Polypropylene resin prices drop sharply
North American polypropylene resin prices have dropped an average of 14 cents per pound since Oct. 1, while polyethylene prices have takena smaller, 3-cent drop since then as well.The PP price-drop ends a two-month period in which prices were flat. Prices for the material had reduced by a total of 19 cents per pound in June and July. That drop came after the market experienced a total of 37 cents in increases from January through May.
Comments: The decline in October PPresinpricesin NA –has meant 33 of the 37 cents in increases (since Q1/Q2 2011) have been erased.This price movement further reinforces the extreme volatility characterizing the regional PP markets. North American PP demand has been quite soft throughout this year, and the weakness in the market has now finally caught up with prices of propylene feedstock.
Kuraray to expand EVOH capacity in U.S.
Kuraray America will invest ¥4 billion (USD 51 million) to expand production capacity for ethylene vinyl alcohol(EVOH) resin, sold under the brand name Eval®, at its facility at Pasadena, TX. Capacity will be increased to meet rising demand, and the expanded facilities will become operational in January 2014.The Pasadena plant currently has a production capacity of 35 KTA, and it will increase to 47 KTA following the completion of the expansion.
Comments: EVOH demand has been growing steadily at around 4%, mainly driven by the growth of the packaging industry. The use of EVOH in food packaging application helps maintain food freshness and extends its shelf life. EVOH is used in various applications for its gas barrier properties and its organoleptic properties for end-use markets such as medical, pharmaceutical, cosmetic, agricultural and industrial packaging, and for environmental protection in plastic fuel systems and construction materials. EVOH is often used as a part of a multilayer plastic structure, including thin lamination films that can add barrier properties to paper, carton board, PLAs and other substrates. The capacity expansion will help Kuraray leverage upon the growing global demand for EVOH.
BASF to expand Brazil polyurethane systems and specialties business
BASF will expand its polyurethane (PU) systems and specialties business in Brazil. The production facilities for PU systems, polyols, TPU and Cellasto® will be enlarged and established at BASF’s Verbund site in Guaratinguetá.
Also, a new development and technical service center will be opened at BASF’s Demarchi site in order to create a major facility to support the company’s customer and market development activities. Due to spacial restrictions these expansions cannot be realized at the Mauá site.
Comments: BASF’s decision to expand its polyurethane system in Brazil would enable the company to benefit from the largest and fastest-growing economy in South America. Polyurethane demand is growing at 7% mainly for applications such as flexible foam, leather and rigid foam insulation. Currently Brazil has more than 300 flexible foam producers in addition to the rigid foam production, thereby ensuring future demand for the product. The country represents more than 60% of the total South American polyurethane market.
LyondellBasell’s earnings soar on strong NAolefins business
LyondellBasell reported third-quarter net income of USD 895 million, up 92% from the year-ago quarter, on sales up 29%, to USD 13 billion. Results were driven by strong performance in the company’s North American olefins business.
Operating income for LBI’solefins and polyolefins/Americas business was USD 599 million, up 34% from the year-ago quarter. Ethylene production volume increased during the quarter primarily as a result of the return to service of one of the Channelview olefins plants which had undergone scheduled maintenance activity during the second quarter. The company’s olefins and polyolefins/Europe, Asia and International segment posted operating income of USD 144 million, down 60% from the year-ago quarter, on due to lower cracker margins and lower ethylene and co-product production volumes, as well as lower margins for polyethylene.
LyondellBasell to buy back debt, to pay special dividend.
LyondellBasell has launched a tender offer to buy back about USD 2.8 billion in debt due 2017 and 2018, and pay a special dividend to shareholders of up to USD 2.6 billion. The debt, denominated mostly in dollars with a small proportion in euro, of 8% and 11%, respectively.The USD 2.8 billion tender offer covers about 57% of the 2017 and 2018 debt covered by the offer.
Comments: LyondellBasell has come a long way since the announcement of its bankruptcy in January 2009. In the past two and a half years, with effective implementation of debt restructuring initiatives, cost cutting programs/reorganizations, and the upbeat market and favorable pricing conditions, LBI came out of Chapter 11 in April 2010 and now the company is performing impressively well.
Uflex Ltd. breaks ground in Kentucky
Flexible packaging firm Uflex Ltd. broke ground on its USD 180 million plant in Elizabethtown(KY), the company’s first in the United States. The company had announced plans for the PET film plant in April.The first phase, which will cost USD 90 million, will include capacity to make 66 million pounds of PET film annually. That part of the project is scheduled to be complete by the end of 2012, and production will begin in early 2013. The plant will employ 125 in the first phase. The second phase, which is scheduled to be operational in 2014, will double the plant’s annual capacity.
