Nova Chemicals outlines business improvement initiatives after the third quarter loss of $65 million
Nova Chemical Corporation reported a third-quarter loss of $65 million. Approximately $9 million was attributed to the power interruption – as announced earlier. Approximately $10 million was attributed to from expenses associated with the permanent closure of the polyethylene line in Ontario. Nova continues the losing streak to the 10th quarter in a row.
The Olefins/Polyolefins business reported a net loss of $8 million in the third quarter, compared to a second-quarter net loss of $5 million. Average polyethylene prices were lower but were more than offset by lower feedstock costs and higher ethylene selling prices. Ethylene and polyethylene sales volumes were reduced, partly as a result of the power disruption in August that reduced production at four Ontario plants. Earnings were reduced by approximately $9 million due to this disruption.
In an effort to streamline operations and increase profitability, Nova Chemicals announced its plans to shut down a 275 million pound linear low-density polyethylene line at its St. Clair River Site, in Corunna, Ontario. This shutdown will occur during the second quarter of 2004.
The shutdown of the company’s smallest, highest-cost polyethylene line will reduce NOVA Chemicals’ capacity by 8%, corresponding to 0.6% of the total North American polyethylene capacity. The company expects the shutdown to impact roughly 60 positions.
About 80% of the high-margin products from the A-Line will be moved to other facilities of which 30% will be moved to the new Advanced SCLAIRTECH® technology line in Joffre, Alberta. This will result in higher operating rates for the new plant and significantly lower production costs for the retained products.
Another Unique Service From Chemical Market Resources, Inc. 1120 NASA Rd 1, Ste 340, Houston, TX 77058 USA; Tel: 281-333-3313 Email: POE-SNA@CMRHouTex.Com Copyright © 2003 Page 3/17 of Issue 23 – Volume 1 According to Nova, this move is to increase the operating rates of its lowest-cost facilities and reduce the fixed costs by $5 to $10 million per year.
Comments: The A-Line was built in 1960 and is one of the world’s first linear low-density polyethylene production lines. The line is based on the SCLAIR solution technology representing 6% of the licensed capacity under this platform. The St. Clair River site houses the B-line with a capacity of roughly 340 million pounds which was built in 1977.
Although the SCLAIR facility in St. Clair River Site has experienced fairly high operating rates in the past, the cost of production has also been relatively higher due to the age of the plant. The shutdown of the facility coupled with shifting high-margin products to the AST plant will enable NOVA to leverage the new lower-production-cost technology asset. The AST plant has a capacity of 850 million pounds (expandable to 1 billion) and is currently operating at approximately 70%.
Although the proposed shutdown only represents 0.6% of the North American polyethylene capacity, it is a positive step towards balancing the supply/demand dynamics. The supply for LLDPE has outpaced its demand over the past two decades mainly prompted by very high expectations about the success of LLDPE and its potential to replace LDPE in all applications. While the LLDPE market did indeed grow at a very high rate the demand could not catch up with the capacity additions. Furthermore, LLDPE could not replace LDPE in all the applications because of processing difficulties and clarity issues. In certain applications, LLDPE had to be blended with LDPE to improve processability. Further, LLDPE was unable to replace LDPE in extrusion coating applications.
As producers continued to add capacity there was considerable overcapacity in the LLDPE market and the operating rates declined to the low 60s. Increasing capacities, declining growth rates, and lower operating rates led to a decline in margins. The recent increase in feedstock prices and the gloomy state of the polyolefin industry added to further deterioration in the LLDPE margins.
Borealis to expand capacity by 80,000 MT/year at Porvoo, Finland
Borealis is planning to increase polyethylene production capacity at its Porvoo facility, in Finland, by 80,000 MT/year.
Comments: The current capacity (PE2 plant) at the Porvoo site is based on Borealis’ Borstar process technology and was expanded in 1998 from 120 KT to 140 KT. The Borstar polyethylene process, comprising 2 independently controlled reactors, can produce unimodal and bimodal polyethylenes having densities from homopolymer down to 0.918 g/cm3. Product properties are determined by (1) the ratio of the components produced in the first and second stages, (2) the molecular weights of the components produced in each stage, and (3) the amount of comonomer incorporated in each stage.
