Basell to license new Spherizone technology for polypropylene manufacturing
Basell announced that the Spherizone process, a new manufacturing technology that significantly and uniquely expands the polypropylene property envelope, is now available for license on a global basis.
The Spherizone process is based on MultiZone Circulating Reactor (MZCR) technology that enables the production of more uniform and custom PP products. The Spherizone process represents the next generation of PP technology, allowing producers to widen the breadth of the PP property envelope. Unlike blends obtained from reactors-in-series type technologies, the resulting Spherizone resins are claimed to have more homogenous intra-particle composition profiles leading to improved processability and final end-use properties.
According to Basell, in addition to expanded product capability, the Spherizone process offers the benefit of low capital and operating costs. The new reactor design can produce bi-modal products in a single reactor due to its ability to operate dual phases in a continuously circulating system, and the result is a polymer with extremely uniform properties throughout the reactor.
Comments: Multizone Circulating Reactor is an outgrowth of RGT (Reactor Granule Technology) with the latest process improvements. The multizone reactor essentially allows a single reactor to operate in a variety of process conditions to optimize the product stream. This represents the latest technology development from Basell since the Catalloy/Hivalloy, almost a decade ago. Unlike Catalloy/Hivalloy, Basell’s willingness to license the Spherizone at such an early stage indicates a new post Montell direction for the Basell Polyolefins.
Please refer to our analysis on Basell’s Spherizone technology that was sent on Monday, October 13, 2003.
Al-Zamil group of Saudi Arabia and Basell Holdings Middle East announce signing of a Memorandum of Understanding for a 450,000 MT/year PP plant using Spheripol
Al-Zamil Group of Saudi Arabia and Basell Holdings Middle East GmbH announced the signing of a Memorandum of Understanding (MoU) regarding the participation of Basell in a project established by Al-Zamil to produce 450,000 MT/year of polypropylene using Basell’s Spheripol process technology. The propylene feedstock for the PP plant will be sourced from a propane dehydrogenation plant based upon the UOP Oleflex process.
The propane feedstock and the manufacturing site have been allocated from Saudi Aramco and the Royal Commission, respectively. The selection of an EPC Contractor will be done in the next phase of the project. The mechanical completion of the plant is intended to be in 2007. The implementation of the project is subject to the necessary corporate approvals of both parties.
The investment for the overall Propylene-Polypropylene Complex is expected to be around US $550 million, equivalent to 2 billion Saudi Riyals.
Comments: Saudi Arabia currently has approximately 1,350 KT of polypropylene capacity. Ibn Zahr has 640 KT of polypropylene capacity in Al Jubail based on UCC’s UNIPOL technology. NIC has 450 KT of polypropylene capacity in Al Jubail based on Targor’s NOVOLEN technology. Yanpet has 260 KT of polypropylene capacity in Yanbu based on UCC’s UNIPOL technology. Teldene had tentative plans of building a 280 KT capacity polypropylene plant after 2003 in Yanbu using Basell’s Spheripol process. Teldene formed in 1997 is a joint venture between a local National Petrochemicals Company and Basell.
Al-Zamil Group’s polypropylene plant will increase Saudi Arabia’s polypropylene capacity by 33% to 1,800 KT. After completion of the plant Al-Zamil will account for 25% of the Saudi Arabia’s polypropylene capacity. This will be the first plant in Saudi Arabia to be built on Basell’s Spheripol technology.
Total demand for polypropylene in Saudi Arabia is around 140 KT growing at 7%-8% annually. Therefore most of the polypropylene production in Saudi Arabia is exported to other regions. Saudi Arabia has cost advantage due to the availability of cheaper feedstock.
Unlike Unipol, Basell traditionally took an equity position in most of the technology licensees and is in a leading position in the total pounds of PP licensed.
Formosa increasing polypropylene capacity in US to produce TPO alloys & debottlenecking PP plant in Taiwan
Formosa Plastics Corp. is adding 140 million pounds of polypropylene capacity in 2004 to produce a new line of reactor thermoplastic polyolefin alloys. The expansion will bring Formosa’s annual PP capacity in Point Comfort to about 1.6 billion pounds.
Formosa based in Livingston, NJ will use technology recently licensed from Chisso Corp. of Tokyo. The alloys will be sold under the Newcon® trade name.
Newcon alloys are composed of hard crystalline polymer segments and soft elastomeric segments. The alloys are produced with the Chisso gas-phase polymerization process and with a unique Chisso catalyst. Formosa already uses Chisso technology in half of its PP production in Point Comfort.
Injection molded applications for the new materials include: (1) bumper fascias, (2) interior and exterior autoparts, and (3) flexible parts for appliances. Other applications include: cast, blown and biaxially oriented PP films and flexible sheets.
