Friday, 11 December 2009

Egyptian Petrochemical exports could decline by 40% in 2009

Pyramids at sunset, Giza.
Egypt's chemical industry could suffer a 40% decline in exports in 2009, according to a new forecast by Business Monitor International. The surprise for me in this story is that Egypt even has an established petrochemical industry. It is not an area which we at ICIS cover very strongly at present. According to the report there are several chemical project in this region which I was not aware of.

Here is an excerpt:
"BMI expects PP capacity to rise to 820,000 by 2013. We do not believe Egypt Hydrocarbon Corporation's (EHC) proposed complex near Suez - which would have two plants capacity of 450,000 tpa each, producing HDPE and LLDPE alongside a cracker and ammonia, ammonium nitrate, and methanol plants - will come online by 2013, even if it does manage to secure financing by 2010. Similarly, it is doubtful that GAFI's bid for foreign investment in a US$200mn PVC plant with a capacity of 120,000 tpa and a US$150mn PS plant with a capacity of 200,000 tpa will materialise in time for them to come onstream by the end of the forecast period."


Download a list of Egypt chemical plants from ICIS plants and Projects here.
Download a list of Egypt chemical projects from ICIS plants and projects here.

Tuesday, 8 December 2009

Competition concerns mean Arkema Solvay tie up unlikely

Belgian group Solvay is unlikely to purchase France's Arkema due to competition concerns in their European operations, a communications officer told me at yesterday's final Arkema Christmas Curry event in London.

I sighted synergies in fluorochemicals and the chlor-alkali chain as a good reason for a tie up in a previous post. But those same overlaps, especially in Europe, could mean problems with competition authorities and a lot of post-merger divestments, according to the communications officer I sat next to at the delicious curry at the Bombay Brasserie near GloucesterRoad, west London.

The irrepressible Paul Jukes, chairman of Arkema UK, has been hosting this wonderful event for the last 16 years. It has paid huge dividends for Arkema in the UK in terms of press relations as the event is attended by the entire chemicals and plastics trade press.

Unfortunately Paul is retiring at the end of the year, yet he had something up his sleeve to surprise us. From January he becomes Total's UK public affairs adviser: perhaps we can hope for the first Total Christmas curry in 2010.

Image below: Chemical Industries Association's Simon Marsh has a festive drink with Paul Jukes in the pub post-curry

Thursday, 3 December 2009

Wilton rescue a step closer, Dow plant probably still to close

At last it seems like the folks in charge at Wilton and those in high places at a national level may have generated a rescue plan with some teeth. But is it too little, too late, for the Dow ethylene oxide (EO), ethylene glycol (EG) plant up there?

Individual segments of a ten point plane have been assigned to industry champions (see below). The Dow plant is scheduled for closure in January and this plan is still light on specifics about alternative uses for this plant.

The problem is that there must be a private sector solution for this Dow plant. As a government advisor told me at the recent Chemical Industries Association (CIA) annual dinner in London, the state cannot keep this plant alive. No private sector company has offered a viable solution to date, he added.

Stan Higgins at NEPIC was very pessimistic about the future of this plant a few weeks ago and I have seen no statement from him to contradict that.

The 10 point plan seems more like long term goals than short term solutions. Let's hope the plan comes to fruition prtetty quickly.

Here are the 10 points:

• Innovation - Developing new technologies and innovative capacity in areas vital to the future of the process industries, particularly low carbon as well as energy and feedstock from waste, industrial symbiosis, resource efficiency and recyclable materials. (Industry champion: Steve Bagshaw, Avecia)

• Carbon Capture and Storage (CCS) - Vital to the future sustainability and competitiveness of the process industries. A commitment sought with Government to develop, design, engineer and build a world first CCS system encompassing power generation and industrial emissions for Tees Valley, to help sustain existing businesses and attract new investment. (Industry champion: Phil Bailey, Lucite)

• Future of Ethylene Oxide/ Ethylene Glycol Plant - Build on current work to develop a viable, market-based solution for the future sustainability of this facility. Such a solution is possible but may take several months to complete and Government is asked to assist in ensuring these facilities remain available to a potential investor. (Industry champion: Stan Higgins, NEPIC)

• Energy Efficiency - Develop innovative solutions to reduce the current energy use of industry in Tees Valley, including schemes to share energy generation and use. (Industry champion: John Shipman, Huntsman)

• Training - Securing high grade skills through the current downturn is vital for the long-term success of the process industries. Work with Government to widen a fund to ensure that engineering apprentices can be supported until the end of 2011 to meet industry needs. (Industry champions: George Ritchie, Sembcorp and Robin Davison, Wolviston Management)

• Supply Chain Development - Work with the supply chain to assist them to develop new capabilities for diversified applications. Request that Government encourage business support organisations to recognise the strengths and opportunities facing the supply chain, and help in its development. (Industry champion: James Robson, Exwold)

• Feedstocks - New, lower carbon feedstock is vital for the long term success of the process industries. Take forward projects which examine new feedstocks, and, where appropriate, bring them to industrial application. (Industry champions: Mike Buchan and Andrew Teague, Sabic)

• Teesside Infrastructure for New Investment - In support of the findings of the North and South Tees Study, industry will review in detail the key infrastructure requirements and work with the public sector to deliver these actions. (Industry champion: Paul Gavens, Sembcorp)

• Marketing Tees Valley for Future Investment. Industry will champion and continue to market Tees Valley as a global chemical and process industry hub. (Industry champion: Paul Booth, Sabic)

• Improved Partnership Working - Improve links between Government and industry. Jointly establish a task group, to examine new opportunities for the industry. (Industry champion: Mike Huggan, BOC-Linde)

Monday, 30 November 2009

BASF in talks to JV styrene - IPIC a good fit

BASF is in talks to joint venture its styrene business before exiting the market, Bloomberg reported last week. Abu Dhabi's IPIC (International Petroleum Investment Company) could be a strong contender for this transaction. I recently interviewed its managing director, Khadem Al Qubaisi, who told me he was close to a deal in Europe (pictured).

IPIC wants to expand its aromatics operations in the Chemaweyaat development and would be looking for technology to achieve that. It has a track record of acquiring companies for their technology, such as Austria's Borealis and Canada's Nova Chemicals.

Here is an excerpt from the Bloomberg article:

Nov. 26 (Bloomberg) -- BASF SE, the world’s biggest chemical company, is in talks to form a styrene joint venture as a prelude to exiting the market, a company official with knowledge of the situation said.