Borstar is a 2-stage process comprising a slurry loop first stage and a fluid-bed second stage. The diluent is supercritical propane, in contrast to other loop or stirred-tank slurry polyethylene processes that utilize heavier diluents: isobutane, hexane, or cyclohexane being the most frequently used diluents. The use of supercritical propane as the diluent has several advantages. Supercritical propane is a very poor solvent for polyethylene, so the reactor can make very low molecular weight fractions without fear of fouling due to the dissolution of the low-molecular-weight components. The density of supercritical propane is significantly lower than that of, for instance, isobutane, making the gravity-induced recovery of the polymer in the reactor’s settling legs more efficient. Borealis discovered serendipitously that the large concentration of hydrogen used to control the molecular weight of the polymer produced in the loop does not form bubbles in supercritical propane, bubbles that cause cavitation in pumps.
Although the polyethylene industry in Europe has been in an oversupply status, Boreali’s strategy in this market has been to produce differentiated and/or value-added products. Borealis has a strong position in the pipe and W&C markets, as well as traditional film markets.
Atofina to relocate production of EVA copolymers
Atofina announced its plans to close its 60,000 MT/year ethylene-vinyl acetate (EVA) copolymer unit at Mont, France, and shift production to a converted low-density polyethylene (LDPE) plant at Balan, France.
The move follows a decision to close a 65,000 MT/year ethylene unit at Lacq, France, which supplies the Mont EVA plant. The move will be completed by third-quarter 2005.
The company plans to convert part of its 120,000 MT/year LDPE capacity at Balan to produce 60,000 MT/year EVA copolymers and shut down the rest of the capacity. The plant at Balan will be offline for about one year to carry out the conversion.
The Lacq cracker will close in 2005 because of declining ethane content in locally available gas. Atofina is already sourcing some of the plant’s ethane requirements from elsewhere.
Comments: Many European polyolefins producers with high-pressure technology are readjusting their respective product mix to better align themselves with the market dynamics. One of the advantages of high-pressure technology is the ability to vary the product mix from commodity to differentiated value-added products. Such products include but are not limited to, extrusion coating resins, EVAs, acid copolymers, and ionomers.
Although Western Europe has the highest per capita demand for LDPE and other high-pressure-based products, capacity still outpaces demand. Western Europe’s current capacity of 17 billion pounds per annum far exceeds the domestic demand and exports of 14 billion. With a growth rate estimated at 1.1% per annum, the current capacity should be enough to satisfy demand for the next 5 years. The decision by AtoFina to reduce LDPE capacity will help to improve the margins in this market sector.
The decision will also allow AtoFina to continue to participate in the EVA market. The leading producers of EVA include (1) Atofina, (2) ExxonMobil, (3) DuPont, and others. EVA copolymers are used to make deep-freeze bags, agricultural films, and shoe soles. High-grade EVAs are used in adhesives and other applications. BP announced earlier this year to quit the EVA market and convert its 50,000 MT/year EVA plant at Cologne to produce extrusion coating grades.
Atofina currently produces EVA at 2 sites in France including (1) Mont, France, and (2) Gonfreville, France. The company produces low-grade EVAs at its Gonfreville site.
Sumitomo Chemical considers commercialization of EVA copolymer in Singapore
Sumitomo Chemical has started the feasibility study of establishing its presence in ethylene vinyl acetate (EVA) copolymer in Singapore. The company will either construct a new plant or modify an existing low-density polyethylene unit with a capacity of 200,000 MT/year.
EVA copolymers are already manufactured in Japan, and Sumitomo‘s decision to produce them in Singapore is to add more value to the ethylene derivatives.
Comments: Ethylene Vinyl Acetate (EVA) copolymers with vinyl acetate (VA) content ranging from 10% to 40% are classified as high EVA copolymers. These specialty copolymers with excellent thermal, optical, and physical properties are used in various packaging, adhesives, and durable goods applications.
The major end-use applications for High EVA copolymers include (1) film, (2) hot melt adhesives, (3) carpet backing, (4) molding and profile extrusion, (5) wire and cable, and others (include stretch films, cutlery packaging, and foam applications). High EVA copolymers also offer several performance properties in end-use applications. In film applications high EVA copolymers offer excellent heat seal properties, hot tack, processability, storage stability, and high flow in heat seal areas. In hot melt adhesive applications, high EVAs offer high bond strength, quick setting time, melt strength, flexibility, resistance to solvents, processability, and good compatibility with tackifiers and waxes. In carpet backing applications, high EVA copolymers offer good heat seal, filler retention, compatibility with additives, water resistance, loop pole control properties, bond strength, and processability. In wire and cable applications, EVA copolymers improve flexibility, impact strength, filler acceptance, and processability.