Formosa Plastics Corp also announced its plans to debottleneck its polypropylene plant Lin Yuan in November. The current PP production capacity at Lin Yuan is 180,000 MT/year, and after debottlenecking the capacity will be increased by 50,000 MT/year to 230,000 MT/year. The plant would be shut down for about 10 days to accomplish the expansion.
Comments: Formosa has been one of the most successful PP organizations with focus on PP core markets, better manufacturing cost position and technology. The newer capacity addition of PP will provide excellent opportunities for Formosa in Reactor TPOs, PhyTPOs and soft TPO segments where the markets in general tend to be differentiated commodities.
The current Chisso process technology dates its origins back to the late 1960s when Chisso entered into a technical exchange agreement with Amoco to develop polypropylene technology. Amoco’s expertise in the production of homopolymer combined with Chisso’s expertise in copolymer technology gave birth to the Amoco Chisso process.
At the heart of this technology is the horizontal bed mechanically agitated gas phase reactor, which differentiates this PP process from all the other PP technologies. Its unique plug-flow type design allows for product differentiation and unique design capabilities. The technology is capable of making a full range of products: (1) Homopolymers with a wide range of melt flow rates and stereo-regularity, (2) Random copolymers with a wide range of comonomer content, (3) Impact copolymers with excellent balance of stiffness and impact.
Amoco and Chisso collaborated on PP technology for about 25 years in both slurry and gas phase processes until mid-1995, when the relationship dissolved. Both parties retain the rights to license the process technology. Since 1995 both licensors have worked diligently to differentiate their respective process technologies either via process improvements and/or catalyst design. BP has been able to leverage its expertise in licensing to further promote the Innovene PP process. Chisso has been less successful thus far from a licensing perspective, but continues to make significant contribution to catalyst technologies.
Slovnaft of Slovakia to build polypropylene plant
Slovakia’s biggest crude oil refiner, Slovnaft, has laid the foundation stone of a Sk5 billion (€121.4 million) polypropylene production unit. This is the most significant technological project in the ongoing modernization of the petrochemical portion of Slovnaft’s refinery.
The annual capacity of the new unit will be 255,000 MT/year of polypropylene for application in foils, fibers, injection-molded products for the automotive industry, and consumer products.
The main contractor for this project is German company Linde KCA Dresden GmbH. An integral part of the contract is a license for UNIPOL PP Process technology from Dow Chemical Company. The technology will enable the production of a wide spectrum of homopolymers and ethylene-propylene copolymers.
The project will strengthen the regional polymer alliance between Slovnaft and Hungarian chemical company TVK within the central European group MOL.
Comments: Slovnaft currently operates two polypropylene facilities in Slovak Republic. Both the facilities are in Bratislava and are based on BP Amoco’s slurry process. One of its plant has total capacity of 30 KT while the other has total capacity of 45 KT. This gives Slovnaft a total capacity of 75 KT in the Slovak Republic. The current planned capacity of 255 KT will increase Slovnaft’s total capacity by almost four and half times.
Ticona to increases UHMW-HDPE production in Germany
Ticona has planned to increase production of UHMW-HDPE at its Oberhausen, Germany site by up to 10,000 MT/year. The move is in response to growing demand for UHMW-HDPE and improving their manufacturing capabilities for an expanded product range.
The debottlenecking is scheduled to be completed in the second half of 2004. The expansion will raise total capacity at Oberhausen to 40,000 MT/year.
In 2002, Ticona opened a North American UHMW-HDPE facility in Bishop, Texas, with a 30,000 MT/year capacity. Ticona produces UHMW-HDPE under the GUR® brand.
Comments: Ultra High Molecular Weight HDPE (UHMW – HDPE) has polymer chains 10 to 20 times longer than high density polyethylene. UHMW HDP is a polyethylene homopolymer with Mw ranging from 3 to 6 million made in a slurry process using Ziegler catalyst. The longer chains give UHMW HDPE major advantages in toughness, abrasion resistance, and freedom from stress cracking. Since it is a polyethylene it shares the lubricity, chemical resistance, and excellent electrical properties of conventional HDPE. The long chains are also responsible for the difficulty encountered in processing the material on conventional molding andextrusion equipment. When heated above the melting point it becomes clear but does not flow.
In Europe only two major domestic suppliers of UHMW HDPE: Basell and Ticona. Imported UHMWPE is available from Mitsui Petrochemical Industries, DSM, BAAF (Beijing Auxiliary Agent Factory #2), PIL (Polyolefins Industries Ltd.), Polialden Petroquimica S/A, and others. Basell was the largest supplier for UHMW HDPE in North America but in 2002 Polialden Petroquimica SA purchased the UHMWPE business from Basell. The purchase did not include any plants and Basell closed its UHMWPE plant that was located at Sulphur, LA. Currently Ticona is the only local producer while Polialden exports its material to the US.
