initiatives, charging that the initiatives distort or suppress scientific data that conflicts with the administration’s political goals.
The Union of Concerned Scientists issued a report stating that recent initiatives on climate change, mercury emissions, clean air, lead paint, and other issues are based more on politics than sound science. According to another report by the National Academy of Sciences, the administration’s plans to study climate change “may be influenced by political considerations.”
Braskem expanding PVC capacity in Brazil
Brazilian company, Braskem S/A announced its plans to expand its PVC capacity. The company will invest about $30.7 million in increasing the PVC capacity by 110 million pounds/year at its plant in Maceió, Brazil. The project is scheduled for completion by mid-2005.
The expansion will increase Braskem’s PVC capacity in Brazil from 1.05 billion pounds to 1.16 billion pounds per year.
The investment is part of a three-stage expansion program through which Braskem intends to raise its PVC annual capacity to 1.38 billion pounds over the next few years.
Comments: In 2003, Braskem announced its plans to increase PVC production at its sites located in Camacari and Maceio in Brazil. The company had not decided on the capacity to be expanded and the project investment earlier. Now the company has decided to invest about $30.7 million and increase PVC capacity by 110 million pounds.
The demand for PVC is increasing at about 5-6% per annum in South America. To capture the growing markets, the company has made a decision to invest in more capacity.
Chemical Market Resources, Inc. is planning on organizing a session in the upcoming FlexPO2004 conference on Sept 15-17, 2004 titled “PVC Issues and Opportunities – A decade in review”.
Tosoh to increase its stake in Philippines PVC manufacturer Philippine Resins Industries, Inc.
Tosoh Corporation announced its plans to acquire 30 per cent of the outstanding shares in the Philippine PVC manufacturer Philippine Resins Industries, Inc (PRII). As a result, Tosoh will increase equity from 50 to 80 per cent in the company, with Mitsubishi Corporation retaining the balance.
PRII was established in the Philippines in 1996 for the production and sale of PVC. In 1999, capacity and sales had reached 70,000 MT/year and in 2001 the company increased capacity by 20,000 MT/year. Currently, the company is debottlenecking the PVC plant to increase the capacity to 100,000 MT/year.
The debottlenecking is scheduled for completion in May 2004. The additional capacity will make PRII the biggest manufacturer of PVC in the Philippines. Tosoh supplies vinyl chloride monomer from its Nanyo Complex in western Japan.
Comments: In 2001, Tosoh & Mitsubishi bought a 49% stake in Philippine Resins Industries from Mabuhay Vinyl and an 11% stake from the Bank of Philippine Island. The companies then decided to jointly invest about $35 million for the expansion of the PVC capacity of the company by 20,000 MT/year.
Over the last few years, Tosoh has been expanding its PVC operations in Asia in order to meet the growing demand. In 2002, the company started the construction of a PVC plant in China and the Philippines at a total investment of 4.0 billion Yen. Tosoh also operates a PVC plant in Indonesia under the joint venture between Mitsui & Co, and Indonesian partners. The joint venture is called P.T. Standard Toyo Polymer. The company has established another jv (between Tosoh and Plas-Tech Corp.) called Tosoh Polyvin Corporation in the Philippines for PVC production.
The demand for PVC is expected to grow at about 6-8% per annum for the next five years in the Asia/Pacific region.
DuPont acquires PVB business of Czech Republic-based company Retrim
DuPont announced that it acquired Retrim, a safety glass interlayer company, with plant operations in Zlin, Czech Republic. DuPont will acquire the complete Retrim business, including some 50 employees and proprietary technology allowing the re-use of polyvinyl butyral (PVB) trim materials produced during the manufacture of automotive and architectural laminated glass.
Comments: The addition of a safety glass interlayer manufacturing plant and PVB expertise in the Czech Republic bolsters DuPont’s presence in central and Eastern Europe.
In addition to its new Czech Republic facility, DuPont Glass Laminating Solutions manufactures Butacite® and SentryGlas® interlayers at sites in the United States, Korea, and Germany. Business sales are reported as part of the DuPont Performance Materials platform, with $5.3 billion in sales in 2003.
Polyvinyl butyral is primarily used as an interlayer for laminated glass. The major uses of PVB include (1) automotive glass, and (2) architectural glass. The major applications for architectural glass are (1) vertical safety glazing (entrance doors, patio-type sliding doors, side lights), (2) sloped and overhead glazing (3) display cases in stores, museums, and libraries, (4) bullet-resistant glazing, and (5) electronic security glazing. The global demand for PVB resin for use as an interlayer is about 235 million pounds.
The major producers of PVB include (1) Solutia, (2) DuPont, (3) Sekisui, (4) Kuraray, and (5) Wacker Chemie. The main advantages of PVB as an interlayer include: (1) high shattering resistance, (2) good adhesive properties, (3) high clarity, (4) high penetration resistance, (5) excellent UV stability, (6) good bondability to glass, (7) low UV-light transmittance, and others.
