Chemical Week Magazine June 2005 eBook

Transcription

MONSANTO Takes Stake in Solutia Reorganization • ALGERIA Eyes Petchem Projects •
www.chemweek.com
INNOVENE Plans Investment in Saudi Arabia
The Worldwide News Source for Chemicals Makers and Processors • June 15, 2005 • $12.00 U.S., $15.00 elsewhere • PMA 40051509
Distribution
Possible Roadblocks Ahead
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Date: 2005.06.17 04:04:08 +08'00'
contents
THE WEEK: June 15, 2005
Volume 167 • Number 20
COVER STORY
19 Distribution: Potential
Roadblocks Lie Ahead
Chemical distributors say their financial performance
improved in the past year, helped by higher prices.
Demand was strong in North and South America,
and some of Europe, but volume growth was slow in
major European markets. Many financial challenges
remain, including rising regulatory costs.
Clear the air with
Products!
www.chemweek.com
Newsbriefs
6
Apollo launches Hexion
Specialty Chemicals •
OxyChem buys Vulcan
Chemicals • ISP to shut
San Diego alginate plant •
Cargill to build biodiesel
unit • Private equity firm
tightens grip on Elementis •
BASF is silent on CIba
takeover reports ... buys fine
chemicals firm
Top of the Week
8
8
Monsanto takes stake in
Solutia reorganization
Innovene plans petchem
complex in Saudi Arabia
Compliance with the Clean Air Act
demands innovative applications from
a knowledgeable source.
13 Analysts project dim
prospects for asbestos bill
EUROPE/MIDEAST
14 Algeria plans massive
petrochemicals investment
14 EU mulls hike in energy
efficiency
ASIA/PACIFIC
15
15 LG Chem expands olefins,
VCM, acrylics in Korea
New Construction Projects
16 Linde-Sazeh-Hyundai consortium lands Iran’s
olefins 11 • Oman Methanol to build second
plant • Ar-Razi awards contract to Mitsubishi
UNITED STATES/AMERICAS
9
10
10
11
12
12
12
13
Commodity weakness drags
down earnings estimates
PolyOne trims earnings
estimate on flat demand
Kerr-McGee TiO2 unit
files for IPO
Pioneer to sell land
for cash
Growers brace for Asian
13
soybean rust
Chemical industry M&A
activity picks up
Mexico’s Phoenix project
may face problems
Grupo Imsa to relocate U.S.
coatings unit
BP incident sparks review of
contractor safety statistics
14
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Heavy Industries • LG Chem, Dow mull expansion of polycarbonate venture • Degussa ups
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Copyright 2005, Solvay Chemicals, Inc. All Rights Reserved.
100
contents
CW100
33 Most of the Biggest Producers End 2004
on Strong Note
Sales and profits improved in 2004 for most chemical companies in the
CW100. Strong demand lifted profits, as selling prices rose faster than
energy and feedstock costs. Many basic chemical companies returned to
the black, as well as fertilizer producers.
www.chemweek.com
Innovation
Basic Chemicals & Plastics
25 Celanese and Dow revisit catalytic route
from ethane to ethylene
29 Styrene settlement splits market
29 Ineos boosts phenol
production
30 CW Price Report
Regulatory
31 Groups say Brown will
hinder environment laws
31 Harvard study finds DEHP in 31
neonatal infants
CW75
25 DuPont and CMR roll out novel technologies
CW75 Index*
Pharmaceuticals & Fine Chemicals
27 U.S. firm produces low-cost antibodies
from transgenic eggs
JUNE 8
144.93
WEEK AGO
145.15
QUARTER AGO
158.75
YEAR AGO
125.15
*Jan. 1, 2002 = 100.
36 Chemical stocks flat after the Fed
indicates that interest rates might rise
Departments
5
27 India turns attention to ethical drugs
Specialty Chemicals
Viewpoint
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Features
34 Marketplace
28 Powder coating market grows
28 Digest: Flame retardant prices rise • Akzo to
sell pieces of Intervet
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Chemical Week, June 15, 2005
3
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Great Expectations
It’s been a difficult few years for trade associations in general, but particularly for ACC. As firms
have cut costs and improved efficiencies, their trade associations have been expected to do the
same, but without compromising their lobbying abilities. ACC was already facing criticism for
its slow pace of restructuring when a series of issues came to the fore on which certain members
had opposing positions, including methyl tert-butyl ether and natural gas price controls. Its lobbying efforts were weakened, several member firms quit, and ACC’s president and CEO, Greg
Lebedev, was forced to resign last year.
The organization has clearly made some headway since then,
particularly in getting consensus from members on key lobbying
efforts, under temporary leader Tom Reilly, a former chairman
of ACC’s board of directors, who was brought out of retirement
until a permanent replacement for Lebedev was named. Problems
remain, however. Some members complain that the “Essential 2”
advocacy effort has taken too long to get launched. They say
that more restructuring needs to be done, and that ACC needs
to demonstrate more clearly the benefits promised under its value
proposition.
The man with the task of solving those problems is Jack Gerard,
formerly head of the National Mining Association (NMA), who
was recently named ACC president and CEO. His advocacy
skills have already been lauded by ACC’s board, but it is Gerard’s
operational skills that will be just as important. At NMA he was
credited with boosting lobbying efforts at the same time as bringing about a more than 50%
reduction in staff. ACC’s staff has already been cut from 213 at the time of its merger with the
American Plastics Council in 2002, to 143, and its budget has been trimmed by 20%, $73 to
million, but some members say there are more efficiencies that can be achieved.
“I will approach this job as a businessman,” Gerard told attendees at ACC’s annual meeting
at the Greenbrier resort at White Sulphur Springs, WV last week. “I won’t promise you what
can’t be delivered.” Gerard says he plans to “focus resources to make priorities happen,” but
declined to comment on any specific actions until after his official start date on July 1. The goal
for any trade association today is to become less bureaucratic, and shift its culture “from one of
conducting activities to one of delivering results,” he says. “Being new, I’m not imprisoned by
the way things were done in the past.”
Similar changes are taking place at other trade associations. Former ACC president and CEO
Fred Webber, who now runs the Alliance of Automobile Manufacturers (Washington), recently
told Washington newspaper The Hill that companies these days “expect associations to run like
businesses. That wasn’t always the case; today we are held accountable.” Whatever improvements Gerard brings to ACC, it will have to be in fairly short order. Several CEOs tell CW they
have great expectations for the association under Gerard’s leadership, but that they want to start
seeing results by the end of the year.
—ANDREW WOOD
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5
newsbriefs
■ Cargill to Build Biodisel Unit
Cargill says it will construct a 37.5-million
gal/year biodiesel plant, and a 30-million lb/
yr glycerin refinery next to its existing soybean crush facility in Iowa Falls, IA. Financial
terms were not disclosed, and the deal is
pending regulatory approval. Construction
is expected to start this summer, with production beginning in April 2006, Cargill
says. The company says it plans to produce
biodiesel and USP-grade glycerin exclusively
from soybean oil when the plant first opens,
and eventually expects to be able to use animal fat and waste grease for biodiesel.
■ DuPont CTO Wins Heritage Award
DuPont senior v.p. and chief science and
technology officer Thomas M. Connelly
received the Commercial Development
and Marketing Association’s (CDMA)
2005 “Award for Executive Excellence”
as part of the Chemical Heritage
Foundation’s
(CHF;
Philadelphia)
Heritage Day 2005 ceremonies last week.
The award is given
annually to an individual who has
made an outstanding contribution in
the field of commercial
development
and marketing in
the chemical industry, CDMA says.
Connelly: Excellence
award winner.
Also at Heritage
Day, the Chemist’s Club awarded the
2005 Winthrop-Sears Award to Herbert
Boyer, biochemist, genetic engineer, and
cofounder of Genentech.
■ Univar Expands in Poland
Univar says it has acquired Mapol (Warsaw),
a distributor serving the brewing, detergent, enzymes, and food and beverage
markets in Poland for an undisclosed sum.
Univar has an existing Warsaw-based distribution operation in Poland. Meanwhile,
many major distributors are acquiring
smaller distributors to build up their regional
networks (p. 19).
■ Huntsman Prepays Bank Debt
Huntsman says it has made a $100-million
dollar equivalent voluntary prepayment
to certain of its senior secured bank credit
facilities. Huntsman says it intends to pay
down $2 billion in debt over the next two
to three years.
6
Apollo Launches Hexion Specialty Chemicals
Borden Chemical, Resolution Performance Products, and Resolution Specialty Materials have
completed their merger to form Hexion Specialty Chemicals, says Apollo Management (New
York), which owns the three companies. Hexion posted pro forma 2004 sales of $4.1 billion
(CW, May 4, p. 8). Hexion also includes Bakelite, which Borden Chemical acquired in late
April. Standard & Poor’s (S&P) affirmed its B+ corporate credit rating for Hexion, following
closure of the deal. S&P says it has assigned Hexion a negative outlook because the company
has more than $2.3 billion of total debt outstanding. “The ratings reflect a very aggressive
financial profile resulting from high debt leverage at the outset of the merger, somewhat offset
by a satisfactory business profile as a leading global manufacturer and marketer of thermoset
resins,” says S&P credit analyst George Williams. Apollo says it expects to take Hexion public
via an initial public offering, from which it plans to raise about $800 million. Timing of the
IPO has not been disclosed.
OxyChem Completes Vulcan Chemicals Acquisition
OxyChem has closed on its previously announced acquisition of Vulcan Chemicals. The
Federal Trade Commission approved the deal earlier this month, contingent on OxyChem selling Vulcan’s Port Edwards, WI facility within 10 days of the closing (CW, June 8, p. 7). The Port
Edwards facility produces potassium hydroxide, a market in which OxyChem and Vulcan are
the top-two producers. Erco Worldwide (Toronto), a producer of sodium chlorate, has agreed
to buy the plant (CW, April 20, p. 7). The completion of the Vulcan deal leaves Dow Chemical,
OxyChem, and PPG Industries as the top-three producers of chlor-alkali in North America
with about 70% of the market.
ISP to Shut San Diego Alginate Plant
International Specialty Products (ISP) says it will shut alginate production at San Diego, CA,
and shift most of production to Girvan, Scotland. No financial details were disclosed. The
San Diego operations are expected to be closed in early 2006. The company cites “persistently
increasing production costs.” The company says its Girvan plant is the largest alginate plant
in the world. San Diego production not transferred to Scotland will be manufactured under
license, the company says. The San Diego plant employs 125 people, and only a few are being
offered other opportunities within ISP, the company says.
Chevron and Unocal Reach Agreement with FTC ...
Chevron and Unocal say they have reached agreements with the Federal
Trade Commission (FTC) staff proposing a settlement to resolve all
outstanding FTC issues associated with Chevron’s proposed $16.4-billion acquisition of Unocal. Terms of the settlement relate exclusively to
Unocal’s patents for reformulated gasoline (RFG), which has been the
subject of ongoing litigation between Unocal and the FTC, Chevron says.
The settlement would resolve that litigation, pending completion of the
proposed acquisition. FTC has charged that Unocal illegally acquired
monopoly power in the technology market for producing low-emission
gasoline in California by inducing the California Air Resources Board O’Reily: Seeks prompt
(CARB; Sacramento) to adopt RFG standards that substantially over- consummation of deal.
lapped with Unocal’s patent rights. Chevron has agreed to stop enforcing the RFG patents,
and will dedicate the patents to the public for their remaining term. “We are optimistic about
completing the regulatory review shortly, and look forward to the prompt consummation of the
acquisition,” says David O’Reilly, Chevron chairman and CEO.
... CNOOC May Still Bid for Unocal
China National Offshore Oil Co. (CNOOC) says that “it is continuing to examine its options”
with respect to making a competing bid to Chevron’s $16.4-billion offer for Unocal. “Options
include a possible offer by the company for Unocal, but no decision has been made in this
respect,” CNOOC says. “No assurances can be made that the company will ultimately make an
offer for Unocal, or, if any such offer is made, whether any agreement will be reached between
the company and Unocal.” No further details were disclosed. “A further announcement will be
made if and when appropriate,” the company says.
www.chemweek.com
Private Equity Firm Tightens Grip on Elementis
Keith Hopkins, nonexecutive chairman of Elementis, and Edward Wilson, a nonexecutive
director, have resigned from the company with immediate effect. Elementis says it has appointed
Edward Bramson, a principal at private equity capital company Hanover Investors (London), to
succeed Hopkins. The company has also appointed as nonexecutive directors Matthew Peacock,
another principal at Hanover; Ian Brindle, a former U.K. chairman at PricewaterhouseCoopers;
and former Laporte CEO Ken Minton. Elementis’s nonexecutive board has expanded from
six members, to eight, including CEO Geoff Gaywood. Philip Brown, an Elementis executive
director, will retire at the end of this month. Elementis says the moves follow “discussions”
with Hanover, which has built up a 15.2% stake in Elementis since the start of this year, and
“consultation” with leading institutional shareholders in Elementis. Hanover is seeking to exert
greater influence over Elementis in a bid to improve the company’s weak financial performance,
analysts say. Hanover specializes in purchasing stakes in underperforming businesses, and playing an active role in turning the businesses around. The expanded nonexecutive board will
target “the restoration of shareholder value and profitable growth” at Elementis, Bramson says.
Elementis’s share price has doubled since Hanover started buying the company’s shares.
BASF is Silent on Ciba Takeover Reports …
BASF and Ciba Specialty Chemicals declined to comment on a report last week in Swiss newspaper Basler Zeitung that BASF is negotiating to acquire Ciba. Analysts say that such a deal is
unlikely. The report also says that Ciba may have discussed the sale of its textile effects business
to textile dyes firm DyStar (Frankfurt). Private equity capital company Platinum Equity (Los
Angeles) last year acquired DyStar from Aventis, BASF, and Bayer (CW, Aug. 11, 2004, p. 5).
… Buys Fine Chemicals Firm; Restructures Paints in Australia
BASF says it has agreed to acquire 75% of fine chemicals manufacturer Orgamol (Evionnaz,
Switzerland). Financial terms were not disclosed. Orgamol generated 2004 sales of about
€100 million ($122 million). Approval of the transaction is still required from Orgamol’s Swiss
employees, who have a combined shareholding of 25% in the company via an employee foundation. Separately, BASF says it has agreed to acquire Akzo Nobel’s 50% stake in the companies’
BASF Akzo Nobel (BAN; Melbourne) coating joint venture. The business markets OEM coatings to the automotive industry in Australia. Financial terms were not disclosed. BASF says it
will merge BAN with refinish coating business BASF Coatings (Sydney) to create a new entity,
BASF Coatings Australia, effective July 1. The new business will have sales of about €25 million/year, BASF says.
Private Equity Firm Buys Five Rütgers Business Units
Private equity capital firm International Chemical Investors (INCI; Frankfurt)
says it has agreed to acquire five business units from Rütgers Chemicals
(Castrop-Rauxel, Germany). Financial terms were not disclosed. The business units are Rütgers’s two custom fine chemicals divisions with facilities at
Mannheim, Germany and Augusta, GA; activated carbon business Rütgers
CarboTech (Essen, Germany); Rütgers Organics (Mannheim); and Rütgers’s
Cincinnati-based performance chemicals division. INCI says it will combine
the five units under a single management team to create a specialty chemicals
group with sales of $120 million/year and a staff of 490. The fine chemicals Riemann: Seeking
operation will be named WeylChem; the carbon business will be renamed synergies.
CarboTech; Rütgers Organics will retain its name; and the performance chemicals business unit will
be named Nease Corp. “To date, the businesses have been separately managed with a focus on local
markets,” says Achim Riemann, INCI managing director. INCI plans to seek synergies between the
businesses and combine certain research and marketing functions, he says. INCI says it also plans
further “complementary” acquisitions.
Degussa Agrees on China PEEK JV
Degussa says it has signed an agreement for a previously announced polyether ether ketone
(PEEK) and polyether sulfone joint venture at Changchun, China (CW, Dec. 15, 2004, p. 7).
Degussa will hold 80% of the jv, Jida Degussa High Performance Polymers Changchun, and Jilin
University (Jilin, China) will have the rest. Jilin University will supply technology to the jv.
www.chemweek.com
■ DB Challenges Rail Acquisition
Deutsche Bahn (DB; Berlin), Germany’s
state-owned railroad company, says it is
planning a legal challenge to the planned
acquisition by Compagnie Européenne de
Wagons (CEW; Paris) of rail logistics company VTG (Hamburg) from tourism company
TUI (Hanover). VTG says it is Europe’s biggest private-sector lessor of rail tank cars
and other specialized wagons. DB says that
CEW’s joint ownership, with French stateowned railroad company SNCF (Paris), of
rail tank car and tank container leasing
company Ermewa (Geneva), means that
CEW would have a dominant position in
the rail tank car market following CEW’s
purchase of VTG. Private equity capital
company IPE-Ross (Paris) owns CEW.
■ Lanxess Buys Back Bond from Bayer
Lanxess says it has repurchased from
Bayer a €200-million ($245 million) mandatory convertible bond that Lanxess
issued to Bayer last year (CW, Nov. 24,
2004, p. 5). Lanxess says it has resold the
bond to Morgan Stanley Bank (Frankfurt),
which will convert the bond to Lanxess
shares. Morgan Stanley says it has begun a
bookbuilding process to place the shares,
which are equivalent to a 15.9% equity
stake in Lanxess. Morgan Stanley says it
may offer a second tranche of shares that
would increase the number offered to a
figure equal to an 18.3% Lanxess stake.
■ Helm Buys Stake in Saudi Acetyls Unit
Helm Arabia (Hamburg) says it has agreed
to take a 25% stake in Saudi International
Petrochemical Co.’s (Sipchem) previously
announced acetyls project at Al Jubail,
Saudi Arabia (CW, May 18, p. 14). Helm
Arabia is a jv between trading and distribution company Helm (Hamburg) and defense
company Thales (Paris). Helm Arabia also
signed long-term agreements to offtake
acetic acid and vinyl acetate monomer from
the Sipchem acetyls complex, which is due
to start operating in 2008.
