DuPont Dow records first sales of new ENGAGE® grades
DuPont Dow Elastomers reported the first commercial sales of ENGAGE polyolefin elastomer ethylene butene grades to the automotive TPO, plastics modification, and footwear markets. The company introduced 4 new grades of ENGAGE based on ethylene butene in August for these markets along with the compounding, extrusion, and injection molding markets.
The four new grades of ENGAGE were produced at DuPont Dow’s new 300 million pounds/year plant in Plaquemine, LA., and are the first of a series of expanded offerings that will be made at the new production facility. Designed to provide improved cold temperature impact performance, enhanced processability, and better melt strength, the company said that feedback from customers has been very positive on the extended ENGAGE offerings based on butene comonomer. Dow produces a total of 500 million pounds/year of ENGAGE® in Freeport, TX. and Plaquemine LA.
Comments: The new grades of ENGAGE complement DuPont Dow’s already broad range of existing ethylene octene products. DuPont Dow’s aim in adding ethylene butene to its existing portfolio was to extend and strengthen the ENGAGE brand through the introduction of several next generation materials, including bimodal and higher melt strength grades. The use of butene as the comonomer also lowers the manufacturing cost associated with the new grades allowing DuPont Dow to optimize value generation and retention, while passing some savings to the end-users.
ENGAGE and similar elastomeric products (i.e.,EXACT®, TAFMER®, FLEXOMER®) have been well received in the market place since their introduction in the mid to late 1990s. Such products have been successful in replacing thermosets like EP(D)M in TPO-based formulations providing easier processability, enhanced colorability, better dispersion, and lower costs. In response to the healthy growth rates of elastomers & plastomers, ExxonMobil and Mitsui have also recently increased capacity by 180 and 200 million pounds, respectively. It is anticipated that competition amongst these types of polymers will increase intensively as new players enter the market and as existing players introduce new products, especially ones based on propylene.
Equistar to close polymer catalyst R&D center at Morris, IL
Equistar Chemicals announced its plans to shut down a polymer catalyst R&D facility at Morris, IL by end of 2003. The company took an $11-million charge to write off the facility in its third quarter results. Equistar posted a $40-million net loss for the quarter, on sales of $1.64 billion. According to the company, it is increasingly using molecular modeling and high-throughput computation techniques in its R&D work, and hence decided that it no longer needed the catalyst pilot plant at Morris. Some of the 50 workers at the facility will be transferred to other Equistar operations at the Morris site, which include ethylene and polyethylene (PE) production.
Equistar has a catalyst pilot plant at Matagorda, TX in addition to its main R&D operation at Cincinnati. Equistar’s R&D spending will decline from $38 million in 2003, to as low as $30 million next year as a result of the closure.
Comments: Equistar’s main R&D activities are centered around advanced polyolefins including single-site chemistry, bimodal resins design, and single/multi-reactor enhancements, majority of which are conducted at its facilities in Matagorda, TX and Cincinnati, OH. In the single-site chemistry arena, Equistar has already completed commercial trials with its STAR™ catalyst to produce mHDPE in a slurry reactor. Single-site catalysts are adept at incorporating comonomer, in stark contrast to Ziegler and chrome catalysts spawning a new industry based on ethylene copolymers having densities less than 0.9 g/cm3. The market has been less enthusiastic about mHDPE resins and the value it brings to the table. As a result Equistar has opted to delay commercialization until demand for such resins increases.
Equistar’s current R&D effort is targeting bimodal HDPE resins for pressure pipe and large-part blow molding applications, and HDPE and linear low-density PE (LLDPE) for film products. Research on high-pressure low-density PE (LDPE) products is limited to supporting existing products. Equistar also has a licensing and collaboration agreement with The Procter & Gamble Company to advance elastomeric homopolymer polypropylene (EHPP) technology. P&G acquired the rights to this catalyst technology, and has been trying to develop applications for the past few years. P&G hopes to leverage Equistar’s application laboratory facilities, along with its expertise in polyolefins to bring new elastomeric products to market.
Japanese polyolefins producers to produce fewer grades
Major Japanese petrochemical companies will drastically cut the grades of plastics they produce in order to lower production and distribution costs due to stiff competition from countries such as China. Currently, the companies make plastics used for wrapping material and electronics parts in several grades – differing in properties such as heat resistance and strength – based on requests from client firms.
Mitsui Chemicals Inc has constructed a plant in Osaka prefecture that is one of the largest of its kind in the world, capable of producing 300,000 tons of polypropylene a year. When the facility begins production in the beginning of 2004, Mitsui will shut down three of its smaller plants and cut the 50 grades it currently produces to five. With this reduction of grades, production and distribution costs are expected to drop almost 10 percent, or about 5 billion yen.