Engineering contractors compete for HDPE plants in Iran
Daelim Industrial, Mitsui Engineering & Shipbuilding, Tecnimont, and Uhde have submitted proposals to Petrochemical Industries Development Management Co. (Tehran), a subsidiary of National Petrochemical Co. (NPC), to build a previously announced 300,000 MT/year high-density polyethylene (HDPE) plant at Ilam, Iran.
The plant is scheduled for completion in 2006. The plant will receive ethylene from a 300,000-350,000 MT/year cracker being built by NPC at the same site.
Dow reports more than 150% increase in earnings for the third quarter of 2003
The Dow Chemical Company reported sales of $8.0 billion for the third quarter of 2003, compared with $7.1 billion a year ago. This represented an 8% increase in price and a 5% increase in volume. Net income was $332 million, representing a 150% increase as compared to $128 million a year ago.
Dow’s plastics sales increased 13% reporting total sales of $1,890 million, compared to $1,667 million during the third quarter last year. Polyethylene volume was particularly strong in Europe and Latin America.
Comments: The phenomenal recovery of Dow Chemical Company came about because of careful cost-cutting measures and tough decisions on plant closures.
The recovery is attributed to the efficient team led by Mr. Stavropoulos – Now that things are better – what’s ahead for Dow Chemical Company and him?
London Metal Exchange working with the plastics industry to develop futures contracts
The London Metal Exchange (LME) announced that it has undertaken an intensive analysis of the plastics industry in recent months and worked closely with leading producers and consumers with the aim of developing futures contracts for the industry.
LME executives have been investigating polyolefins over the last few months. According to them, although it might seem odd initially, plastics are more akin to some of LME’s current contracts. The executives claim that there is significant volatility and a growing desire for risk management tools from both producers and consumers.
Contracts for polypropylene and linear low-density polyethylene could be launched in the first half of next year, subject to LME’s resolving a few outstanding issues.
The LME is launching a website – www.lmeplastics.com – as part of its drive in the next few months to develop further its contacts with the industry.
In addition, the LME will hold a further and broader series of intensive discussions with producers and consumers to refine its ideas.
Comments: Due to significant volatility in raw material pricing and lack of a solid pricing methodology, companies participating in the polyolefins industry are studying the feasibility of mechanisms to better manage risk to reduce costs.
Futures are a simple mechanism that has been used in other markets to insulate producers and consumers from the adverse effects of price volatility on their margins.
The issues that make plastics attractive for commodity trading are (1) volumes, (2) quarterly contracts, (3) extensive capacity disruptions, and (4) a large number of buyers. The factors that make them unattractive to commodity exchanges include: (1) lack of product standardization, (2) high TS&D content, (3) differentiated products based on the company name, reputation, and technology and (4) designed applications and reluctance to switch grades.
These factors mentioned above made virgin polymers unattractive to e-Commerce (see our analysis from February 2002) and e-commerce was attractive only for recycled plastics. The Chicago Mercantile Exchange attempted a similar approach and failed. Invariably, London Metal Exchange’s approach will have to overcome all of the problems from previous attempts.
Dexco Polymers announces styrene-isoprene-styrene (SIS) grade for improved die cuttability
Dexco Polymers LP, a joint venture between Dow Chemical & ExxonMobil Venture announced the introduction of a new high di-block, 4-arm radial Styrene-Isoprene-Styrene (SIS) product, VectorDPX 586. This new grade has low migration characteristics providing significantly improved die cuttability for label stocks.
It is also generating interest in specialty tape applications. Vector DPX 586 has several advantages including (1) low melt viscosity, (2) high adhesion properties, and (3) high shear characteristics. Dexco claims that by using sequential polymerization technology that permits precise di-block level control, versatile new products are possible meeting today’s stringent market demands.
Comments: Dexco Polymers is the second-largest manufacturer of SIS in North America. The only other players include Kraton Polymers and Polimeri Europa. SIS is mainly used in adhesive applications in the packaging industry. The major end-use applications include (1) cartons (2)boxes and corrugated boards; (3) bags, (4) envelopes, (5) disposable products (diapers, paper products); (6) cigarettes; and (7) labels.
SIS is an unsaturated SB Copolymer and is commonly used in hot-melt adhesives and pressure-sensitive adhesives. Hot melt adhesives compete with solvent-based adhesives among others. In recent years hot melt adhesives have increased in popularity compared to solvent-based adhesives due to increases in solvent cost and restrictions on the type and amounts of solvents that can be released into the atmosphere. This has enabled SIS to maintain healthy growth rates. In the hot melt adhesives market, SIS mainly competes with High EVAs. High EVAs are relatively cheaper than SIS and therefore more widely used. SIS is usually used for specialty niche applications.