■ Malaysia’s Titan Completes IPO
Titan Chemicals says it raised about MR800
million ($210 million) earlier this month
from an initial public offering (IPO) of shares
(CW, May 25/June 1, p. 7). The figure is at
the bottom end of Titan’s target range, the
company says. Investor enthusiasm was
likely tempered by weakening prices for
petrochemical products, analysts say.
7
top of the week
Monsanto Takes Stake in
Solutia Reorganization
S
olutia says that it has reached an agreement with Monsanto and a committee
of unsecured creditors on a reorganization plan that could allow it to exit bankruptcy
protection later this year. Monsanto says that it
“could receive up to approximately 50% ownership of Solutia’s common stock” in exchange
for the funds contributed to help bring Solutia
out of bankruptcy.
Solutia filed for bankruptcy protection in
December 2003, citing
the impact of liabilities
for litigation, environmental remediation, and
post-retirement benefits
and liabilities assumed at
the time of its 1997 spinGrant: Practical
solution for Monsanto.
off from Monsanto.
Solutia says it plans
to file the plan with
the bankruptcy court
later this summer. “Our
plan is to emerge from
bankruptcy protection
in late 2005,” says a
Solutia spokesperson.
Solutia will raise
Quinn: Relief from
Solutia’s liabilities.
$250 million through
a rights offering to unsecured creditors in
exchange for 22.7% of the common stock in
the reorganized company. The offering will be
underwritten by Monsanto, which has agreed
to purchase all rights not exercised by unsecured creditors.
“This agreement provides significant relief
from the historic liabilities that were a driving
factor in our Chapter 11 filing, reduces the risk
profile in terms of contingent liabilities, and
strengthens our balance sheet,” says Solutia
president and CEO Jeffry N. Quinn. Solutia
says that roughly $150 million of proceeds will
be used to fund retiree benefit obligations that
Solutia inherited when it was spun off from
Monsanto; $50 million will be used for off-site
remediation in Anniston, AL and Sauget, IL;
the remaining $50 million will be used to cover
unspecified liabilities.
Current plans call for the reorganized
Solutia to be an independent, publicly traded
company. Solutia’s secured debt and debtor8
in-possession financing will be repaid in full
with proceeds from an exit financing package
that is still to be arranged. Solutia’s existing
shares are expected to be cancelled, and current shareholders are not expected to receive
any distribution, Solutia says.
Monsanto agreed in December 2004 to take
on remediation costs at former Monsanto sites
never operated by Solutia. Monsanto says it
expects that its financial commitment under the
new plan and previous agreements with Solutia
will be covered by a previously booked $284million charge recorded in December 2004.
Solutia will retain responsibility for operating
its business regardless of the size of the eventual
June 15, 2005
Solutia stake it winds up with, Monsanto says.
Monsanto will have the right to name some
board members, but it has no interest in operating the company or consolidating Solutia as
part of Monsanto, officials say. “This is not a
change in philosophy or investment strategy,”
says Monsanto CEO Hugh Grant, stressing
that Monsanto’s operating focus remains on its
core seeds and traits, and herbicides businesses.
“This is a common sense, practical solution.”
In exchange for cash and other contributions
to enable Solutia to emerge from bankruptcy,
Monsanto will receive equity that will allow it to
share in some of the potential upside in Solutia,
Monsanto says.
Monsanto would not comment on how long
it would hold the Solutia stake. “How long we
hold on to our Solutia stake will be a function of what provides best economic value for
[Monsanto] shareholders,” says Monsanto
CFO Terry Crews. —ROBERT WESTERVELT
Innovene Plans $2-Billion Petchem Complex in Saudi Arabia
Innovene, the olefins, derivatives, and refining subsidiary of BP, and Delta International
(Jeddah, Saudi Arabia), owned by the Al-Aiban family, say they have signed a memorandum
of understanding (MOU) to build a $2-billion petrochemical complex at Al Jubail, Saudi Arabia
by late 2008. Innovene and Delta will have yet-to-be-defined equal shares in the complex;
other parties, such as the government of Saudi Arabia or banks, will hold minority stakes.
The partners plan to build an
■ CRACKING ON*
ethane and propane-fed cracker
(in thousands of m.t./year)
with capacity for 1.2 million m.t./
Investor
Location
Capacity
Onstream
year of ethylene, and two downSabic YanSab
Yanbu
1,300
2008
stream units each with capacity for
Sabic Sharq
Al Jubail
1,300
2008
350,000 m.t.-400,000 m.t./year of
Aramco-Sumitomo
Rabigh
1,300
2008
high-density polyethylene (HDPE)
Tasnee/Sahara
Al Jubail
1,000
2008-09
and linear low-density polyethylene
PMD
Al Jubail
1,350
2008
(LLDPE). Innovene will supply its PE
Innovene-Delta
Al Jubail
1,200
2008
technology. Excess ethylene capacity
*Ethylene projects announced in Saudi Arabia. Source: CW research.
of about 400,000 m.t.-500,000 m.t./
year and some propylene will be sold to other consumers at Al Jubail, and on the merchant
market until additional downstream units are built, the companies say.
Ralph Alexander, CEO of Innovene, and Badr Al-Aiban, chairman and CEO of Delta, signed
the MOU last week in Riyadh. The companies say that the project will be “a platform for
future long-term growth opportunities.” Delta, which operates in the oil and gas, and real
estate businesses, will be responsible for securing feedstock from Saudi Aramco as well as
for raising financing. Innovene will contribute marketing expertise. The companies plan to
award engineering and other contracts early next year and start construction in mid-2006.
BP plans to float Innovene on the New York Stock Exchange by the end of this year.
Innovene says it generates more than $15 billion/year of sales, and has assets worth $9 billion. The company recently started up a 900,000-m.t./year ethylene plant at Caojing, China
in a jv with Sinopec.
Innovene’s is the sixth cracker to be announced in Saudi Arabia for completion by the end
of 2008 (table). The plants’ combined capacity of about 7.5 million m.t./year will more than
double Saudi Arabia’s current total of about 6 million m.t./year. Petrokemya, a Sabic subsidiary, and Saudi Chevron Phillips are separately planning to add more capacity after 2008.
— NATASHA ALPEROWICZ
www.chemweek.com
business & finance news
Commodity Weakness Drags Down
Earnings Expectations
S
puttering demand and declining
commodity chemical prices are leading analysts to scale back earnings
expectations for most
commodity
chemical
makers. Year-over-year
earnings
comparisons
remain positive, however,
and margins are expected
to recover in the second
half, analysts and producers say.
“It’s not a case of ‘the Lipton: Seeing a U.S.,
sky is falling,’” Andrew Asian pickup.
Liveris, president and CEO of Dow Chemical
said at a media briefing at ACC’s annual meeting last week in White Sulphur Springs, WV.
“Fundamentals are still sound. China is not
retreating. Certainly Europe could be stronger, but overall, the situation is good.”
Chemical inventories have swelled as demand
slumped in the first half, but recovery remains
on track, producers say. “A lot of people have
cited the rapid buildup of inventory,” says Nova
CEO Jeffrey Lipton. “Energy prices have moderated, and manufacturing globally has taken
a pause. But we are starting to see a pickup in
Asia and North America. The third quarter
will be the inflection point.”
Ethylene contracts fell
2 cts/lb in May, to 38.5
cts/lb., and spot prices have
been trading well below
contract levels, reportedly at 26 cts/lb last week.
Polyethylene (PE) prices
lost 2 cts/lb in April, and a
further 4 cts/lb in May, to
67 cts-78 cts/lb del, sources
Liveris: Overall
situation still good.
say. Polypropylene prices
shed 2 cts/lb for April, to 63.5 cts-70 cts/lb,
and may fall sharply for May in line with the 8cts/lb drop in propylene prices, to 35 cts/lb in
May. Weekly railroad data in the U.S., the most
recent measure of chemical demand, shows that
year-to-date chemical railcar loadings though
the week ended June 4 totaled 671,000 railcars,
up 0.4% from the same 2004 period. For the
week ended June 4, chemical railcar loadings
declined 2.5%, to 27,743 railcars.
“Given the current weakness, we now anticipate further erosion in commodity chemical
PolyOne Trims Earnings
Estimates on Flat Demand
D
estocking by North American customers and sluggish European
demand have prompted PolyOne to
cut its expectations for second-quarter operating income from continuing operations
from $46.7 million-$48.7 million, to about
$39 million. Operating income of $39 million falls about 17% below year-ago results.
The company has cut revenues estimates
for continuing operations by 5%-6%, to
$588 million-$600 million, up 7%-8% from
the same period last year.
PolyOne says it had expected a seasonally
stronger second quarter compared to the first,
but volumes have been flat so far and price
increases have been less than anticipated.
Operating income from its resins and intermediates segment is expected to improve, but
by $1 million less than previously expected, to
www.chemweek.com
$28.9 million-$31.9 million, PolyOne says.
Shipments in the distribution segment are
likely to be flat at first-quarter levels, and soft
demand in the performance plastics segment
has hampered efforts to improve margins in
that segment, PolyOne says.
Net income contributions from discontinued
operations are also likely to drop by $1 million
from earlier estimates, to $6 million-$8 million because worse-than-expected automotive
sales in North America are expected to offset
improvement in specialty resins, PolyOne says.
PolyOne says it continues to expect that
operating cash flow in the second quarter
will be positive, thanks to higher earnings,
cash distributions from equity affiliates, and
further working capital efficiency improvements, partially offset by higher cash interest
payments.
profits in the third-quarter,” says Morgan
Stanley (New York) chemical analyst Kunal
Bannerjee. “This is a change from our earlier
view of a positive turn in margin trends starting in early second-half 2005.” The need for
a draw down in producers inventories is the
primary driver, Bannerjee says.
One analyst says the so-called industry
“soft-patch” can now firmly be termed a “pothole” as the inventory correction drags on.
“Commodity fundamentals remain sloppy,”
says Robert Koort, analyst at Goldman Sachs
(New York). “The duration of the much-cited
inventory correction continues to grow longer
and longer.” North American PE producers
have increased inventory in seven of the last
eight months, he says. “Even with an eventual
snapback in demand, we believe it will take
a few months, probably until August, before
producers can regain their pricing power.”
Margin recovery should resume in the second half since most of the current problems
are limited to inventory issues, Koort says. “We
expect Asian buying to return in force over the
next two months as the region prepares for the
holiday season,” he says. “We believe the resurgence in Asian buying will lead to an inventory
restocking cycle, and another spurt in the commodity chemical cycle.”
—ROBERT WESTERVELT and ANDREW WOOD
■ Eastman Completes Debt Repurchase
Eastman says it has completed a $500-million debt repurchase via a series of tender
offers. Proceeds from the recent sale of its
interest in Genencor International, which
generated $419 million, and other available cash resources were used to fund the
repurchase. “This transaction is consistent
with our efforts to improve the company’s
profitability and strengthen our financial
profile,” Eastman says. Eastman reported
outstanding long-term debt of roughly
$2.1 billion as of March 31, prior to the
debt repurchase.
■ PPG Plans Euro Debt Offering
PPG Industries says it intends to offer
€300 million ($363 million) in senior
notes due 2015 for sale outside of the
U.S. The sale is expected to close by June
23, PPG says. PPG says it has applied to
list the notes on the Luxembourg Stock
Exchange. PPG says it intends to use proceeds to retire $275 million in other bond
debt and for general corporate purposes.
9
Pioneer to Sell Land For Cash
Pioneer says it has agreed to sell
about 60 acres of land adjacent to its
Henderson, NV chlor-alkali plant to
Marnell Properties (Las Vegas). Pioneer
expects the sale to net proceeds of
$22.8 million, which the company will
use to pay down debt. The transaction is
expected to close by the fourth quarter,
it says.
Pioneer says it recently prepaid
$18.3 million of its senior notes due in
2006, leaving $6.9 million outstanding on those notes. The company says it
must use the proceeds from the sale to
prepay outstanding debt at the close of
the sale.
The remaining proceeds will be offered
to redeem its 10% senior secured notes
totaling $150 million due in 2008. The
notes were issued by Pioneer’s Canadian
subsidiary PCI Chemicals Canada.
Marnell says it will build a facility for
Century Steel (Las Vegas) on the land.
— PHS
Kerr-McGee TiO2 Unit Files for IPO
K
err-McGee’s titanium dioxide (TiO2)
unit has filed a registration with the
SEC for an initial public offering
(IPO) for up to $300 million of common
stock. The company has not yet determined
the number or price of shares to be offered.
Kerr-McGee says it is still evaluating the
possibility of an outright sale of the unit.
Lehman Brothers and J.P. Morgan are the
underwriters for the IPO.
Kerr-McGee announced earlier this year
that it was considering several alternatives for
its TiO2 unit (CW, Feb. 23/March 2, p. 8).
TiO2 accounts for about 93% of Kerr-McGee’s
chemical sales, generating $1.21 billion in sales
in 2004.
Kerr-McGee is expected to retain voting control of the company, but it has not
determined what its share of that would be
Kerr-McGee plans to distribute its stock to
shareholders if it decides to proceed with the
IPO, the company says.
“This business was never a fit with KerrMcGee’s oil and gas business,” says Frank
Mitsch, analyst at the Fulcrum Group (New
York). It may be difficult to find a strategic buyer, although Sachtleben Chemie
(Duisburg, Germany) could be a possibility, Mitsch says. Sachtleben is owned by
Rockwood Specialties (Princeton, NJ) (CW,
April 28, 2004, p. 8). With the recovery of
TiO2 prices and margins, and strong market
conditions expected for the next few years,
Kerr-McGee should be able to find interested buyers among private equity groups or
general investors through an IPO, he says.
Kerr-McGee is the world’s third-largest producer of TiO2, trailing DuPont and Lyondell
Chemical, with an estimated 13% share of
the market.
—PECK HWEE SIM
Order online at chemcentral.com!
Growers Brace for Asian Soybean Rust
T
he USDA says some Asian soybean rust
(ASR) has been discovered in Seminole
County, GA, but that the devastating
crop disease has not spread as rapidly as experts
initially had forecast. Growers will likely know
within the next several weeks whether they can
expect significant crop damage this year from
the soybean rust, experts say. The rust, which
has been a major problem in Asia and South
America, can wipe out 80% of a grower’s soybean crop, and it has been closely monitored in
the U.S. since its discovery last November in
Louisiana (CW, Nov. 24, 2004, p. 8).
Tropical storm Arlene, which last week
was heading for the southern U.S. Gulf Coast
states—all of which have already tested positive for ASR spores—could carry the disease
north to other farming areas that so far have
been spared, says Bob Gordon, fungicide marketing specialist for Dow AgroSciences. “ASR
spores need six continuous hours of wetness to ease was confirmed in the U.S.,” he says.
germinate,” Gordon says. Winter freezes that
The number of fungicide products approved
stretched down to Tampa, FL kept only spores by EPA to combat ASR has increased from two
in south Florida alive, he says. Thus
last November, to the current level of
far, the winds in that area have not
about 20. Eight of these products have
allowed those spores to move north,
approval for use in all states, while the
Gordon:
he adds. Most have been blown into
remaining products have emergency
Tropical
the Atlantic, Gordon says. “Arlene
exemptions for use in soybean procould change everything in the next
storm Arlene ducing states while EPA registration is
few weeks,” he says.
pending, according to both USDA and
‘could change
Planning to prevent widespread
Vroom.
everything.’
devastation began several years
Triazoles, which Dow AgroSciences
ago, says Jay Vroom, president
sells, has proven to be the most effective
and CEO of CropLife America
method of treatment for ASR, Gordon
(Washington), in written testimony before says. Strobilurins and chloronitriles have also
the House of Representatives Committee on had success, but only as preventive medicines.
Agriculture and several of its subcommit- “Triazoles have worked so well because they
tees in April. “This is the first time EPA has have a curative as well as a preventative effect,”
ever granted prior approval for emergency Gordon says. “They are the only chemicals to
treatment of a plant disease before that dis- have both properties.”
—RYAN W. SMITH
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Chemical Industry M&A Activity
Picks Up in the First Quarter
T
he rate of M&A activity in the chemical industry during the first-quarter has
outpaced the number of deals completed
during the same period last year, according to
data compiled by investment banking firm
Young & Partners (Y&P; New York). Twenty
deals valued at more than $25 million were
completed during the first quarter, up 42%
from the year-ago period, Y&P says. Those
deals had a total value of $7 billion, compared
to $3 billion, Y&P says.
The biggest deals completed during the first
quarter include Cytec Industries’ acquisition of UCB’s Surface Specialty Business for
$1.8 billion. J.P. Morgan Chase & Co. (New
York) bought PQ for $734 million.
Most of the M&A activity happened in
Europe, where 40% of the deals were made,
Y&P says. Europe is undergoing the most
restructuring, Y&P says. Asia and the rest of
the world accounted for 40%, while the U.S.
made up the remaining 20%, the firm says.
Grupo Imsa to Relocate
U.S. Coatings Unit
Grupo Imsa (Nuevo Leon, Mexico) says its
Acero division will relocate its Richmond,
CA-based painting and metal coatings
production unit to Shreveport, LA. The
move will strengthen Acero’s U.S. position by shortening order fulfillment times
and providing more reliable delivery to
the Midwest and East Coast, the company
says. The move will cost an estimated
$70 million, and will be complete by second-quarter 2006, it adds. The Richmond
facility will be sold, reducing the net
capital cost of the relocation, it says. The
Shreveport facility will work in conjunction with Acero’s recent acquisition of an
industrial steel painting plant in Fairfield,
AL, the company says.