UHMW HDPE is used in gears or snowmobile drivers and impellers for snow blowers, where it provides low temperature toughness, corrosion resistance, and lubricity. In the mining industry it is used as a sliding surface in chutes and hoppers because of its excellent abrasion resistance and chemical resistance.
ExxonMobil and Qatar Petroleum sign Heads of Agreement (HOA) for LNG supply
ExxonMobil Corporation and Qatar Petroleum announced that they have signed a Heads of Agreement (HOA) to supply Liquefied Natural Gas (LNG) from Qatar to the United States for an expected period of 25 years.
The HOA covers the development of two large LNG trains with combined capacity of 15.6 million tons per annum of LNG, or about 2 billion cubic feet per day, by Ras Laffan Liquefied Natural Gas Company Limited II (RasGas II). The feed gas for these trains will be sourced from Qatar’s giant North Field, which has proven natural gas reserves in excess of 900 trillion cubic feet (tcf). More than 26 tcf of the reserve will be dedicated to this project. Downstream of the plants the parties will be working to acquire necessary transportation capacity and developing regasification capacity in the United States. Total estimated investment including ships is about $12 billion.
The project is the largest LNG import project that has been announced for supplying natural gas to the United States, and makes Qatar Petroleum and ExxonMobil leaders in supplying the important U.S. natural gas market. Delivery of LNG to the United States is projected to begin in 2008/2009, and will likely extend for more than 25 years. Several locations are currently under evaluation fordeveloping a receiving terminal, and we expect the permitting process will be initiated in the fourth quarter of 2003.
The LNG trains will be built at Ras Laffan Industrial City in Qatar by RasGas II, a joint venture between Qatar Petroleum and ExxonMobil that has been operating since 2001. Two existing trains currently produce more than 6 million MT/year of LNG and two additional trains of 4.8 million MT/year each are under construction. Qatar Petroleum will have a 70 percent equity interest in the project, and ExxonMobil 30 percent.
In his statement at the HOA signing ceremony, Minister Al-Attiyah said, “This important agreement to supply LNG to the U.S. markets is a major achievement for the State of Qatar and highlights another successful joint effort between Qatar Petroleum and ExxonMobil. The strength of Qatar Petroleum and ExxonMobil establishes an ideal partnership to meet the challenge of supplying the growing energy requirements of the United States. This long-term LNG supply agreement builds on Qatar’s valued and strong relationship with the U.S.
Comments: This could have an impact on the polyolefins in the future, especially with organizations that use natural gas as the raw material. ExxonMobil at present has not ruled out the possibility of value added products from LNG including PP.
Thai investment firm acquires stake in Indonesian olefins producer, Chandra Asri
Bangkok based Glazer & Putnam Investment firm acquired Indonesian Bank Restructuring Agency’s (IBRA) 25.9% stake in PT Chandra Asri.
Chandra Asri’s plant at Cilegon, Indonesia is the country’s only steam cracker, with production capacity of 520,000 MT/year of ethylene. Chandra Asri is the main supplier of ethylene to polyethyleneproducer PT Peni (Merak, Indonesia), which BP sold earlier this year to investment firm Indika Group (Jakarta).
Comments: Chandra Asri’s plant was constructed in the early 1990s with the financial backing of a consortium of Japanese investors led by Marubeni and several Indonesian shareholders including Prajogo and Bambang Trihatmodjo, a son of former President Soharto. State-owned IBRA obtained its stake in Chandra Asri after the Asian financial crisis of the late 1990s forced Chandra Asri into bankruptcy. Prajogo still holds 49.5% of Chandra Asri via the investment company, and the Japanese companies have the rest.
Since inception Chandra Asri has not been profitable. During Asia’s economic meltdown in 1997, the company ran into serious difficulties due to reduced demand for its products. Due to the above factors the company was unable to repay its loans to Indonesian state-owned banks.
IBRA was established in 1998 to resolve the domestic banking crisis that resulted from the economic crisis. IBRA assumed Chandra Asri’s debts and took a stake in the company.
Kuraray to increase ethylene vinyl alcohol copolymer capacity in US
Kuraray announced that it had firmed up plans to expand capacity for its ethylene vinyl alcohol (EVOH) copolymer EVAL in the US. The company plans to continue with the project to build a new facility with capacity between 12,000 and 24,000 MT/year, which would give it a maximum capacity of as much as 47,000 t/y. Detailed plans will be finalized by the end of 2003.
Comments: Kuraray started work to double production capacity of its EVOH copolymer at its Eval Europe subsidiary at Antwerp in May, 2003. Now the company has decided to increase EVOH capacity in United States as well.
Kuraray has a global EVOH capacity of about 45,000 MT at manufacturing sites located at Antwerp, Belgium; Okayama, Japan; and Pasadena, TX.