BASF and Toray form a joint venture for polybutylene terephthalate production in Asia
BASF Aktiengesellschaft and Toray Industries Inc. formed a 50-50 joint venture for the production of polybutylene terephthalate (PBT) base resin to supply the rapidly growing Asian market with this engineering plastic.
The newly formed company, Toray BASF PBT Resin Sdn. Bhd. will build a world-scale PBT plant with an annual capacity of 60,000 MT/year at BASF’s Verbund site in Kuantan, Malaysia. Construction will start middle of 2004 and the new plant is scheduled to come on stream at the beginning of 2006. The total investment for the plant is approximately US$40 million.
The new plant will be operated with the most advanced polymerization technology from Toray and the main raw material, namely butanediol (BDO) will be procured from BASF’s subsidiary. The PBT base resin will be independently marketed by each company under their trade names (BASF: Ultradur®, Toray: Toraycon®).
Comments: PBT is semicrystalline, thermoplastic polyester. PBT is formed by the transesterification reaction of dimethyl terephthalate and 1,4-butanediol. The product is raised to the desired molecular weight through subsequent post-condensation. Most PBT is compounded with a variety of additives to produce resins with a wide range of end-use properties. These resins are sold in the form of pellets.
PBT resins exhibit good resistance to most chemical solutions. PBT retains its resistance to many chemicals even at elevated temperatures. Because of its rapid crystallization rate injection molding is the preferred method of processing PBT. PBT has been used in the connector industry, where chemical resistance, high-temperature resistance, good electrical properties, and long flow lengths in thin sections are important. The addition of small amounts of other polymers such as PC or PET can improve the surface appearance of PBT-based molded parts.
The total demand for PBT in North America in 2003 was 325 million pounds. PBT is used for various applications including (1) electrical/electronics, (2) automotive, (3) industrial, (4) appliances, and others.
The major suppliers for PBT in North America include (1) GE Plastics (Valox® and Enduran®), (2) Hoechst Celanese (Celanex® and Duranex®), (3) Albis Corporation (Petlon®), (4) BASF (Ultradur®), and others.
Ticona to boost Fortron® PPS plant capacity
Fortron Industries, a joint venture of Ticona, the technical polymers business of Celanese AG, and Kureha Chemicals Industries, announced plans to increase the capacity of its Fortron® polyphenylene sulfide (PPS) plant in Wilmington, NC, by 25 percent through debottlenecking by the end of 2005. The multimillion-dollar program will occur in two stages: the first to be completed in 2004 and the second by the end of 2005.
The company has also begun feasibility and conceptual design studies for a new PPS plant to be completed within the next five years to meet the anticipated growth in new and traditional PPS markets.
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. Polyphenylene Sulfide (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.
LG Chem develops new engineering plastics materials by applying nanotechnology
South Korean Company, LG Chem, Ltd. announced the successful development of a new high-barrier engineering plastics material named HYPERIER® by applying nanotechnology.
HYPERIER® has several properties such as high barrier capability of solvents, water, and gas, which are important factors when used for automobile fuel tanks and containers for food, cosmetics, pesticide, and others.
By applying nanotechnology to its new material, LG Chem has dramatically increased the barrier ability. Furthermore, its single-layer molding capability provides cost-effectiveness to processing companies by saving equipment and raw material costs. LG Chem plans to commercialize its new EP material for cosmetic containers in the first half of 2004. Moreover, co-research projects with car makers are currently in progress to apply HYPERIER® for automobile fuel tanks to secure the global KRWon 1 trillion/ year market.
Comments: Packaging is a potential market segment for nanocomposites due to their improved barrier properties. Progress of gas molecules through the polymer matrix is slowed by the tortuous path created by the impermeable inorganic filler, thereby improving the barrier properties. The permeability of the filled polymer is inversely related to the aspect ratio of the filler material. Nanocomposites, with higher aspect ratios than traditional fillers, lead to greater barrier properties and are often used in multi-layer polyethylene terephthalate (PET) bottle applications such as beer, juice, and carbonated soft drink containers. Multi-layer containers produced from nanocomposites provide a better balance of adhesion, processing, and barrier than is attainable with conventional materials.
Nanocor, in alliance with Honeywell Plastics and Mitsubishi Gas Chemical Company, produces nylon-6 nanocomposites that are used primarily in food A and beverage packaging. LG Chem is the world’s first company to develop a single-layer material featuring good durability and higher leak resistance. HYPERIER® is a combination of the words hyper and barrier, indicating excellent barrier properties. With its high processing ability, the material can be used for containers of various products. LG Chem hopes to lead the multi-trillion-won container materials market with this innovation.
