BP and Philips starts up HDPE Plant
BP Solvay and Chevron Phillips Chemical have started up their joint 700-million lbs/year high density polyethylene (HDPE) plant at Cedar Bayou, TX. The new plant replaces three lines at Deer Park, TX which had a combined HDPE capacity of 260 million pounds per year.BP Solvay Polyethylene North Americawill discontinue production of 260 million pounds of high density polyethylene (HDPE) capacity from three small-capacity lines at its Deer Park, Texas manufacturing site.
Comments: CPChem and BP Solvay will each own 50 percent of the new plant, share its production of general-purpose blow molding HDPE resins, and market their share of production independently. The predecessors of the two companies (Solvay and Phillips) have lead the growth and development in the HDPE business, as well as process technology. In fact, the slurry loop technology has a commanding percentage of HDPE global capacity. In North America, the Phillips loop accounts for over 50% of the capacity. Within blow molding applications, the slurry loop accounts for majority of the market share by capacity (85% liquid food blow molding resin, 60% HIC and Industrial blow molding resin). The process also has a commanding market share (80%) of HDPE pipe resin in North America.
Dow reports second quarter 2003 earnings with an improvement of 65%
The Dow Chemical Company reported sales of $8.2 billion for the second quarter of 2003, compared with $7.3 billion a year ago. Earnings before interest, income taxes and minority interests (EBIT) were $799 million. Net income was $393 million.
As a result of improved prices and cost control effortsDow’s Performance Plastics and Performance Chemicals have continued to perform well under adverse conditions. The EBITfor these two segments had improved by 12% despite higher feedstock and energy costs.
Dow’s plastics sales increased 11% with higher prices more than offsetting reduced volume. Polyethylene volume was down in North America and Latin America but was slightly up in Europe and Asia Pacific.
Comments: Since William S. Stavropoulos appointment as president and CEO last December, he has outlined a strict strategy to restore Dow’s profitability. As part of the strategy Dow began to control internal expenses and took actions to maintain margins, while preserving if not growing volume. As a result of the strategic initiatives, Dow has succeeded in increasing prices by 16% trading off a 2% decrease in volume. Dow seems to be on the right track to restoring its overall profitability, despite the global economic scenario.
Dow’s path back to profitability came at the expense of tremendous cost-cutting and postponing of vital innovative projects – an exceptional move on the part of Dow. The lost opportunity costs though not apparent and not immediately recognized by the Wall-Street Warriors, continue to buildup. Dow’s current robust situation and its ability to return to profits so quickly is a direct result of its innovative spirit from the past. Just stop and think, if PLA polymers opportunity was presented to Dow by Cargill in the last two years instead of 1997, would it have received the same level of attention?
We as, dependents of Dow’s Innovation and new product development breathe a sigh of relief and take it as a sign that things will be better!
Sunoco restarts PP plant at LaPorte, TX
Sunoco Chemical has resumed production at its 940-million lbs/year polypropylene (PP) plant at LaPorte, TX. The plant was closed after an explosion and fire in June .The plant is now running at full capacity.
Comments: The plant was shutdown for a month, due to an explosion occurred in the hexane distillation unit.As the plant for shut down for a short time, it should not disrupt the supply/demand dynamics of polypropylene.Sunoco’s has a total PP operational capacity of 2.5 billion pounds, with facilities located at LaPorte, TX, Neal, WV, MarcusHook, PA, and Bayport, TX. For more information refer to Polyolefins & Elastomers – Strategic New Analysis – Vol. 1, Issue 10, and Issue 14.
SABIC to expand StaMax P long glass fiber polypropylene
SABIC is planning to build a second production line and expand capacity to 35,000 MT/year. SABICacquired StaMax P long glass fiber polypropylene (PP) business earlier this year.
The new plant will be located at the Genk, Belgium, and is expected to be completed in early 2004. The move is response to the consumption of long glass PP in the automotive industry and its growth rate being substantially higher than that for other automotive polymers.
Comments: SABIC had formed 50:50 joint venture with Owens Corning in 1999 to produce long glass fiber polypropylene StaMax P®. In April 2003, SABIC acquired the remaining 50% ownership from Owens Corning. Under the new agreements SABIC has the exclusive rights to manufacture and sell StaMax P in the European market. After the transaction Owens Corning continued to supply PerforMax® glass fiber to the company.