EVOH is the best currently available barrier material. The development of EVOH as a barrier material essentially opened up several innovative markets including plastic gas tanks, plastic beer bottles, shelf stable meals, MREs etc., On a performance basis, EVOH has better barrier properties than PVDC. Since, EVOH is highly hygroscopic, it has to be protected in the multiple layer structures with tie-layer resins. For a while, most of the growth in tie-layers was associated closely with the growth in the EVOH markets.
The major disadvantage of the EVOH based composite structures is their lack of recyclability.
Singaporean company Singpu Chemicals evaluates PVC project in China
Singapore based company Singpu Chemicals announced that it is studying plans to build a polyvinyl chloride (PVC) plant at Taixing, China. The project would be completed in 2005-06 and will be funded partly by the proceeds from a recent initial public offering of shares on the Singapore stock exchange.
The PVC plant would receive chlorine from Singpu’s chlor-alkali unit at Taixing. The company will complete an expansion of its chlor-alkali unit from 100,000 MT/year of caustic soda, to 150,000 MT/year.
Comments: Singpu Chemicals is a Singapore-incorporated chemical company with operations based solely in the People’s Republic of China. The company is involved in the manufacture of chemical products such as caustic soda, chlorine, hydrogen, aniline, nitrobenzene, p-nitrochlorobenzene, o-nitrochlorobenzene, and hydrochloric acid.
The company had reported 87% increase in its net profit in the first half of 2003. Singpu Chemicals has increased capacities of its products including caustic soda (capacity increased from 47,500 MT/year to 97, 500 MT/year) and aniline (capacity increased from 23,000 MT/year to 53,000 MT/year). The demand for PVC is increasing in China and hence the company is evaluating construction of a PVC plant to capture the growing market.
Technip to construct PVC plant in China
Technip received a contract worth $50 million from Cangzhou Cang Hua Chemical Industry (CCI; Cangzhou, China) to build a previously announced vinyl chloride monomer (VCM) and polyvinyl chloride (PVC) complex at Cangzhou.
The complex will use Technip’s VCM and Chisso’s PVC technologies, and will have production capacities of 400,000 MT/year of VCM & PVC. The complex is scheduled for completion by 2005.
Berry Plastics’ deep draw polypropylene drink cups on the market. They Said It Couldn’t Be Done…
Polypropylene drink cups have been on the market for many years, but recent technology developments from Berry Plastics is changing the game. The industry had said that polypropylene could not be drawn deeper than 4,” however, Berry Plastics has developed a drink cup line that draws just over 8” deep, which translates to sizes up to 44oz.
Historically, Berry Plastics has been involved in injection molding plastic packaging concepts for the consumer products and retail industry. In the past five years Berry Plastics’ drink cup division has been addressing the need for a product line that can compete more aggressively with paper, foam and polystyrene thermoform drink cups.
Berry’s engineering team identified polypropylene as the preferred material for deep draw thermoforming cups. They chose this material over the more widely used polystyrene for its increased performance properties, such as durability, crack resistance, and cost. PP also offers a bright future in terms of its technology development, specifically around clarity and processability.
Investing in this new material has given Berry Plastics the ability to “pull the curve” and bring innovative solutions to the fountain industry. Retailers are realizing that polypropylene drink cups are a cost effective alternative for fountain programs vs. traditional plastic cup materials. Polypropylene also addresses the increasing demands of the on-the-go consumer for a more durable and leak proof cup.
QSR & C-Store customers alike find the value in a drink cup that has such remarkable “reusable” properties and is competitively priced. Since Berry Plastics introduced this product line to the market place, they have secured promotional and every day drink cup business from many global retailers. The company has also invested in capacity expansion to cope with the increasing demand.
Comments: They said it couldn’t be done, and for the last 25 years in the plastic cups industry, polypropylene cups were an unreachable mountain top. Now Berry Plastics has put the thermoformed PP cups into mass circulation. In Houston, both Target and McDonald are using the deep draw 20 oz. cups for promotional programs.
The giant disposable products firm Sysco commented that “green sells” so they expect that PP cups will actually command a premium over comparable items made from other polymers. Berry is now working on clear versions of their cups and expects to have a commercial product by early next year. The resin used will be procured from domestic suppliers. The total plastic cups market is about 1 billion pounds with polystyrene having the largest share, and PP having 8% share. This might change significantly if the thermoformed PP cups become successful.
EPA files 13 complaints against OxyChem PVC plant
PVC producer Occidental Chemical Corp. might be the first facility targeted by a new Environmental Protection Agency review of pollution in the plastics industry.
The EPA announced on Oct. 2 that it was issuing 13 complaints against Occidental’s Pottstown plant for vinyl chloride emissions that violated the Clean Air Act, the Clean Water Act and the Resource Conservation and Recovery Act. Vinyl chloride (VC) is a carcinogen.