Negotiations are at early stages and may be prolonged by antitrust concerns, said the person, who declined to be identified as discussions are private. BASF is still pursuing a sale of styrenics generating 3 billion euros ($4.5 billion) in sales, and Middle Eastern and private equity buyers are the most likely candidates, the person said.

The talks signal BASF is willing to accept a compromise after failing to find a buyer for factories that make styrene, used in CD cases and televisions. An earlier attempt to sell the unit to Rotterdam-based LyondellBasell Industries fell through after the financial crisis and slumping demand forced the chemical maker to seek bankruptcy protection.

Friday, 27 November 2009

Total trip to Qatar yields great images

Just back from a trip to Qatar with French chemical major, Total. We toured the Ras Laffan cracker, saw the inauguration of Qatofin's new lldpe plant at Mesaieed, and had an update on Total's global petrochemical strategy.

Here are some images from the trip


Journalists in hot, bumpy, minibus


Total Petrochemicals CEO Francois Cornelis


Qatofin opening ceremony


Incense at the Qatofin opening ceremony



Qatofin opening ceremony





Qatar skyline

Thursday, 19 November 2009

Poland chemical privatisation faces more delays

Close-up of stacks of bank notes
It's perhaps not surprising that bidders are to be given extra time to submit binding offers for the package of Ciech, fertilizer, caprolactam and polymer producer Zaklady Azotowe Tarnow (ZAT) and nitrogen fertilizer, plastics and oxo alcohols producer Zaklady Azotowe Kedzierzyn (ZAK).

Poland's chemical industry privatisation, Polish state company restructuring agency Nafta Polska revealed the news on Thursday, as reported on ICIS news. The move was necessary, the agency said, because some of the six shortlisted potential buyers had requested more time to examine the financial condition and investment strategy of each of the firms in the package.

None of these companies is in particularly good shape financially and all will require further restructuring to bring them up to world-class standards. Central Eastern Europe is being hit really hard by the economic downturn too with financial instability at state level still a real concern.

Tuesday, 17 November 2009

IPIC names Bayer MaterialScience on list of possible acquisitions

International Petroleum Investment Company (IPIC) is in talks with five major petrochemical players in the US and Europe, including Bayer MaterialScience, and expects to close a European acquisition by the first quarter of 2010, the managing director of the Abu Dhabi-based company said on Tuesday.

Khadem Al Qubaisi said technology from the new company would be used to develop petrochemical projects in Abu Dhabi. The purchase would also continue IPIC’s geographical expansion, he said.

“It’s a big deal. We’re looking to buy a very big petrochemical company in Europe. It’s in petrochemicals and specialities also. Bayer MaterialScience is one of the companies we’ve been talking to,” Al Qubaisi said. To read the full story click here.

I interviewed Al Qubaisi and was really impressed by his ambitious expansion plans for IPIC. Watch out Europe and the US, this company is on course to become a world leader in petrochemicals.

I also liked Al Qubaisi's interview style. He was very relaxed and spoke excellent English. I hope to keep in touch with IPIC and build much closer links to ICIS.







In Europe, IPIC already owns a 48% stake in Spanish energy and chemical group Cepsa, 64% of Austria-headquartered polyolefins group Borealis and a 19% stake in Austrian oil and chemical group OMV.

This year it acquired 100% of Canada’s NOVA Chemicals.

Tuesday, 10 November 2009

Allandis a new force in European polymer distribution

Allandis, a new pan-European leader in polymer distribution, is to be launched in the first quarter of 2010, according to Peter Fields, its creator.

Financing is in place and a series of acquisitions over the next 18 months will create a major player in European polymer distribution, said Fields, formerly chief operating officer at European distributor Azelis.

Fields told ICIS he aims for sales of E300-E400m within 2-3 years. It may contain Azelis Plastics, the polymers arm of Azelis, which is currently conducting a strategic review of its organisation. “The Azelis review has a number of options one of which is to divest its polymers,” said Fields, adding that Allandis has separate funding and will be independent of Azelis.

Polymer distributors exist on wafer-thin margins so it will be fascinating to see if this is a successful venture. Fields certainly sounded confident when I interviewed him this morning.

Friday, 6 November 2009

Brenntag ipo could stir up chemical distribution merger activity


BC Partners' impending initial public offering of German chemical distribution group, Brenntag, could excite further merger and acquisition (m&a) activity across this sector. Azelis, IMCD and Univar could all be sold or IPO'd by their private equity owners if the Brenntag deal is successful.

But this is a big "if". Owners BC Partners have a big job on their hands repackaging the debt used to fund the Brenntag acquisition to make the group saleable. And the capital markets may not yet be ready for a E1.5bn floatation.

Brenntag is in surprisingly good financial shape for a company operating in commodity chemicals during this downturn so BC Partners' decision to IPO may make sense.

Photo from
http://www.flickr.com/photos/didbygraham/

Wednesday, 4 November 2009

Poland chemical privatisation moves a step closer


The boards of Ciech, Tarnów and Kędzierzyn are to present the financial situation and investment strategies of their companies to potential investors from the short-list this week, according to Adam Leszkiewicz, deputy treasury minister, told the Polish News Agency (PAP), quoted in Polish Market Online.
‘Investors interested in the privatisation of the first group of chemical plants have scheduled meetings this week with the boards of Ciech, Tarnów and Kędzierzyn plants, which will present their financial situation and strategy’ Leszkiewicz said.

The six short-listed companies are: an American private equity investment fund Bain Capital Ltd; a consortium of a British investment fund Cinven Ltd and an international advisory company Kolaja & Partners Ltd; private fund NQI (National Qatar Industries Company), specialized in oil, gas and petrochemical investments; German capital group PCC SE; Lithuanian UAB Achema Group and capital group I Fund Mistral SA.

The Polish Treasury would prefer to sell all three companies to one investor by the end of 2009. However, the companies may be sold separately.

Nafta Polska, a state-owned company set up to handle the privatisation
The companies are due to be privatized by the end of this year, but this is unlikely! The economic climate and collapsed demand in central and eastern Europe may jeopardise this.

(Image of Ciech HQ courtesy of Wikipedia)

Humet bids for Hungary chemicals company

Hungary's pharma company Humet is leading a consortium to make a buyout offer for a multinational chemicals company, according to the Budapest Business Journal.

The report says a consortium led by dietary supplement maker Humet has made a preliminary buyout offer for 100% of a Hungary-based multinational chemicals company with annual turnover of several billion forints.