Pressure-sensitive adhesives that are based on SIS have outstanding resistance to creep since the polymer can undergo viscous flow only by a detachment of polystyrene blocks from domains with subsequent reattachment of the blocks to other domains. In the pressure-sensitive adhesives market, SIS mainly competes with acrylic-based adhesives. Acrylic-based pressure-sensitive adhesives are also specialties and are priced higher than SIS.
SIS-based adhesives also compete to some extent with other SB Copolymers such as SBS and SEBS. SEBS has better UV resistance and heat resistance compared to SIS. Therefore SEBS is preferred over SIS in such applications even though SEBS is priced much higher than SIS.
Kuraray to increase hydrogenated styrenic elastomers capacity in Japan
Kuraray announced its plan to expand the capacity of hydrogenated styrenic elastomers by 4,000 Mt/year to 23,000 MT/year at its plant in Kashima, Japan (Kamisu-machi, Kashima-gun, Ibaraki Prefecture). The company’s hydrogenated styrene elastomers are marketed under the brand names SEPTON® and HYBRAR®.
The company plans to invest about $13.7 million in the expansion. The fourth production line is scheduled to come on stream in January 2005.
Comments: Kuraray is the second largest manufacturer of hydrogenated SB Copolymer (HSBC) in the world. The other major suppliers of HSBC include Kraton Polymers and Asahi Kasei who have well-established markets in North America.
Recently a number of new players such as Dynasol and TSRC have started producing HSBC and are actively pushing their products into North America. Kuraray started production of thermoplastic elastomers at its Kashima Plant in 1990 with an annual capacity of 1,000 tons. Since then, the Company has actively increased the production capacity of Another Unique Service From to the current level of 19,000 tons. In 2002, Kuraray’s subsidiary SEPTON Company of America, Pasadena, Texas started production with a total capacity of 12,000 tons.
Kuraray considers thermoplastic elastomers as its core business. The decision to expand capacity to 23,000 tons at the Kashima Plant reflects the Company’s commitment to this business. This increase in capacity is mainly in response to growing demand, particularly in Asia.
Hydrogenated SBCs are thermoplastic elastomers with excellent elasticity, and can be processed like typical plastics. Its applications include car interiors, electrical appliance components, and housing materials, as well as toys, tools, stationery, and a variety of everyday items. In addition, it is also used as a modifier to improve the impact strength of engineering plastics. It is used as a heat-resistant, high-strength plastic in automobiles and electronic materials and as an inorganic solvent adhesive material.
DuPont Dow showcases new Nordel® EP(D)M grades at American Chemical Society Rubber Division Expo
DuPont Dow featured its new grades based on metallocene gas phase EP(D)M technology at the American Chemical Society Rubber Division Expo and technical meeting in Cleveland, Ohio, Oct.14-16.
Combining metallocene technology with gas phase EP(D)M production has allowed DuPont Dow to break new ground in EP(D)M. DuPont Dow has brought to market five new Nordel® MG hydrocarbon rubber grades and in 2004 will introduce an ultra-high diene grade aimed at sponge weatherstripping. Initial offerings include three very high Mooney viscosity (over 100) grades.
According to DuPont Dow, users upgrading existing formulations with high molecular weight Nordel® MG experienced significant improvement in mixing time, compound extension, and fill factor yielding improved total economics.
Comments: DuPont Dow signed an agreement with Dow to develop and market gas phase metallocene-based EPDM in January 2002 in an effort to compliment their Nordel IP products. By leveraging Dow’s Insite Constrained Geometry catalyst, DuPont Dow is able to produce products with higher Mooney numbers (some as high as 150) and higher ENB content. The current Nordel IP line is limited to less than 70 Mooney. The Nordel MG line is produced in the 198 million pounds per year Unipol® line in Seadrift, Texas, originally built by Union Carbide. Dow obtained the plant as part of the Union Carbide purchase. Metallocene-based EP(D)M was commercialized in 1997 when DuPont Dow brought its 198 million pound plant on stream in Plaquemine, Louisiana.
Dow to build a new commercial-scale plant for the production of DOW XLA elastic fiber
The Dow Chemical Company announced plans for its subsidiary, Dow Chemical Ibérica, to build a new commercial-scale plant for the production of DOW XLA® elastic fiber at its facilities in Tarragona, Spain.