EPA alleges the company released waste water with vinyl chloride in excess of legal limits and failed to demonstrate that it was meeting vinyl chloride limits in effluent and did not report a May 2002 vinyl chloride release immediately.
EPA also indicated that Occidental under-reported hydrochloric acid emissions in 1997 and VC and ammonia emissions in 2001. Although the complaint did not specify a financial penalty, the company faces fines of up to $27,500 per violation per day.
The program targets the plastics foam and resin manufacturing industries, along with industrial organic chemicals. It aims to reduce emissions of VC and five other toxins.
Comments: Oxychem is the second largest emitter of VCM nationwide and Pottstown, NY was the center of attraction in the past of higher than normal public health related problems.
The current case is expected to continue on a “litigation track” unless Oxychem enters a negotiated settlement.
Oxychem is not new to environmental settlements. Oxychem is the off-shoot of the Hooker Chemical Company of the early 80s – Love Canal, Dioxine issues… Hooker Chemical Company, by changing its name to Occidental Chemicals in the mid-80s successfully distanced itself from the Love Canal and other environmental problems – considered a stroke of genius in the public relations field.
Polimeri Europa to sell its Baytown, TX TPE plant and five other facilities
Polimeri Europa announced its plan to sell its Baytown, TX thermoplastic elastomers plant and five other facilities. ENI, the parent company of Polimeri Europa had put the elastomers business for sale a year ago but could not find a buyer. According to the company, there are potential buyers for five of the six units.
The company plans to concentrate its elastomers business at its Ravenna, Italy site only. The Ravenna site produces styrene-butadiene, and butadiene rubber, TPEs and lattices.
Comments: ENI has decided to sell its elastomers operations at six different locations including: (1) Baytown, TX, (2) Ferrara, Italy, (3) Porto Torres, Italy, (4) Hythe, UK, (5) Grangemouth, UK, and (6) Champagnier, France.
The elastomers business is part of Polimeri Europa (Milan), which together with Syndial (Milan) the former EniChem—comprise of ENI’s chemicals operations.The elastomers operations were carved out as a separate business for divestment. It had sales of €650 million ($741 million)/year and competes with Bayer, DSM, DuPont Dow Elastomers, Goodyear, JSR, and Kraton. Polimeri’s elastomers operation has 10% of the European elastomers market outside Italy, where it has 34%. It also has 2% of the market in North America.
After failing to find a buyer for the elastomers business as a whole, the company decided to retain its Ravenna, Italy site and sell the rest of its elastomers facilities.
The major business sectors of Enichem in North America include SB rubbers and SB copolymers. With current sale of Kraton SB copolymers pending, Enichem’s SB copolymers are also in the center of lot of speculation on possible owners.
Any of the existing SB copolymer suppliers planning to acquire Enichem facilities will have to deal with the potential FTC issues. We covered the potential opportunities in our recent FlexPO conference.
Noveon buys custom TPU supplier Thermedics from Viasys Healthcare Inc.
Noveon acquired certain assets of Thermedics® Polymer (Thermedics), a manufacturer of thermoplastic polyurethane (TPU), from VIASYS Healthcare Inc. This acquisition will expand Noveon’s Estane® TPU product lines to the full range of aliphatic and aromatic TPUs, both of which are used in a variety of extrusion and injection molding applications.
Thermedics is a custom manufacturer of thermoplastic polyurethanes supplying different grades including medical grade urethanes, optical grade Tecoflex®, and industrial grade aliphatic urethanes.
Noveon is headquartered in Cleveland, OH, with regional centers in Brussels, Belgium, and Hong Kong. VIASYS Healthcare Inc. is a global, research-based medical technology company headquartered in Conshohocken, PA.
Noveon manufactures TPUs at plants in Avon Lake, OH, and Oevel, Belgium. The firm’s specialty materials unit also makes chlorinated PVC and cross-linked polyethylene. Specialty materials account for about 40 percent of Noveon’s sales, which totaled about $1 billion last year.
Comments: The thermoplastic polyurethane (TPU) markets can be classified into the aromatic and the aliphatic variety of TPU. The aliphatic TPUs constitute a smaller volume of the overall TPU market but command a high margin due to their ability to remain clear (no yellowing on exposure to UV or radiations) which is vital to medical and glazing applications. Noveon (Formerly BF Goodrich) produces mostly aromatic TPUs while Thermedics produces mostly aliphatic TPUs.
Noveon currently produces thermoplastic polyurethanes and alloys for broad applications, including wire and cable coverings, fabric coatings, hoses and tubes, mass transit, film and sheet, adhesives and binders and molding applications. Major brands include: Estane® thermoplastic polyurethanes, Estaloc® reinforced engineering thermoplastics, and EstaGrip® thermoplastic elastomers.