Humet did not name the company. This must be in the pharmaceutical field as no mainstream chemical company I know of in Hungary would be a good fit. BorsodChem and TVK are certainly outside the sphere of interest. Any other ideas?

Humet already owns a combined direct and indirect 54% stake in chemicals company Reanal Finomvegyszergyár so it could be a buyout of this group..

Humet's biggest owner is Tyler International, with a 20.27% stake.

Thursday, 29 October 2009

Arkema a good fit for Solvay?

Two businessmen shaking hands, close-up
Could Belgian chemical group Solvay be interested in a bid for French rival Arkema? There are certainly some excellent potential synergies, especially in the fluorochemicals and chlor-alkali chain.

Solvay recently agreed to sell its pharma division for E4.5bn to Abbott, giving Solvay net liquidity of E2.5bn according to some estimates. Analysts told ICIS news recently that Solvay would look to expand in Asia. Arkema has a strong portfolio of chemical projects in Asia and sees it as a key growth region.

Solvay has market capitalisation of E5.7bn whilst Arkema is worth Arkema is worth E1.65bn.

Reuter's suggests Clariant and Umicore might be good targets. "There are rumours of a bid by Solvay for Umicore if Solvay sells its pharmaceutical division. This is pushing the share price up," Kristof De Graeve at SG Private Banking says, according to the blog cafepharma

Arkema product portfolio:

VINYL PRODUCTS
* Chlorine / Caustic Soda
* Pipes and Profiles (Alphacan)
* PVC
* Vinyl Compounds
INDUSTRIAL CHEMICALS
* Acrylics
* Fluorochemicals
* Hydrogen Peroxide
* PMMA (Altuglas International) and Methacrylics
* Specialty Acrylic Polymers (Coatex)
* Thiochemicals
PERFORMANCE PRODUCTS
* Functional Additives
* Specialty Chemicals (Ceca)
* Technical Polymers


Solvay product portfolio:

Plastics:
Aromatic Polyamides
Engineering Polymers
Fluorelastomers
Fluorinated Fluids
Fluoropolymers
Other Semi-crystallines
Sulfone Polymers
Ultra Polymers
Vinyls

Chemicals:
BARIUM STRONTIUM
- CALCIUM CHLORIDE
- CAUSTIC SODA
- CHLORINATED INORGANICS
- CHLORINATED ORGANICS
- FLUOR
- FLUOR ORGANICS
- HYDROGEN PEROXIDE
- INORGANIC PEROXIDES
- ORGANICS
- PERACETIC ACID
- PERSALTS
- POLYGLYCEROLS
- PRECIPITATED CALCIUM CARBONATE & MG SALTS
- SODA ASH
- SODIUM BICARBONATE

Wednesday, 28 October 2009

OMV to control Nova Chemicals

Businessman and woman looking at diagram mounted on frosted glass
Austrian oil and chemicals group OMV is to intervene in the strategic planning and operation of Canada's Nova Chemical, following its acquisition earlier this year by Abu Dhabi’s International Petroleum Investment Co (IPIC).

IPIC is a partner with OMV in Austria-based plastics major Borealis and also holds a direct stake in OMV. NOVA was acquired in a $2.3bn (€1.5bn) deal .

According to ICIS news “The ongoing strategic analysis of NOVA's business revealed that IPIC needed to provide a higher degree of involvement in NOVA's operative business than originally envisaged,” OMV spokeswoman Michaela Huber told ICIS news.

The European Commission this week cleared an application by IPIC and OMV to share control of NOVA. IPIC hold a 19.6% stake in OMV. Borealis is jointly controlled by IPIC (64%) and OMV (36%).

OMV has been trying hard to expand its international reach. The failed acquisition of Hungary's MOL was a recent, long running attempt. IPIC is purely an investment vehicle but has been growing its chemical empire strongly.

Tuesday, 27 October 2009

Akzo Nobel results allow cautious optimism

Dutch coatings group Akzo Nobel produced third quarter results today which were above analysts expectations.

Martin Evans of Cazenove analysts said in a note: "A good result, above consensus - with stabilisation continuing, and cost savings helping, although the recovery remains “fragile”. End market demand for paints, coatings and chemicals remains mixed, although Asia and Latin America remain much better. The US does not seem to be getting any worse although is still depressed. Inventory levels remain low due which should continue to help a steady restocking phase in due course, although customers remain cautious of building up too high inventories ahead of the year end.

The tentative recovery story continues, and with the Q3 results season now in full swing we will see if similar levels of recovery emerge across Europe's chemical sector.

Friday, 23 October 2009

Yet another Wilton, Teesside rescue plan?

Former Synetix (bought by Johnson Matthey in 2001) boss Bob Coxon, who heads up the North-east Science and Industry Council, is to conduct a review of the options for the Wilton, Teesside chemical complex.

The blog wonders if there are simply too many well-meaning public, semi-public and private groups vying to find a solution for the site, where Dow's ethylene oxide and ethylene glycol facilities are due to be closed in January.

Only a few weeks ago I reported on ICIS news a government spokeswoman saying there was currently a review being undertaken by regional development agency One North East “to see what investment would be needed for that plant to continue to be commercially active and what investment would be needed to change the end products it is producing. That’s going on at the moment. There isn’t anything else going on”.

The spokeswoman said money could be available for capital investment at the site if “a demonstrable, viable business case” was put forward.

Does the left hand know what the right hand is doing? Are there simply too many initiatives, causing confusion to everyone concerned? Who are North-east Science and Industry Council and how do they differ from North East Process Industry Cluster (NEPIC), One North East, and all the other agencies involved?

Here is part of the most recent nebusiness.co.uk report:

"This month’s announcement that former Synetix boss Bob Coxon, who heads up the North-east Science and Industry Council, would lead an urgent review of what the Teesside cluster of companies immediately needs from both private sector networks and regional and national government is not the first time that local agencies have addressed the problem - although it’s the first time they have talked publicly about it.

Mr Clarke revealed that ONE had been working for up to a year on a rescue plan for Dow before it pulled the plug on its ethylene glycol plant in June. Dow’s customer Croda followed suit a few days later. Artenius, for completely different reasons, was next. The big question is what happens now.

“We don’t yet have a proposition,” admitted Mr Clarke. But he’s working on it.