StaMax P is a lightweight, long fiber glass polypropylene thermoplastic for semi-structural applications. It can be used to replace metal and bridge the gap between short-fiber compounds and glass mat thermoplastics (GMT). This expansion is mainly to address the growing demand for StaMax P in automotive markets.
Formosa declares force majeure after hurricane Claudette on Point Comfort, TX polyolefins plants
Formosa Plastics Corp, Point, Comfort, Texas has declared force majeure on polyethylene and polypropylene from the effect of Hurricane Claudette.
The storm hit the Texas coast early July 15, leaving the Point Comfort plant without power until late July 16. All the production units including PE, PP, PVC and a number of other chemical products were knocked out. Since then, the firm has launched procedures to restart the site’s PVC, PE, vinyl chloride monomer, ethylene glycol and EDC units.
The plants are expected to resume full production by early August. Formosa can produce 2.1 billion pounds of PE, 1.5 billion pounds of PP and 1.3 billion pounds of PVC annually in Point Comfort.
Nutley, NJ based Easiwrap International makes stretch film that shrinks
Easiwrap International Corp. has launched a new type of film for wrapping pallets. The film shrinks when you tug on the corners and fits tightly. The reactivity of the film starts with that tug. When applying the film, you wrap the pallet loose. Just a slight tug in the corner orients the molecular structure and starts it shrinking.
The company that has started extruding polyethylene-based oriented film at a plant in Dublin, Ireland is now looking to expand into the U.S.
The Dublin plant has three extruders running around the clock. End-use markets for this application include food and beverage distributors, window fabricators and building supply companies.
Comments: Stretch filmsare used to unitize bags or boxes stacked on pallets during shipping andwarehouse handling. Stretch film is one of the fastest growing packaging uses for LLDPE, replacing conventional corrugated board, strapping, paper and shrink wrap. LLDPE resins accounts for roughly 90% of the resins used in the stretch films market. Stretch films tend to be LLDPE rich with LDPE blended to improve the processability of the material.
Easiwrap will enter the North American stretch film market and compete for the 1 billion plus poundsper year North American stretch film market. The packaging market in North America is highly competitive and concentrated. The main converters for stretch films in North America include (1) AEP Industries, (2) Inteplast, (3) Pactiv(Tyco), (4) Atlantis, and (5) Pliant Corporation.
Crompton faces class-action suits for price fixing of EP(D)M
Crompton is facing a series of federal and state class-action lawsuits for allegedly fixing prices of ethylene propylene diene monomer (EPDM), plastic additives,and rubber chemicals, the company says in a recentSEC filing. Crompton says it is under criminal investigation by the U.S. Department of Justice (DOJ), the Canadian Competition Bureau (CCB), and under a coordinated civil investigation by the CCB, the DOJ, and the European Commission (EC).
Crompton has been named as a defendant in two federal class-action suits in California for rubber chemicals; in a total of five class-action suits in California, Connecticut, New Jersey and New York for EPDM; as well as four class-action suits in Pennsylvania for plastic additives, the SEC filing says. All of the suits were filed in March and April. The company is also facing state class-action lawsuits in 17 states and Washington, DC for rubber chemicals, which Crompton is seeking to dismiss.
Buyers, meanwhile, have also filed state class-action suits against Crompton for price fixing and antitrust activity in the California EPDM market.
Crompton was previously was granted amnesty relating to an EPDM industry investigation in Canada, Europe, and the U.S. The company says it is discussing a possible plea to violations of antitrust laws with DOJ on rubber chemicals.
DSM Elastomers plans to shut down EPDM plant
DSM Elastomers will shut down its EPDMplant in Addis in mid-2004. The closure is meant to streamline DSM’s assets and take advantage of production capacity coming onlinein Europe. One of the units had already been shutdown earlier this year. The move will eliminate about 180 plant and contractor jobs as production is shifted to the company’s operations abroad.
Production will shift to the company’s operations in Brazil and to a new plant built in The Netherlands, where the parent company is located. DSM also has a plant in Japan.
Comments: As a result of the age and technology of the plant it was not able to compete effectively, especially in light of increased raw material prices. Back in 1999, DSM Elastomers had planned to undergo major plant modernization of its Addis facility. The primary objective of the initiative called for the modernization of the three existing rubber production lines to enable cost effective operations through the year 2020. A closer examination by DSM determined that revamping the facility still would not provide the cost economics needed to compete as a low-cost supplier.