Thermedics currently participate in the biomedical, security glazing, automotive & transportation, breathable fabrics, specialty fibers and miscellaneous markets. Thermedics entered the TPU biomedical markets with the introduction of Tecoflex® (Aliphatic polyether polyurethanes) in 1983 and have expanded their product offering with Tecothane® (aromatic polyether-based polyurethane), Carbothane® (aliphatic polycarbonate-based polyurethane), Tecophilic® (high moisture absorption aliphatic polyether-based polyurethane) and Tecoplast® (aromatic polyether-based polyurethane).
The acquisition gives Noveon an access to medical, glazing andvarious industrial applications in which Noveon was not actively involved. These applications are considered as specialty aliphatic TPU markets. Noveon had earlier acquired French TPU compounder Gemoplast SA in October 2002.
ExxonMobil to purchase stake in Russian energy giant, YukosSibneft?
ExxonMobil is negotiating to buy a substantial stake in Energy and Petrochemicals Company YukosSibneft based in Moscow. ExxonMobil is planning to buy about 40% stake in YukosSibneft and the company might be willing to pay up to $25 billion for 40% or more of YukosSibneft. ExxonMobil is competing with ChevronTexaco, which is discussing the possibility of buying 25% of YukosSibneft.
YukosSibneft is one of Russia’s biggest oil and gas company and the fourth-largest worldwide. The company was formed recently by the merger of Yukos and Sibneft.
Huntsman looks for new sources of natural gas
Huntsman is looking to establish direct purchasing relations with natural gas and gas liquids suppliers for its U.S. operations. Huntsman is trying to align themselves with a natural gas producer.
According to Huntsman there is a huge difference between what the natural gas driller makes and what they pay. Huntsman currently purchases about $200 million/year of gas, based on $3-$4/million BTU prices.
Comments: In the last three years natural gas prices have increased dramatically and this has impacted the plastics industry adversely. All the major participants in the industry are taking actions to negate the effects of increasing natural gas prices. Some of the actions taken by suppliers include: (1) shutdown of inefficient capacities, (2) switching the flexicrackers from natural gas based ethane to naphtha, (3) rationalizing global operations to take advantage of overseas cheaper natural gas, and others.
Huntsman in its efforts to decrease the impact of increasing feedstock costs is looking to establish a relationship that translates into cheaper supply of natural gas. Other suppliers affected by the changing market conditions could take similar actions.
BP chief calls for switching ethylene pricing mechanism
BP claimed that the major barriers to the efficient operation of the European petrochemicals market were proliferation of polymer grades and a “dysfunctional” system of ethylene prices.
According to BP, customers do not differentiate between different grades of polymers. BP also believes that besides raising costs unnecessarily, the large number of grades has prevented the establishment of a limited number of market prices for polymers, or “prices that market players can trust, prices that provide a basis for risk management [and] can be relied upon over time for investment decisions.
Iain Conn, BP’s CEO reiterated his company’s belief that Europe needs to switch from a quarterly to a monthly system of ethylene pricing. According to Conn, ethylene producers are acting illogically by trying to run a quarterly mechanism when naphtha, the region’s primary ethylene raw material, is priced essentially in real time and polymer prices are set on a monthly basis.
Comments: The plastics pricing is in a chaotic situation. A considerable portion of the North American plastics pricing is based on “indexing” based on three to four price services, which in turn get their prices from suppliers and major end users on an anonymous basis. The price indexing services report the prices without accountability, to protect the confidentiality of the price information providers. Most pricing services claim, the prices are based on a selected “panel”, however, the panel size, comnposition, accuracy are never questioned by the suppliers and the end use customers alike.
The resin pricing is driven by: (1) end use demand, (2) inventories, (3) current and potential supply disruptions, (4) suppliers’ plans, (5) suppliers’ anticipated problems and (6) impact of imports.
The current pricing system can at best be described as chaotic and the price indexing organizations provide the prices to the suppliers and major end users and they also collect the same for them. In an oligopsonistic market this is cutting close to price collusion. The price indexers have a tremendous influence on price setting – thus tails are wagging the dogs.
We are currently in the process of developing a detailed analysis of the price setting mechanisms and the use of indexes for price setting in North America. Look for our analysis in the upcoming New Generation Polyolefins – Bimonthly Review
DuPont Dow introduces new fluoroelastomers based on Advanced Polymer Architecture (APA)
DuPont Dow Elastomers introduced Viton® Extreme™fluoroelastomers based on Advanced Polymer Architecture (APA) designed to meet the demanding performance requirements currently not met by traditional high performance elastomers.
According to the company, Viton® Extreme™fluoroelastomers have several properties including: (1) thermal resistance, (2) unique resistance to chemicals and to environments that have historically exceeded the performance of conventional fluoroelastomers. Viton® Extreme™ products allow specifiers to confidently select parts used in highly caustic applications.