Japan Polyethylene Corp, created in September 2003 through the merger of two firms, will cut the number of its product grades to between 300-400 from the 1,000 or so that the two companies produced before the merger.
PS Japan Corp, the largest Japanese producer of polystyrene used for electronics and office equipment cases, will reduce its 60 grades by about 40 percent this fiscal year.
Comments: The Japanese Polyolefins Industry has been in a constant state of flux for majority of the last two decades, with mergers narrowing down the number of players to a small handful. We initially analyzed the transitioning industry as part of NGP in June 1996 (Vol. 1 Iss. 6) and then again in June/July 2000 (Vol. 5 Iss. 6). Since that time, the Japanese polyolefins industry continues to evolve in an effort to stay competitive with the rest of the global polyolefins industry. Japanese polyolefins companies cite the following reasons for the merger activities taking place: (1) mega-mergers of western counterparts, (2) anticipated tariff reduction, (3) increasing expansion of Middle Eastern players, and (4) emergence of large scale facilities in nearby Asian regions.
All of these factors have prompted many Japanese polyolefins suppliers to seek synergistic alliances in an effort to lower costs and preserve market share.
Besides the shear size of the Japanese polyolefins producers, or lack of, compared to its Western counterparts, many producers have traditionally approached the polyolefins industry with a specialty rather than a commodity perspective. The specialty approach has driven many producers to utilize smaller and much more flexible plants to produce a variety of grades of polyolefins. Unfortunately, the construction of larger – commodity type plants in near by regions has prompted many Japanese producers to seek alternative strategies to lower production costs. This new strategy to produce few grades will allow these players to take advantage of economies of scale, longer production runs, and less transitions to significantly reduce the cost structure and become more competitive
Braskem considers construction of polyethylene complex
Braskem has announced that it is conducting a feasibility study for an ethane-based ethylene and polyethylene (PE) complex at Corumbá, Brazil. Corumbá is on the Bolivian border, and the complex would use natural gas from a Bolivian pipeline into Brazil. It would produce 600,000 MT/year ethylene and an equivalent amount of PE.
According to the company, the decision on the complex will be made by 2005, depending on natural gas pricing from the Bolivian government and the PE market forecast through the end of the decade. The complex would be completed between 2008 and 2010.
Braskem is the largest privately owned petrochemical firm in Latin America. It was created in August 2002 from the merger of polypropylene (PP) and PE producer OPP Quimica; vinyls maker Trikem; caprolactam producer Nitrocarbono; and PE maker Polialden. The company owns Brazil’s largest cracker, Copene, at Camaçari. Braskem and Ipiranga Petroquimica share control of the second-largest cracker, Copesul, at Triunfo.
Comments: Brazil has recovered from its financial crises of the 90s and seems to be poised for growth. This economic recovery will help the polyolefin industry in Brazil as well as Latin America. Brazil is the largest producer of polyolefins in Latin America with total production capacity of 3,700 KT. The demand for polyolefins and other thermoplastic resins remained weak during 2003 as compared to 2002. However, it is anticipated that a modest growth in the overall economy (3-4%) could spur very healthy growth rates (10-12%) in the polyolefins sector.
The polyolefin industry in Latin America, in general, is impacted by the various political and economic problems of some of the countries. The polyolefin industry as a whole in Latin America seems to be recovering. The utilization rates in recent years have started improving. Brazil and Mexico seem to be driving the recovery in Latin America. Many producers in Brazil including Braskem are aligning assets to take advantage of the growth. Rio Polimeros is adding 540 KT of LLDPE/HDPE capacity based on UNIPOL technology while Polibrasil is replacing an existing 125 KT polypropylene slurry plant by 300 KT SPHERIPOL plant.
Increase in HDPE capacity and operating rates by Thai Polyethylene & Formosa
Formosa Plastics has reduced operating rates at its 240,000 MT/year linear low density polyethylene (LLDPE) plant in Mai Liao, Taiwan. The company trimmed operating rates by 10% to 60% capacity for November to produce more high density polyethylene (HDPE) at its Lin Yuan plant. Ethylene supply to its HDPE plant in Lin Yuan had been tight due to the turnaround of China Petroleum Corp.’s naphtha cracker.
Thailand’s Thai Polyethylene has announced its plans to debottleneck the largest of its three HDPE plants at Map Ta Phut. The capacity of 200,000 MT/year HDPE plant is being expanded to a capacity of 220,000 MT/year.