For Mr Clarke, an economist not a scientist, Wilton has been a sharp lesson in financial catalysis - the collision of micro and macro economics that’s sparked a sequence of events that are threatening to be both politically and economically destabilising for the region.

They are now being addressed with a series of initiatives at local, national and even European level.

It all began with the closure of nylon maker Invista and the loss of 300 direct jobs in February. A sprawling plant that had benefited from consistent investment, but whose miles of eerily silent pipes now shadow the Wilton site, Invista was among utility provider Sembcorp’s biggest customers. The speed at which Invista withdrew sent shockwaves through the industry, but while the impact locally was profound, the real wake-up call came with Dow.

Mr Clarke said he understood why many process employees on Teesside, who have seen a succession of high profile visits to struggling car manufacturers in the Midlands, felt Government treated theirs as the Cinderella industry. And it’s true that up until the new green generation of process plants began to populate Wilton and sister sites in the Tees Valley, London seemed remarkably reluctant to dirty its hands with Wilton, despite the sector’s huge economic impact.

Even energy and climate change minister Ed Miliband, whose portfolio would naturally bring him into contact with the process sector, was said to be surprised at the scope of the Wilton complex on a recent visit.

Mr Clarke defends the government’s record, but admits the agency had to be “creative” in securing what was then SFI (now GBI) funding for Sabic’s low density polyethylene plant, opening later this year, because the “scale of investment was out of sync with the job creation” - the crude Whitehall calculation used to justify writing a cheque from the Exchequer.

He insists that if the private sector comes forward with a sustainable investment proposal for Wilton, cash would be found to support it. Unfortunately, nobody has. And while national government has a role to play in addressing Teesside’s current problems, it’s not responsible for sorting them out, said Mr Clarke. “We are not going to have a nationalised chemical industry or another ICI. We have to come up with a private sector solution.”

And that is proving difficult. “Coming up to the recession we had lots and lots of independent companies, integrated through Sembcorp. While things were going well, Wilton was spiraling upwards. But the very advantage in an upturn becomes a potential disadvantage in the downturn because if one or two companies within that supply chain have difficulties, that upsets the products and by-products going back and forth. Then all of a sudden the advantages become a problem.”

He conceded, though, that there has been a marked reluctance to admit it. “We all need to move from a position of saying ‘does anyone care about the process industry’ and ‘can we be a bit more open about communicating what the issues are’, to coming up with a proposition that industry, central government and local authorities can support to make happen.”

Wilton was made great by one big bold experiment. Maybe now is the time for another.

Wednesday, 21 October 2009

IMF bailout good news for Ukraine

close-up of the flag of Ukraine
Ukraine is to receive a $3.4bn International Monetary Fund payment in November. This will help shore up the country's ailing finances, including a huge budget deficit. Ukraine has been hit hard by collapsing demand for export such as steel. Its chemical sector has also suffered as domestic and regional sales collapsed in the wake of the financial crisis.

Here's a report from local news agency. "Ukraine expects the International Monetary Fund to release a $3.4 billion payment under the agency’s $16.4 billion lending program to the country, Economy Minister Bohdan Danylyshyn said, according to Bloomberg.

“This will help sustain the economy and, to a certain extent, help cover the budget deficit,” Danylyshyn said today in an interview at Ukraine’s Consulate in New York. “It’s a pretty complicated situation in Ukraine, that’s why we expect (a) budget deficit this year and next.”

Ukraine is relying on the IMF loan program to stay afloat after the credit crisis undermined demand for its raw materials, including steel exports. The country has received $10.6 billion in loans to date.

The IMF team, led by Ceyla Pazarbasioglu, arrived in Kiev earlier this week to assess whether Ukraine meets the terms of the loans. Ukraine is at “serious risk” of veering off track ahead of the country’s next review in November, Fitch Ratings said in a statement on Oct. 14.

“It would be politically right to support the government’s measures aimed at stabilizing the situation,” Danylyshyn said. “That would also be a very good signal for investors.”

Tuesday, 20 October 2009

Chemical industry poised for recovery in Central and Eastern Europe

Dole Queue
Survival is the name of the game for Central and East Europe’s (CEE) chemical industry over the next few years. Huge challenges remain:
- Poor domestic and regional economic growth
- Lack of state intervention to shore up economic recovery: many countries have no resources to do so as they are nearly bankrupt
- No state money to rescue ailing chemical companies
- Sluggish recovery in export markets
- Inefficient and small companies which cannot compete globally

Is the region better placed for recovery than western Europe?

- Large parts of CEE are landlocked and therefore less exposed to competition from Middle East imports
- Economic growth, when it comes, has the potential to be fast and strong
- Higher oil prices will fuel recovery in Russia
- Privatisation could yield great results in Poland

My view? This region has great potential and with good corporate leadership it will recover strongly. Good corporate leadership is not consistent across the region and more consolidation is vital.

Friday, 16 October 2009

Brentagg CEE marketing video

Just found this very professional Brentagg Central and Eastern Europe(CEE) video. This company must have a very decent marketing budget!

Thursday, 15 October 2009

Wanhua gives up BorsodChem takeover battle

overlooking the Danube, Budapest
Hungary's BorsodChem has reached an agreement with China's Wanhua, allowing it a future as a minority shareholder but not to control the company.

According to portfolio.hu, it seems Wanhua has given up its intention to squeeze out owner Permira and become a majority owner of the Hungarian company.

"After three days of intensive negotiations, the management and the majority shareholders of Hungarian chemicals firm BorsodChem signed an agreement in principle with representatives of Wanhua Industrial, a China based holding, which controls Yantai Wanhua.

The parties also reached an agreement on BorsodChem’s debt restructuring plan, which enjoys a strong support by the senior lenders and the Hungarian government.

"This is a very important step for the financial restructuring of BorsodChem and the implementation of our growth plan", stated Wolfgang Büchele, CEO of BorsodChem after the negotiations.

"This result is good for BorsodChem, its customers, suppliers and the employees in particular", Büchele added. "But there is still a long way to go. Several questions remain unresolved for the time being and will be addressed only at a later stage. The delegates agreed on further negotiations in due course to discuss the open questions in a friendly and constructive manner."

The negotiations, which took place in Budapest, were attended by Wolfgang Büchele, representatives of the shareholders Permira and Vienna Capital Partners and Wanhua Industrial, including Chairman Jiansheng Ding.

Last week, in a meeting with senior lenders of BorsodChem the banks expressed their strong support of the current management of BorsodChem and their expectations that the current management continues to operate BorsodChem during the implementation of the growth plan.