Viton® Extreme™ TBR-605CS (developmental polymer VTR-8802), a new TFE/Propylene copolymer, utilizes APA technology and a new bisphenol cure site. Compared to existing TFE/Propylene polymers, TBR-605CS has several advantages such as: (1) improved processing and lower volume swell in hydrocarbon oils, (2) superior compression set resistance, (3) good metal adhesion and (4) good steam resistance.
Viton Extreme™ ETP-600S is an upgrade to ETP-900 with significantly improved processing and end-use properties while maintaining the excellent resistance to acids, hydrocarbons and low molecular weight esters, ketones and aldehydes. Viton® Extreme™ ETP-600S has low-temperature flexibility (Tg-10°C), and is inherently resistant to base attack and volume changes in highly caustic solutions, amines and hot water.
Comments: DuPont Dow Elastomers had launched new grades of Viton in 2002, based on its APA technology. The new products were introduced as a result of a $50-million investment in polymerization and curing technology at DuPont Dow’s site in Dordrecht, the Netherlands. The Viton grades based on APA technology are priced 5-10 percent higher compared to regular Viton grades.
Kevlar inventor inducted in women’s hall of fame
Kevlar aramid fiber Inventor Stephanie Kwolek, was inducted into the National Women’s Hall of Fame in Seneca Falls, NY on October 4, 2003. Kwolek had joined DuPont in 1946 as a laboratory chemist in Buffalo, NY and spent 40 years with the company, mostly at its experimental station at Wilmington, DE.
According to DuPont, nearly 3,000 law enforcement officers have survived potentially fatal or disabling injuries because they were wearing body armor made from aramid fiber, and all US combat soldiers have worn Kevlar helmets since the 1991 Gulf War.
Colortech buys Eastman’s polyethylene color concentrates business
Colortech Inc. (Morristown, TN), a subsidiary of Polyplast Muller GmbH, and Eastman Chemical Company jointly announced that Colortech purchased Eastman’s polyethylene color concentrates business.
Colortech operates compounding plants in Morristown, TN, and Brampton, Ontario, Canada. Eastman sold its polyethylene color concentrates business because it did not meet Eastman’s profit margin expectations.
Eastman used to manufacture polyethylene color concentrates at Kingsport, TN. The major end use markets for polyethylene color concentrates include flexible packaging and consumer goods such as plastic bags and containers.
Comments: Colortech is a supplier ofb polymer masterbatches for different polyolefin applications including brown ilm, geomembrane, extrusion coating, injection molding, blow molding, sheet and profile extrusion, and synthetic fibers. Colortech’s parent company, Polyplast Muller GmbH (PPM), is headquartered in Straelen, Germany. In mid-1996, Colortech became a member of the Polyplast Muller group of companies. The company’s manufacturing facilities are located in Brampton, Ontario, and Morristown, TN.
Pactiv buys amorphous polyethylene terephthalate and polypropylene packaging business from Rock-Tenn
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 20/22 of Issue 22 – Volume 1 21. Pactiv buys amorphous polyethylene terephthalate and polypropylene packaging business from Rock-Tenn Pactiv Corp (Lake Forest, IL) has announced an agreement to purchase the plastic packaging business of Rock-Tenn Company (Norcross, Georgia) for $60 million. The transaction is expected to close in October 2003 and is subject to normal regulatory approvals and customary conditions to closing.
The packaging business of Rock-Tenn incorporates the manufacturing of amorphous polyethylene terephthalate (APET) and polypropylene (PP) for food packaging. Two manufacturing facilities located in Conyers, GA and Franklin Park, IL are involved in the transaction.
Comments: Pactiv is one of the leading packaging companies in North America. It has grown rapidly over the last few years through acquisitions. In August 2003, the company had acquired the remaining 30% assets of Mexican thermoformer Central de Boisas SA de CV, giving it complete ownership of the company. Pactiv’s acquisition of Rock-Tenn brings new confectionery and fresh-cut products to its packaging business.
The company entered APET thermoforming business through the acquisition of Winkler Forming Inc. in 2002. Pactiv had gained the ownership of two manufacturing facilities, one in Santa Fe Springs, CA, and the other in Bridgeview, IL through the acquisition.
Britton to sell stake in Hungarian PVC compounder Pannonplast
Britton Consulting Kft, the subsidiary of US-based investment group Britton LLC, has announced its plan to sell its shares in Hungary’s Pannonplast Muanyagipari Rt. Pannonplast is the country’s biggest plastics and PVC processing group.
Britton’s reasons for the move included a recent call for an exceptional general meeting to be held on Nov. 3, 2003 from one of Pannonplast’s other shareholders, which was “causing further legal uncertainties” in Pannonplast, according to Britton.
Mitsubishi Chemical plans to build 3,000 MT/year biodegradable plastic capacity
Mitsubishi Chemical has announced plan to scale up its environment-compliant biodegradable plastic operation to 3,000 tons. The plastic is a petroleum-derived polyester resin which was launched in April 2003.