Sinopec begins implementation of AspenTech’s Polymer Process Control solution at polypropylene plant
Aspen Technology announced that Sinopec Beijing Yanshan Petrochemical Co., Ltd (BYPC) has begun implementation of AspenTech’s non-linear polymer production control solution at its BP Innovene polypropylene plant in Beijing, China. The solution, which is based on the Aspen Apollo™ product, will enable Sinopec to optimize execution of product transitions and improve steady-state quality performance. The decision to adopt the solution follows an earlier successful implementation at the Sinopec Qilu polyethylene plant.
BYPC is the second Sinopec plant to implement Aspen Apollo to help control and optimize its operations. AspenTech’s production control solution has also been deployed at the Sinopec Qilu UNIPOL polyethylene plant in Qilu, eastern China, where it has delivered faster product transitions, reduced quantities of off-specification material and a significant increase in production capacity.
Aspen Apollo utilizes a non-linear modeling technology unique to AspenTech that combines the speed and efficiency of empirical models with the constraints and ‘reality focus’ normally associated only with first-principle based models. It provides a set of desktop tools for model development, analysis, and simulation, an online system for controller implementation, and a web-based engineering and operations interface.
The Aspen Apollo technology has already been applied to a broad range of polyethylene, polypropylene and polystyrene process technologies. The polymer producers who have implemented AspenTech’s solution are experiencing the benefit of accurate, real-time property predictions, reductions in off-specification material during transition and steady-state production, and increased plant capacity without capital expense for de-bottlenecking.
DuPont Dow Elastomers faces losses from EPDM investigation
Dow Chemical and DuPont announced that in separate regulatory filings, the companies expect their 50-50 DuPont Dow Elastomers joint venture to incur losses as a result of an investigation by European and U.S. officials into possible anticompetitive in synthetic rubber markets.
DuPont Dow Elastomers has been subpoenaed in connection with the probe. The companies said that they are unable to estimate the range of losses due to the investigation at this point. The filing did not disclose whether the losses would be incurred as a result of fines, civil judgments, or both.
Crompton, a leading ethylene-diene propylene monomer (EPDM) manufacturer, said last year that it notified antitrust authorities about possible antitrust violations and has been granted conditional amnesty from criminal prosecution and fines that may result in the U.S., Europe, and Canada. Bayer and DSM say their offices in Europe have been raided in connection with the probe.
Equistar’s Plexar® extrudable tie-layer resins to be sold in Europe through MSI Technology and Nichimen Europe, plc
Equistar Chemicals, LP, announced that it will distribute its Plexar® extrudable tie-layer resins in Europe through an expanded alliance with MSI Technology, L.L.C., and in conjunction with Nichimen Europe, plc, effective Jan. 1, 2004. MSI Technology has been responsible for the sale of Equistar’s Plexar resins in the United States and Canada since 1997.Nichimen Europe is a well-known European distributor of specialty plastic materials.
The current distributor of Equistar’s Plexar resins in Europe will continue to fulfill existing customer orders until December 31. Plexar tie-layer resins are anhydride-modified polyolefins that bond dissimilar polymers together in multilayer structures.
Comments: Equistar is one of the major suppliers of tie layer resins with a manufacturing facility in Clinton, Iowa. The company is the second largest supplier of tie layer resins in North America. Equistar does not have any manufacturing facility in Europe. The company participates in European markets via distributors. The new distributor Nichimen Europe plc is a general trading company with offices in various locations in Europe. MSI Technology, L.L.C is currently responsible for the sale of Equistar’s Plexar resins in North America.
Equistar offers various types of tie layer resins including LLDPE based, LDPE based, HDPE based, PP based, and EVA based. The functional groups within Plexar resins enable the resins to bond to a variety of materials including ethylene vinyl alcohol copolymers (EVOH), nylon, polyethylene terephthalate (PET), polystyrene (PS), epoxy, polyurethane (PU), polyvinylidene chloride (PVdC), metal, paper, and other substrates while still providing excellent adhesion to polyethylene. As a result, multilayer structures can be produced that combine key properties of various resins, such as the low oxygen permeability of EVOH, the stiffness and low moisture vapor transmission rate (MVTR) of high density polyethylene (HDPE) or sealability of ethylene vinyl acetate (EVA).
DuPont and Koch subsidiaries agree on sale of INVISTA fibers unit and Koch to integrate Kosa into Invista
DuPont and Koch Industries, Inc. announced that they have reached a definitive agreement to sell INVISTA, formerly DuPont Textiles & Interiors, to subsidiaries of Koch for $4.4 billion in cash. The two subsidiaries are KED Fiber Ltd. and KED Fiber, LLC.