DSM made a decision to exit most of the downstream businesses to focus on the upstream operations. The EP(D)M operations were on the block for disposal for a while. The major Nitrile rubber business was sold to Zeon Chemicals.
Basell and Dow announce PE and PP price increase in Europe
On July 11, 2003, Basell, Brussels, Belgium announced that there will be a price increase of a € 100 per ton for all its polyethylene and polypropylene grades in Europe which will take effect no later than September 1.
Dow Europe also announcedprice increase for polyethylene and polypropylene resins which will allow Dow to have acceptable margins in the current market conditions.
Dow will increase the price in Europe by€50 per metric ton effective August 1, 2003 and €100 per metric ton effective September 1, 2003 for all polypropylene resins. These will include INSPIRE® performance polymers, low-density polyethylene (LDPE) resins and high-density polyethylene (HDPE) resins, DOWLEX® polyethylene resins, ATTANE®ultra low density polyethylene (ULDPE) copolymers, ELITE® enhanced polyethylene resins and ASPUN®fiber grade resins.
Comments:The price trend analysis presented later in the issue clearly indicates a fall in the prices after May, a result of decreased demand. The increase in prices is an attempt to restore margins lost during the past couple of months.
Polyone to sell its share in Welvic Australia Pty, a producer of PVC compounds to Orica
PolyOne Corp. has sold its stake in Welvic Australia Pty to Orica for about $2.3 million. PolyOne had owned 37.4 percent of Welvic, with Orica controlling the remainder. Welvic, based in Melbourne, is Australia’s largest PVC custom compounder and has three production facilities in Greater Melbourne, Victoria, Australia, with annual revenues of approximately $20 million. Orica and PolyOne have also formed an alliance to provide Chemnet with access to a range of PolyOne’s resin compounds and concentrates for distribution in Australia and New Zealand.
Comments: PolyOne Corporation based in Ohio is a global polymer company with operations in thermoplastic compounds, specialty polyvinyl chloride or vinyl resins, specialty polymer formulations, engineered films, color and additive systems, elastomer compounds and additives and thermoplastic resin distribution.
PolyOne Corporation was created by the merger of M. A. Hanna Co. and Geon Co. on September 1, 2000. The combined companies form the world’s largest compounder and distributor of polymers.
PolyOne has four business segments (1) performance plastics, (2) elastomers and performance additives, (3) distribution, and (4) resin & intermediates.
Orica Chemnet, a business unit of Orica Chemicals, is the largest importer and distributor of chemicals in Australia, New Zealand, Fiji and Papua New Guinea. Chemnet imports more than 300,000 MT/year of commodity and specialty chemicals from overseas partners who are recognized as global leaders in their fields of activity.
Orica manufactures and supplies industrial and specialty chemicals, agricultural chemicals and fertilizers, commercial explosives and mining chemicals, paints and other consumer products. Their products include well-known brands such as Dulux, Selleys and Cabot’s. Orica is the largest chemical company in the region and the world’s leading supplier of commercial explosives. Orica has a 50:50 joint venture with ExxonMobil, Qenos that produces polyethylene and polypropylene, synthetic rubber, masterbatches and compounds.
Murphysboro, IL based flexible packaging company, Bemis to close Illinois film converting plant
Bemis Co. Inc. will close its Murphysboro film converting plant and shift work to more-modern facilities at Curwood Group packaging complex, based in Oshkosh, Wis., 115 employees will be affected.
Bemis started the facility in 1968 to perform six-color printing for Bemis’ high-barrier film group. The plant was updated in the early 1980s but would have needed new equipment to automate production.
Comments: Bemis has been rationalizing its assets by closing the inefficient plants and shifting the operations to more cost effective and modern plants.
In 1997, Bemis shuttered its Memphis, TN and Pepperell, MA plants, followed by its Murphysboro, TN plant in 1998.
The economic conditions in recent years have forced many converters to continuously look for opportunities to cut costs or improve efficiency.Bemis has had the option to switch its operation between different facilities, enabling it to more easily optimize operations. Since 1997, Bemis had started investing heavily in modernizing its film capacities.
Hartsville, SC based Sonoco Products may close 18 more plants
Sonoco Products Co. plans to close 18 plants to cut costs by $60 million. The move is in response to restructuring its business which will also eliminate 1,100 jobs. The closure is expected to be completed by the end of the year.