Launched in the Fall of 2002 by Dow Fiber Solutions (DFS), a business unit within the Dow Polyolefins and Elastomers portfolio, DOW XLA elastic fiber is the most recent offspring of Dow’s INSITE® technology.
The specially modified, olefin-based elastic fiber exhibits optimal stretch and recovery properties and unprecedented resistance to extreme heat and harsh chemicals – features that bring recognized benefits to all aspects of the textile value chain.
The new plant is scheduled for start-up in the third quarter of 2004 and the plant represents a first for Dow, which has been known primarily as a supplier of raw materials and specialty chemicals to the textile industry.
Comments: Dow Fiber Solutions, a business unit within Dow’s polyolefins and elastomers business unit launched its first product, Dow XLA in June 2002. Also called “The Freedom Fiber”, Dow XLA differs fundamentally from other elastomeric fibers in its basic chemistry, which is based on polyolefin chemistry rather than the urethane or polyester chemistries typical of other commercial elastic fibers.
The XLA fiber was awarded its own fiber subclass and generic name (Lastol®) by the FTC in early February.
The main advantages of this fiber include improved heat resistance and chemical resistance compared to conventional elastic fibers (Spandex®). The heat and chemical resistance provide a range of benefits to yarn and textile manufacturers, including the ability to be efficiently cone dyed and to withstand severe dyeing, bleaching, mercerizing, and garment washing conditions, and the thermosol dyeing process.
Dow’s XLA is based on the company’s Insite® technology. The fabrics containing Dow XLA are used in shirt & sportswear markets. Dow XLA yarns are available globally through several companies such as Drescafil (Spain), R.L.Stowe Mills (Belmont, NC), and Arco Texteis (Portugal).
Toyobo to produce 500 MT/year of Dow’s XLA elastic fiber
Toyobo and Dow Fiber Solutions (DFS) of Dow Chemical Company have reached an agreement on Toyobo’s exclusive rights to manufacture and market Dow XLA elastic fiber in Japan. Dow XLA elastic fiber, the world’s first olefinic-based fiber will be produced for Japanese markets with Toyobo’s spinning technology.
Toyobo plans to target the XLA fibers in applications such as sporting outfits, car seats, and others. The company has set its sales target to reach 2,000 MT/year in three years. The company will initially start producing 500 MT/year at Tsuruga, Japan.
Asahi Kasei to establish a new subsidiary Thai Asahi Kasei Spandex Co for the production of Roica® spandex yarn in Thailand
Asahi Kasei has announced its plan to establish a subsidiary of Asahi Kasei Fibers for the production and sale of Roica® spandex yarn in Thailand. The new subsidiary will be called Thai Asahi Kasei Spandex Co. (TAS). The company will have a Roica production capacity of 2,500 MT/year. The scheduled start-up date for the plant to be built at Sriracha, Thailand is September 2004.
TAS will be 60% owned by Asahi Kasei Fibers, 21% by SAHA Group of Thailand, and 19% by Wacoal Corporation of Japan.
It presently operates two overseas production bases: Formosa Asahi Spandex (FAS) established in Taiwan in 1998, and Hangzhou Asahi Kasei Spandex (HAS) established in China in 2003. The new Roica operation in Thailand will help meet increasing demand in Asia, particularly in the ASEAN market.
Comments: The demand for spandex yarn is continuously increasing in Asia. Asahi Kasei Fibers is strengthening and expanding its Roica operations globally, in accordance with a strategy of establishing production bases near user demand.
The different producers of spandex yarn include (1) DuPont, (2) Bayer, and others.
National Petrochemical (NPC) details Olefins 11 and 12 and transfers PVC to Olefins 8
National Petrochemical Co. (NPC) announced that is preparing bid documents for two previously announced world-scale olefin complexes at Bandar Assaluyeh and plans to invite bids by the end of the year.
The complexes, dubbed olefins 11 and 12, will include aromatics, ethylene glycol, and polyolefins units. They are the last two projects in NPC’s fourth five-year development plan, ending this year. Engineering, procurement, and construction contracts will be managed by NPC’s subsidiary Petrochemical Industries Development Management Co. (Pidmco, Tehran).
Separately, NPC says a polyvinyl chloride (PVC) complex originally planned to be built independently by NPC at Bandar Imam, will now form part of NPC’s olefins 8 complex at the same site. NPC is going ahead alone with that complex following Shell’s withdrawal. Uhde and Shazeh Consultants (Tehran) have the contract to build the PVC complex, which will comprise units producing 570,000 MT/year of chlorine, 270,000 MT/year of ethylene dichloride, 300,000 MT/year of suspension-grade PVC, 40,000 MT/year of emulsion grade PVC, and 16,200 MT/year of sodium hypochlorite. Uhde is providing its process technologies. Olefins 8 include a 1.1-million MT/year ethylene plant, as well as ethylene glycol and polyethylene units.