“This move represents an important
step in the consolidation of our presence in North America,” says Santiago
Clariond, CEO of Imsa Acero. The company says it is working to position itself
as the U.S. construction industry’s largest pre-painted steel supplier.
— RYAN W. SMITH
12
GLOBAL DEMAND*
First quarter total: 20 deals
United
States
20%
Europe
40%
Asia
& the rest
of the world
40%
*Deals valued at more than $25 million each.
Source: Young & Partners (New York).
Europe and the U.S. each accounted for 50%
of all deals in first-quarter 2004, Y&P says.
The number of basic chemical deals completed during the first quarter outpaced the
number of specialty chemical deals, Y&P
says. Basic chemical deals accounted for 55%
of the 20 acquisitions completed, compared
to 21% of 14 acquisitions made during firstquarter 2004, the firm says.
Financial buyers’ interest in the chemical
industry remains strong, but the number of
deals completed by those firms decreased
during the first quarter, Y&P says.
Acquisitions completed by financial buyers
accounted for 20% of all deals, down from
29%, the company says. Financial buyers’
share of the M&A market has retreated
because of higher interest rates, making it
more difficult to borrow money; the high
yield market is in “disarray”; and chemical
companies have become more aggressive at
making offers because business conditions
and earnings have improved, says Peter
Young, president of Y&P.
The surge in M&A during the first quarter is a continuation of activity that began in
2004, the firm says. Eighty-five deals were
completed last year, up 25% from 2003; and
the total value jumped 48%, to $31 billion,
Y&P says.
—KERRI WALSH
Report Details Problems Facing Mexico’s
Phoenix Project
M
exico’s Phoenix project has little
chance of gaining final approval
before President Vicente Fox leaves
office in 2006, according to a report by consulting firm Baker and Associates (Houston).
The planned project would include a 1.2-million m.t./year cracker and downstream units
to be built at Coatzacoalcos or Altamira, but
raw material pricing negotiations between
state oil company Pemex and potential investors have yet to be resolved.
The report says that the demands by private
investors that Pemex grant them discounts on
the natural gas condensates creates a situation
that is “politically awkward” because natural
gas prices are tied by law to international
market rates at Henry Hub and the Houston
Ship Channel. There is pressure to change the
law in order to lower the prices for potential
private investors in Phoenix, including
Nova Chemical, but so far there has been
no progress, the report says. The report also
says that new petrochemical capacity planned
for Venezuela and Trinidad could hurt the
Phoenix project’s ability to access export
markets in the region. Analysts say that
about 80% of a planned ethylene complex in
Venezuela would be exported.
The report also analyzes factors that
make the Phoenix project different from
any previous investment in Mexico, such as
Pemex’s minority stake in the project and that
the oil union would not have automatic labor
rights in the new company.
Separately, Fox recently told Mexican
reporters that he would prefer that the
planned Phoenix project be located at
Coatzacoalcos, rather than Altamira, because
Coatzacoalcos’ location near many of the
nation’s other petrochemical plants would
generate more opportunities for development
of associated projects. “But I am not the one
to decide; that will be up to the investors,” Fox
said, according to the Coatzacoalcos-based
Mexican newspaper Diario del Istmo. Fox also
told the paper that the “financial component
has been difficult,” but that once an agreement
is reached with private investors, the location
will be decided. Baker & Associates says that
both state governments have been engaged
“in a full-press public relations campaign to
bring the project home.”
—KARA SISSELL
www.chemweek.com
BP Incident Sparks Review of
Contractor Safety Statistics
R
epresentative Gene Green (D., TX) has ernment compiles safety statistics.
introduced legislation that would force
Companies track the overall safety rates,
refineries to disclose contractor deaths although they might not be reported to the
in sector safety statistics reported to OSHA, government in a way that reflects them as a
effectively closing a loophole that
chemical industry accident, one
critics say allows companies to
industry source says. ACC recently
under report fatalities.
launched a performance tracking
Green introduced the legislaWeb sites as part of its Responsible
tion after the Houston Chronicle
Care program, which will include
reported that the 15 people killed
statistics on contractor safety.
in a March explosion at BP’s Texas
Green is also pushing for more
City refinery were contractors, and
severe penalties against companies
therefore would not be reported
whose willful disregard leads to
to OSHA as refinery workplace Green: Closing a
workplace deaths. Such infractions
fatalities. The deaths do appear loophole.
are currently classified as a misdein government statistics, however, just not meanor and several members of Congress are
as refinery workers. Government statistics pushing for that to be increased to a felony,
report no refinery deaths for 2002 or 2003, according to the Houston Chronicle’s report.
although nine people died at refineries in However, in a situation such as the March accithose years, the report says. The deaths often dent, BP would not be charged with a crime
show up in catchall “other” categories such because the dead were not employees, it says.
as “Special Trade Contractors not Otherwise
Separately, plaintiffs attorneys are reporting
Classified,” it says.
that the settlement negotiations with families
Green’s bill would require refineries and of the dead and the injured in the BP accident
other industrial facilities to combine the injury are moving ahead at a surprisingly quick rate,
and illness logs for employees and contractors, and resolution of at least some of the claims
which are now kept separately. The contractor could be reached in the next serveral weeks,
injury statistics are not included when the gov- media reports say.
—KARA SISSELL
Analysts Cite Dim Prospects
for Asbestos Bill
Financial analysts say they are not optimistic about the prospects for the asbestos
litigation trust fund bill that is working
its way through the Senate. “Ignore the
din from Washington,” says Frank Mitsch,
analyst with Fulcrum Global Partners
(New York). “Our sense is that Congress
will not pass legislation that will cap current and future asbestos claims any time
soon,” Mitsch says. “We remain skeptical, as we were three years ago when
there was a similar bill before Congress.”
The Senate Judiciary Committee passed
the bill last month. The bill would set up a
$140-billion trust fund to pay all current
and future asbestos-related health claims.
The full Senate is expected to begin negotiations this week on the Senate floor, but
several plaintiff and insurer groups have
come out in opposition to the bill as currently written, and Washington sources
say it is going to be difficult to forge a
compromise.
Mitsch also says that Dow Chemical
has released details from an analysis of
its asbestos liabilities, which estimates
the company’s total asbestos liability to
be about $1.6 billion. About half of that
is expected to come from Dow’s insurers,
however. Since 2002 Dow’s defense and
resolution costs for asbestos suits have
averaged $15.6 million per quarter, or about
5 cts/share, Mitsch says.
— KS
��
www.chemweek.com
13
EUROPE/MIDEAST
Algeria Plans Massive
Petrochemical Investment
S
tate-owned energy group Sonatrach
(Algiers) and its Entreprise Nationale
de l’Industrie Pétrochimique (Enip)
subsidiary have confirmed plans for a massive
expansion of petrochemical capacity (CW,
May 4, p. 18). Projects include world-scale
integrated ethylene complexes at Skikda and
Arzew, Algeria; a propane dehydrogenation
and polypropylene complex at Arzew; a fuel
oil catalytic cracking complex at Skikda; an
integrated purified terephthalic acid (PTA)
and polyethylene terephthalate (PET) resins
complex at Skikda; an integrated n-paraffins
extraction and linear alkyl benzene (LAB)
complex at Skikda; and a “central crude oil
refinery,” the company says.
Enip is also planning to renovate and
expand its existing petchem complexes at
Skikda and Arzew, and has awarded an
€18.6-million ($22.7 million) project
management consultancy (PMC) contract to
Stone & Webster (S&W) for that work.
Algeria is trying to catch up with other
energy-rich countries in the Mideast and
North Africa, and put its petchem industry on
■ Advent Buys Paintmaker
Advent International (Boston), a private
equity capital company, has agreed to
acquire paints and varnishes producer
Dufa Romania (Bucharest) from three
shareholders for €18 million ($23 million),
according to press reports in Romania.
Further details were not disclosed. Dufa
has sales of about €15 million/year.
■ Vopak Names Next Chairman
Vopak has named
John Paul Broeders
as its next chairman,
effective
January
1, 2006. Broeders
will succeed Carel
van den Driest, who
will be nominated
to Vopak’s supervisory board at the
Broeders: Taking the
helm at Vopak.
company’s
2006
shareholders’ meeting. Broeders is currently Vopak’s vice-chairman.
14
the map, sources say. The Algerian government
has intended to expand the country’s petchem
sector for several years, but it delayed those
plans a few years ago following political
unrest in the country and a drop in oil prices
in world markets. Now awash with money
on the back of high oil prices, and having
achieved a gradual return to political stability,
Algeria is eager to relaunch the plans, sources
say. Sonatrach and potential joint venture
partners are scheduled to discuss opportunities
in Algeria’s petrochemical sector at meetings
in Algiers between June 11 and 17.
Sonatrach is reviving an ethylene project
at Arzew that it shelved some years ago when
then partner BP decided not to proceed. The
plant would be based on ethane feedstock
and have capacity for 1 million m.t./year of
ethylene. The Skikda ethylene unit would
be a liquids cracker, using naphtha and
condensate as feedstock, and have capacity for
1.8 million m.t./year ethylene and 400,000
m.t./year of propylene. It would feed units
producing ethylene glycol, polyethylene, and
polypropylene.
Enip’s revamp of existing units will be
a four-phase program due to end in 2009.
The company’s Lummus-process, 120,000m.t./year ethane cracker at Skikda will be
revamped using S&W’s advanced recovery
systems (ARS) technology, which could
raise ethylene capacity by 100,000 m.t./year.
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Downstream units, which include a chloralkali complex and plants producing ethylene
dichloride, vinyl chloride monomer, and
polyvinyl chloride, will also be modernized
and expanded. A methanol plant at Arzew and
downstream units producing formaldehyde,
urea formaldehyde, phenol formaldehyde,
and melamine formaldehyde resins will also
be rehabilitated and expanded.
S&W’s contract, which the company won
in competition against ABB Lummus Global,
covers all four phases. It includes feasibility
studies and preparation for bids for each of the
expansions and upgrades; invitations to bid
and selection of engineering, procurement,
and construction (EPC) contractors;
supervision of EPC work; and start-up.
Separately Naftec, Algeria’s state-owned
refining firm, is modernizing its Arzew
refinery. The company’s other main refineries
are at Algiers, Hassi Messaoud, and Skikda.
—NATASHA ALPEROWICZ
EU Mulls Energy Efficiency Hike
T
he European Parliament, which has equal
powers with the European Union (EU)
member state governments on environmental legislation, has voted to adopt draft laws
that would require EU governments individually to improve national energy efficiency levels
by more than 11% within a decade. National
governments would be free to decide how to
achieve the efficiency improvements if the proposed legislation, dubbed the energy efficiency
and energy services directive, were passed.
The parliament, via the proposed legislation, is aiming to toughen previously
announced proposals by the European
Commission for EU-wide improvements in
energy efficiency averaging 1%/year between
2006 and 2012.
Cefic says it is “not at all enthusiastic” about
the proposed energy efficiency improvements.
Chemical companies already have “systematically improved their energy efficiency and
invested heavily,” says Peter Botschek, manager/petrochemicals and energy for Cefic.
Environmentalists say the proposals do not
go far enough, however. Greenpeace says that
to reduce global-warming gas emissions significantly, energy efficiency levels should be
increased by at least 2.5%/year for the private
sector, and 3%/year for the public sector.
—ALEX SCOTT
www.chemweek.com
ASIA/PACIFIC
LG Chem Expands Olefins, VCM,
And Acrylicins In Korea
L
G Chem will expand capacity at both of
The Daesan ethylene expansion will feed the
its ethylene plants in Korea by a combined planned VCM unit, which will also be built at
420,000 m.t./year, and build a vinyl Daesan and have a capacity of 200,000 m.t./
chloride monomer (VCM) plant in Korea, year. The VCM plant’s output will be shipped
president and CEO Ki-Ho No tells CW. The to China to feed LG Chem’s PVC plants there.
company has also decided to build an acrylic
LG Chem is doubling PVC capacity at
acid plant in Korea, after initially
Tianjin, China to 500,000 m.t./
planning to build the unit in China.
year by 2006, and adding 50,000
It will be the first time LG Chem’s
m.t./year at the site by 2008. It
proprietary acrylic acid technology
recently announced a 350,000-m.t./
is commercialized, he says.
year VCM project at Tianjin that,
LG Chem needs extra ethylene
together with the Daesan VCM unit,
capacity to supply the company’s
will supply the Tianjin PVC expangrowing polyvinyl chloride (PVC)
sions (CW, May 25/June 1, p. 19).
business in China. The company
The company also plans to build
aims to have 1 million m.t./year of No: Big plans in
a 450,000-m.t./year PVC complex
PVC capacity in that country by China.
in Fujian Province, China (CW,
2008, No says.
March 9, p. 17). Discussions on that project
LG Chem is discussing with licenser KBR are very protracted, however, No says. LG
a 300,000-m.t. expansion of LG Chem’s Chem would hold 50% of the Fujian complex,
480,000-m.t./year Daesan, Korea cracker, and the provincial government and some local
which it recently acquired as part of a joint PVC producers would jointly hold the rest.
acquisition with Honam Petrochemical of “We want to use our technology and brand,
Hyundai Petrochemical. The project will cost but [the Chinese] have other ideas,” No says.
about $250 million, No says. LG Chem also The company will decide by year-end whether
is raising capacity of its Yeosu, Korea cracker to go ahead with the Fujian PVC complex or
by 120,000 m.t./year, to 890,000 m.t./year, instead add capacity at Tianjin, he says.
for completion in June 2006, he says.
Meanwhile, LG Chem says it will build an
acrylic acid plant at Yeosu after originally planning to build the plant in China. The company
operates three acrylic acid units at Yeosu with
a combined capacity of 160,000 m.t./year.
“It is very, very difficult to get propylene raw
material for China and the investment cost in
China would be much higher,” No says. LG
Chem will build an 80,000-m.t./year acrylic
acid plant at Yeosu by the end of 2007. The
unit will be based on LG Chem’s own recently
developed production process, unlike the three
existing lines, which use Nippon Shokubai
technology, No says.
Separately, LG Chem is considering
building a 150,000-m.t./year acrylonitrile
butadiene styrene (ABS) plant in China. It has
300,000 m.t./year of ABS capacity at Ningbo,
China and is adding a 150,000-m.t./year line
there. “We want to add 150,000 m.t./year of
ABS capacity on top of that, to have 600,000
m.t./year in China by 2008,” No says.
LG Chem says it may build the ABS unit
in Guangdong Province, possibly at Shell
Chemicals’ soon-to-be-completed Daya Bay
petrochemical complex, which would supply
feedstocks. Shell is seeking investors for ABS
manufacture at Daya Bay, and it has been in
separate talks with BASF and Samsung, as
well as LG Chem. “If we agree with Shell at
the end of this year or beginning of next year,
the ABS plant could be onstream two and a
half years later,” No says.
—NATASHA ALPEROWICZ
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www.chemweek.com
15
new construction projects
Linde-Sazeh-Hyundai Consortium Lands Iran’s Olefins 11
National Petrochemical Co. (NPC; Tehran) has selected a consortium of Linde, Sazeh
Consulting (Tehran), and Hyundai (Seoul) to build NPC’s Olefins 11 complex at Bandar
Assaluyeh, Iran, sources say. Olefins 11, as exclusively revealed by CW, will comprise two
identical trains each with a capacity of 1.2 million m.t./year of ethylene (CW, May 18,
p. 7). All of the output from the plants will be used to feed downstream complexes via a
previously announced ethylene pipeline in western Iran. The Iranian government recently
announced plans for five additional complexes along the 2,285-km pipeline, doubling the
original number. The pipeline will transport 2.8 million m.t./year of ethylene, including the
entire output from Olefins 11, as well as tonnage from the Olefins 9 complex of Arya Sasol, a
joint venture between NPC and Sasol, and other sources, according to Mohammad Hassan
Peyvandi, director of planning and development at NPC.
Hyundai, Linde, and Sazeh will carry out the work under terms of an engineering, procurement, and construction (EPC) contract estimated to be worth just under €1 billion
($1.22 billion). The contract, which has not yet been signed, will cover both ethylene
trains. The plants will be built in succession, each taking 42 months to complete. NPC
recently changed the scope of the engineering contracts it awards to foreign companies
from engineering and procurement, to EPC, to cut down on delays in completing projects. Foreign contractors will be the leaders in engineering consortia that must include
Iranian firms, following the changes. Three other consortia competed for the Olefins 11
order. They were made up of ABB Lummus Global with Pidec (Tehran); Stone & Webster
with Namvaran Consulting (Tehran); and Technip with Nargan Engineers & Contractors
(Tehran).
Bakhtar Petrochemical Co., a subsidiary being established by NPC, will operate Olefins 11.
Bakhtar will also be the operator of projects along the planned pipeline. — NATASHA ALPEROWICZ
Mideast Methanol: Oman
Methanol to Build Second Plant ...
Oman Methanol Co. (OMC; Muscat) says it
has approved construction of a second 3,000m.t./day methanol plant at Sohar, Oman
where the company is building its first, identical unit (CW, Dec. 22/29, 2004, p. 14). OMC
is a joint venture of MAN Ferrostaal (Essen,
Germany), Methanol Holdings (Trinidad),
and Oman Methanol Holding (Muscat).
Toyo Engineering is building the first plant,
due for completion at the end of 2006. OMC
says it aims to secure financing for the second
unit by the second quarter of 2006.
... Ar-Razi Awards Contract to
Mitsubishi Heavy Industries
Saudi Methanol Co. (Ar-Razi), a 50-50 joint
venture between Sabic and a consortium of
Japanese companies led by Mitsubishi Gas
Chemical (MGC), says it has awarded a contract to Mitsubishi Heavy Industries (MHI)
to build Ar-Razi’s previously announced fifth
methanol plant at Al Jubail, Saudi Arabia (CW,
Aug. 2, 2004, p. 15). The plant, scheduled to
come onstream in the first quarter of 2008, will
have capacity for 5,000 m.t./day of methanol.