Comments: The largest markets for flexible packaging are the United States and Europe, and the company, in a bid to extend its global reach is seeking to strengthen its presence in both these regions. The Kentucky plant would cater mainly to the eastern United States market –Uflex is currently contemplating setting up another unit in the northern part of the U.S to extend its reach to a wider consumer base. Uflex is based in Noida, near Delhi, and is amongst the largest manufacturers of packaging films in the world. It has plants in India, Mexico, Poland, Egypt, and Dubai. The company recently opened a USD 75 million plant in Altamíra, Mexico in 2009.
Borouge Innovation Centre gets new extrusion line
Borouge, the JV of Borealis and the Abu Dhabi National Oil Company, has ordered a complete pipe extrusion line from KraussMaffei Berstorff (KMB) for its new Innovation Centre in Abu Dhabi. Equipped with the latest tools for plastics processing and analysis, the Innovation Centre will initially focus on developing film and moulding applications as well as pipe extrusion.
More than 50 international researchers and engineers will address compounding innovations as well as solutions for the infrastructure, automotive and advanced packaging sectors. Wire and cable applications will follow later. In a collaborative approach, the Centre will work with Borouge’s own customers and Borealis’ European innovation centres as well as with local and international educational institutions such as the Petroleum Institute of Abu Dhabi and universities.
Comments: Borouge employs Borstar catalyst/process technologies for their polyethylene and polypropylene resins manufacturing. Advanced pressure pipe applications have been a major focus for Borouge and the addition of this new pipe fabrication line will definitely enhance and speed up its development. The completion of the third stage of Borouge at Ruwais in early 2014 will boost Borouge’s total polyolefin capacity to 4.5 million tonnes (LDPE, LL/HDPE, and PP). This will be the largest polyolefin production site in the world. With new and advanced technologies (Borealis factor), favorable feedstock situation (the Middle East factor) , the critical mass (by design), coupled with the clear and focused market strategy on Asia especially China, Borouge will soon be a major force to be reckoned with in the global polyolefin arena.
Russia’s Lukoil plans polymer production centre
Lukoil has launched stage one of a major project to construct what is destined to become the country’s biggest polymer production centre in the Stavropol region.On 25 October, the construction phase of a 2 billion cubic metre per year gas processing plant (GPP)was launched at Budyonnovsk. This represents the first stage of Lukoil’s gas chemical facility (GCF) located on the industrial site of the Lukoil-Neftekhim subsidiary Stavrolen.By 2017, the second stage of the GCF will include a 225 KTAethylene plant and a polyethylene production unit with a 255 KTA capacity. By then, the GPP will have a full capacity of 4 billion cubic metres of gas per year. Ultimately, ethylene capacity of the GCF is expected to reach at least 600KTA. Stage one of the scheme, due for completion in 2015, will see an upgrade of the Stavrolen site’s existing 350KTAethylene production unit, converting it to processing liquefied gases.
Primary feedstock for the chemical complex will be associated petroleum gas from the gas fields developed by Lukoil in the Russian sector of the Caspian Sea. The GCF is due to produce not only polyethylene but also polypropylene and other petro chemicals.
Comments: Lukoil’s decision to establish a polymer production centre is supported by the rapid growth of various industries across several sectors of the Russian economy. The Russian packaging market has been growing rapidly along with the construction industry –which will put pressure on the production of polyolefin products. The increase in polyethylene demand has traditionally been met with an increase reliance on imported polyethylene, thus the new polyolefin capacities will alleviate some of this pressure.
DSM opens China Science & Technology Center
Royal DSM N.V. has launched a Science & Technology Center in Shanghai, which will be the company’s main innovation base in China and, among other things, strengthen its engineering plastics R&D in Asia Pacific, especially for automotive, electrical and electronics sectors.
Along with the company’s original China Innovation Center in Jiangyin, Jiangsu province, the new center houses the full scale of DSM’s innovation capabilities in both science and technology, as well as in business development and the shaping of new ventures.
The new center is the largest engineering plastics R&D base outside the Netherlands. In addition to product and application development, it will also research market trends, client needs, and work with universities and other research institutes. The center has a total of more than 100 staff in the areas of materials sciences, chemistry and biotechnology.
Comments: This follows Dow, ExxonMobil Chemical, DuPont and a host of other companies to establish R&D centers in Shanghai –arguably the most preferred location in China for technology related R&D. This stems from the considerations of excellent human resources, desirable living conditions, big city attraction, excellent infrastructure, mild climate, and the hub status for all means of transportation (air, sea, and train).