According to Mitsubishi, it has now perfected the technique enabling degradation speed to be adjusted and hence the company plans to scale-up the production. Lowered costs conferred by advantages of scale will secure a leading position for the product in the local biodegradable resin market, estimated at 10,000-20,000 tons.
Comments: Biodegradable plastics, first introduced by Dow-Cargill with the PLA polymers has a long growth and excellent potential for the future.
Mitsui develops biodegradable optical disks comparable with polycarbonate disks
Mitsui Chemicals has developed an optical disk using a plant-derived biodegradable resin with corn as raw material. Mitsui Chemicals was able to develop the world’s first optical disk from biodegradable resin jointly with the Sanyo Electric group’s optical disk manufacturing affiliate Sanyo Mavic Media.
According to Mitsui, durability is at the same level as the polycarbonate (PC) disks currently in common use, and Sanyo Mavic is scheduling commencement of volume production for the end of this year.
Alcoa and Dayton Technologies team up to develop plastic-wood products for composite decking & railing
Alcoa Home Exteriors Inc. and Dayton Technologies LLC have teamed up to enter the market for composite decking and railing. Dayton Technologies plans to construct one plant in Monroe, OH to handle engineering, material science and extrusion for the high density polyethylene and wood-flour products.
The product will be branded under Alcoa and will introduce its deck and railing products in early 2004.
Alcoa and Dayton have a history together. In 1997, Alcoa sold Dayton to Deceuninck NV of Hooglede, Belgium. Dayton still extrudes profiles for Alcoa’s Mastic window line at its 550,000-square-foot headquarters in Monroe.
Comments: Although Wood Plastic Composites (WPC) have been around for several decades, it was not until pioneers like American Woodstock started using WPC in automotive applications in the early 1980s that this technology became commercially viable. The popularity of WPC soared in the 1990s when it was introduced into the decking market by Trex (former Mobil division) and Advanced Environmental Recycling Technologies. Since then the development of licensable technology has helped to increase market participation. Although there has been an influx of participants in the WPC market in recent years, the market continues to be dominated by a handful of players, the largest being Trex.
WPC typically have wood to plastic ratio ranges between 30-70% with 50:50 being the most common. Types of plastics used include (1) Polyethylene, (2) Polypropylene, (3) PVC, (4) PS, (5) ABS, and others. The most common resin continues to be polyethylene, recycled and virgin, followed by PVC and PP. The critical market driver for polyethylene in WPC continues to be decking. Usage of PP is driven by the automotive sector, while window manufacturers are driving the growth of PVC in WPC.
Production of WPC products comprises the following steps: (1) Drying of wood flour to reduce moisture content, (2) Compounding with plastic and additives, (3) Pelletizing (optional), (4) Forming. Single and twin screw extruders are widely used. The former is popular with manufacturers who buy compounded pellets and form the products. The latter is used by manufacturers with internal compound capabilities.
The use of wood composites into applications such as flooring, molding, furniture & cabinet arenas is increasing constantly. The different advantages of wood composites include: (1) no finishing required, (2) color can be added during processing, (3) ease of molding, (4) product consistency, (5) improved stiffness to weight ratio, (6) little or no moisture absorbency, and (7) resistance to rot & insects.
Dayton Technologies is a subsidiary of Belgian company, Deceuninck Plastics Industries. The company is a supplier of construction products such as door systems, window systems and others.
Huntsman completes $375 million bond offering
Huntsman has completed a $375-million bond offering. The company will use $310 million of the proceeds to reducebank debt and pay expenses, and will use the remainder to increase its overall liquidity.
The seven-year bonds carry an interest rate of 11.875%. Credit Suisse First Boston (New York) and Deutsche Bank (New York) were lead managers of the offering. Huntsman indicated that the reduction of its bank debt will negate the need to make further bank debt repayments until July 2005.
Ashland to eliminate 500 jobs under Top-Quartile Cost Structure (TQCS) program
Ashland announced that it will take action to reduce selling, general and administrative expenses by $75 million a year in fiscal 2004. The company will implement a Top-Quartile Cost Structure (TQCS) program under which it will eliminate 500 employees in the company. Eighty percent of the current reductions will be completed before Nov. 30, 2003.
This amount is in addition to $25 million in annualized savings already achieved from a program announced in October 2002. That program included job cuts, a reduction in the number of corporate jets, closing its London office, narrowing corporate contributions, and reducing expenses for corporate events.
Ashland plans to establish a reserve in the fourth quarter for an estimated pre-tax loss of about $9 million on non-strategic assets within its APAC construction group that have been identified for divestment, raising total charges to $27 million for the quarter. Those charges will be offset by a gain of about $80 million from the recent sale of its electronic chemicals business to Air Products.
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