Closing is expected in the first half of 2004, subject to government approvals. The transaction is expected to be neutral to accretive to DuPont earnings in 2004. According to DuPont, the potential of its fibers businesses can be best realized as part of a company like Koch which is fully committed to INVISTA and the markets it serves.
Koch Industries Inc. has created a new board of directors for the Invista fibers business that it is acquiring from DuPont. Kosa will be run as part of Invista. George Gregory, Kosa president and chief executive officer, will become a senior vice president with Invista, reporting directly to Jeff Walker, a senior Koch official who will become Invista’s new chairman and chief executive officer. Current Invista President Steve McCracken, a 28-year DuPont veteran, will retain that title in addition to being named chief operating officer and a board member.
The eventual location of Invista’s headquarters also is undecided. The business currently is run from DuPont’s campus in Wilmington, DL. Kosa is based in Houston, but also has a regional headquarters in Charlotte, NC. The combined Invista business is expected to have 24,000 employees — 18,000 from Invista and 6,000 from Kosa.
Comments: INVISTA, currently a business unit of DuPont, is an integrated fiber and intermediates business with 2002 revenues of $6.3 billion. It is comprised of three businesses: Apparel; Interiors and Industrial; and Intermediates. The company markets its products under several trademarks including: Lycra®, Stainmaster®, Antron®, Coolmax®, Thermolite®, Cordur®, Supplex®, Tactel®, and in the specialty chemicals business: Corfree®, Dytek®, Adi-Pure® and Tetrathane®. Upon integration of Kosa with Invista, polyethylene terephthalate (PET) resin will play a smaller role within Invista than it did for Kosa. PET sales amounted for about 50% of Kosa’s estimated $3 billion sales in 2002, however after integration PET sales will have an estimated share of only 16% of Invista’s new $9.3 billion total.
BP to reshuffle senior petrochemical management
BP announced its plans to reorganize its senior petrochemical management in anticipation of the retirement of Mike Buzzacott, group vice president (v.p.)/Europe, next April. Holly van Deursen, currently v.p./group strategy at BP, will become group v.p./North America based at Naperville, IL with global responsibility for acrylonitrile; fabrics and fibers; and specialties and derivatives; and will be responsible for olefins in the U.S.
Richard Hookway, currently president/natural gas liquids, North America, will become commercial director/petrochemicals, based in London. Current group v.p./Americas, Andrew Mackenzie, will move to Sunbury-on-Thames, U.K. and have regional responsibility for Europe. He will also be responsible for olefins in Europe and have global responsibility for polyolefins and acetic acid. Steve Welch, group v.p./Asia, will be given the global responsibility for purified terephthalic acid and para-xylene; and for olefins in Asia.
ExxonMobil proposes $600 million Texas LNG project
An Exxon Mobil Corporation affiliate, Golden Pass LNG Terminal LP, announced plans to develop a $600 million Liquefied Natural Gas (LNG) receiving terminal near Sabine Pass, Texas.
The terminal, which will process imported LNG for distribution throughout Texas and the United States, should take about three years to build and involve employment for some 600 workers during peak construction. The facility is expected to be operational in the 2008/09 timeframe, with an initial processing capacity of 1 billion cubic feet per day (bcfd) of LNG. The plant will be designed for an expansion to 2 bcfd throughput in the future.
According to ExxonMobil, there is strong growth in natural gas demand projected in the future and the import of LNG will be an important component of the supply mix. In October, Exxon Mobil Corporation and Qatar Petroleum announced a Heads of Agreement to supply 15.6 million tons a year of LNG (2 bcfd) from Qatar to the United States for an expected period of 25 years. ExxonMobil holds purchase options for potential LNG import sites in Corpus Christi, Texas, and Mobile Bay, Alabama. The company is also evaluating possible sites for an offshore terminal in the Gulf of Mexico.
Comments: Well, it’s one more on the table – now there are 22+ new and expansion LNG projects publicly noted. The US Natural Gas market is in the range of 25 billion cubic feet (BCF)/day and if all 22+ project’s volumes are added, their impact is 10 BCF/day. What does this mean? Obviously not all the projects are going to go, some industry experts forecast that the existing terminal expansions and about 5 new terminals is all the market will justify in this round.
With the newer generation 450,000 M3 ships now looking realistic, costs to transport to the US, even from the Middle East will be about $1.00/M3. This means that these new supplies will be very competitive and natural gas in the US should be plentiful, but we just don’t need 22 new projects.
Shell plans another gas-to-liquids plant in Saudi Arabia
Shell has signed a gas exploration deal in Saudi Arabia with its partners Total and Saudi Aramco, indicating that it considers the Middle East as the center for the development of its gas-to-liquids (GTL) technology. The exploration agreement, covering 210,000 square meters of the Rub Alkhali (Empty Quarter), gives Western oil companies access to Saudi hydrocarbon reserves for the first time since the nationalization of the oil and gas sector in the 1970s. Shell will hold 40% of the consortium. Its two partners will own 30% each.