It will combine process technologies developed
by MGC and MHI. Haldor Topsoe will provide its gas-reforming technology. The project
will raise Ar-Razi’s methanol capacity to 5 mil16
Ar-Razi: More to come.
group, recently completed construction of a
won210-billion ($208.4 million) phenol and
bisphenol A complex at Yeosu.
Degussa Ups Methacrylates
Capacity at U.S. Site
Degussa says it will add methyl methacrylate
(MMA) capacity at Fortier, LA and construct
a methacrylic acid plant at the same site. The
company says it will debottleneck its Fortier
MMA plant by 20,000 m.t./year, raising its
worldwide total to 480,000 m.t./year by 2006.
Degussa will also build a 20,000-m.t./year
methacrylic acid unit at Fortier for completion
in 2006. The decision follows an announcement earlier this year of Degussa’s $95-million
acquisition from Cytec of the 50% Degussa did
not own in MMA producer Cyro Industries.
Foster Wheeler Lands Feedstock
Contract in India
Foster Wheeler says it has secured a project management services contract from Oil and National
Gas Corp. (ONGC; New Delhi) for a grassroots
facility at Dahej, India that will remove ethane,
propane, and butane from liquefied natural gas.
The project is scheduled for completion in 2007.
Output will be used as feedstock at ONGC’s
previously announced steam cracker at Dahej
(CW, June 2, 2004, p. 18).
Jacobs Gets Ineos Phenol
Contract at Antwerp
lion m.t./year, making it the largest dedicated
methanol-producing complex, the company
says. Ar-Razi’s No. 1 complex has capacity
for 640,000 m.t./year; No. 2 is designed for
720,000 m.t./year; and Nos. 3 and 4 each have
capacity for 850,000 m.t./year.
LG Chem, Dow Mull Expansion of
Polycarbonate Venture
LG Chem and Dow Chemical, partners in
the LG Dow polycarbonate (PC) joint venture at Yeosu, Korea, are in talks to double
the jv’s capacity, CW has learned. The
jv’s Dow-process PC unit has nameplate
capacity of 65,000 m.t./year and is currently operating at 80,000 m.t./year. The
new plant would also use Dow technology
rather than a phosgene-free process that was
recently developed by LG Chem, and would
be completed within two years. A decision
is due in the next few weeks, sources say.
LG Petrochemicals, also part of the LG
Jacobs Engineering says it has been awarded a
contract to expand capacity at Ineos Phenol’s
Antwerp complex (CW, April 20, p. 11).
Capacity will be raised by 210,000 m.t./year,
to 680,000 m.t./year of phenol by June 2006.
The expansion will make Antwerp the largest
phenol- and acetone-producing complex, the
company says. Ineos Phenol also recently debottlenecked its Gladbeck, Germany phenol plant
by 20,000 m.t./year, to 650,000 m.t./year.
Oman EDC Contract
Awarded to Uhde
Liwa Petrochemical Co. (Muscat), a joint venture between Oman Oil Co., LG International
(Seoul), and National Petrochemical Co.
(NPC; Tehran), has signed a license agreement with Uhde for a previously announced
ethylene dichloride (EDC) plant at Sohar,
Oman (CW, Nov. 17, 2004, p. 15). The
300,000-m.t./year EDC unit will supply
downstream plants at Sohar and sell product
in export markets. Completion is scheduled
for the second quarter of 2008.
www.chemweek.com
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COVER STORY
Distribution
C
Potential Roadblocks Lie Ahead
hemical distributors say their financial performance improved in the
past year, helped largely by higher
prices, especially for commodities. Demand was strong in North
and South America, and certain
parts of Europe, but volume growth was slow in
major European markets including Germany,
www.chemweek.com
companies say. And the road ahead is rocky.
Many of the financial challenges distributors
have encountered in recent years remain. They
include rising costs of regulatory compliance
and insurance, particularly in the U.S.; spiralling investments in information technology; and
increased spending on logistics. Distributors also
have to serve a supplier and customer base that
is shifting production increasingly to emerging
markets, and consolidating. Leading distributors
say that to stay on top they must restrain costs,
concentrate on their competitive strengths, and
hold on to their customer base, which has access
to a wider range of alternative sourcing options
today than it ever had before.
For now, however, the distribution sector’s
19
COVER STORY
performance is strong. “If you didn’t have a
good year, or past 18 months, you shouldn’t be
in the business,” says John Yanney, president
and CEO of ChemCentral. “Distributors have
been the beneficiary of inflation,” with chemical product price increases averaging about 7%
in North America in the last year, Yanney says.
Volumes rose too, albeit more moderately, he
says. ChemCentral does not disclose its results,
but the company’s North American 2004 reve-
nues, excluding its joint ventures, climbed about
20% over the prior year, he adds. “Business
was good all over the globe,” and in particular
for the company’s ChemCentral International
(Pompano Beach, FL) division, which had an
especially strong year due to rising exports to
China, Latin America, and Southeast Asia,
Yanney says.
North American market leader Univar says it
increased first-quarter Ebit 36.5%, to $46 mil-
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to a variety of other chemical distribution firms such as Ashland,
Vinmar International and R.T. Vanderbilt.
Channel Polymers
LaRoche Industries, Inc.
a division of
has sold its Industrial Distribution Business
to
has merged with
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We served as financial advisor to
H. Muehlstein & Company, Inc.
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to LaRoche Industries, Inc.
Chemicals & Plastics Industry Investment Banking Group Contact
Gary Denning, Director • 404.495.7042 [email protected]
For a free e-mail subscription to our Chemical Industry Quarterly Update,
visit www.hlhz.com/register/chemicalsindustry
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management services; Houlihan Lokey Howard & Zukin Capital, Inc., a California corporation, a registered broker-dealer and SIPC member firm, which provides investment banking, private placement, merger,
acquisition and divestiture services; and Houlihan Lokey Howard & Zukin (Europe) Limited, a company incorporated in England of 83 Pall Mall, London SW1Y 5ES which is authorised and egulated by the
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20
lion, driven by strong sales growth, improved
productivity, and beneficial currency effects.
Consolidated net sales rose 16.6%, to $1.5 billion, due largely to stable demand and higher
chemical prices achieved by Univar USA and
Univar Canada, says Gary Pruitt, Univar CEO.
“Chemical pricing is certainly having an uplift
effect, and it impacts producers as well as distributors,” Pruitt says. “There is also a payoff
from efforts of our management team that is
focusing on growing our business in targeted
areas such as food, pharmaceuticals, and other
markets,” he says.
DYNAMIC AND HEALTHY. European market
leader Brenntag posted a 12% increase in 2004
Ebitda, to €270 million ($331 million), on sales
up 7%, to €4.6 billion. “In many regions and
markets we have improved our competitive position,” says Brenntag CEO Klaus Engel. Business
was “dynamic and healthy” in North America,
but in Western Europe conditions were “tougher
than the numbers tell,” he adds. Brenntag met its
targets in the company’s key markets of France,
Germany, and Italy, “but the results there were
not exciting,” he says. Growth was stronger in
emerging markets such as Eastern Europe and
South America, Engel says. Brenntag’s overall
cash flow and sales increased about 13% and
14%, respectively, in the first quarter of 2005,
but volume growth was “flat,” Engel says.
Brenntag’s results, achieved amid rising prices,
partly reflect sound management of costs, Engel
says. “If you have a good network and offer good
value, you can extract good profits,” he says. “But
you must have an excellent relationship with the
chemical industry and with the market.” A rapid
turnover of inventories also protects a distributor in times of rising costs and prices, he adds.
Brenntag turned over its inventory 15-20 times
in 2004, Engel says.
Ashland Distribution says it also had a strong
year, which continued into the first three
months of 2005, when the company posted its
second-consecutive record quarter. Operating
profits increased 79% in the first quarter, to
$34 million, compared with the first quarter
of 2004, on sales up 21%, to $956 million. The
division’s ability to pass through price increases
accounted for the steep sales gain, says Hank
Waters, president of Ashland Distribution. The
business intends to hold on to this growth in
several ways, including the further building of a
“low-cost business model,” Waters says.
Europe’s dedicated specialty chemical distributors also report growth in revenues and
profits. Azelis (Milan) says its sales increased
from €480 million in 2003, to €705 million
in 2004, boosted by acquisitions. Underlying
sales growth was about 7.5% and Ebita mar-
www.chemweek.com
gins were about 4%, says CEO Hans Udo year acquired Solvadis (Frankfurt) from Mg wide from a growing range of suppliers has
Wenzel. “We had a dynamic first half of 2004 Technologies. Solvadis is one of Europe’s become another major challenge for distribuand a flat second half, and that continued into top-10 distributors with sales of more than tors. “You may think you have a good foothold
the first quarter of 2005,” Wenzel says. “As a €460 million/year. Other European distribu- in certain accounts,” Yanney says. “But if proddistributor of specialties, our products are less tors under private equity ownership include uct comes into the U.S. at a reduced cost, it will
price-sensitive. But we were able to pass price Albion Chemicals (Yeadon, U.K.), Azelis, find its way to the customer,” he says.
increases on satisfactorily.” Wenzel also reports Brenntag, and IMCD Group (Rotterdam).
Sourcing from China and India, especially
good growth in pharma intermediates, and food
These companies say that private equity for specialty and fine chemicals, is a particular
ingredients and additives.
ownership has instilled financial
concern. “If I am a consumer and
Biesterfeld (Hamburg), one of Europe’s discipline that in some ways has
cannot get product from a primary
top-10 chemical distributors with consolidated benefited their operations. Bain
Western producer, I will get it from
sales of €595 million/year, in 2003 spun off Capital agreed on a business plan
China,” says one market source. That
its sales activities in Germany for commod- with the Brenntag management
creates increased competition for the
ity chemicals into a 50-50 joint venture with prior to acquiring Brenntag in early
European or North American disBrenntag. Privately owned Biesterfeld achieved 2004, and it has stuck to the plan,
tributor serving that account, and
a solid performance in 2004 at its remaining Engel says. “There has been a lot
also makes the producer “a little nerspecialties and polymers businesses, says CEO of constructive involvement from
vous,” the source says.
Birger Kuck. “Sales and returns increased in our shareholder,” he says. “They are Engel: Extracting
Distributors have responded to
2004 for specialty chemicals and plastics dis- driven by enhancing our exit value. strong profits.
the challenge by sourcing greater
tribution,” Kuck says. The jv with
So we have become more
volumes of chemicals from a wider
Brenntag faces tougher conditions,
focused on what we spend
range of locations. “We are buying
however. “In commodity chemicals
and how we spend it,” he
and selling agchems, pharma ingreSupplier cost
in Germany we do not see much
adds.
dients, and industrial chemicals in
pressures
growth,” Kuck says. “Everybody is
Bain also fully supports
India and the rest of Asia, as well as
fighting to keep their volume in this
Brenntag’s policy of growSouth America,” Kuck says.
can provide
competitive market.”
ing
organically
and
via
China has emerged in recent years
distributor
Univar and Ashland Distribution,
acquisition. “It is tougher
as a key source of chemicals for disopportunities. to get projects approved,” Pruitt: Positive effect tributors as well as producers. Most
as well as Brenntag and Biesterfeld,
have each restructured in recent years
Engel says. “But, so far, of pricing.
major distributors have offices in
to help boost profits and better deal
not one single project
China, mainly for sourcing but also
with rising costs and increased competition, says has not been endorsed by our sharefor exporting to the Chinese market.
Marc Fermont, senior partner at consulting firm holder.”
“Distributors are more independent
DistriConsult (Montreux, Switzerland). Those
Azelis is a relative newcomer to
from their suppliers, and they are
challenges have been exacerbated by the growing the distribution sector, having been
playing bigger roles as importers,”
trend toward private equity ownership of chemi- established by private equity comespecially in the U.S., the market
cal manufacturers, Fermont says. “The private pany Permira in 2001. Azelis was sold
source says. “Today it’s as easy to buy
equity owner wants to position a company to to another private equity company,
from China as it is from Midland,
bring in results, so suppliers tend to be less flex- Electra Partners Europe (London), in Yanney: Business
MI,” he adds.
ible and more demanding on distributors,” he 2003. Electra owns 70% of Azelis’s good worldwide.
Brenntag has expanded its operasays. “By trying to reduce their own costs, these equity and 57% of its voting rights, and the tions in China, and today sources 65,000
suppliers might give fewer concessions, such as Azelis management own the rest. Azelis, since m.t.-70,000 m.t./year of specialty chemicals
discounts, to distributors.”
its creation, has grown rapidly via acquisition there, Engel says. They include large volumes
Any M&A in the chemical distributor’s cus- to become one of Europe’s top-five chemical of food ingredients and pharma ingredients—
tomer base “creates disruption and chaos” for the distributors via a network of subsidiaries with products in which Chinese producers “have a
distributor, Yanney says. The distributor in some established identities.
technological edge,” Engel says. Brenntag also
cases must start from scratch trying to build a
“As far as our day-to-day business is con- imports 15,000 m.t.-20,000 m.t./year of chemirelationship with the new customer entity, and cerned, Electra is completely hands-off,” Wenzel cals into China, mainly organic intermediates,
often finds itself locked out if the acquirer has says. “With acquisitions, they want to be sure he says.
another preferred distributor, he says.
that each deal adds value for us. That’s helpAzelis says it also imports a range of specialties
Cost pressure on chemical manufacturers can, ful because they’re financial experts,” he says. from China, and that volumes have increased in
however, provide opportunities for distributors, Electra initially pledged €40 million in equity recent years. “I think that in 2005 we’ll reach
sources say. “Specialty chemical producers are for acquisitions by Azelis, and that has not yet the point where growth will become normal as
outsourcing more to distributors,” Engel says. been used up, Wenzel says.
opposed to exponential,” Wenzel says. He cites
“They are looking at how to optimize costs.”
Electra is unlikely to decide for a few years higher prices for chemical products in China,
Private equity ownership of the chemical whether to exit Azelis via an initial public offer- and rising transportation costs.
distribution industry has also grown in recent ing of shares or another route. “In 2007, we’ll
It recently became possible for overseas comyears, mainly in Europe. Chemdis Ltd., a sub- discuss how to let our equity partners get their panies to establish 100%-owned distribution
sidiary of private equity capital company Special money back,” Wenzel says.
operations in China. The Chinese government
Situations Venture Partners (Munich), last
Customers’ ability to source chemicals world- passed legislation last December allowing foreign
www.chemweek.com
21
COVER STORY
Shifting gears: Distributors face
challenges down the road.
companies to establish wholly owned trading
subsidiaries with very low capital requirements
and very few restrictions. Foreign-owned enterprises in China that are engaged in other types of
activity are also permitted to expand their business scope to include trade and distribution. The
move is a result of China’s commitment to liberalize its trade and distribution sectors for foreign
investors following the country’s accession to the
World Trade Organization (Geneva) in 2001.
The Chinese government has yet to issue
implementation regulations for the new laws or
approval procedures for foreign-owned distri-
bution businesses, however. “It will take some
time until this materializes into approvals at
the local level,” says law firm Beiten Burkhardt
(Munich). “However, we expect these approvals eventually to become a standard process for
foreign investors.”
Chemical distributors say it will be some
time before they are able to offer traditional,
“full-line” distribution services to suppliers
and customers in China, however. Chemical
producers in China are not familiar with distributors’ business model, they say. Distributors
say they are likely to form jv’s in China rather
than have wholly owned operations there,
despite the new legislation. “The role of distributors vis-à-vis producers has not been established
in China,” Engel says. “Chemical manufacturers in China want to do it all on their own.
Distributors have to find their role in the value
chain,” he says. It could be five to 10 years before
overseas distributors establish extensive, 100%owned networks in China, Engel says. Brenntag,
meanwhile, will establish a representative office
in Shanghai within a few months, and is “looking to team up with a major partner in China,”
Engel says.
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Azelis says it plans to offer distribution services starting next year from its Shanghai office,
which until now has been used for sourcing.
“Our objective is to develop in 2006, for selected
producers, the capability to distribute in China,”
Wenzel says. The move may lead to a jv between
Azelis and a Chinese partner, he says.
Globalization of the distribution industry has
stepped up elsewhere with local distributors in
developing regions such as Latin America and
the Mideast expanding beyond their borders,
Fermont says. “These distributors are becoming more savvy, more professional, and more
environmentally aware than ever before, and the
level of their expertise is improving,” he says.
In Europe, meanwhile, consolidation of the
chemical distribution sector is expected to
continue. A repeat of the megadeals that took
place in the early part of this decade, such
as Univar’s purchase of Ellis & Everard and
Brenntag’s acquisition of Holland Chemical
International, is not expected, companies
say. But the leading distributors are expected
to continue buying small and medium-size
enterprises (SME) that make up the bulk
of Europe’s fragmented distribution indus-
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22
www.chemweek.com
try. Univar, the second-biggest distributor revenues are generated by sales for producers in is not to say that, if the right deal comes along,”
in Europe, and Brenntag, each have market more than one country,” Wenzel says.
the company would not investigate, Waters
shares of just 5%-7%, analysts say. “We’re
Azelis expects to boost its sales to €800 mil- says. Ashland Distribution instead is focused
very unlikely to see big mergers and spec- lion/year in 2005 via acquisitions, Wenzel says. on organic growth, he says.
tacular deals,” Engel says. “But the general “We aim to be one of the top three or four disChemCentral is “definitely” going to
consolidation trend will go on.”
tributors of specialties,” he says. Azelis made expand soon via acquisition in Latin America,
ACQUISITION TRAIL. Many SMEs cannot afford
acquisitions last year in Belgium, Spain, and and is eyeing Asia, Yanney says. He would not
the rapidly rising costs of operating a chemical the U.K., as well as in Eastern Europe. The elaborate. The company already has a presdistribution company, and will be acquired or company is seeking acquisitions in Scandinavia ence in Asia through its DoveChemCentral
go out of business, analysts say. Major distribu- and the Baltic states, as well as in Spain and the (Singapore) jv with DoveChem Holdings.
tors, meanwhile, are acquiring
ChemCentral recently named
smaller distributors to build
Bill Hough, senior v.p. and
up regional distribution netdirector/marketing, as presiworks. “Costs are greater,
dent of its Southeast Asia
regulatory hurdles are higher,
operations. The company
and the pressure for geographialso recently expanded into
cal spread is increasing,” Engel
the Mideast via a jv with
says. Brenntag’s insurance costs
RishiRoop Holdings in Dubai,
increased 30% in the last two to
Yanney says. The jv takes
three years, he says.
the same name as another jv
Kuck: Pan-European Wenzel: Seeking
Sammons: Reach’s
Waters: Focused on
more acquisitions.
impact not known.
organic growth.