The Permira Funds and Vienna Capital Partners (VCP) should remain majority shareholders and continue to exercise operational control, the banks stated."

Wednesday, 14 October 2009

Gazprom strikes gas deal with China

Annual general shareholders’ meeting of Gazprom
Russian gas giant Gazprom has signed an initial contract to supply China with natural gas. The news may peturb those chemical companies in central and eastern Europe who are nervous about reliable gas supplies this winter, particularly those who rely on gas flowing through Ukraine.
Last winter large parts of the chemical sector in Ukraine and other countries were affected by lack of gas reserves.
According to the Associated Press, "Gazprom's chief executive Alexei Miller (pictured, right) said the agreement between Russia's state-run natural gas monopoly and China National Petroleum Corp. calls for the supply of 70 billion cubic meters of gas a year. A price had not been set and no contract signed yet.
Chinese media reports have said the agreement is expected to be a gas-for-loans deal similar to a $25 billion oil-for-loans deal that was completed earlier this year.
Russia and China are increasingly overcoming traditional mistrust to push ahead on mutual economic interests.
Russia's cash-strapped energy companies need Chinese funding, while Beijing has welcomed the chance to further diversify sources for energy needed to fuel its fast-growing economy. The global economic crisis and changing market conditions have further spurred cooperation as lower demand from Europe has spurred Russia to diversify markets for its oil and gas."

Monday, 12 October 2009

BorsodChem lenders support independence

Hungary's PVC producer, BorsodChem, insists that its lenders want private equity owners Permira and Vienna Capital Partners to keep a majority stake in the company.

China's Wanhua Industrial Group has been building a stake in the group by purchasing large amounts of mezzanine or junior debt. A familiar battle for BorsodChem may be brewing (see earlier entries).

According to Reuters, "BorsodChem said that chemicals firm Wanhua may become a minority equity holder but any cooperation should be discussed only later and must be based on contractual agreements typical in the industry.

"In a meeting with senior lenders ... the Senior Steering Committee of the senior syndicate expressed its strong support of the current management of BorsodChem and its expectations that the current management continues to operate BorsodChem after the implementation of the debt restructuring plan," the firm said.

"Permira Funds and Vienna Capital Partners should remain majority shareholders, as was made clear by the banks," BorsodChem said.


View BorsodChem in Hungary in a larger map

Dow confirms closure plan

US group Dow Chemical has insisted it is pressing ahead with plans to close the site in January.

According to nebusiness.co.uk, a consultation period has come to an end and 55 jobs are at risk.

The news seems to confirm what Stan Higgins at NEPIC (North East Process Industry Cluster) and the UK government told me last week. We'll have to wait and see if a white knight emerges to rescue the operation, as some were suggesting (see earlier entries).

Thursday, 8 October 2009

Mandelson, Dow, Third Coast negotiating over Wilton?

Colleagues returning from the EPCA conference in Berlin spotted Third Coast executives entering a meeting with people from Dow Chemical. Could it be that the two companies are negotiating together with direct input from UK business secretary, Peter Mandelson, to rescue Dow's ethylene oxide/ethylene glycol plant at Wilton, Teesside?

This would explain why Stan Higgins, CEO of industry group the North East Process Industry Cluster was so adamant that no deal was being struck. Also why a government spokeswoman was also so sure. Could Mandelson simply be by-passing his own department?

Dow's plant is scheduled for closure in January (see earlier entries).

Tuesday, 6 October 2009

Mystery of Third Coast Chemicals' Wilton rescue plan

On Sunday ICIS reported that US-based Third Coast Chemicals was negotiating a takeover of the Dow Chemical ethylene oxide/ethylene glycol (EO/EG) site at Wilton, UK, scheduled for closure in January 2010.

We'd got confirmation of a Sunday Times report from Martin Staley, EMEA vice president for Third Coast who told ICIS: “We’re working with the North East Process Industry Cluster (NEPIC) to see if there’s an opportunity that the plant can be saved.” The company had previously worked on a takeover plan which had stalled in May this year.

However NEPIC CEO Stan Higgins later told ICIS that no negotiations were going on with Third Coast or anyone else. A spokeswoman for the UK’s Department for Business, Innovation and Skills added: “We’re not in any negotiations with Third Coast at the moment. I don’t believe we’re in negotiation with any other parties.”

Higgins was very upset about the Sunday Times report, claiming it gave false hopes to workers at the plant.

Now a source from the EPCA meeting in Berlin insists negotiations are going ahead with Third Coast. Could Dow and Third Coast be secretly negotiating without the knowledge of Stan Higgins at NEPIC and the DBIS? The plot thickens......

La Seda de Barcelona announcement today?

There are rumours in the market that troubled PET producer La Seda de Barcelona may have breached its bank covenenants with an announcement due out today (6 October).

These are unsubstantiated rumours so I'd love to hear from anyone who can tell me if this is true or false. Please contact me by e-mail at will.beacham@icis.com

Shares in La Seda were suspended earlier this year in a dispute about 2008 accounts. Its UK operation, Artenius, entered bankruptcy proceedings too and is being administrated by Deloitte.

Monday, 5 October 2009

Wilton rescue for Dow EO/EG plant by Third Coast Chemical

The Sunday Times reported yesterday that US producer Third Coast Chemicals is in talks to take over the Dow ethylene oxide and ethylene glycol facility at Wilton.
This would be excellent news for Wilton and the UK chemical industry in general.

The Dow plant was the UK's only producer of EO/EG and it is dangerous to transport. The question now is: will Croda now reverse its decision to close the downstream ethoxylates and surfactants plants. It decided to close these in the wake of the Dow closure.

The Times article sated "Ministers are to examine plans to inject tens of millions of pounds into an American-led project to revitalise the chemicals industry in the northeast and save thousands of jobs.

It would see Texas-based Third Coast Chemicals take control of a key plant at the former ICI chemicals complex at Wilton, Teesside. State agencies would provide most of the £50m funding in what is regarded as the first leg of a strategic review by the government of the chemicals industry.

Senior industry sources told The Sunday Times this weekend that the government was in the early stages of formulating an assistance programme to the beleaguered £60 billion-a-year industry. It employs more than 200,000 workers and has been among the worst affected by the recession.

The Department for Business denied that the government had launched a strategic review but it is understood that a team within the Shareholder Executive has begun working on a strategy and has made Wilton a top priority."