The $2 billion plan replaces an abortive $5 billion venture involving Shell and Total within the Saudi Gas Initiative that would have also comprised joint activities in petrochemicals, desalination and power generation. Instead, the downstream operations will be undertaken by separate investment projects. The signing of the Saudi deal took place only a few weeks after Shell agreed to invest $5 billion in upstream gas facilities and the world’s largest GTL unit in neighboring Qatar.
The GTL facility, located on shore at Ras Laffan, will produce 140,000 barrels per day of middle distillates, primarily naphtha and clean transport fuels, as well as normal paraffins and lubricant base oils.
Comments:The term “syncrude” is passé. These new GTL monsters will ship discreet products, mostly to European markets (at least initially) where more diesel is needed and there is a dual home for the GTL’s naphtha in ethylene crackers or as a refinery gasoline stock. These two products alone, according to Shell sources, could comprise 80% of output with the remainder highly fragmented into lube, wax and other specialty stocks with even higher alternate values at low volume. The issue here is that discreet products with high values will be shipped. For instance, in the case of diesel, the synthetic, high C-tane, Zero Sulfur product should command at least a $4.00 – $5.00/bbl premium over its naturally refined cousins. In Europe, the motor car diesel market is several times larger than in the US. These types of incentives are huge value added potentials and it is obvious now why the markets will see synthetic product slates, not just the older view of “Syncrude”.
DuPont takes actions to achieve $900 million annualized cost improvement in 2005
DuPont announced that it will take aggressive actions to ensure its global competitiveness following the separation of INVISTA. Included are productivity and organizational actions that will achieve a $900 million cost improvement in 2005. In addition, the company will undertake actions that strengthen its ability to achieve 6% annual revenue growth – a key objective in its ongoing transformation to become a sustainable growth company.
The company expects its actions to yield $450 million cost improvement in 2004, and the full $900 million in 2005. Cost improvements targeted for 2004 will essentially offset residual costs from the separation of INVISTA and other expected fixed cost increases, thus allowing the full measure of the company’s 2004 volume and price improvement to benefit operating earnings. A portion of the fixed cost savings will come from work force reductions.
DuPont will take the following actions:
Reduce Costs from INVISTA Separation – DuPont will realize a total of $200 million in fixed cost reductions to offset residual costs from the anticipated separation of INVISTA.
Leverage and Strengthen Infrastructure – DuPont will leverage and center its staff functions, support services, and manufacturing operations broadly, including corporate costs. Infrastructure actions are expected to achieve $250 million in fixed cost reduction in 2004, and the full $500 million in 2005.
Improve variable margins – Actions to improve variable margins include consolidating product lines by at least 20%. These actions are expected to realize a $100 million variable margin improvement in 2004, and the full $200 million improvement in 2005 – mainly through cost reduction.
Improve Growth Capabilities – DuPont will rebalance resources toward emerging markets, where much of its growth will occur in the coming years. Initial focus will be on China, where the company already has a strong base. Other areas of interest include Central & Eastern Europe and Brazil.
Advanced Polymer Alloys introduces Alcryn® MPR™ 4000 series
Advanced Polymer Alloys (APA), a division of Ferro Corporation announced the availability of an improved grade of Alcryn® Melt-Processible Rubber™(MPR) – the Alcryn MPR 4000 series. The improved grade provides more efficient processing and greater profitability. The 4000 series of Alcryn MPR is designed as an extrusion grade with specific applications in the architectural industry as window and door seals, weather-stripping, and other complex profile extrusions.
The improvements to the 4000 series include a change to its chemical makeup that improves processing performance. As a result, the different advantages include more efficient extrusion causing less die drool, and allowing extruders to run the material more quickly. Specific benefits of the improved 4000 series include: (1) Increase in production line speeds,(2) Excellent co-extrusion performance with PVC, (3) Exceptional low-temperature sealing performance, (4) Low coefficient of friction, and (5) Excellent durability and abrasion resistance.
First introduced in 1994, the 4000 series of Alcryn MPR offers advantages such as: (1) moderate flow in general plastic processing, (2) good for complex extrusions, (3) superior weather resistance through its black grades, (4) can be co-extruded and calendar-laminated with PVC without adhesives, and (5) can be recycled several times.
Comments: Advanced Polymer Alloys, a division of Ferro Corporation is the world’s only manufacturer of melt-processible rubber.