Brenntag made acquisi- growth strategy.
between the two companies,
tions in Poland and the U.K. in 2004, and last eastern Mediterranean, he adds.
RishiChem (Mumbai).
month acquired food additives and ingredients
Biesterfeld also has followed a pan-European
Distributors, meanwhile, are bracing for the
distributor Especialidades Puma (Barcelona). strategy in specialties and plastics “very success- introduction of the European Union’s (EU) proBrenntag is looking for “add-on acquisitions” in fully,” Kuck says. “We provide sales service for posed Reach chemicals legislation. Reach affects
the U.S. and Europe, Engel says. “We want to be manufacturers that use our organizations all distributors because it applies to importers of
a top-three player in each important European over Europe, while only a couple of years ago chemicals to the EU as well as producers. “For
market,” he says.
they had to deal with up to 40 different distri- companies importing products from overseas,
Univar announced the acquisition last week of bution partners,” he says. Biesterfeld is seeking Reach may be a real hurdle,” Kuck says. “For
Mapol (Warsaw), a distributor serving the food acquisitions or jv opportunities in the U.K. and those distributing products made in Europe it
and beverage, enzymes, and detergent markets Scandinavia, he adds.
should be easier to handle.”
in Poland. Terms were not disclosed. Univar has
Europe’s plastics distribution sector is parThe many SMEs in the distribution sector
an existing Warsaw-based distribution opera- ticularly fragmented, and more M&A activity are likely to be hit hardest by Reach because of
tion that serves the industrial consumables, is expected, distributors say. “Statistics show the costs of registering products under the new
personal care, chemicals, and polymers markets that in 2002 there were about 133 plastics dis- rules. The bigger distributors, meanwhile, are
in Poland.
tributors in Western Europe,” with the top seven waiting to see exactly what form the Reach legForming a commodity chemical jv with firms commanding about 30% of the market, islation will take. “We still don’t know exactly
Brenntag was Biesterfeld’s response to the high says Steve Fazakas, v.p./international at Ashland how it’s going to play out,” says John Sammons,
cost of operating in that field, Kuck says. “The Distribution. That has contracted to just over chief administrative officer at Univar. “There is
environmental investments required are very 100 distributors, and the top players command still substantial debate in the EU as to how it is
high,” he says. “It is hard for a priabout half of the market, he says.
going to be implemented, so there’s no clear picvately owned company to survive.”
The distribution sector is less ture on its impact.”
Biesterfeld closed four tank farms and
fragmented in North America,
The costs associated with Reach are almost
‘Today it’s as
sold a further two to Brenntag after
and the industry has consolidated certain to trigger a further round of restruceasy to buy
the jv was formed. The jv competes
less there than in Europe. Ashland turing, distributors say. “Small competitors
with Brenntag in the German disDistribution made its first acqui- will suffer, and that will help the bigger ones,”
from China
tribution market although it shares
sition last month since a major Wenzel says. But the potential disappearance of
as it is from
logistics infrastructure for commodrestructuring that began in 2002, chemical products from EU markets, because
Midland, MI.’
ity chemicals with Brenntag.
purchasing Albis’s (Hamburg) producers or importers cannot afford to register
Distributors of specialty chemiHouston-based North American them under Reach, will outweigh any benefits
cals have been more successful than
plastics distribution business, from consolidation, distributors say. “This would
distributors of commodities in establishing Waters says. The acquired business distributes mean a decreasing market for all of us,” Kuck
pan-European distribution networks. That is mainly engineering resins as well as com- says. European chemical distributors federation
also due to the high environmental and logistics modity chemicals, and does not include any FECC (Brussels) and national distributors assoinvestments required to establish a commodity physical assets, he says. The deal is a good fit for ciations are lobbying the European Commission
chemicals network, companies say.
Ashland Distribution, combining “the right for amendments to Reach that they say would
Azelis, since its inception, has been striving geographies, customer mix, and suppliers,” he make the legislation more manageable and less
to internationalize its operations. “We are still adds. “We don’t intend to make acquisitions burdensome for distributors.
a very young network, but already 40% of our the centerpiece of our growth strategy, but that
—IAN YOUNG and ESTHER D’AMICO
www.chemweek.com
23
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innovation
PROCESS TECHNOLOGY
Celanese, Dow Revisit Catalytic
Route from Ethane to Ethylene
F
irms including Celanese and Dow Symyx has identified catalysts for the oxo
Chemical are separately revisiting a dehydrogenation of ethane to ethylene that
long-known technology for the oxida- could prove competitive with steam cracking,”
tive dehydrogenation of ethane
Laurence says. Symyx recently filed
to produce ethylene and/or acetic
a patent for the catalysts, which are
acid. That route to ethylene was first
one of several products the company
demonstrated by Union Carbide
expects to commercialize under a
and Phillips Petroleum in the 1970s,
series of HTR alliances in 2006
but was found not to be competitive
(CW, June 8, p. 45).
with steam cracking. However, the
The oxo dehydrogenation of ethprocess has already been commerylene is thought to proceed via an
cialized by Sabic for production
ethoxide intermediate formed by
of acetic acid, and developments Mazanec: Proof of
ethane on the catalyst surface that
in catalyst discovery and process concept.
can then undergo an elimination
equipment could also make it competitive reaction to form ethylene. The surface ethoxwith existing routes to ethylene, experts say.
ide can be oxidized further to form a surface
Celanese is developing the technology as acetate, which can be hydrolyzed with water
part of an alliance with high-throughput to produce acetic acid. Sabic recently started
research (HTR) firm Symyx, says Laurence up a plant at Yanbu, Saudi Arabia that uses the
Alexander, analyst at Deutsche Bank (New latter oxidation route to produce acetic acid
York). “Working with Celanese off the rem- from ethane (CW, June 1, p. 25). Celanese is
nants of the old Union Carbide research effort, thought to be more interested in acetic acid
FUEL CELLS
DuPont, CMR Roll Out Novel Technologies
D
uPont and start up company CMR
Fuel Cells (Cambridge, U.K.) have
announced separate developments in
high-performance direct methanol fuel cell
technologies. Direct methanol technologies
generate power from the fuel cell in situ, and do
not need a separate reformer to convert methanol to hydrogen. CMR says it has produced a
working prototype of a direct methanol fuel
cell that is 10% of the standard size of those
currently available for powering portable electronic appliances, and 20% of the cost of those
cells. The company says its fuel cell runs fourtimes longer than conventional batteries in
a laptop or other devices such as power tools.
The fuel cell is also instantly rechargeable with
methanol, says Michael Priestnall, chief technology officer for CMR.
CMR’s new fuel cell is based on a new type of
fuel cell stack that mixes air and fuel. Previously,
fuel cell stacks have relied on complete separation of air and fuel, the company says. “We
firmly believe CMR’s technology is the equiva-
www.chemweek.com
CMR: Unveiling
low-cost, smallsize fuel cell.
lent of the jump from transistors to integrated
circuits,” says CEO John Halfpenny.
DuPont’s fuel cell technology, meanwhile,
dubbed DuPont Gen IV features a new generation of membrane electrode assemblies
(MEAs) for enhancing the performance of
fuel cells powered directly with methanol,
DuPont says. The new MEA delivers about
20% more power, and more than doubles
runtimes and requires “significantly” less catalyst, than standard MEAs, DuPont says. The
performance improvements of the new MEA
will lead to “more cost-effective fuel cell systems,” DuPont says.
—ALEX SCOTT
than ethylene, but declined to comment on its
plans for the technology.
Dow, meanwhile, is working with Pacific
Northwestern Laboratory (Richland, WA)
and Velocys (Plain City, OH) to develop
a microchannel reactor to produce ethylene from ethane via oxo dehydrogenation.
Velocys is a developer of commercial microchannel reactor technology that was spun
off from Battelle (Columbus, OH) in 2001.
Several problems of operating the process
at a commercial scale can potentially be
overcome by the use of microchannel technology, which “preserves advantages of
microscale laboratory reactors at a commercial level,” says Velocys program manager
Terry Mazanec.
The initial oxidation step is highly exothermic and hard to control using conventional
reaction equipment, resulting in consecutive
side reactions that produce unwanted by-products, experts say. However, the microchannel
system allows better temperature control,
which favors ethylene production, Mazanec
says. The group has successfully completed
the first of four steps toward commercialization, including proof of concept, and catalyst
adaptation and optimization, he says.
—ANDREW WOOD
■ DuPont Extends R&D Deal with MIT
DuPont says it will invest an additional
$25 million to extend its DuPont MIT
Alliance (DMA) research collaboration with the Massachussets Institute of
Technology (MIT; Cambridge). DMA was
originally funded in 2000 with a fiveyear, $35-million investment to develop
bio-based materials. The collaboration
will be extended to include alternative
energy technologies, nanocomposites,
nanoelectronic materials, and safety and
protection materials, DuPont says.
■ Dow Corning Links with Daikin
Dow Corning and Daikin Industries
(Osaka) say they have agreed to collaborate to develop fluorosilicone products.
Silicone gives fluorocarbons improved
properties, including softness, flexibility,
low-temperature resistance, and better
adhesion to substrates, Daikin says. The
companies say they are targeting applications in the aerospace, automotive,
construction, semiconductor, and textile
industries.
25
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pharmaceuticals & fine chemicals
ANTIBODIES
U.S. Firm Produces Low-Cost
Antibodies from Transgenic Eggs
B
iotechnology firm Viragen (Plantation, technology, the company says. The technology
FL), in collaboration with Oxford is a “dramatic breakthrough” for producing
Biomedica
(Oxford,
antibody drugs, the company
U.K.) and the Roslin Institute
says. “It is expected to offer
(Edinburgh)—the
company
a lower-cost manufacturing
behind Dolly, the first cloned
alternative for the production
sheep—has created a low-cost
of many protein drugs, with
system for manufacturing humanadditional potential advanized antibodies from transgenic
tages in the quality of the
chicken eggs, the
products,” Viragen says.
companies say.
The therapeutic antibody
Viragen says it has
produced using the technolapplied the technology is a drug candidate for
Sang:A new route to
production.
ogy successfully to
treating malignant melaproduce an anticannoma. The antibody was successfully expressed
cer drug using the
using Oxford BioMedica’s LentiVector genewhites of eggs laid
delivery technology in Viragen’s proprietary
by transgenic hens.
avian system. Three other protein-drug candiExpression levels of
dates, including two commercially marketed
selected antibodies using Viragen’s technology products that each generate sales of more than
are “significantly higher” than those associ- $2 billion/year, are featured in ongoing avianated with any competing avian-expression expression studies to demonstrate the breadth
CUSTOM MANUFACTURING
India Looks to Ethical Drugs
I
ndia’s pharmaceutical manufacturing sector is focused largely on generics, but its
attention is turning toward ethical drugs,
says Girish Malhotra, president of consulting firm EPCOT International (Pepper Pike,
OH). Indian custom pharma manufacturers’
main strategy in generics is to produce drugs
more cheaply by using simpler chemistries in
a more creative way. This approach has established a new business model that the global
pharma manufacturing sector has to “live
under,” Malhotra says.
However, recent adoption of patent laws
for the protection of intellectual property in
India means that Indian pharma “is entering
the world of the major players,” Malhotra says
(CW, Feb. 16, p. 22). “Now the playing field
will really change. The Indian pharma sector experienced its first growth wave through
generic drugs, and now with new patent laws
and process improvements it may experience a
second wave in ethical drugs,” he says.
Development costs of a drug for a com-
www.chemweek.com
pany in India are about 10% of those for a
drug developed by a major pharma company
in Europe or North America. Costs in India
can be lowered further in cases where it is
possible to simplify the manufacturing processes, Malhotra says. One way to cut costs
significantly could be to shift production
from batch to semi-continuous, or continuous, processes.
Widespread adoption of continuous processes has been restricted until now because
such processes are not included in FDA’s
GMP. This is about to change, however. FDA
has launched Process Analytical Technologies
(PAT), an initiative to improve manufacturing efficiencies through better process control
methods such as continuous manufacture.
Adopting PAT will give manufacturers quality and cost advantage, Malhotra says. India’s
API manufacturers are more likely to be early
adopters of PAT than their counterparts in
Europe and North America, given Indian
firms’ simpler processes, he says.
—AS
of the technology’s capabilities, Viragen says.
“We have long believed that this joint
effort would develop an avian system capable
of efficiently and economically producing
human biopharmaceuticals,” says Helen
Sang, scientific leader of the project that
is developing the technology and senior
scientist at the Roslin Institute. “We are
developing an elite manufacturing platform
that should emerge as a method of choice for
many products.”
“One of the key advantages we expect to
prove is the quality of the drug product,”
says Viragen president and CEO Charles
A. Rice. The company plans to demonstrate
that its avian-manufactured products are
glycosylated. Glycosylation, a process in
which a saccharide or sugar is attached to the
therapeutic protein, confers molecular stability and reproducibility of proteins, among
other benefits. “We believe this is critical,”
Rice says.
—ALEX SCOTT
■ Wyeth Optimizes Biopharma Process
Wyeth and Dublin City University
(Dublin) say they have begun a four-year
R&D collaboration to enhance Wyeth’s
biopharmaceutical processes. Science
Foundation Ireland (SFI; Dublin), a government body, will provide €4 million
($4.9 million) to fund the collaboration,
which will investigate the molecular
characteristics of Wyeth’s proprietary production cell lines and process technology.
Wyeth has a major biopharma manufacturing facility at Grange Castle, Ireland.
■ Boehringer Adds API Capacity
Boehringer Ingelheim says it is expanding capacity at its manufacturing facility
at Petersburg, VA to enable the company
to produce the active pharma ingredient (API) phenylephrine hydrochloride,
used in nasal decongestion treatments.
The expansion will enable Boehringer
Ingelheim for the first time to manufacture phenylephrine in the U.S.
■ Brenntag Gains GMP Status in Spain
Brenntag Quimica (Barcelona), a Brenntag
(Muelheim an der Ruhr, Germany) subsidiary, says it has gained GMP status
for production, storage, and distribution
of chemicals for the pharmaceutical and
cosmetics industries, at the company’s
Barbera del Valles, Spain site.
27
specialties
PAINTS AND COATINGS
Powder Market to Grow as
Demand Shifts to Asia
P
owder coating revenues will grow 5%6%/year for the next several years,
nearly doubling the 3% expected
growth rate in the overall coatings sector, says
The ChemQuest Group (Cincinnati). That is a
steep decline, however, from the double-digit
growth rate that the market had experienced
in prior years, ChemQuest says. The global
market was valued at $3.5 billion in 2004,
and the top-five producers account for about
50% of the total market (table), it adds.
Several factors have contributed to the drop
in growth in this market, says Mike Brown,
v.p. at ChemQuest. These include significant
price erosion for powder coating producers
in the late 1990s, when several appliance
manufacturers used Internet-based auctions
to negotiate their powder coating contracts,
Brown says. “Once the transparency of the
auction allowed manufacturers to see how
little profit the powder coatings industry as a
whole was willing to accept, the margins just
dried up,” he says.
Rohm and Haas (R&H) recently
announced plans to close its Wytheville,
VA powder coatings plant in the next 6■ Lanxess Enters Chinese Toll Deal
Sino Surfactant (Shanghai) has agreed
to toll manufacture textile processing
chemicals for Lanxess at Shanghai for
the Chinese market, the companies say.
Lanxess says it has opened a technical
competence center at Shanghai.
■ Ciba Enters Textiles Agreement
Ciba Specialty Chemicals says it has signed
an agreement to take over responsibility
for worldwide technical support, sales,
quality control, and production licensing of Schoeller Technologies’ (Sevelen,
Switzerland) multifunctional finish for textiles. Schoeller, which developed the
technology for the finish, will continue to
handle branding, marketing, patenting,
and licenses of the product, Ciba says. The
finish repels moisture on the outside of a
garment, transports moisture rapidly from
the inside to the outside, and accelerates
drying, Ciba says.
28
■ POWDER RANKINGS*
(in millions of US dollars)
Akzo Nobel
DuPont
Rohm and Haas
Jotun
PPG Industries
$700
475
342
115
100
*Global powder coatings sales for top-five producers. Source: SRI Consulting
(Menlo Park, CA).
9 months, consolidating production at its
Warsaw, IN and Reading, PA plants (CW,
June 1, p. 9). R&H cites rising raw material
costs, and a 2%-4% drop in selling prices.
The powder coating market is also pressured by overcapacity, caused in part by a
shift in OEM product demand to China,
from Europe and North America, Brown
says. Demand will continue to shift to China
and other Asian countries, but it will not
decline from the 5%-6% growth rate, Brown
says.
Several producers, including Akzo Nobel
and R&H, say they are concentrating on Asia.
Akzo announced plans last year to build a
powder coating unit adjacent to its existing
powder coating plant at Shenzhen, China.