Chlorinated polyethylene joint venture between Honam Petrochemical & Chinese company, Yaxing Chemical
South Korean firm, Honam Petrochemical and Chinese company, Yaxing Chemical Co Ltd, announced their plans to invest about 241 million Yuan in the production of chlorinated polyethylene.
The board of Yaxing Chemical Co Ltd approved the proposal to invest 180.74 million Yuan (US$21.77mil) in a joint venture with South Korea’s Honam Petrochemical Corp to make chlorinated polyethylene (CPE). The remainder of the investment will come from Honam Petrochemical.
The joint venture will construct a CPE plant having a total capacity of about 40,000 MT/year and is expected to start operations in 2005. Yaxing Chemical will hold a 75% stake in the joint venture.
Comments: Chlorinated polyethylenes (CPEs) are produced by the chlorination of high-density polyethylene. The major applications of CPEs include (1) wire and cable, (2) construction, (3) automotive parts, (4) industrial, and others. CPE is mainly used as an impact modifier for hard polyvinyl chloride. The global major suppliers of CPEs are DuPont Dow, (North America & Europe), Denki Dagaku Kogyo (Japan), Toyo Soda (Japan), Yaxing Chemical (China), and others.
Yaxing Chemical Co., Ltd. is a joint-stock enterprise, which centers on developing and manufacturing new chemical products. The company’s major products include (1) chlorinated polyethylene (CPE), (2) caustic soda, (3) polyvinyl chloride, and others. The company is the world’s largest CPE production plant. The current CPE capacity is about 70,000 metric tons per annum. The manufacturing facility is located in Weifang, Shandong Province. Yaxing technology comes from Hoechst. The company has about 25% of the global market share for CPE.
Yaxing Chemical built its first CPE production plant in 1990 using technology introduced by Germany’s Hoechst AG.
Alloy Polymers to expand compounding capacity
Alloy Polymers Inc. announced the addition of a new twin-screw extrusion line. The company is also retrofitting another line at its plant in Gahanna.
The expansion is expected to be complete by mid-2004 and will add about 14 million pounds of annual compounding capacity, according to the company.
Alloy, a toll compounder based in Richmond, VA., bought the Gahanna plant from Basell NV in 2002.
Comments: Alloy Polymers is one of the leading toll compounders of engineering thermoplastics. In 2002, the company bought Basell’s 110 million pound PP compounding facility in Gahanna, OH. Alloy’s two current manufacturing locations include (1) Richmond, VA, and (2) Gahanna, OH.
The company’s major markets include (1) automotive, (2) construction, (3) electronics, and (4) textiles and others. Richmond, Virginia plant offers twin screw compounding equipment. The plant manufactures polyethylene, polypropylene, and engineering plastic compounds with emphasis on markets such as (1) personal care packaging, (2) food, (3) medical, and others. Gahanna facility offers a combination of batch and continuous compounding equipment.
Alloy’s focus has always been on the services and will continue to be particularly in compounding services for specialty polyolefin products. The news is not a surprise. Alloy Polymers’ toll compounding business will continue to expand.
Mitsui to increase polypropylene compounds capacity
Mitsui Chemicals announced its plans to increase capacity for polypropylene (PP) compounds during the next four years to meet growing demand from the auto industry. According to the company, it will increase compound capacity at Bungsue, Thailand by 8,000 MT/year, increasing the total production in Asia to 42,000 MT/year. The company also intends to construct a 30,000 MT/year plant in Sidney, OH.
Comments: Mitsui Chemicals was founded in October 1997 as a result of a merger between Mitsui Petrochemicals and Mitsui Toatsu.
The company is a major producer of polypropylene compounds (TPO/TPV) among various other resins. Mitsui markets thermoplastic Elastomers under the trade name Milastomer® on a global basis. Mitsui is an active supplier of these compounds for the automotive bumper fascia, automotive interior trims, including dashboards, doors, and headliners, and various miscellaneous applications like weather strips, waterproof sheets, gaskets, home window weather strips, frames, etc.
The company has recently decided to switch its focus from C2 to C3 chemistry. The company will turn its ethylene-centered businesses into propylene-centered ones. Mitsui’s decision to increase PP compounding capacity is in sync with its overall strategy. For more information, please refer to our biweekly newsletter “Global PO&E – Vol. 2 – Iss. 4”.
Hercules’ acquisition of Meraklon S.p.A. fails to obtain antitrust regulatory approval
Hercules Incorporated announced that the proposed acquisition of Meraklon S.p.A. through Hercules’ subsidiary, FiberVisions A/S in Denmark, previously announced on August 8, 2003, will not occur as a result of difficulties encountered in obtaining antitrust regulatory approval.
Meraklon is a closely held polypropylene fiber company with its principal offices and production facilities in Terni, Italy. Hercules manufactures and markets chemical specialties globally for making a variety of products for home, office, and industrial markets.