Andersen building wood composite facility
Andersen Corp based in Bayport, Minnesota is planning to build a 150,000-square-foot facility for wood composite profile extrusion in North Branch, Minn. The facility is scheduled to start production by spring 2004.
Anderson’s core production is wood but started wood composites in 1995 with extrusion lines at its headquarters production plant and in White Bear Lake, MN.
Extrusion operations will cease at White Bear Lake, home of Andersen’s 40,000-square-foot research facility, which has 40 employees. Andersen has been extruding at that location for about seven years.
Comments: The wood plastic composite (WPC) market has experienced double-digit growth in the last several years. Although the field is crowded with operations dispersed all across North America, the industry continues to be dominated by a handful of players with the top 5 accounting for almost 90% of the market. Traditional participants in the wood industry are taking advantage of plastics to develop products with better performances as well as lower costs. Product development is taking place at a fairly rapid rate. Traditionally recycled plastics have been the primary base for the plastics used. However, the use of virgin resin has started to increase as the WPC manufacturers get more sophisticated. As WPC penetrates the engineered products markets, the use of polyolefins-based modifiers (i.e., maleated polyolefins) is also expected to increase. Suppliers of such products to the WPC market include (1) Crompton, (2) Eastman, and (3) DuPont.
PolyOne puts its non-core business operations for sale and restructures its Elastomers business
Polyone Corporation announced its plan to sell its non-core business operations namely: (1) engineered films, and (2) specialty resins. The company also announced that it will close two manufacturing plants within its Elastomers and Performance Additives business segment as it acts on restructuring initiatives to reduce costs and bring capacity in line with sales demand.
PolyOne’s DeForest, Wisconsin, and Wynne, Arkansas, plants are to close around the end of 2003. The Company also plans to reduce the number of sales and administrative positions within the business. These combined moves will translate into the reduction of approximately 230 positions across the business. The DeForest and Wynne plants manufacture a variety of products, including compounded elastomers and dispersed rubber chemicals. PolyOne intends to carefully transition these products to other elastomer manufacturing facilities with excess capacity at Burton, Ohio; Dyersburg, Tennessee; and Kennedale, Texas.
On October 21, 2003, PolyOne announced that Elastomers and Performance Additives was one of three business operations being considered for divestment. The Company has set no deadline for divesting the business. Elastomers and Performance Additives had 2002 sales of $364 million, representing 14 percent of total Company sales.
PolyOne projects that this restructuring action in Elastomers and Performance Additives will yield annualized pre-tax earnings improvement of $7.5 million. Total restructuring expense is projected to approximate $15 million, of which approximately $7.5 million will be non-cash and related to asset write-offs. The estimated 2003 fourth-quarter restructuring expense is $11.5 million, with minimal funding of the cash closure costs anticipated in 2003.
PolyOne’s engineered films division accounted for about 6% of its 2002 sales, while its specialty resins units accounted for 4% of its sales.
Honeywell develops a one-step route to produce polymer nanocomposites
Honeywell has developed a process to make polymer-nanoclay composites using organic swelling/ compatibilizing agents. Such composites have much better properties than virgin polymers, but the production process is difficult because the components are not compatible. Honeywell claims that their agents help the mixing process and allow the production of composites of almost any thermoplastic in one step using conventional extrusion equipment.
Honeywell’s process uses a melt-compounding method that combines the nano clay and the polymer using a compatibilizing agent. The agent consists of a mixture of organic radical substituted ammonium or phosphonium cations.
Comments: Mixing solid microscopic particles of clay with plastic resin creates the so-called nanocomposites. They contain clay particles measuring one billionth of a meter. The different properties of nanocomposites include (1) high strength, (2) high barrier properties, (3) improved heat resistance, and others. Potential markets include packaging, auto parts, and medical devices.
Several companies such as General Motors, Atlantic Composites Ltd., IPL Inc., Crompton Corp., Decoma International Inc., and Akzo Nobel, have established R&D programs to develop polymer nanocomposites. PolyOne and Nanocor formed an alliance earlier this year to produce and market nanocomposites produced from polyolefins, polyvinyl chloride, and other polymers.