The several advantages of melt processible rubber include: (1) easy processing on conventional plastics equipment, (2) no compounding or pre-drying before processing required, (3) recyclable scrap with no detrimental effect on performance or appearance. MPR has several advantages such as durability, coefficient of friction, and resistance to abrasion, chemicals, oils, fuels, and long-term exposure to sunlight and other aspects of weathering when compared to sot TPEs and many vulcanized rubbers.
PolyOne sets up TPU deal with Spanish firm Merquinsa
PolyOne and Spain’s Merquinsa announced that they would cooperate on the development and distribution of new thermoplastic polyurethane specialty compounds.
The TPUs will be marketed under the OnFlex-U® brand. Under the agreement, PolyOne will develop compounds based on Merquinsa’s Pearlthane® TPU specialty elastomers. The partners plan to coordinate research and development efforts to expand OnFlex-U applications, and develop novel TPU compounds for extrusion and injection molding markets.
Production of OnFlex U will begin in Europe and Asia during 2004. The target applications of OnFlex-U compounds are areas where halogen-free flame-retardant compounds are required.
Comments: Merquinsa is a global supplier of TPU products (Pearlthane®) and is headquartered in Spain. Merquinsa’s primary markets of focus include 1) Automotive, 2) Footwear, 3) Furniture, 4) ID Animal tags, 5) Industrial, 6) Sports & Leisure and 7) Textile Coatings.
Polyone Corporation is an international supplier of thermoplastic compounds, specialty resins and various polymers & elastomer formulations and is headquartered in Cleveland, OH.
Polyone currently supplies OnFlex-S & Bergaflex® (Styrene based) and OnFlex-V (TPVs) Elastomers to the industry. The partnership adds a complementary product to existing PolyOne’s product portfolio and gives access to specialty TPU markets for Merquinsa. Applications of OnFlex-U (TPUs) include cable-sheathing and automotive wires, hoses & tubing conveyor belts and gaskets. The North American demand for TPU in 2002 was estimated at 110 MM Lbs.
Kaneka to build polyolefin beads plant in China
Kaneka announced its plans to build a 1,200 MT/year expandable polyolefin beads plant at Suzhou, China. The unit will be Kaneka’s first in China, and is due to start production in 2004.
The facility will make expandable foam for use in packaging of information technology products, and core sections of automobile bumpers. Kaneka plans to invest about $4.6 million for the plant. The plant will increase the company’s total capacity for the beads to 26,000 MT/year.
Comments: Polyolefin foams can be classified into the following categories: (1) Non-XLPE, (2) XLPE, (3) PP, (4) EPP Beads, (5) EPE Beads and (6) EVA Foams. The foam beads are considered as specialty material within foam applications. The global producers of foam beads include (1) JSP International, (2) Kaneka and (3) BASF Corporation.
The major applications for foam beads include (1) Automotive, (2) Protective Packaging, (3) Marine Floating Devices, (4) Sporting and Recreation Goods and other miscellaneous applications. The demand for foam beads have been increasing in the Asian regions due to the high growth of electronic items. Kaneka currently hasthe followingAsian manufacturing locations (1) Osaka, Japan, (2) Kashima, Japan and (3) Kautan Pahang, Malaysia. This expansion will complement Kaneka’s product portfolio and give them a strong market presence in Asia.
Polish polyolefins producer, PKN Orlen and MOL Hungarian Oil and Gas Plc. sign initial agreement to merge
MOL Hungarian Oil and Gas Plc. (MOL) and Polski Koncern Naftowy ORLEN SA (ORLEN) signed Memorandum of Understanding whereby they agreed intention to initiate co-operation in the Central and Eastern European oil sector.
The parties believe that this co-operation would allow both MOL and ORLEN to benefit from synergies and could present the opportunity to compete more effectively with the major global operators in the sector.
The two sides agreed to set up working groups to assess fields of potential cooperation in three areas including: (1) implementation of a cross-purchase agreement of 10-15% of the other company’s shares; (2) assessment of the prospects of forming a joint company that could make joint investments and, eventually, management asset sales; and (3) the possibility of merging the two companies “for potential economic benefits.” Those initiatives, the statement said, would be implemented once a final agreement is signed and the two companies receive shareholder approval. PKN Orlen is one of the major producers of polyolefins in Eastern Europe.
Comments: OMV of Austria, MOL of Hungary, and Orlen of Poland are the three major competitors in Central and Eastern Europe. There are several options for the merger between Orlen and MOL such as full merger, cross-share holding, or dual listing.