Akzo operates two other powder coating
plants in China, at Ningbo and Suzhou. The
company also increased its stake in Interpon
Powder Coatings Korea (Ansan) in 2003 from
50% to 100%, as part of its strategy to grow
in Asia (CW, Oct. 8, 2003, p. 11).
R&H opened its first powder coating plant
in Asia with the recent commissioning of
a new $5-million facility at Shanghai. The
plant produces powder finishing materials
for industrial and specialized applications.
Producers are trying to fill production
capacity at existing European and North
American plants by focusing R&D on new
technologies and applications, Brown says.
Research is also concentrating on improving the aesthetic appeal of powder coating
finishes on OEM parts. Powder coating producers have only penetrated about 10%-15%
of the overall OEM market, Brown says.
“Currently, we’re seeing the industry go
beyond metal applications,” says the Powder
Coatings Institute (PCI; Alexandria, VA).
Medium-density fiberboards, used primarily
in entertainment cabinets, office furniture,
and countertops, have shown the most promise as new applications, PCI says.
Producers are also studying hardwoods
and certain types of plastics for powder
coating applications, PCI says. However,
more research needs to be done, as the lowtemperature threshhold of these substrates is
an obstacle to implementation, PCI adds.
—RYAN W. SMITH
DIGEST
Flame Retardants Prices Rise
Albemarle and Great Lakes Chemical
say they have raised prices for several brominated flame retardants, effective July
1, because of increasing demand and rising raw material costs. Albemarle says it
will increase brominated diols prices by 12
cts/lb worldwide. The company says it will
raise hexabromocyclododecane (HBCD)
and
dibromoethyldibromocyclohexane
prices by 5% worldwide. Great Lakes has
also announced a 5% price hike for HBCD,
effective July 1. The company says it will
raise tetrabromophthalic anhydride and
derivatives by 15 cts/lb, worldwide. Great
Lakes says it has nominated a 20 cts/kg
global price hike for decabromodiphenylethane. Meanwhile, Albemarle says it will
increase the minimum price of elemental
bromine, a key raw material to make bro-
minated flame retardants, worldwide, to
$2,000/m.t., effective July 1.
Akzo to Sell Pieces of Intervet
Akzo Nobel’s animal health care business
Intervet says it has agreed to divest some of its
feed additives operations to animal feed producer Biovet (Peshtera, Bulgaria). Financial
terms were not disclosed. Intervet says it is
divesting its Flavomycin and Gainpro brand
bambermycins used to fatten turkeys; its
Stenerol brand halofuginone, also used to
fatten turkeys; and its Hostazym, Sacox, and
Salocin brand animal feeds used to fatten pigs.
Intervet says it expects the deal to close July
31. “These activities no longer fit in with our
core business operations, and have become
distanced from Intervet’s portfolio,” says Akzo
board member Toon Wilderbeek. Intervet’s
sales were $1.257 billion last year, Akzo says.
www.chemweek.com
basic chemicals & plastics
INTERMEDIATES
Styrene Settlement Splits Market
L
ong simmering differences among
European styrene producers have led to
a split settlement for June of €782/m.t.
del, and €750/m.t. del (CW, June 8, p. 42).
Some players say the high settlements could
undermine the credibility of European styrene contract market.
The higher contract price was established
before June benzene contract negotiations
concluded. Benzene dropped €166/m.t. to
€529/m.t. del. “How can a styrene price have
any credibility if it was set before we know the
cost of benzene,” one producer says.
Producers who settled at the higher number
agree that the split is causing confusion, but
argue that the lower number is endangering
profitability. “Styrene at €750/m.t. is really
close to break even,” one producer says.
May styrene contracts settled at €962/m.t.,
del, about $1,180/m.t. del, at a time when
spot prices dropped as low as $720/m.t. fob.
April contract prices were more than $200/
m.t. above average spot prices, at €1,145/m.t.
del. Market players say the typical difference
between spot and contract prices has been
about $50/m.t. Even with the freight differential and the customary discounts of as much
as 10%, the gulf between spot and contract
prices threatened to become a credibility gap.
Some polystyrene producers have been
forced to cut operating rates to about 50%,
and others have shut capacity with styrene
prices at €782/m.t., one producer says. There
is no point to setting styrene prices at levels
that are too high for derivatives producers to
SPOT SPLIT*
(in dollars/m.t.)
1600
Contract
Spot(1)
1400
1200
1000
800
600
400
200
0
Jan
Feb
March
April
May
June
*European prices. 1) monthly average. Source: CW research.
absorb, and then giving retroactive discounts,
he says.
The real issue is styrene overcapacity, says
Monica Bianchi, business manager/styrenics at
Tecnon Orbichem (London). Current styrene
nameplate capacity in Europe is 6.2 million
m.t., more than 10% above consumption of
AROMATICS
Ineos Boosts Phenol Production
I
neos Phenol (Gladbeck, Germany) says it
has completed a 20,000-m.t./year expansion at its Gladbeck phenol plant during
a planned maintenance turnaround, raising
capacity at the plant to 650,000 m.t./year.
Ineos has also debottlenecked its Mobile, AL
plant in the past 18 months, by 60,000 m.t./
year in total, to 500,000 m.t./year. The Mobile
plant is running at full capacity, and output
is “sold out,” says CEO Peter Bickert. The
company will continue to increase capacity at
the Mobile plant, Bickert says. Ineos recently
signed a contract with Jacobs Engineering to
expand its Antwerp phenol plant (p. 16).
Meanwhile, U.S. phenol contract prices
have fallen 3.5 cts/lb during the first quarter,
to 71.5 cts-73.5 cts/lb del due to a slow start
in demand. Contract prices firmed 2 cts/lb
www.chemweek.com
in April in response to a demand pickup and
higher feedstock costs, sources say. They are
expected to drop 9 cts-10 cts/lb each in May
and June, however, in line with the steep
decline in benzene and propylene feedstock
costs, says Kevin McCarthy, analyst at Banc
of America Securities (New York). Increased
supply, particularly from Asian producers who
were previously constrained by benzene and
propylene feedstock availability, could contribute to the downward pressure on prices as
well, McCarthy says. Healthy demand boosted
acetone prices by a penny in the first quarter,
to 43 cts/lb del for large volume customers,
and to 66 cts-69 cts/lb del for smaller volume
buyers, sources say. Producers are seeking second-quarter increases of 3 cts-8 cts/lb.
—PECK HWEE SIM
5.5 million m.t., Bianchi says. Styrene operating rates in Europe have fallen to about 80%,
producers say.
“Benzene had been driving styrene pricing,”
Bianchi says. “Now that benzene prices have
returned to more manageable levels, we are
seeing the supply-demand situation in styrene
come to the fore.”
—GREGORY DL MORRIS
■ PotashCorp Takes SinoChem Stake
Potash Corporation of Saskatchewan
(PotashCorp) says it has agreed to buy
a 9.99% interest in SinoChem’s fertilizer import and distribution business,
Sinofert. It also has an option to buy
another 10.01% interest in the next three
years. The purchase price is not yet determined. Sinochem’ recently announced
that it would place its fertilizer business
into a publicly traded company (CW,
Feb. 9, p. 7). The Sinofert acquisition is
subject to the completion of that transaction, expected in July, PotashCorp says.
Sinofert is the largest importer of fertilizer
products in China, PotashCorp says.
■ Agrium Buys Distribution Assets
Agrium says it has agreed to buy
ExxonMobil subsidiary Imperial Oil’s fertilizer distribution business in Western
Canada for $22 million in cash. The transaction is expected to close in the third
quarter, Agrium says. The acquisition
includes storage and distribution assets,
long-term leases for land at 190 independently operated retail locations, as well
as exclusive fertilizer agreements with
the independent operators, who typically
market more than 500,000 m.t./year of
fertilizer in Western Canada, Agrium says.
■ Basic Chemical Price Watch
DuPont has announced a $150/m.t., 5%,
increase in titanium dioxide prices for
Asia/Pacific, excluding Japan, effective
July 1. DuPont cites tight global demandsupply conditions. • Degussa has issued
hydrogen peroxide (H2O2) price increases
of 7 cts/lb, about 10%, on a 100% basis,
effective July 1, or as contracts permit. The
company says it is implementing transportation and energy surcharges for H2O2 in
North America, based on a basket of leading US energy indexes, also effective July
1. FMC announced a similar increase on
H2O2 last week (CW, June 8, p. 40).
29
cw price report
COMMENTARY
U.S.
EUROPE
SPOT
U.S. olefins spot prices stabilized last week
following recent declines, helped by higher
feedstock costs and signs of improved demand
from Asia. Butadiene contract prices firmed a
penny for May, to 45 cts/lb del, on tight supply
and healthy demand. Producers are seeking a
rollover for June contracts. European ethylene
numbers continued to fall, by $50/m.t. last
week, in response to lackluster demand and
quiet trading activity. Propylene and butadiene
spot prices were steady on light trade, sources
say. Third-quarter olefins contract talks were
expected to begin last week.
Aromatics prices in the U.S. gained on
higher energy prices. Benzene climbed 17 cts/
gal as buyers outnumbered sellers. Toluene
and mixed xylenes firmed about 3 cts/gal in
tandem with stronger demand from the gasoline sector, as well as higher benzene prices.
Styrene spot prices were steady in the U.S. as
sellers held on to offers in the low- to mid-40s
cts/lb fob range, but buyers were absent at
those prices. May styrene contracts shed 7 cts10 cts/lb, to 64 cts-68 cts/lb del, in line with
the sharp decline in May benzene contracts.
U.S. producers have reportedly shaved operating rates by 20%.
However, European benzene prices softened last week by about $10/m.t. Muted
demand kept toluene and xylenes flat, sources
say. The major upheaval in the European petrochemical market was the split settlement for
styrene contracts (p. 29). Spot styrene prices
surged by a $100/m.t. in Europe, however, as
demand showed signs of revival.
Methanol spot prices lost about 2 cts/gal in
the U.S. and about €5-€10/m.t. in Europe
last week due to impending startup of new
capacity in Chile and Trinidad, sources say.
Contract prices were steady, however, at
95cts/gal fob for May and June in the U.S.,
and at €230/m.t. fob in Europe.
Para-xylene spot prices in the U.S. inched up
$70-$80/m.t. in the U.S. because of heightened buying interest. European p-xylene prices
lost about $60/m.t. in the past two weeks,
bringing prices on par with U.S. numbers.
European June p-xylene contracts decreased
€14/m.t., to €660/m.t. del. Acrylonitrile and
ethylene glycol (EG) markets saw increased
trading activity, but weakness in feedstock
costs eroded spot prices by about $20/m.t.
and €10/m.t. respectively, sources say. Asian
EG prices reportedly have firmed about
$50/m.t. over the past month, to $700$710/m.t. c&f.
30
CONTRACT
SPOT
CONTRACT
ETHANE
50-51 cts/gal fob ▲
NAPHTHA
$440-450/m.t. cif ▼
GASOIL
120-124 cts/gal fob
$450-460/m.t. cif ▼
PROPANE
BUTANE
ETHYLENE
25-26.5 cts/lb del
38 cts/lb del May
$650-670/m.t. cif ▼
€750/m.t. del Q2
chemical-grade
33-34 cts/lb del
33.5 cts/lb del May
€580-600/m.t cif
€705/m.t. del Q2
polymer-grade
34-35 cts/lb del
35 cts/lb del May
€600-620/m.t cif
BUTADIENE
45-50 cts/lb fob
45 cts/lb del May ▲
$920-940/m.t. fob
€702/m.t. del Q2
BENZENE
230 cts/gal fob June
$730-750/m.t. fob ▼
€529/m.t. fob June
TOLUENE1
MIXED XYLENES
192 cts/gal fob June ▲
$480-500/m.t. cif
STYRENE
43-44 cts/lb fob
64-68 cts/lb fob May ▼
$800-820/m.t. fob ▲
€750/m.t.,€782/m.t.del June ▼
METHANOL
83-85 cts/gal fob ▼
95 cts/gal fob May
€205-210/m.t. fob ▼
€230/m.t. fob Q2
MTBE
186-1878 cts/gal fob ▼
PROPYLENE
$550-560/m.t. cif
$625-650/m.t. fob
ETHYLENE (U.S. contracts; cts/lb)
BENZENE (U.S. spot; dollars/gal)
$4.5
45 cts
40
4.0
35
3.5
30
3.0
25
2.5
20
2.0
15
1.5
10
1.0
5
0.5
0
0
J J
’04
J J A S O N D J F MAM J J A S O N D J F MAM
’03
’04
’05
STYRENE (U.S. spot; cts/lb)
A
S
O
N
D
J
’05
F
M
A
M
J
M
A
M
J
METHANOL (U.S. spot cts/gal)
100 cts
90
80
70
60
50
40
30
20
10
0
70 cts
60
50
40
30
20
10
0
J J
’04
A
S
O
N
D
J
’05
F
M
A
M
J
J J
’04
A
S
O
N
D
J
’05
F
SPOT
CONTRACT
SPOT
CONTRACT
PARA-XYLENE
$750-800/m.t. fob ▲
44.5 cts/lb del Apr
$780-800/m.t. fob ▼
€660/m.t. del June
ORTHO -XYLENE
38-39 cts/lb fob
38.5 cts/lb fob Apr
$760-780/m.t. fob
€650/m.t. del Q2
45 cts/lb del May
€680-700/m.t. cif ▼
€710/m.t. del June
60-63 cts/lb del
$1,280-1,320/m.t. cif ▼
€1,385-1,400/m.t. del Q2
ETHYLENE GLYCOL
antifreeze
40-45 cts/lb fob
fiber-grade
ACRYLONITRILE
$1,310-1,320/m.t. fob
EDC
23-24 cts/lb fob
$440-450/m.t. fob
INORGANICS
CHLORINE
$320-360/ton fob
$345-375/ton fob Q2
CAUSTIC SODA
$320-340/ton fob
$365-375/ton fob May
SODA ASH
$96-105/ton fob
€150-180/m.t. del
$270-290/m.t. fob ▼
€280/m.t. del May
€200-210/m.t. del.
1) Nitration-grade. CW Price Report is compiled the Wednesday prior to publication through consultation with producers, consumers, and
traders. Prices are quoted fob (free-on-board), cif (cost, insurance & freight), c&f (cost & freight), or frteq (freight equalized). References are
NWE (Northwest Europe) port for Europe and USG (U.S. Gulf) port for the U.S., and reflect recent large-volume transactions.
www.chemweek.com
regulatory
LAWSUITS
Groups Say New Justice Will
Stymie Environmental Protection
E
nvironmental groups say the Senate’s con- fundamental government safeguards,” he says.
firmation of Janice Rogers Brown as U.S.
Lawsuits with significant importance to the
Court of Appeals justice for the District chemical industry have moved through the
of Columbia will hurt environmental protec- D.C. district and appeals courts. The recent
tions and other laws that safeguard
lawsuit filed by CSX to block a
public health. The D.C. appeals
hazmat transportation ban enacted
court appointment is important to
by the D.C. city council went
environmental and industry groups
through the lower court. Lawsuits
because many of the most influenfiled by states attorneys general
tial lawsuits against EPA and other
against EPA for rules on New
federal agencies move through that
Source Review and mercury emiscourt, says environmental group
sions also are pending in the D.C.
Earthjustice (Washington).
federal court system.
Brown is a judicial activist with Brown: Regulatory
Brown has been clear about her
a well documented anti-regula- atrophy?
opinions on government regulatory history, raising concerns that she will be tions, Earthjustice says. Brown in the past has
“legislating from the bench,” says Earthjustice said that “where government moves in, comattorney James Cox. Brown’s record “reveals munity retreats, civil society disintegrates,
she’s a staunch, opening activist opponent of and our ability to control our own destiny
HEALTH EFFECTS
Harvard Study Identifies DEHP in Neonatal
Intensive Care Infants
I
nfants treated with medical devices containing the plasticizer di(2ethylhexyl)
phthalate (DEHP) also have relatively high
levels of a DEHP metabolite in their urine, say
researchers at the Harvard School of Public
Health (HSPH; Cambridge) and the U.S.
Centers for Disease Control (CDC; Atlanta).
DEHP is found in polyvinyl chloride (PVC)
used to make intravenous tubing, bags, and
other medical devices, the researchers say. The
study was paid for in part by advocacy group
Health Care Without Harm (San Francisco)
and a research center funded by HSPH and
the National Institute of Occupational
Science and Health (NIOSH; Atlanta). The
study also indicates that high levels of DEHP
in infants’ urine are linked to intensity of
treatment involving medical devices containing PVC, the researchers say.
“Our study not only demonstrates that
infants in the neonatal intensive care units are
exposed to demonstrably high levels of DEHP,
but we have also clearly linked the intensity of DEHP product use with the amount
www.chemweek.com
of DEHP that entered infants’ bodies,” says
Howard Hu, HSPH professor of occupational
and environmental medicine.
DEHP metabolizes into mono-(2-ethylhexyl) phthalate (MEHP), which can be
measured in the infants urine as an indicator
of DEHP exposure, researchers say. MEHP
in laboratory animals has been shown to
“disrupt reproductive tract development and
function,” HSPH says.
ACC says the levels of DEHP that the study
reports are “actually reassuring,” because—
even in the most highly exposed group of
children studied—the levels found are below
those which show no adverse health effects in
laboratory animals. “It takes a whole lifetime
of doses far higher than seen here to cause the
negative health effects in some rodents,” says
ACC’s phthalates esters panel.
ACC also says the finding that children
undergoing the most intensive medical treatment have the highest levels of phthalates in
their systems, “agrees with earlier studies and
states the obvious.”
— KS
atrophies. The result is: families under siege;
war in the streets; unapologetic expropriation
of property; the precipitous decline of the rule
of law; the rapid rise of corruption; the loss of
civility and the triumph of deceit.”