FTC approves FPCC, Kraton JV for construction of hydrogenated styrenic block copolymer plant
The Fair Trade Commission (FTC) has approved a jointventure between Formosa Petrochemical Corp and Kraton Performance Polymers Inc. The joint venture will include the construction of a plant to produce hydrogenated styrenic block copolymer (HSBC). Located in Mailiao, the plant is expected to cost between USD 165-200 millionand to be operational by H2-2013. Since Formosa Petrochemical has more than a 25% share of Taiwan’s ethylene, propylene and gasoline markets, it had to seek permission from the FTC for the project to go ahead because of monopoly concerns.
Comments: The growth of the Chinese automotive market has fuelled the demand for hydrogenated SEBS in the region. In automotive markets,SEBS is most commonly consumed in interior applications where soft touch and soft feel properties are required.
There other growth areas for SEBS consumption include:(1) Handles and grips of tools and consumer products such as razors –driven by the growing middle class population. (2) The increase in use of hygiene products such as baby diapers, adult incontinence and feminine hygiene products. These are higher value applications where higher concentration SEBS is commonly consumed mainly as film or fiber.
SEBS is a high premium value added product and Kraton being a global leader will be able to provide market and technical expertise to the joint venture.
Sabic building first compounding plant in western China
Sabic Innovative Plastics plans to set up an engineering thermoplastics compounding plant in the western Chinese city of Chongqing, to tap into the growing electronics, computer and automotive manufacturing base. The facility is slated to open in 2013 and will be the first in west China for the Company. It’s also the latest in a string of plastics-related investments in China this year from Sabic IP and its parent, Saudi Basic Industries Corp. in Riyadh, Saudi Arabia.
The compounding plant will be located in the Chongqing Western Microelectronics Industrial Park.
Comments: Chongqing is one of the oldest industrial bases of China. The location has automotive, military, iron & steel and aluminum industry centers.
Sabic’s compounding facility will benefit the automotive market due to their long experience in this industry and will allow the company to cater to the local market. In recent years,the development of Chongqing Changan has become the region’s auto industry presenting opportunities for local and foreign players to enter the market for auto parts and car production. The vehicles produced at this location ranges from simple motorcycles, to modern passenger cars, and to heavy industrial vehicles. Automotive manufacturers at the location include ChangAn Group, Dongfeng Yu An, ChangAn Group, ChangAn Ford Mazda, ChangAn Suzuki, LiFan Automobile, etc.The location accounts for more than 15% of the total Chinese auto production.
Sabic ventures into new technology funding
Saudi Basic Industries Corp. has launched of a global corporate venture capital arm, Sabic Ventures BV, based in Sittard, the Netherlands, with the primary goal of seeking out innovative technologies and businesses that fit with the company’s global strategy.
Sabic Ventures aims to build up a portfolio of technology options for the company’s future businesses. It will do this by investing directly in start-ups as well as established operations. The new organization will both lead investment and work alongside venture capitalists.The investment sizes will depend on the stage of investment, but will generally range from USD 500,000 to USD 5 million for seed stage companies, between USD 2 million to USD 10 million for early-stage deals and between USD 5 and USD 20 million for later stage investments.
Comments: To be a global leader in chemical industry, SABIC realizes the importance of stepped-out technologies which SABIC does not have and may not develop in time –and as a result, the venture capital route may be a necessary approach. In recent years, SABIC has been relentlessly developing its leadership position via alliances, JVs, organic growth, mergers and acquisitions and now venture capital investment.
PTTGC to invest in petro-based chemical and bio-based chemical businesses in ASEAN
PTT Global Chemical (PTTGC) Plc will invest aggressively in Asean, mainly Indonesia, through all types of projects -green field, joint ventures and merger and acquisition. The new investment will focus on petro-based chemical and bio-based chemical businesses, under the investment plan until 2020. The investment plan was completed after the merger of PTT Chemical (PTTCH) and PTT Aromatics (PTTAR) and Refining. PTTGC was created from the merger.
Indonesia is in the focus, mainly because of its large the population size. The Philippines and Vietnam are highlighted as the interesting markets for petrochemical exports, with a population of nearly 200 million populations.
Comments: Thailand and Indonesia historically have an excellent relationship. PTT, owns several coal mines, green fields in Indonesia.
PTT keeps the option open for additional investments in Indonesia.
GAIL to invest USD 1 billion to acquire larger shale gas assets
GAIL India is evaluating opportunities to invest at least USD 1 billion over the next year or so to acquire larger shale gas assets, primarily in the US and Canada. GAIL could conclude a new deal in the next six months.
Comments: GAIL has been actively pursuing the acquisition of shale assets in North America this year. The Company acquired a 20%stake in Carrizo’s Eagle Ford asset in September. GAIL will spend about USD 300 million over the next few years to develop this asset and train about 10 members of its upstream team to better understand the sector.