In the new process developed by Honeywell, the technology starts with a one-step process involving a melt-compounding method that combines an organoclay (these are clays such as bentonite, modified with quaternary amines — the amine’s nitrogen is ion-exchanged for the clay platelet’s sodium or calcium) with a special compatibilizing agent and a polymer. During the mixing, the clay particles exfoliate or break off into layers, creating platelet particles. By using polymers with a melt-processing temperature of 220°C or greater, these three components can be compounded to produce a variety of unfilled, glass fiber-reinforced, impact-modified, pigmented, heat-stabilized, and flame-retardant versions of polymer nanocomposites in one extrusion step.
While nanocomposites are relatively new, their future is promising in any number of commercial applications. Virtually any product using thermoplastics would benefit from nanocomposites, including medical and electronic components, automotive parts, construction materials, machine parts, and food packaging. A key advantage of nanocomposites is their substantially improved modulus at very low filler levels compared to conventional fillers which require high filler loading. Thus fabrication of lightweight parts with high stiffness is possible with nanocomposites.
Shell plans gas-to-liquids plant in Qatar
Shell is expected to announce a £2.5-billion ($2.9 billion) deal with Qatar to develop the world’s largest natural gas-to-liquids (GTL) plant. The plant would have a capacity of 137,000 barrels/day and come on stream toward the end of the decade.
It would convert natural gas into several products, including naphtha and low-sulfur diesel. According to Shell, if the deal goes ahead that it would begin front-end engineering in early 2004 and drill two appraisal wells within the first quarter of 2004. The plant would start up around 2007, and some products from the planned plant would be for export to the West. It would be the first world-scale GTL plant, 10 times larger than Shell’s GTL plant at Bintulu, Malaysia, currently the world’s largest GTL plant.
Comments: Shell’s recent announcement of their MEGA GTL facility in Qatar is a watershed event. A 137,000 BPD unit requiring the commitment of 5 – 8 TCF (depending on risk abatement or financial reserve cushion requirements which Shell may carry themselves) of desulfurized natural gas with a project timing of about 4 – 5 years. Experts comment that the indicated project cost of $2.9B does not take into account the requirements to build facilities to sweeten the natural gas infrastructure and this issue may add to the project lead time a little. The facilities necessary to move the sulfur produced (if that is the plan) would cost almost $250mm alone so the net project cost may be closer to $4-5B. Still, the economics are daunting. On a “total mix” basis of high paraffinic LPG, naphtha, and diesel, using roughly $.50/mm BTU gas, this project could land tanker loads in the US Gulf Coast for under $17.00/BBL according to one source in the GTL business.
For Shell, the product mix is a great fit in their global business due to the high paraffin nature of the product. Shell’s major position in waxes, lube stocks, naphtha for refining or cracker feedstock, and very high-value diesel ($1.00 – $4.00/BBL) over conventional diesel is a revenue side bonanza. As a cracker feedstock, besides being low cost, ethylene, and propylene yields could be enhanced by as much as 10-15% vs. conventional materials. There will be more projects like this one.
ASEAN to create a common market for Southeast Asian countries
The Association of Southeast Asian Nations (ASEAN) has decided to create a common market, the ASEAN Economic Community, by 2020. The 10 ASEAN nations will eliminate tariffs and non-tariff barriers, and liberalize the region’s service industries, under the agreement. ASEAN governments also signed separate free trade agreements with China, India, and Japan.
IRS investigates patent donation claims
The IRS is investigating tax deduction claims made by companies that donate patents to charitable institutions, such as universities. The IRS is concerned that companies are overestimating the market value of patent donations by overlooking restrictions on the beneficiary’s use of the patent, or the existence of competing technologies.
Comments: Several organizations used this IRS deduction for “House-cleaning” of unprofitable, non-relevant technologies. The concept was simply to donate the technology to a university and/or a research organization for the estimated commercial value as a potential tax deduction.
One of the IRS’ requirements was that the recipient of the donation has to prove their capability to work on the technology on a sustained basis for at least 2 years time period. The major organizations circumvented the problem by donating funds for continued research on the subject.
The most recent ones include (1) Amoco-BP’s EHPP technology to Stanford University, (2) Shell’s functionalized butylenes technology to SRI, (3) Amoco-BP’s butanediol technology to Texas A&M University among others.
These “tax-deductible donations” were handled by major accounting firms and financial organizations. The concept was a win-win situation for the organizations as well as the recipients. IRS’ major question is more related to “valuing the technology”, which in most cases was handled by big 10 accounting firms.