The Senate, which voted 56-43 to confirm Brown’s appointment, has been sharply
divided along party lines over her nomination. One Democrat crossed party lines to
vote in favor of confirmation. Senator Harry
Reid (D., NV) says Brown’s appointment is
like “putting the fox to guard the hen house.”
—KARA SISSELL
NRDC Sues EPA Over Children’s
Pesticide Exposure Rules
The Natural Resources Defense Council
(NRDC; Washington) and several other
groups have filed a lawsuit against EPA
for allegedly failing to respond “in a
timely manner” to NRDC’s petition that
the agency consider the higher-thanaverage potential exposure to pesticides
for children of farmers when it sets limits
for pesticide residues on food. The Food
Quality Protection Act (FQPA) requires the
agency to set regulations that take into
consideration the higher susceptibility of
certain subgroups of the population, the
plaintiffs say.
“Congress told EPA to set pesticide
levels for food that provide a reasonable
certainty of no harm to all our children,
including kids living on and near farms,”
says NRDC senior attorney Michael
Wall. “EPA has abdicated its responsibility.” FQPA requires EPA to account for
children’s health when setting residue
levels, and NRDC in 1998 petitioned EPA
to identify children living in farm areas as
a group that merits special consideration.
The agency has not responded to the petition, NRDC says.
Health officials say that children’s
developing bodies and brains are particularly susceptible to pesticide exposure.
Children are also more likely to be
exposed to pesticides because they come
in contact with more dust and dirt, and,
in farming regions, they tend to play outdoors near fields where pesticide spraying
has taken place, NRDC says.
NRDC says EPA has “failed to consider
farm kids’ heightened exposure risks
when setting allowable pesticide standards for food.”
—ks
31
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7087
cw100
Earnings End 2004 on Strong Note
Higher Pricing and Improved Demand Lifts Profits
S
ales and profits improved in 2004 for most chemical companies
in the CW100. Strong demand lifted profits, as selling prices
rose faster than energy and feedstock costs. Basic chemical producers in the CW100 posted the strongest year-over-year gains.
Many basic chemical companies returned to the black. Lyondell
Chemical’s sales jumped 57%, to $5.9 billion, helped by its purchase
of Millennium Chemicals last year. Net income at Lyondell was
$54 million, compared to a $302-million loss in 2003. “During 2004,
the industry experienced a greater cyclical turnaround than was anticipated,” says Dan Smith, president and CEO.
Fertilizer producers also returned to the black. PotashCorp’s
earnings were $298.6 million, compared to a $126.3-million
loss in 2003. Sales increased 18%, to $2.9 billion. Better pricing
and tight supply helped boost earnings, Potash says. Agrium’s net
income improved to $276 million, compared to a $121-million
loss, excluding special items for both years. Sales rose 14%, to
$2.8 billion. Agrium’s 2004 net income rose 88%, to $224 million, excluding special items. Earnings growth was led by Agrium’s
Sales
(in millions of dollars)
BASIC CHEMICALS
DOW CHEMICAL¹
AIR PRODUCTS
PRAXAIR
EASTMAN CHEMICAL¹
LYONDELL CHEMICAL
NOVA CHEMICALS
BRASKEM (ADR)
POTASHCORP
AGRIUM
SOLUTIA
GEORGIA GULF
POLYONE
OLIN
WESTLAKE CHEMICAL
AIRGAS²
METHANEX
TERRA INDUSTRIES
WELLMAN
GRAFTECH INTERNATIONAL
NL INDUSTRIES
TERRA NITROGEN
PIONEER (CL A)
LSB INDUSTRIES
DIVERSIFIED CHEMICALS
CHINA PETROLEUM & CHEM (ADR)
DU PONT
SUNOCO
ICI (ADR)
PPG INDUSTRIES
ASHLAND
GOODRICH
ENGELHARD
FMC
CABOT
VALLEY NATIONAL GASES
www.chemweek.com
Net income
2004
Change
from
2003 (%)
$40,161.0
7,411.4
6,594.0
6,580.0
5,968.0
5,270.0
4,592.1
2,901.4
2,838.0
2,697.0
2,206.2
2,161.5
1,997.0
1,985.4
1,895.5
1,719.5
1,507.0
1,305.0
848.0
741.7
419.6
407.1
364.1
23.1
17.7
17.5
13.4
57.0
33.5
20.3
17.7
13.6
11.0
52.7
10.0
28.3
39.5
6.1
21.1
11.7
17.6
19.1
-37.3
3.8
7.5
14.7
42,155.7
27,491.0
23,186.0
10,731.5
9,513.0
8,349.0
4,724.5
4,166.4
2,051.2
1,934.0
154.5
-18.9
1.3
46.1
-4.2
8.6
9.7
7.8
12.2
6.8
7.7
2.1
2004
wholesale operations in North and South America, which benefited
from tight supply and demand in the fertilizer market, the company
says.
Dow Chemical reported net income up 60.8%, to $2.8 billion,
on sales up 23.1%, to $40.16 billion. Volumes improved 6%, and
prices, 17%, Dow says. Profit margins rose from 5.3%, to 7%,
the company says. “We began 2004 determined to maintain the
momentum of our drive for financial fitness, to sustain the gains of
2003, and to further develop the foundation for long-term growth,”
says Andrew Liveris, president and CEO. “Supported by improving chemical industry fundamentals, we achieved success on all
fronts.”
Net income and profit margins improved at most diversified
chemical companies, but sales growth was slower than the basic and
specialty chemical sectors. DuPont’s net income rose 77.6%, including special items, to $1.78 billion, on sales up 1.3%, to $27.5 billion.
Net income improved 41%, to $2.4 billion, before special items, the
company says. Higher selling prices and volumes, as well as favorProfit Margins
Operating income
Sales ratios
Capital Ratios
Change from
2003 (%)
2004
Change from
2003 (%)
2004
Change
from 2003
(%)
SG&A as
a % of
sales
R&D as a
% of sales
Return on
invested
capital (%)
Dept-toequity (%)
$2,797.0
604.1
697.0
170.0
54.0
262.0
260.2
298.6
276.0
-316.0
105.9
18.6
51.0
120.7
80.2
236.4
67.6
-38.8
17.0
211.1
45.9
-1.2
2.4
60.8
51.0
19.1
NM
NM
835.7
221.1
NM
NM
NM
747.5
NM
NM
718.1
17.7
NM
NM
NM
NM
213.4
NM
NM
-22.6
7.0
8.2
10.6
2.6
0.9
5.0
5.7
10.3
9.7
-11.7
4.8
0.9
2.6
6.1
4.2
13.8
4.5
-3.0
2.0
28.5
10.9
-0.3
0.7
5.3
6.4
10.4
-4.7
-7.9
0.7
2.1
-5.1
-0.8
-40.3
0.9
-4.9
0.0
1.0
3.8
0.1
-0.9
-8.7
-3.7
5.7
-8.7
4.8
1.0
$5,402.0
1,553.0
1,661.0
678.0
402.0
569.0
1,107.7
672.6
558.0
97.0
255.0
122.8
165.0
311.0
257.8
434.4
218.5
38.4
146.0
94.1
57.6
51.0
12.3
40.9
14.2
15.0
22.6
94.2
139.1
46.8
59.7
33.8
-1.0
90.8
119.3
29.9
118.7
8.1
12.4
61.8
-25.5
41.7
-37.9
163.1
11.7
-31.8
6.1
14.8
14.3
9.2
5.4
6.1
5.3
5.5
10.7
10.7
2.8
9.3
7.3
3.0
38.5
NA
2.9
7.7
11.6
15.0
2.6
6.8
13.5
2.5
1.7
1.2
2.3
1.8
0.9
NA
NA
NA
1.5
NA
0.7
0.2
NA
NA
NA
NA
1.0
0.9
1.1
NA
0.0
NA
10.1
7.7
9.1
4.9
0.4
6.5
6.6
7.0
13.9
36.8
14.8
1.7
7.6
9.3
4.8
13.0
5.6
-5.7
2.4
53.9
32.2
-0.5
0.1
94.8
47.6
79.7
174.1
282.6
94.8
103.5
52.8
56.6
NM
47.9
168.4
73.3
38.6
98.7
37.0
94.7
164.2
NM
0.0
6.1
529.9
88.5
4,352.0
1,780.0
605.0
402.4
683.0
398.0
156.0
235.5
175.6
122.0
7.7
60.6
77.6
93.9
950.0
36.6
323.4
305.2
-0.4
341.2
62.7
3,154.2
10.3
6.5
2.6
3.7
7.2
4.8
3.3
5.7
8.6
6.3
5.0
5.2
3.7
2.0
0.3
5.7
1.2
0.9
6.4
2.1
4.2
0.2
11,527.9
3,967.0
1,480.0
1,241.6
1,496.0
423.0
622.3
407.5
349.7
344.0
24.0
42.8
16.8
58.5
4.3
9.4
150.3
20.8
2.6
13.1
5.2
35.5
9.1
16.3
3.7
27.1
21.2
14.0
17.0
9.4
17.0
14.1
37.1
0.4
4.8
0.1
2.6
3.2
0.5
5.3
2.4
4.6
NA
0.0
9.6
8.9
13.8
5.4
13.2
8.6
4.8
12.1
9.5
6.6
5.5
50.6
49.8
85.8
154.9
33.1
41.0
141.4
36.3
93.8
43.2
135.1
33
cw marketplace
Phone: 212 621 4914
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E-mail: [email protected]
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cw100
able currency exchange rates and lower costs
helped to boost earnings, DuPont says. ICI’s
net income improved 18%, to £259 million
($471 million) before special items. Profits
jumped 950%, to $402.4 million including
items, on sales down 4.2%, to $10.7 billion.
Specialty chemical makers benefited from
second-half price improvements, producers say. Rohm and Haas (R&H) reported
Sales
(in millions of dollars)
SPECIALTY CHEMICALS
ROHM AND HAAS
CIBA SPCLTY CHEMICALS (ADR)
SHERWIN-WILLIAMS
MONSANTO
AVERY DENNISON
ECOLAB
LUBRIZOL
NALCO HOLDING
CROMPTON
VALSPAR
RPM INTERNATIONAL (2)
W.R. GRACE
IFF
HERCULES
CYTEC INDUSTRIES
GREAT LAKES CHEMICAL
ALBEMARLE
H.B. FULLER
SIGMA-ALDRICH
OM GROUP
A. SCHULMAN
ARCH CHEMICALS
SENSIENT TECHNOLOGIES
MEMC
RESOLUTION PERFORMANCE
STEPAN
MINERALS TECHNOLOGIES
NEWMARKET
POLYMER GROUP
OMNOVA SOLUTIONS
COMPASS MINERALS
MACDERMID
AMERON INTERNATIONAL
OCTEL
AMCOL INTERNATIONAL
CAMBREX
GENENCOR
QUAKER CHEMICAL
ROGERS
CALGON CARBON
DELTA & PINE LAND
CABOT MICROELECTRONICS
ACETO
PENFORD
ATMI
PARK ELECTROCHEMICAL²
ALBANY MOLECULAR
AMERICAN VANGUARD
SYMYX TECHNOLOGIES
DETREX
BALCHEM (CL B)
AMERICAN PACIFIC
DIVERSA
KMG CHEMICALS
TOR MINERALS
MAXYGEN
TECHNOLOGY FLAVORS & FRAGRNCES
net income up 72%, to $496 million, on
sales up 14%, to $7.3 billion. Demand was
higher across most of R&H’s businesses and
regions, and selling prices “had a notable
increase in the second half of the year,”
the company says. “We delivered a muchimproved performance in 2004,” says Raj
Gupta, chairman, president, and CEO.
“The overall economic recovery helped bolNet income
Profit Margins
2004
Change
from
2003 (%)
2004
Change from
2003 (%)
2004
Change from
2003 (%)
7,300.0
6,157.6
6,123.6
5,457.0
5,340.9
4,184.9
3,159.5
3,033.3
2,549.8
2,440.7
2,341.6
2,259.9
2,033.7
1,997.0
1,721.3
1,603.7
1,513.7
1,409.6
1,409.2
1,346.9
1,239.1
1,120.9
1,047.1
1,028.0
996.0
935.8
923.7
894.1
844.7
745.7
695.1
660.8
605.9
480.5
459.1
443.7
410.4
400.7
365.0
336.6
314.9
309.4
297.7
279.4
246.3
194.2
169.5
150.9
83.2
74.4
67.4
59.5
57.6
43.6
30.5
16.3
16.0
13.7
5.7
13.2
10.6
12.1
11.2
54.0
9.6
16.7
8.6
12.4
14.1
6.9
8.2
17.0
12.5
36.3
9.5
8.6
47.7
12.6
29.8
6.1
31.6
27.4
19.2
11.3
18.2
8.6
9.2
15.7
6.6
0.9
5.7
23.4
8.0
7.1
17.8
50.0
20.9
10.7
23.0
9.7
6.4
43.5
-0.7
-13.7
20.8
32.1
24.3
8.9
-13.6
17.5
22.7
26.3
-28.8
3.0
496.0
248.0
393.3
271.0
279.7
310.5
93.5
-138.8
-36.7
142.8
141.9
-402.3
196.1
27.0
126.1
19.9
54.8
35.6
232.9
122.5
27.9
17.3
73.9
226.2
-67.0
10.3
58.6
33.1
4.7
-24.4
49.8
53.2
13.5
11.1
31.6
-25.9
26.2
9.0
40.1
5.9
5.3
46.7
13.1
3.7
20.1
29.9
-11.7
14.5
12.9
0.8
8.0
0.4
-33.4
1.8
1.1
-49.1
-1.3
72.2
-21.4
18.4
238.8
15.2
11.9
3.0
NM
NM
27.0
301.6
NM
13.6
-63.5
38.6
NM
-26.1
-7.8
22.3
NM
74.9
71.3
-9.2
94.0
NM
110.2
13.4
60.3
-99.1
NM
54.2
6.8
-55.0
-79.2
58.5
NM
14.8
-39.5
52.6
31.3
-80.9
23.8
38.0
-56.1
911.4
NM
NM
41.1
124.4
NM
42.4
-96.0
NM
-8.0
-12.7
NM
NM
6.8
4.0
6.4
5.0
5.2
7.4
3.0
-4.6
-1.4
5.9
6.1
-17.8
9.6
1.4
7.3
1.2
3.6
2.5
16.5
9.1
2.3
1.5
7.1
22.0
-6.7
1.1
6.3
3.7
0.6
-3.3
7.2
8.1
2.2
2.3
6.9
-5.8
6.4
2.2
11.0
1.7
1.7
15.1
4.4
1.3
8.2
15.4
-6.9
9.6
15.5
1.0
11.9
0.6
-58.1
4.0
3.6
-301.6
-7.9
4.5
5.4
6.1
1.6
5.1
7.4
4.4
-6.6
-5.4
5.0
1.7
-2.8
9.1
4.0
6.2
-2.8
6.7
3.0
14.7
-6.2
1.5
1.2
8.2
14.9
-5.8
0.6
6.2
2.7
64.2
-12.3
5.4
8.0
5.0
11.7
5.4
0.1
6.0
4.4
10.8
1.6
9.8
15.0
3.5
3.2
1.2
-22.4
15.7
8.2
9.1
-1.8
9.1
13.6
-117.8
5.4
5.2
-135.1
-3.5
ster demand across all markets and regions,
and our strong portfolio of products and
technologies continued to drive growth. At
the same time, the rapidly escalating raw
material costs added significant pressure
on our gross profit margins; however, our
focus on increasing selling prices partially
closed the gap in the second half of the
year,” Gupta says.
—KERRI WALSH
Operating income
2004
1,291.0
878.9
773.3
1,289.0
628.1
785.9
451.1
528.3
228.9
332.9
309.8
264.0
433.1
337.0
259.8
182.4
217.1
124.2
392.4
211.7
88.4
85.7
175.4
301.5
79.0
58.3
161.7
58.3
102.0
26.1
171.3
124.6
29.6
117.5
55.8
89.2
61.7
27.1
55.8
34.3
68.5
87.3
17.2
26.0
53.8
16.7
37.8
30.8
24.3
5.9
16.1
5.5
-18.4
4.1
2.7
-45.6
-0.7
Sales ratios
Capital Ratios
Change
from 2003
(%)
SG&A as
a % of
sales
R&D as a
% of sales
Return on
invested
capital (%)
13.3
7.0
11.9
12.3
4.3
11.4
67.1
15.7
39.2
8.2
13.4
117.8
4.4
-4.5
12.5
23.0
16.1
-4.8
11.4
NM
19.6
17.1
0.9
73.6
88.1
10.8
-3.0
-12.0
14.4
-12.1
22.3
5.3
-48.2
-14.9
16.6
3.7
-6.3
-14.8
58.6
16.7
4.7
21.6
22.8
-14.4
106.8
40.1
-39.2
49.4
89.5
146.7
28.1
-76.0
NM
0.6
-8.7
NM
NM
17.2
21.6
33.8
32.3
20.8
38.6
15.7
35.2
16.2
20.1
35.0
24.6
25.4
21.3
13.8
15.6
12.5
21.6
30.7
9.1
9.9
24.5
17.5
10.7
7.4
9.8
13.4
18.1
11.8
19.1
8.5
31.5
22.7
21.6
17.5
27.6
37.8
28.3
20.7
18.4
15.5
26.7
12.4
10.4
35.1
14.4
26.7
31.4
NA
15.8
16.3
32.8
NA
22.1
16.5
NA
45.0
3.6
4.1
0.6
9.4
1.5
1.5
4.5
5.9
1.9
3.1
1.1
2.3
8.6
2.2
2.3
1.7
2.3
1.1
3.0
NA
0.0
1.4
2.3
3.7
1.8
1.6
3.1
7.3
1.3
1.1
NA
3.3
0.9
2.2
1.2
4.4
18.5
3.4
5.6
1.1
18.1
14.2
0.1
2.2
7.9
NA
14.1
2.0
52.2
NA
2.6
NA
127.6
NA
0.0
329.3
11.8
6.6
3.5
16.5
4.0
9.8
13.7
2.6
-3.0
-3.1
7.4
8.0
73.9
12.3
1.9
8.8
1.5
2.9
4.6
16.7
21.3
5.6
3.0
5.8
35.9
-9.8
3.3
6.0
7.8
0.8
-10.3
9.1
8.7
3.6
1.8
12.3
-4.0
2.9
4.2
13.6
2.3
2.0
14.1
12.9
1.9
4.8
12.0
-3.3
16.1
6.7
NA
14.9
0.4
-19.8
4.7
3.8
-20.4
-15.9
Dept-toequity (%)
69.3
70.3
29.6
20.4
65.0
41.3
128.9
482.1
262.1
54.9
73.7
NM
73.5
1,247.4
33.1
49.0
126.5
25.0
14.6
5.0
11.4
59.8
79.7
26.2
NM
61.2
11.9
79.3
546.5
357.3
NM
99.0
27.0
21.1
15.5
57.8
9.6
12.1
0.0
50.4
7.9
2.0
0.0
78.9
38.7
0.0
16.4
30.4
0.0
NA
0.0
0.0
5.8
45.7
16.4
0.8
66.8
1) Revenue figure includes sales other than operating revenues. 2) fiscal year January through May. NA=Not available. NM=Not meaningful. Source: Standard & Poor’s Compustat (Englewood, CO).
www.chemweek.com
35
JUNE 8
144.93
WEEK AGO
145.15
QUARTER AGO
158.75
YEAR AGO
125.15
*Jan. 1, 2002 = 100.