Friday, 2 October 2009

BorsodChem not for sale: Permira

Permira, the owners of Hungary's PVC manufacturer BorsodChem, say they will hold on to the group as it should recover strongly when the downturn tails off.

According to Reuters, Ulrich Porwollik, a head of communications at Permira in Germany, confirmed a report in Vilaggazdasag.

'Permira has long term goals with BorsodChem,' Christian Neuss, partner at Permira was cited by Vilaggazdasag as saying.

He said once an economic recovery starts in the world, the company will be able to return to growth again.

The paper also cited BorsodChem Chairman Chief Executive Wolfgang Buchele as saying that Wanhua can come in as a partner of BorsodChem but not as a majority owner.


View BorsodChem in a larger map

Tuesday, 29 September 2009

Chemicals journalist clears scrub for National Trust

The blog spent last Friday working with fellow Reed Business Information staff to maintain a rare chalk meadow habitat at Box Hill, Surrey, UK

Look out for a fellow wearing a dandy flat cap!

RBI Volunteer Day at Box Hill from Adam Tinworth on Vimeo.

Thursday, 24 September 2009

Bidders shortlisted for Poland chemical privatisation

Close-up of the flag of Poland

Poland's privatisation agency, Nafta Polska, has unveiled its shortlist for the chemical sell off it is planning.

According to ICIS news, US-based private equity firm Bain Capital; London-based private equity firm Cinven in a consortium with Polish human resource and interim management services company Kolaja & Partners; German chemical company Petro Carbo Chem (PCC); National Qatar Industries Company; Lithuanian chemical, logistics and cargo group UAB Achema; and Polish investment fund Mistral have been shortlisted.

The government is selling off Ciech group and a second sector comprising fertilizer groups Zaklady Azotowe Pulawy (ZAP) and Zaklady Chemiczne Police (ZChP).

It is interesting to note that no large multinationals have chosen to participate in this sell-off. Poland is a huge and potentially fast-growing market. Can these companies be in such bad shape that they are of no interest? Or are they just too small to be worth the bother?

Tuesday, 22 September 2009

Poland's construction chemical market falls


Bad news for construction chemical manufacturers serving the Poland according to a new report. Annual declines in demand of 5% are forecast for 2010 and 2011. The only surprise here here is that the falls are not more severe.

"After an excellent 2004-2008, a much slower development of the Polish economy as well as drying up financial sources for buildings projects, especially in the residential sector, will give a rise to a certain correction in the Polish construction chemicals market between 2009 and 2011. The report estimates that in 2009-2011 the market’s average annual rate of change, measured in sales value, will equal -5%. The market will report the steepest declines in 2010.

The condition of the construction chemicals market could undoubtedly be enhanced by investments in new public utilities. The report suggests that constructing and further expanding schools, university campuses, libraries, sports halls, swimming pools, hospitals, museums or civil administration offices will be the most dynamically developing arm of the non-residential sector and, to a large extent, will compensate for the loss in the property developing residential construction."

Picture attribution http://www.flickr.com/photos/17989497@N00/

Monday, 21 September 2009

Poland runs out of gas for chemicals?

Poland may have to cut chemical production if supplies of natural gas run out later this year, according to a Reuter's report. This could have a big impact on chemical producers such as Police, Pulawy and Anwil which were affected last year during the Ukraine gas dispute.

"Poland's gas monopoly PGNiG estimates it will be short 0.5 billion cubic metres of gas in the fourth quarter and may be forced to reduce supplies to large industrial clients, PGNiG deputy head was quoted as saying on Monday.

"We estimate the fourth quarter deficit will reach 0.5 billion cubic metres. We cannot rule out that deliveries to our industrial clients will be reduced," Dudzinski told Puls Biznesu daily.

Poland, which was not receiving all the contracted gas from Russia for nearly six months this year, is currently in talks with Russia to increase gas supplies to make up for shortages in 2009 in 2010.

Radoslaw Dudzinski added the monopoly might be short 2.3 billion cubic metres next year, should the government fail to amend a deal with Russia and increase natural gas supplies.

During the gas row between Russia and Ukraine in January, PGNiG was forced to reduce supplies to its biggest clients including chemical makers Police PICE.WA, Pulawy PULW.WA and Anwil. (Writing by Patryk Wasilewski; Editing by Kim Coghill)"

Arkema upskales carbon nanotube technology

French chemical group, Arkema, are pushing further into nanotechnology by building a 400 tonne/year plant, scheduled for startup in 2011. Together with BayerMaterialScience, DSM and others, Europe is really pushing forward with this technology.

Here is some of the press release: "Arkema announced the construction of a carbon nanotube (CNT) pilot production plant at its Mont site (France, Pyrénées-Atlantiques). The 400 ton/year plant, scheduled for startup beginning of 2011, will operate an innovative process and will be the only CNT production plant in the world to use an entirely bio-sourced raw material.


In 2003 Arkema launched a research project to study CNTs and their applications. In 2006 Arkema started up at its Lacq facility the first pilot laboratory capable of producing some 20 ton/year of CNTs, sampled under the trademark Graphistrength®. Arkema in particular developed a range of innovative masterbatches that are easy to process within various thermoplastic, elastomer and, more recently, thermoset matrices. These high-tech masterbatches help optimize the application properties of end-products.

Arkema put in place from the very launch of the project a CNT-specific health-safety-environment initiative to ensure the protection of its employees, users, and the environment. Its code of conduct is based on three principles: prevention, permanent knowledge acquisition, and transparency with stakeholders in accordance with the advice of the January 2009 French Public Health Council.

Arkema has already established a large number of partnerships in various sectors ranging from electronics and transport, to renewable energies (wind, photovoltaics) and energy storage (batteries, supercapacitors) for the development of applications requiring enhanced performance in terms of electrical conductivity, thermal conductivity, and mechanical strength."

Friday, 18 September 2009

Poland chemical privatisation deadline passes

Close-up of stacks of bank notes


This week the deadline for preliminary bids in Poland's chemical privatisation plan passed.

According to ICIS news, only Germany's Petro Carbo Chem (PCC) has publicly declared that it is a confirmed bidder for the package, which comprises Ciech, Zaklady Azotowe Tarnow (ZAT) and Zaklady Azotowe Kedzierzyn (ZAK).

The blog wonders whether the whole thing may fail if bids do not match up to the valuations privatisation agency, Nafta Polska, have in mind.