Sonoco Products is a large paperboard producer which makes a variety of rigid and flexible plastic packaging. Sunoco has a large high-density polyethylene film operation and also injection molds industrial products used in wire and textile applications.
Comments: In the face of poor economic conditions Sunoco Products is continuing with the restructuring of its operations. Sunoco Products is closing its non-strategic plants to decrease costs. Recently, Sunoco reported its 2003 second quarter net income of $81 million compared to net income of $9 million for second quarter in 2002. The strategy of streamlining its operations and reducing the non-strategic assets seems to be helping Sunoco in improving its bottom line.
Propylene feedstock shortage leads Philippines based Petrocorp PP plant to shutdown
Bataan, Philippines based Petrocorp, shutdown its 160,000MT/year plant due to shortage of propylene feedstock. With the propylene deliveries being cut since April, the plant had to be shut down for an indefinite period of time. The local traders of PP, who supplied the company with propylene, were its main customers.
Haverhill, MA based film extruder Vernon Plastics goes out of business
Haverhill, MA based Vernon Plastics has closed down due to tough economic conditions and high resin costs. Vernon Plastics had 225 employees and produced flexible PVC, printed film and laminated products. The company has a 175,000-square-foot plant in Haverhill and at least two calendering lines.
Imperial Home Décor Group had purchased Vernon Plastics facility in March 1998 from New York-based investment bankers Blackstone Group. Vernon was part of Blackstone-owned Borden Decorative Products Holdings Inc., which merged with Imperial Wallcoverings Inc. to create the Cleveland-based Home Décor Group.
Vernon makes PVC films for such products as upholstery, pool liners, bookbinders and outdoor advertising. The company, founded in 1951, recorded close to $45 million in sales last year, she said. Its headquarters in Haverhill was established in 1967.
Comments: Vernon Plastics as well as other PVC film and sheet producers are under continued threat from imported products, intermediate and finished, from Asia.
The Asian region has not historically been strong in the production of PVC resins, but has the advantage of lower labor costs for film converting operations. Unlike blow molded or pipe products where one would be shipping air, films and its derived products lend themselves to favorable transportation logistics and can effectively compete with films made in North America. In fact, majority of the vinyl upholstery used in North America is produced overseas, as well as products like shower curtains and other consumer goods.
DuPont Dow Elastomers new technology simplifies seal production and improves performance
DuPont Dow Elastomers has a new technology that would be economical, have cure in place (CIP) technology and have a wider selection of elastomer seal materials that is not limited to CIP silicone or polyurethane. Trademarked Vertex™ meets the critical need for high-performance, cost-effective elastomer sealing components in the automotive, electronic and industrial markets.
Vertex™ seal technology uses equipment similar to ‘hot melt’ applications and the technology provides for rapid production of an installed elastomer part with no manual fitting.
DuPont Dow offers several material compositions that can be used with Vertex™ seal technology including compounds based on DuPont Vamac® ethylene acrylic elastomers and Viton® fluoroelastomers, two well-known performers under-the-hood.
SABIC’s European Headquarters shift from London to the Netherlands
SABIC is moving its current European Headquarters SABIC Global Ltd., London to SABIC Euro Petrochemicals B.V., in Sittard, Netherlands. Beginning July 2003, the transfer is targeted to be completed by the end of the year. The shifting of the base of SABIC’s chemicals and polymers business will be accompanied by the relocation of a number of employees as well. A stronger organization, centered in Europe, along with the two world-scale production sites in The Netherlands and Germany will enable SABIC deliver its customers with an improved quality of service. The best practice business processes, notable accomplishments in R&D and a fully integrated sales force are indicative of the steady growth being experienced by SABIC. They hope to further strengthen their leading position in chemicals and polymers production and sales.
Comments: SABIC seems to be doing a diligentjob at integrating its businesses since the acquisition of DSM last year. SABIC announced second quarter net profits of $478 million, compared to $372 millionin the first quarter of this year, an increase of 29 %. First half year profits of US$ 850.6 million increased 224% over $ 262.6 million earned in the first half of 2002.