C
hemical stocks finished flat in the
CW75 Index for the week ending June
8, in line with broader market indexes.
Basic chemical stocks inched up by almost
1%, while diversified and specialty chemical
shares were flat.
Chemical stocks rallied late in the week on
news from Federal Reserve chairman Alan
Greenspan that the economy is expected
to remain strong. Stocks trickled back
down, however, after another Fed member
announced that interest rates might rise.
MEMC’s shares rose on news that Lehman
Brothers (New York) increased the company’s
second-quarter estimates due to strong demand.
Monsanto’s stock rose 6.2% following news
that the company will take a stake in Solutia,
which will ease Solutia out of bankruptcy and
remove some uncertainties about Monsanto’s
potential future environmental liabilities,
analysts say.
CW 75
(index; Jan. 1, 2002 = 100)
160
CW 75 stock index
World index1
140
120
100
MJ
’04
J
A
S
O
N
D
J
’05
F
M
A
M
J
SECTOR COMPARISON
(index; Jan. 1, 2002 = 100)
Basic
World index1
Diversified
Specialty
250
200
150
100
MJ
’04
J
A
S
O
N
D
J
’05
F
M
1) Morgan Stanley composite index. Source: CW research.
36
or
y*
Ma
rke
( $ tc
mi ap
llio
ns
)
Cl o
sin
gp
ric
e
1-W
ee
kc
ha
ng
1-W
e
vs eek
. C ch
W7 an
5 i ge
nd
YT
ex
D%
ch
an
ge
YT
D
C W cha
75 n g e
ind vs
ex .
Tra
ilin
gP
-E
Di
vid
en
dy
iel
52
d
-w
ee
kh
ig h
52
-w
ee
kl
ow
We
e
vo k l y
lum
e
ke
r
te g
3M
MMM D
58,921
76.56
DuPont
DD
D
46,129
46.31
Dow Chemical
DOW
D
43,768
45.53
BASF
BF
D
36,400
68.00
Bayer
BAY
D
24,911
34.11
Monsanto
MON
D
16,591
61.86
Sasol
SSL
B
15,695
25.57
Praxair
PX
S
15,001
46.37
Air Products
APD
S
14,109
61.53
Syngenta (ADR)
SYT
D
11,881
21.11
Akzo Nobel
AKZOY D
11,261
39.40
PPG Industries
PPG
D
11,195
65.20
Rohm and Haas
ROH
S
10,491
46.75
PotashCorp
POT
B
9,982
90.25
BOC Group
BOX
S
9,679
38.78
Solvay
SVYSY D
9,145 108.10
Clorox
CLX
D
8,962
58.12
Ecolab
ECL
S
8,298
32.49
DSM (ADR)
DSMKY D
6,704
17.50
Sherwin-Williams
SHW
S
6,257
44.98
Avery Dennison
AVY
S
5,967
54.00
Lyondell Chemical
LYO
B
5,906
24.00
ICI
ICI
S
5,675
19.05
Mosaic
MOS
B
5,298
13.79
Ashland Inc
ASH
D
4,926
67.60
Eastman Chemical
EMN
D
4,672
58.23
Ciba (ADR)
CSB
S
4,397
31.03
Huntsman Corporation HUN
D
4,125
18.65
Sigma-Aldrich
SIAL
S
4,076
59.19
IFF
IFF
S
3,526
37.44
Engelhard
EC
D
3,485
28.90
MEMC
WFR
S
3,212
15.36
Lubrizol
LZ
S
2,660
39.25
Nalco Holding
NLC
S
2,565
18.10
Agrium
AGU
B
2,556
19.22
Nova Chemicals
NCX
B
2,531
30.75
Shanghai Petrochemical SHI
B
2,506
34.80
Valspar
VAL
S
2,444
47.47
Scotts
SMG
D
2,382
71.14
Methanex
MEOH B
2,274
18.75
Church & Dwight
CHD
D
2,222
35.00
RPM International
RPM
S
2,106
17.92
FMC
FMC
D
2,067
55.08
Cytec Industries
CYT
S
1,887
41.05
Cabot Corporation
CBT
D
1,827
29.02
Airgas
ARG
S
1,812
24.04
Crompton
CK
S
1,766
15.03
Great Lakes Chemical GLK
S
1,730
33.24
Albemarle
ALB
S
1,695
36.39
Westlake Chemical
WLK
B
1,601
24.63
Hercules
HPC
S
1,577
13.96
Minerals Technologies MTX
S
1,373
66.93
Olin
OLN
D
1,329
18.68
Rhodia
RHA
D
1,192
1.90
Georgia Gulf
GGC
B
1,175
34.45
ATMI
ATMI
S
1,043
28.08
Sensient Technologies SXT
S
972
20.58
H.B. Fuller
FUL
S
940
32.63
MacDermid
MRD
S
882
29.12
Symyx Technologies
SMMX S
838
25.69
Ferro
FOE
S
820
19.56
Cabot Microelectronics CCMP S
752
30.45
NL Industries
NL
B
746
15.36
Compass Minerals
CMP
B
736
23.44
Rogers
ROG
S
709
43.12
OM Group
OMG
S
694
24.37
PolyOne
POL
D
625
6.80
Arch Chemicals
ARJ
S
564
23.85
A. Schulman
SHLM S
523
17.05
Cambrex
CBM
S
465
17.60
Albany Molecular
AMRI S
433
13.41
American Vanguard
AVD
S
356
19.52
Wellman
WLM
B
351
10.81
Stepan
SCL
S
191
21.25
Aceto
ACET
S
178
7.35
*D = Diversified. S = Specialty. B = Basic. Source: CW research.
-0.6%
-1.6%
-1.1%
1.2%
-0.3%
6.2%
1.9%
-2.8%
-0.1%
-0.1%
-0.3%
-2.0%
-0.7%
-0.2%
5.0%
-0.7%
-0.8%
-0.6%
2.9%
-0.4%
1.8%
-1.7%
1.4%
3.5%
-1.9%
-2.1%
1.9%
-1.9%
-2.4%
-0.4%
-2.8%
11.7%
-1.0%
0.6%
0.4%
-6.9%
5.5%
-1.5%
-1.9%
-1.7%
-2.7%
0.6%
-3.7%
-1.9%
-0.5%
-2.0%
-3.0%
-3.1%
-5.7%
2.1%
-0.6%
-1.7%
-2.3%
7.3%
1.5%
-0.8%
-0.5%
-0.4%
-0.8%
-2.8%
-0.3%
-3.9%
-1.2%
2.4%
4.1%
-3.8%
0.4%
-0.5%
2.2%
-3.1%
12.2%
5.7%
-5.8%
-0.7%
-0.9%
A
M
J
-0.4%
-1.4%
-1.0%
1.3%
-0.2%
6.4%
2.0%
-2.7%
0.0%
0.1%
-0.2%
-1.8%
-0.5%
0.0%
5.1%
-0.6%
-0.7%
-0.5%
3.1%
-0.2%
2.0%
-1.6%
1.5%
3.6%
-1.7%
-1.9%
2.1%
-1.8%
-2.3%
-0.2%
-2.7%
11.9%
-0.8%
0.8%
0.5%
-6.8%
5.6%
-1.3%
-1.8%
-1.5%
-2.6%
0.7%
-3.5%
-1.7%
-0.4%
-1.9%
-2.9%
-2.9%
-5.6%
2.3%
-0.4%
-1.5%
-2.1%
7.5%
1.6%
-0.6%
-0.3%
-0.3%
-0.6%
-2.6%
-0.1%
-3.8%
-1.0%
2.6%
4.2%
-3.6%
0.6%
-0.3%
2.4%
-3.0%
12.4%
5.8%
-5.7%
-0.6%
-0.8%
-5.7%
-4.2%
-7.4%
-2.3%
2.7%
12.0%
19.8%
5.8%
6.7%
-1.1%
-4.8%
-3.1%
6.9%
9.1%
3.1%
1.8%
-0.5%
-7.3%
9.1%
1.7%
-8.7%
-15.6%
4.8%
-15.5%
16.8%
1.6%
-15.6%
NA
-1.5%
-12.2%
-5.4%
15.9%
7.9%
-7.3%
14.1%
-34.7%
-0.3%
-4.7%
-3.2%
3.1%
4.5%
-7.3%
14.0%
-19.8%
-24.2%
-9.2%
28.4%
17.4%
-5.6%
-26.1%
-6.0%
0.5%
-13.5%
-29.6%
-30.7%
24.6%
-13.0%
15.4%
-19.2%
-14.5%
-14.4%
-24.0%
-29.7%
-1.0%
0.0%
-24.8%
-24.9%
-15.8%
-19.0%
-34.9%
20.4%
6.4%
2.0%
-11.2%
-42.0%
-3.4%
-1.9%
-5.1%
-0.1%
5.0%
14.3%
22.1%
8.1%
9.0%
1.2%
-2.5%
-0.8%
9.2%
11.3%
5.4%
4.1%
1.8%
-5.0%
11.4%
4.0%
-6.4%
-13.4%
7.1%
-13.2%
19.1%
3.9%
-13.3%
NA
0.8%
-9.9%
-3.1%
18.2%
10.2%
-5.0%
16.4%
-32.4%
2.0%
-2.4%
-0.9%
5.4%
6.7%
-5.0%
16.3%
-17.5%
-21.9%
-6.9%
30.7%
19.7%
-3.3%
-23.9%
-3.7%
2.8%
-11.3%
-27.3%
-28.4%
26.9%
-10.7%
17.7%
-16.9%
-12.2%
-12.1%
-21.7%
-27.4%
1.3%
2.3%
-22.5%
-22.7%
-13.5%
-16.7%
-32.6%
22.7%
8.7%
4.3%
-8.9%
-39.7%
19.7x
22.4x
11.9x
12.3x
22.7x
31.1x
13.7x
21.2x
21.1x
24.3x
10.8x
17.2x
19.5x
26.7x
14.0x
NA
9.9x
26.6x
NA
15.2x
19.1x
17.6x
14.0x
NM
10.0x
13.7x
15.1x
NA
16.8x
18.7x
14.8x
12.9x
23.6x
NA
9.6x
8.3x
5.2x
18.4x
20.4x
8.6x
24.1x
18.5x
9.5x
21.8x
53.7x
20.5x
NA
21.2x
24.4x
9.2x
NM
22.8x
14.7x
NA
9.2x
27.3x
13.5x
25.1x
17.3x
NM
35.6x
18.2x
3.4x
17.8x
22.5x
8.3x
17.9x
27.7x
16.9x
NM
NA
24.4x
NA
22.1x
16.7x
2.19%
3.20%
2.94%
3.34%
2.14%
1.10%
2.89%
1.55%
2.08%
NA
1.90%
2.88%
2.48%
0.66%
4.85%
NA
1.93%
1.08%
NA
1.82%
2.81%
3.75%
2.89%
0.00%
1.63%
3.02%
4.93%
0.00%
1.28%
1.98%
1.66%
0.00%
2.65%
0.00%
0.57%
1.04%
NA
1.69%
0.00%
1.71%
0.69%
3.35%
0.00%
0.97%
2.21%
1.00%
1.33%
1.20%
1.65%
0.24%
0.00%
0.30%
4.28%
0.00%
0.93%
0.00%
2.92%
1.50%
0.82%
0.00%
2.97%
0.00%
6.51%
4.69%
0.00%
0.00%
0.00%
3.35%
3.40%
0.68%
0.00%
0.56%
1.85%
3.67%
1.36%
88.55
54.47
56.38
74.69
34.80
65.42
26.55
49.23
65.47
23.26
45.60
74.22
49.67
92.15
39.95
118.70
65.75
35.40
18.85
46.28
65.28
35.32
21.65
18.58
69.59
61.57
36.92
30.00
64.60
43.01
32.34
15.49
43.28
20.94
19.97
52.05
42.28
50.61
74.00
20.21
37.43
19.62
57.78
54.53
40.22
27.09
16.18
35.45
40.33
37.67
15.55
69.45
25.08
3.20
58.57
28.86
23.91
33.68
37.09
32.20
26.32
41.98
24.72
26.51
71.36
37.76
10.25
30.38
22.19
27.09
13.71
22.88
15.35
25.51
13.33
72.23 1.4%
38.99 1.6%
37.16 2.3%
48.63 0.1%
23.78 0.0%
33.56 2.9%
14.24 0.2%
36.41 1.5%
47.68 1.7%
15.60 0.1%
29.76 0.2%
55.09 1.8%
36.09 1.5%
42.05 1.8%
30.86 0.0%
78.80 0.0%
48.22 3.2%
28.81 1.0%
11.50 0.0%
37.29 3.5%
49.25 2.0%
14.70 5.1%
14.43 0.1%
12.15 0.9%
47.50 6.0%
41.15 4.9%
28.76 0.1%
18.15 1.5%
52.77 2.3%
34.78 1.8%
26.28 2.8%
7.33 6.3%
31.46 1.5%
15.15 0.6%
13.11 2.0%
25.59 3.0%
26.23 0.1%
40.81 2.1%
55.76 1.5%
11.50 2.1%
26.71 2.0%
13.50 1.9%
38.44 2.6%
40.12 4.2%
27.51 2.1%
20.69 2.3%
4.91 3.7%
22.58 3.0%
28.11 2.9%
14.50 1.9%
11.00 1.7%
53.37 1.6%
15.48 3.1%
1.13 0.3%
29.47 17.5%
17.18 3.8%
18.56 1.7%
24.91 2.9%
26.32 1.4%
16.51 1.1%
16.64 2.1%
25.50 5.6%
11.89 0.6%
17.67 3.0%
33.87 2.4%
19.35 3.5%
6.11 2.3%
22.63 1.7%
15.92 2.3%
17.52 1.5%
8.01 4.9%
13.57 0.5%
6.25 6.2%
20.54 1.4%
6.53 1.4%
■ LAGGARDS
■ LEADERS
1) Morgan Stanley composite index. Source: CW research.
300
Ca
Co
mp
CW75 Index*
Tic
an
y
cw 75 stock performance
COMPANY NAME
TICKER
Albany Molecular
MEMC
Rhodia
Monsanto
American Vanguard
Shanghai Petrochemical
BOC Group
Rogers
Mosaic
DSM (ADR)
AMRI
WFR
RHA
MON
AVD
SHI
BOX
ROG
MOS
DSMKY
1-WEEK
CHANGE (%)
12.2%
11.7%
7.3%
6.2%
5.7%
5.5%
5.0%
4.1%
3.5%
2.9%
COMPANY NAME
TICKER
Nova Chemicals
Wellman
Albemarle
Cabot Microelectronics
OM Group
FMC
Cambrex
Great Lakes Chemical
Crompton
Engelhard
NCX
WLM
ALB
CCMP
OMG
FMC
CBM
GLK
CK
EC
1-WEEK
CHANGE (%)
-6.9%
-5.8%
-5.7%
-3.9%
-3.8%
-3.7%
-3.1%
-3.1%
-3.0%
-2.8%
www.chemweek.com
Presented with
China Chemical
Industry Conference
ew !
l N 05
Al r 20
fo
The 11th Annual
12-14 September 2005 • Shangri-La Hotel • Shanghai, China
A New Power is Emerging in the East: Does the Future Belong to China?
This year is set to be an historic one for China. The country is now the world’s largest producer of coal,
steel and cement, the second largest consumer of energy and the third largest importer of oil. China’s
growth has obvious and amazing benefits for the world but obvious threats as well. This year’s 11th
Annual China Chemical Industry Conference will feature dialogue, case studies and leading expert
opinions on the toughest issues.
2005 Featured Speakers
PETER R. HUNTSMAN, President and Chief Executive Officer, Huntsman Corporation
J. PEDRO REINHARD, Executive Vice President and Chief Financial Officer,
The Dow Chemical Company
KUNO KOHLER, President Asia North, Ciba Specialty Chemicals Inc.
JOSH CHENG, President, Celanese China
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Register now at www.chemconference.com or call 212-621-4978.
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Chemical Week Magazine June 2005 eBook

Transcription

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