The advancement made in shale gas drilling in North America has galvanized the global petrochemical industry. Countries like Poland, China, India, and a host of others have all indicated strong interest in acquiring this technology primarily for energy supply. Meanwhile, major petrochemical companies in North America have announced the expansion of their cracker capacities for ethylene production. Gail is a major gas and petrochemical company in India. It produces and supplies ethylene, propylene, and LLDPE and HDPE.
DuPont Teijin Films to expand production in China
DuPont Teijin Films 50-50 global polyester films joint venture between Teijin and DuPont, will increase its production of polyester film in China. DuPont Hongji Films Fushun, a JVbetween DuPont Teijin Films and FSPG Hi-Tech, will acquire a new site in the Chancheng district of Foshan, to initially construct two polyester film production lines, one for thick film and the other for thin film. The total investment in the project will be about USD 78 million.
With the new capacity, DPHJ’s polyester film production capacity at Foshan will increase from 50KTA to 77 KTA. The thick film line will be built with an inactive production line relocated from a plant at Florence, SC, which was permanently closed in February 2011. It will be used for the expanded production of products for mainly photovoltaic back sheet, and operation is expected to begin in the second half of 2012.
The thin film line will be newly constructed for the expanded production of products for mainly dry film resists and flat panel displays, and operation will begin in 2013.With the increased capacity, DPHJ expects to remain China’s leading manufacturer of differentiated polyester films
Comments: DuPont and Japan’s Teijin are both technologically advanced in PET and this is part of the re-positioning of their PET film business. Fushunis in Guangdong province –one of the most advanced provinces for polymer fabrications with superb infrastructure in place already.
New Toyota hybrid uses more bio-based PET
Toyota Motor Corp. is using a bio-based PET in 80 percent of the total interior surface of its new “Sai”gasoline-electric hybrid, increasing its use of materials from renewable sources. The bulk of the sugar cane-based PET is in non-woven carpet and seat fabric, and is an important part of its development of alternative materials.
The Sai model is currently sold only in Japan. Toyota released a previous version of it with 60 percent of its interior using bio-based PET. It also is using a sugar cane PET developed by supplier Toyota Tsusho Corp. in the trunk of its 2011 Lexus CT200h compact hybrid. Toyota also developed a polylactic acid plastic for the trunk in its Japanese market Raum compact car in 2003.
Comments: There has been some good progress in bio-based PET in both textile and bottles, the two major applications of PET. Earlier this year, Pepsi also announced the 100% bio-based PET bottles in which both components (i.e. ethylene glycol and terephthallic acid) are bio-based..
Singapore refinery fire costs Shell USD 150 Million
The recent fire and production outage at Shell’s Bukom refinery in Singapore will shave about USD 150 million, after tax, off the company’s fourth-quarter earnings. The financial impact is expected to be a combination of lost revenue and the costs of recovery.
The fire broke out at the refinery on September 28 and was extinguished one day later. Operations were halted at all of the refinery’s production units. Most of these units have been restarted, and will progressively come back up to full production during November and December.
The fire caused Shell to cut production at its Bukom steam cracker, and at several downstream petrochemical production plants at nearby Jurong Island. The company declared force majeure on deliveries of several pitcher products from those plants. Shell has lifted some, but not all, of the force Majeure and is delivering products again from the Singapore pitcher units.
Comments: Palau Buxomis a small island about three miles south of Singapore. Shell has had its major refinery and petrochemical facilities at this location for a long time. As a recent expansion, it has a 500,000 barrel per day refinery capacity and 800 KTA ethylene cracking facility there. As expected, any glitch in refinery typically generates domino effects transmitted to a series of downstream operations namely crackers, petrochemicals, chemicals, and even polymers etc. Shell is putting strong effort to restore its normal functions as quickly as possible. Working at Bukomsite, Shell has about one thousand employees as well as several thousands of contract workers.
Haldia Petrochemicals mulls two projects to beat financial crisis
In a bid to come out of its financial crisis, India’s second largest PE maker Haldia Petrochemicals Ltd (HPL) plans to invest in plants to produce Butiene-1 and Styrene-Butadiene-Rubber (SBR).
The company, co-promoted by the West Bengal government, may float a request for a proposal from global firms for project Butiene-1. The total investment for the project will be INR 2 billion (USD 40 million).
Comments: With the current economic growth in India, raw material demand for elastomeric applications is expected to show strong growth. In recent years,the Indian automotive industry has been growing rapidly leading to an increasing demand for elastomers that are commonly used in tire and under the hood applications. The country has also experienced a shortage of natural rubber and rapid increase in price–prompting consumers to look for alternate material giving advantage to synthetic rubber. With this situation, Haldia’s future SBR production would be able to provide alternate options with a cost advantage thereby meeting the growing demand.
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