Shutdown of European PP facilities by BP and Basell
BP announced a shutdown of its 250,000 MT/year PP plant at Grange mouth, Scotland for a month long maintenance turnaround. Basell also plans to shutdown its 245,000MT/year PP plant at Terni, Italy for two-week long turnaround. Their 260,000MT/year plant at Brindisi, Italy had been shutdown for 3 weeks earlier this month. These plant turnarounds combined with improved demand led to steady PP markets in Europe.
Antimicrobial PP Fiber developed by researchers in South Korea
Researchers at Hangyang University in South Korea have managed to incorporate nano-size silver particles into polypropylene (PP) fiber to form an antimicrobial material.
The target market for this product could include a variety of application like carpets,napkins and surgical masks. Silver has been medically proven to kill disease-causing organisms but safe for human use.
Comments: PP non-woven fabrics have had problems in the form of fiber degradation, defacement and health related issues which are tied to microbial activities. These are more prevalent in applications like wet wipes, filters, towels, baby diapers, and apparel fabrics. These problems have been negated by the employment of anti-microbial treatment, the effectiveness of which depends on the type of applications. Two types of treatment are employed in the industry: (1) leachable which are undone on exposure to moisture and (2) non-leachable treatments like AEGIS Microbe Shield, which are permanent. The above breakthrough would come as a welcome relief to the PP nonwoven fabric producers who are always looking for new antimicrobial treatment. This treatment would require passing the stringent FDA as well as the EPA specifications for a few applications.
The applications we feel that would most benefit from this technology include (1) hygiene applications (baby diapers, femininecare and adult incontinence) -microbial activities are reduced by treatment to the cover stock reduced odor and baby rash (2) medical applications -products like surgical drapes, wipes, face masks, instrument wraps,stand covers, and surgical packs, (3) furniture & carpets – products like mattress pads, carpet backings and carpet fibers which are prone to perspiration resulting in fungal build up (4) filtration -microbial sludges/slimes result in a drop of filtration capacities (5) apparels- new high performance fabrics used in various sporting activitiesemploy microbial activities primarily for odor control,and (5) geotextiles – nonwovens used in soil stabilization, asphalt overlay and liners are prone to microbial activity reducing their effectiveness.
Large scale floating methanol plant to be built in South Africa
Petro SA and four international project partners, Petro World Limited, Foster Wheeler Power Systems Inc., Starchem Technologies International Ltd. and Waller Marine Inc. plans to develop a floating methanol production plant at a cost of about $700m.The plant will be located off the African west coast to produce fuel grade methanol as a clean, alternative fuel for electric power plants from natural gas. The output of the plant will be about 12,000 to 15,000 tons per day.
Comments: The site was selected because of the large availability of stranded natural gas in a stable political region and the hardware cost of construction in South Africa is about equal to those lowest levels achievable in China. Also, the petrochemical industry in South Africa is advanced and a LDPE off take license has already been signed with Exxon and several other potential agreements are pending. The driving force in this project is the use of a new scale of methanol plant made by a patented, proprietary process by Starchem Technologies International Ltd. Overall, this means the infrastructure for fuel grade methanol through MTO (methanol to olefins) is highly advanced. There are at least 4+ other MTO projects pending at other sites around the world but it is expected this South African project will be the first on-stream.
Then project leader is PetroWorld Limited of Houston, TX and it is indicated that several other major global oil/petrochemical giants are silent partners to assist this project that will alter the mainstream of the olefins business as we have known it for the past 50 years.
Details on economics and other factors are proprietary but a leading technologist in the project has told CMR that the cost of ethylene from this project will be at least 25% (by a wide margin) lower than comparable steam cracking. These economics are achieved by the use of low cost feedstock, low capex and the huge step in scale of the Starchem fuel grade methanol process.
MTO (methanol to olefins – see later articles in CMRs PO&E and NGP) has been a Holy Grail for many years but until now, with conventional new world scale plants in the range of 5000 t/d, economics were still cost inadequate until Starchem broke the barrier by up scaling to 12,000 – 15,000 t/d using aproprietary process configuration. Starchem is likely to be scaleable up even further the range of 20,000 ton per day. The “.6” capital factor rule ( new capex = (new capex/old capex) .6 is broken by Starchem, where the exponent can be in the range of “.4”.
For information on Starchem, contact Mr. Lowell Fraley at ldfraley@alltel.net or Mr. James Madden through CMR at jmadden@cmrhoutex.com.
Contact us at ADI Chemical Market Resources to learn how we can help.