Lyondell, Chevron Phillips exit American Chemistry Council
Lyondell Chemical Co. and Chevron Phillips Chemical Co. LP have resigned from the American Chemistry Council (ACC). The companies are questioning the effectiveness of the group in leading the industry. Lyondell is voicing unhappiness over how ACC’s merger with the American Plastics Council has worked out.
The resignations come several months after Huntsman Corp. gave similar reasons for leaving ACC, and certainly will increase the financial pressure on the chemical and plastics industry’s largest trade group.
Arlington-based ACC is in some turmoil. The group had been contemplating sizable budget cuts, even before the resignations. As it looks for cuts, the group also is trying to find the money to launch an expensive program of advertising to boost the chemical industry’s public image. The members of the ACC have questioned the implementation of the cost savings produced by the merger of the American Plastics Council (APC) and ACC.
Lyondell and Chevron Phillips said they would be open to returning to ACC if there is a movement toward streamlining the group.
Comments: There have been concerns amongst ACC members on several issues such as budget cuts, budget allocation between APC and ACC for the advertising campaign, and others.
FDA approves the sale of silicone implants
Inamed Corporation, a medical device maker based in Santa Clara, CA has gained approval from FDA to bring the silicone gel breast implants back on the market in the U.S. The advisory panel approved with a 9-6 vote in favor as long as their sale is accompanied by mandatory health tracking, patient education, and long-term studies on the health effects of silicone in the body.
Silicone implants have been banned for most uses in 1992 after problems with ruptures and leaks prompting many women to sue the manufacturers. FDA often follows the advice of its advisory panels, but not consistently enough for Inamed to be confident of approval.
Dow Corning settled a class-action silicone implant suit for $4.5 billion.
Comments: The Food and Drug Administration (FDA) approved the general use of silicone breast implants after concluding there’s not enough evidence of health risks. There have been questions regarding the long-term safety of the implants, which recipients say caused serious diseases like lupus erythematosus and arthritis.
Kuraray to expand polyvinyl alcohol capacity in Frankfurt
Kuraray announced its plan to add a 20,000 MT/year polyvinyl alcohol (PVOH) line at its Frankfurt complex at a cost of ¥3 billion ($25 million). The line, due onstream in 2005, will raise Kuraray’s total capacity at Frankfurt to 70,000 MT/year, and its worldwide capacity to 214,000 MT/year.
Kuraray also has PVOH units in Singapore and at Okayama and Nakajo, Japan. Kuraray is also building a 12,000 MT/year ethylene vinyl alcohol (EVOH) plant at Antwerp for completion in the third quarter of 2004. The company also has 24,000 MT/year EVOH capacity at Houston, and 12,000 MT/year at Okayama.
Shell develops improved propylene oxide-styrene monomer technology
Shell Chemicals announced that it has developed a “fourth-generation” propylene oxide-styrene monomer (POSM) technology that cuts capital costs by about 10% compared with the third-generation process. Shell plans to commercialize the technology at a world-scale plant after it completes a third-generation POSM unit as part of a previously announced petchem complex at Huizhou, China.
The new technology has made improvements in heat integration and the reactor section resulting in more efficient unit operation. According to Shell, the fourth-generation plant is likely to be built in Asia or North America by about 2010, depending on demand.
Comments: The propylene oxide producers such as Sumitomo, and Shell have been working towards developing different methods to produce propylene oxide. Most have focused on the direct catalytic oxidation of propylene.
The polypropylene market is viewed by many as a sink for propylene and tends to pull propylene from other alternate value markets due to higher associated manufacturing costs. A more efficient and cost-effective method for the direct oxidation of propylene would allow for further diversification of the propylene stream into more value-added products. This may, in turn, prompt producers to shift propylene to other markets rather than polypropylene, causing a shortage.
BASF to shut down acrylic acid & butyl acrylate capacity at Freeport, TX
BASF is planning to idle 150 million lbs/year of acrylic acid capacity as well as a butyl acrylate plant at Freeport, TX on January 1. The move is in response to weak market conditions. Following the shutdown, BASF will have an acrylic acid capacity of 320 million lbs/year at the site. BASF will supply its customers from other plants. The company has a combined acrylic acid capacity of about 1.2 billion lbs/year at its plant at Antwerp, Ludwigshafen, and at its 60-40 joint venture plant with Petronas at Kuantan, Malaysia.
Comments: Dow Chemical Company recently acquired Celanese’s acrylic business product line from the Clear Lake, Texas facility.
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