Wednesday, 16 September 2009

China's Yantai Wanhua pursues BorsodChem


View BorsodChem in Hungary in a larger map
BorsodChem's Kazincbarcika PVC plant

China's largest Methylene Diphenyl DiIsocyanate manufacturer, Yantai Wanhua, is in talks with Permira, the private equity group which owns Hungary's main PVC manufacturer, BorsodChem.

According to news service plasteurope.com, it has bought up the company's mezzanine debt to the tune of E200m.

An earlier report in portfolio.hu suggested it was not intent on a hostile takeover.

"Yantai Wanhua plans long-term in BC, aiming to become a strategic investor in the troubled Kazincbarcika-based (northeast Hungary) firm.

Yantai Wanhua is a market leader on its home turf on the MDI market and is the fifth largest in its global league behind BASF, Bayer, Hunstamn and Dwo Chemical.

It has three production bases with 2,000 employees. In 2008, it posted revenues of EUR 814 m with its profit exceeding EUR 170 m. The company's market capitalisation is around EUR 3 billion.

Napi said Yantai Wanhua's management has sat to the negotiating table with the senior leadership of Permira, BorsodChem's majority owner, discussing how they could enter BC as a strategic investor and how they could take part in the reorganisation of the company.

State bailout seen

Hungary's state-owned development bank MFB said at the end of July that it was in talks to bailout debt-ridden BorsodChem, owned by London-based buyout shop Permira that bought BC for EUR 1.6 bn in 2006.

While no details were brought to light, people familiar with the situation said the loan is in the region of EUR 100 million and is needed to complete a new chemicals plant.

The lenders include Royal Bank of Scotland PLC, Unicredit SpA and Lehman Brothers International Holdings Inc., people familiar with the matter previously told Dow Jones.

Permira has been in talks with the company's lenders and the Hungarian government for some time and is expected to inject around EUR 80-90 m of new capital into the Hungarian firm.

As part of the deal, mezzanine lenders are asked to swap EUR 200 m loans for equity, people familiar with the situation told Dow Jones at end-July.

The Hostiles

In mid-August, Büchele announced that uncertainties around BC could be traced back to an Asian investor who, according to available information, has bought a significant part of BorsodChem's mezzanine loans with the involvement of investment banks.

The Chairman-CEO noted the investor failed to inform BorsodChem in writing of its role therefore he sees “hostiles intentions" in the move, saying that “if interests were mutual, there would be no need to involve investment banks."

Büchele told local newswire MTI that BC disposes of cutting-edge technology and it has always strived to become one of the leading isocyanate producers of Europe. If this technology goes to Asia, Hungary would not only lose a production unit, but the chance of further developments, and ongoing investments would be halted. This could weaken the company's position in Europe.

The surfacing of a new investor could put in jeopardy the subsidies already agreed on, as well as the agreements about to be reached, Büchele added."

Yara takes part in Odessa, Ukraine privatisation

Cargo Ships Ply Their Trade At Odessa Port
Odessa port

Norway's Yara has applied for tender documents in Ukrainian privatisation. Brave western chemical companies are keen to enter fast-expanding eastern markets even if they are volatile. Yara is teaming up with the Libyan Government!

According to chemie.de, "Yara International ASA has, through a subsidiary, applied to the State Property Fund of Ukraine (SPFU) for receiving the documents for the tender announced by SPFU for the privatisation of Odessa Port Plant (OPP) to be held on September 29.

Yara has filed this application as a member of a consortium also comprising Kulczyk Holding S.A., representing a privately owned investment group, and the Libyan Investment Authority (LIA), an investment fund being 100% owned by the Libyan Government. The filing is only to pre-qualify the consortium for a possible participation in the tender and implies no binding obligations on any of the parties to the consortium. Should the consortium decide to participate in the tender, Yara will hold a minority position in the possible buyer of OPP.

OPP owns and operates two ammonia and two urea plants in Yuchny, Ukraine, with combined annual capacities of approx. 1.1 million tonnes of ammonia and 0.9 million tonnes of urea. In addition OPP owns and operates a major terminal for ammonia and urea, exporting products produced by other Ukrainian plants as well as by some Russian plants.

Friday, 28 August 2009

Blog goes on holiday

The blog is away for two weeks of sun in Mallorca. Thanks to those who have become regular readers of this chemical industry news blog. Normal service will resume in the middle of September.

Francois Vleugels to run Spolchemie

Francois Vleugels, the driving force behind the modernisation of Czech Unipetrol, is to become the new CEO of Czech chemical group Spolchemie. This is good news for the fellow whose abrupt departure from Unipetrol raised a few eyebrows.

I interviewed Vleugels at 2008's European Petrochemical Association (EPCA) meeting in Monte Carlo. He told me candidly about his frustration at the political interference in Unipetrol's parent group, OKN Orlen.

Thursday, 27 August 2009

Iran petrochemicals forecast to plummet

Iran's petrochemical industry is forecast to suffer a severe slowdown in investment following the re-election of hard-line President Mahmoud Ahmadinejad. The global recession and low oil prices will add to the country's troubles, according to a fascinating new report by companiesandmarkets.com

President Ahmadinejad Inaugurates Petrochemical Facility - Assaluyeh
(Picture - Iranian president Mahmoud Ahmadinejad during the inauguration of Mehr petrochemical facility at Assaluyeh, 1,200 km (746 miles) south of Tehran, Persian Gulf, Iran on June 25, 2009.)


As a journalist I can tell you it is all but impossible to get accurate information about Iran's chemical sector so this is very welcome. Here is the executive summary:

"The Iranian government claims that petrochemicals output rose 18% y-o-y in the 2008/09 Iranian year (ending 20 March) to 27.1mn tonnes, but did not give a breakdown by product. According to government figures, the value of petrochemical exports totalled US$8.2bn in the 2008/09 Iranian year, compared to US$3.2bn four years earlier. This was US$300mn above the level the report had estimated and around 35% above the level achieved in the previous year. This was still US$800mn below the target set by Iran’s petrochemical exporter, the IPCC, demonstrating that the global recession had a deleterious impact on the sector in the second half of the 2008/09 Iranian year. The situation may have been worse if it had not been for the final completion of the Jam Petrochemicals Complex in December 2008, three years behind schedule.