Basell formed a marketing and production joint venture with Orlen called Basell Orlen Polyolefins. The joint venture is constructing a 400,000 MT/year PP and 320,000 MT/year HDPE based on Basell’s Spheripol & Hostalen technologies. The plants are expected to be on stream in 2005. The Basell polyolefins joint venture would be included in the merger plans. MOL could sell its petrochemicals through Basell, which has good marketing channels.The merger will allow both companies to compete more effectively in a competitive market
IPCL plans to double PVC capacity to 3 million metric tons per year
Reliance Group Company, Indian Petrochemicals Corporation Ltd (IPCL) plans to increase PVC capacity from 1.5 million tons annually to 3 million tons at Gandhar in Gujarat. The engineering and technical study for the capacity increase has been completed and the expansion is expected to be over in 18 to 24 months, once the process starts. The expansion would cost the company Rs 250 crore.
IPCL has also commissioned a study to expand its polyethylene (PE) capacity at Gandhar, from the existing 400,000 MT/year to 800,000 MT/year. However, due to the current shortage of liquefied natural gas (LNG) in the domestic market, this plan has been kept on hold for the moment. LNG is the main feedstock for producing PE.
The company is exploring the possibility of using gas that will be produced from Reliance Industries’ (RIL) Krishna-Godavari (KG) basin, which is under exploration. The company is also considering importing LNG for the expansion process.
Comments: IPCL increased its PVC capacity utilization to 109 per cent, while the PE production was increased by 8% with capacity utilization at 100%.
They added that the polymer consumption in India is still the lowest in the world — at 4 kg per person per year — which is much lower compared with other countries. The US has a consumption rate of 115 kg per person per year, while the world’s per capita consumption is 24 kg per person per year. For Asia, the consumption is 13 kg per person per year.
Thai polyvinyl chloride producer Vinythai plans to increase production capacity
Vinythai Plc, Thailand’s second largest polyvinyl chloride (PVC) producer, plans to invest US$3.4 million (140 million baht) to increase efficiency in order to boost it production capacity of vinyl chloride monomer (VCM), the feedstock for PVC.
The company plans to debottleneck production at its VCM plant increasing production capacity to 200,000 MT/year from 187,000 MT/year. The company also plans to raise PVC capacity by 11,000 MT/year to 175,000 MT/year.
Vinythai planned the scheme to take advantage of the increasing demand for its products in the local market and abroad and to gain an edge over other PVC producers in Asean. Most PVC producers depend on imported VCM.
Comments: In order to increase the PVC margins availability of cheaper raw material is important. Vinythai has been buying vinyl chloride monomer for the production of PVC and now is planning on becoming self sufficient in the raw material in order to gain the advantages of higher profit margins.
Demand for VCM is projected to grow in the near future to the point that it could outstrip supply plus the higher demand is expected to narrow the gap between the price for VCM and PVC, resulting in lower margins for PVC.
Plastics e-commerce site Omnexus shuts down
Plastics e-commerce site Omnexus is closed after a decision to pull the plug was taken on 13 November, 2003, following a meeting with shareholders. The investors had invested about $100 million in Omnexus since its inception in 2000.
Founded in 2000 by BASF, Bayer, Dow, DuPont and Ticona, the company offered an electronic platform for transactions as well as an e-marketing service.
More than 20 suppliers used Omnexus as a neutral site to trade resin and machinery, allowing buyers to compare materials and interact with diverse companies.
For the past two years, Omnexus championed UltraLite, software to connect buyers and sellers. The company is recommending that customers use an automated purchase-order technology called Buyer Direct from web networking supplier Elemica Inc. of Wayne, PA. Omnexus has an alliance with Elemica.
The company will lay off its 45 employees, spread between Atlanta and at its European headquarters in Zurich, Switzerland. The trading arena of Omnexus stopped Nov. 30, and now the company is seeking buyers for its e-marketing and advertising services.
Comments: Omnexus the company based electronic marketplace was not able to meet its finances and it never gained the acceptance it wanted. The company had incurred costs of about $30 million to develop the software UltraLite to connect the buyers and sellers.
Decision in polyethylene bag-dumping case delayed until January 2004
The federal government delayed a preliminary decision in an anti-dumping case brought by U.S. plastic bag makers. The Department of Commerce had been scheduled to deliver its preliminary decision Nov. 26, but the agency will now wait until Jan. 16 to decide whether plastic retail carrier bags from China, Malaysia and Thailand should have punitive tariffs.
According to the lawyer representing Chinese exporters and US importers, the Commerce Department will find dumping and they are anxious to find the amount of tariffs imposed.
A Jan. 16 decision may not be final, however. If the Commerce Department decides there is dumping, it will begin a final investigation, including visits to factories in the three countries. After that, the case would go back to the U.S. International Trade Commission.