Comments: FiberVisions, a subsidiary of Hercules is a global player in the manufacture of polypropylene staple fibers that are used in nonwovens which end up in thermally bonded fabrics used in disposable hygiene products including baby diapers, sanitary napkins, panty shields, and adult incontinence. FiberVisions also produces olefin fibers, filaments, and yarns for the textile and industrial markets.
Meraklon S.p.Markets include textile floor-covering, sportswear, industrial filters, geotextiles, and non-woven fabrics for hygiene and medical applications. Meraklon is located in Terni, Italy, with 2002 sales of approximately EUR65 million.
In 2003, Hercules Incorporated reached an agreement to purchase Meraklon S.p.A, an Italian polypropylene fiber company. The addition of Meraklon to the FiberVisions family would have broadened its portfolio of products, particularly in the industrial and technical fibers markets, expanded capacity, and provided better access to the markets of southern Europe and the Middle East. For more information refer to our biweekly newsletter “Global PO&E – Vol. 1- Iss. 15, and Iss. 19”.
DSM to restructure and reduce costs
DSM announced its plans for a major restructuring of its complex at Geleen, the Netherlands over the next two years resulting in annualized cost cuts of E50 million ($63 million).
According to the company, the restructuring will begin this summer and will involve the loss of about 500 jobs, almost 21% of the site’s total, in support service and manufacturing functions. The site has 60 chemical plants, as well as numerous office buildings, laboratories, warehouses, and workshops.
The company says it will also establish a “landlord” organization responsible for further development of the site. The organization will own land as well as basic infrastructure and services.
Comments: The complex in Geleen is one of the largest integrated industrial sites in the Netherlands. The location has DSM’s Research Campus and production plants including EPDM and PP. The EPDM grades are used in various end-use products including automotive components (e.g. sealing systems and hoses), mechanical rubber goods (e.g. molded goods such as gaskets), the building construction industry (e.g. building profiles and roofing materials), wire & cable covering, oil additives and as a basic material for thermoplastics modification and thermoplastic elastomers.
DSM’s move to restructure is a result of the poor economy. The reorganization should give DSM competitive strength in the European markets.
Clariant to eliminate 4,000 jobs under debt-reduction program
Clariant AG announced its plans to eliminate 4,000 jobs by the end of 2005 under its “huge transformation program”. These job cuts will account for a 15% reduction in its workforce.
According to the company, about 1,500 of the job cuts will come from manufacturing operations, an additional 1,250 will come from infrastructure and services, with 800 coming from general overhead and 450 from the firm’s supply chain.
The group recovered from a debt of SFr3.7 billion halfway through 2003, reducing it to SFr2.9 billion by the year-end. The plan will be up for approval at an April 2 meeting of the firm’s governing board. A proposed share sale also is expected to raise 920 million francs ($733 million) in order to improve Clariant’s financial situation.
Comments: Clariant is one of the largest masterbatch producers. The company also manufactures a range of specialty chemicals including dyes, pigments, additives, electronic materials, and pharmaceuticals. In 2002, the company reorganized its life sciences and electronics division under which it sold a site in Varese, Italy.
BP to sell its IPA business to ExxonMobil and close a plant at Baglan Bay, UK
BP announced its plans to shut down a 90,000 MT/year isopropyl alcohol (IPA) plant at Baglan Bay, UK on March 31, 2004.
ExxonMobil Chemical has agreed to acquire BP’s IPA sales and marketing operations in Europe. According to BP, the move will result in 55 job losses by year-end.
The IPA plant is BP’s last remaining operation at Baglan Bay, and its closure marks the end of more than 40 years of petrochemicals production there. The company has been gradually closing capacity at Baglan Bay during the past decade, citing the site’s lack of competitiveness. BP closed an ethylene plant at Baglan Bay in 1994, and since 1999 has shuttered units producing ethanol, styrene, and vinyl acetate monomer.
Comments: There is an excess capacity of IPA in the industry. Moreover, BP has been gradually closing capacity at Baglan Bay, UK. The company has a total IPA capacity of 198 million pounds at Baglan Bay.
The major global producers of IPA include: (1) ExxonMobil, (2) Shell Chemical, (3) Dow Chemical, (4) Lyondell Chemical, (5) BP Chemicals, (6) Nippon Petrochemicals, (7) Tokuyama Soda, and (8) Mitsui Chemicals. ExxonMobil is the largest producer in the world.
The global capacity for anhydrous IPA is about 4,355 million pounds in 2002. The major applications of IPA include (1) direct solvent use (49% of the total North American demand), (2) chemical derivatives (34% of total North American demand), (3) household and personal care (12% of total North America demand), and (4) pharmaceuticals & health care products (3% of total demand).
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