Comments: The anti-dumping complaint was brought by a coalition of U.S. bag manufacturers, Polyethylene Retail Carrier Bag Committee. The petition claims that the plastic bags are being sold in the United States at dumping margins up to 122 percent for China, 78 percent for Malaysia and 117 percent for Thailand which resulted in an increase in imports from the three countries, causing a decline in U.S. market share, employment and profits.
The U.S. International Trade Commission (ITC) decided on Aug. 4, 2003 to proceed with an unfair trade investigation against bag makers and importers from China, Malaysia and Thailand. Now the preliminary decision on the case has been delayed till next year. For more information refer to Global PO&E – Volume 1 – Issue 15, and Issue 18.
Supreme Court rejects Dow Chemical asbestos appeal
The U.S. Supreme Court rejected an appeal by Dow Chemical Co.’s Union Carbide unit arising from a West Virginia jury verdict that its facilities had been unreasonably dangerous due to asbestos fibers in the workplace from 1945 to 1980.
The Supreme Court decided that it will not hear an appeal filed by Dow Chemical’s Union Carbide subsidiary sought to dismiss the second phase of an asbestos trial in West Virginia. During the first phase of the trial, the jury held that the company was liable for punitive damages of three times any compensatory damages, if the plaintiffs are found to have suffered injuries from the facilities and are awarded compensation.
The case stemmed from mass asbestos litigation. About 8,000 plaintiffs who claimed exposure to asbestos initially sued about 250 defendants, including manufacturers, building owners and insurers. Union Carbide was the only case to go to trial and have a jury verdict. Other defendants reached out-of-court settlements and in two other instances, complaints were dismissed.
The plaintiffs claimed Union Carbide operated an unreasonably dangerous workplace for contract workers over the 35-year period through the exposure to breathable asbestos fibers. Asbestos has been linked to lung cancer, asbestosis, a scarring of the lungs, and other lung ailments.
Wellman to cut management positions & halt new products development
Wellman announced its plans to eliminate four senior management positions and halt development of new products as part of an effort to reduce annualized costs by $20-25 million. The company’s president and COO Clifford Christenson resigned and will not be replaced. Thomas Duff will remain chairman and CEO. Wellman plans to eliminate the positions of chief administrative officer, v.p./corporate development, as well as v.p./fiber strategy and new products.
Wellman also plans to stop the development of specialty fiber products, an initiative announced in early 2001 to combat the growing competition from imports. It will concentrate on commercializing new specialty products already developed in the past two years. The company will group its new fiber products with its commodity fibers products to cut costs.
Comments: Wellman incurred a third-quarter net loss of $4.6 million, compared to net earnings of $4.7 million for third quarter in 2002. Hence the company decided to cut costs by eliminating management positions and stopping new product development in certain areas.
Pechiney Plastic lays off 90 at Iowa film plant
Pechiney Plastic Packaging Inc. laid off 40% of its workforce at its food and dairy facility in Des Moines, IA.
The company filed a notice with the Des Moines-based Iowa Workforce Development agency stating that it had laid off 90 workers Nov. 17. The facility, which makes film for cheese, meat and other food, employed 220.
The company is owned by Paris-based Pechiney SA, a maker of aluminum and plastic products. The company reported weaker earnings for its packaging division during the third quarter, with a decline of 30% from the previous-year period.
Comments: Pechiney’s main operating companies include: (1) Pechiney Plastic Packaging, (2) Pechiney Flexibles Europe, (3) Soplaril, (4) Cebak, and (5) Techpak International. The company is being sold to Alcan for about €4.0 billion pending approvals
The company is reducing its costs by laying off employees in it’s under performing units.
Lubrizol to eliminate 150 jobs
Lubrizol announced its plans to cut 150 jobs, about 3% of its workforce, by the end of 2003 in a move expected to yield annualized pretax saving of $15 million beginning in 2004. The company plans to decrease the workforce at several locations including: (1) Wickliffe, OH (headquarters and technical center), (2) Deer Park, TX, (3) Bayport, TX (manufacturing site), and (4) Hazelwood, UK (technical facility).
The company plans to take a restructuring charge of $13 million against fourth-quarter earnings to cover the cost of the plan.
The company had initiated a separate cost-savings program at the beginning of the year, which included job cuts at its Bromborough, UK plant and at a joint venture in India. Those moves are expected to result in an annualized pretax savings of $4.5 million. Lubrizol also froze salaries, and tried to improve earnings with price increases in its fluid technologies for transportation business.
Lubrizol reported a 33% slide in third-quarter earnings, to $24.3 million, including a pretax restructuring charge of $400,000 for restructuring the Bromborough site. Sales dropped less than 1%, to $510 million.
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