Low oil prices are likely to impact badly on the Iranian economy, putting pressure on demand and therefore domestic consumption of petrochemicals. Falling growth in real private consumption and real gross fixed capital formation in 2009/10 will lead to deterioration in output growth of the consumer good, automotive and construction industries, which are major consumers of petrochemicals products. Lower oil prices also mean lower oil revenue, reductions in foreign exchange reserves and worsening liquidity problems in the financial sector. Domestic liquidity will be affected by fewer petrodollars entering the banking system, leading to a slowdown in lending to businesses.

Meanwhile, the hopes of the petrochemicals industry to attract foreign investment will be hit by global recession and sanctions. The prospect of Iran being able to attract substantial FDI inflows over the coming years remains poor, although they have never been great. Like other areas of the economy, Iran’s petrochemicals industry will continue to suffer from chronic underinvestment. Specifically to Iran, the UN, US and EU sanctions regimes relating to the former’s nuclear programme, and which target key sectors of its economy such as oil, gas and petrochemicals, will keep potential investors away, particularly Western investors. However, the door remains open for investors from China and Russia, although these may not have sufficient capital to make up for the decline in Western investment and they are also keen to develop their own domestic capacities. Petrochemicals companies will find it harder to obtain finance and the import material and machinery for the construction of petrochemicals projects.

The government anticipates that 10 petrochemicals projects worth US$12bn will come onstream in the 2009/10 Iranian year, helping to raise output to 39mn tonnes, a 44% y-o-y increase. The report is highly sceptical that the industry will meet its project deadlines or that extra capacity will be fully utilised, given the current economic environment. Iran has a poor reputation for meeting project deadlines and this will be compounded by lack of expertise, a more restrictive financial situation and ongoing international sanctions. There are therefore doubts over the government’s hopes to establish 47 petrochemical operations by the end of the Fifth Five-Year Economic Development Plan in 2015, adding a total of 43mn tpa of capacity. According to officials, once the projects become operational, Iran will represent at least 5.3% of global petrochemical output and 36% of Middle Eastern production. The Oil Ministry has set targets for annual production of 11.5mn tpa of ethylene, 11.5mn tpa of polymer and 3.4mn tpa of urea, with a target of becoming the world’s leading producer of methanol with 7.5mn tpa of methanol capacity representing 18% of global capacity."

Monday, 24 August 2009

Ukraine chemicals, economy, contracts in Q2

Ukraine's chemical industry is in a state of collapse with output slumping 31.1% in the second quarter, according to Bloomberg quoted in the Tehran Times.

Cargo Ships Ply Their Trade At Odessa Port
Ships at port in Odessa, Ukraine Photo by Uriel Sinai/Getty Images


Here is the text: "Ukraine’s economy shrank an annual 18 percent last quarter, the second-deepest slump on record, after industrial production and retail spending plunged.

The fall in output followed a record 20.3 percent contraction in the first three months of the year, the Kiev- based state statistics committee said in a statement on its Web site today, citing preliminary figures. The office is due to publish details when it releases the final report on Sept. 30.

The commodity-driven economy slumped after demand for steel, Ukraine’s biggest export, faltered and its related industries sagged. Reliance on foreign-currency borrowing pushed Ukraine’s banks into decline, with 17 lenders now under central bank control. The former Soviet state is relying on a $16.4 billion International Monetary Fund bailout to avert default. Gross domestic product will slump 14 percent this year, the IMF estimates.

“An ‘improvement’ from minus 20.3 percent to minus 18 percent is still a huge negative in anyone’s books,” said Timothy Ash, head of Europe, the Middle East and Africa research at Royal Bank of Scotland Plc in London. “The third quarter will probably also show a steep decline, but favorable base effects might ease the year-on-year decline in the fourth quarter.”

Ukraine’s industrial production has declined through the past year and sank an annual 26.7 percent in July, the state statistics office said today in a separate release. Steel production fell 30.4 percent in July, chemicals output slumped 31.1 percent and machine building dropped 52.9 percent. The three industries produce Ukraine’s main exports, which account for more than 50 percent of total output.

Metals, chemicals

Metals and chemicals producers including VAT Odeskyi Pryportovyi Zavod, Ukraine’s second-biggest ammonia producer, have posted record losses. VAT Azovstal Iron & Steel Works said on Aug. 4 it cut steel output by 37.5 percent from January through July to adapt to shrinking markets."

Friday, 21 August 2009

Turkey petrochemicals forecast suggests tough future

New forecasts show that Turkey's petrochemical and chemical sector is in line for a tough 2009.

Turkey had become used to double digit growth in demand for plastics and chemicals, sucking in imports from Europe and Asia. No longer. Here is chemicals content of the report, just out:

"While 2009 will be a terrible year for the Turkish petrochemicals market, we maintain that the country remains among the best positioned economies in emerging Europe to recover in late 2010. We hold to the view that H109 will be the trough of the current recession. With the economy set to grow 1.7% in 2010 with a concurrent recovery, BMI forecasts a strong rebound in petrochemicals. Two key industries consuming petrochemicals – the automotive and construction sectors – will see growth of 8% and 3.6% respectively in 2010, with higher rates of growth thereafter. This should help support the development of Turkey’s downstream industries and give a boost to Petkim, its customers and other Turkish petrochemicals and plastics producers as the industry expands capacity.

By the end of 2009, petrochemical capacities are forecast to include 420,000tpa of PE, 150,000tpa of PP, 150,000tpa of PVC and 520,000tpa of ethylene. The economic downturn will have a highly negative impact on petrochemicals output in 2009, particularly given the importance of the automotive industry as one of its chief consumers. It is believed the days of 15%+ annual growth in polymer demand seen in recent years will come to an end, and expect a contraction in the market. Plastics production capacity reached around 5.6mn tpa in 2008 and was forecast to reach 6.5mn tpa in 2009, 11.3mn tpa in 2013 and 13mn tpa by 2014. However, the plastics industry will be impacted by the raising of import tariffs on petrochemicals from 3% to 6.5%. Although providing local producer Petkim with some protection from foreign competition, the new taxes will make it more expensive to import the raw materials needed for plastic production. Turkey is dependent on foreign raw materials for its needs, with 84% imported in 2007. On a positive note, the Turkish Plastics Industry Association has reported that plastics exports increased 25% in 2008 to reach US$43.7bn.

Plastics accounted for roughly 27% of total chemicals exports, with the main export markets being Russia, Romania, Ukraine, Iraq and Germany. The report forecasts plastics production capacity not exceeding 9mn tpa. For some polymers, Turkey’s needs have to be covered largely by imports, with PVC 81% imported, PP 87% and HDPE 80%. In the case of LDPE, local production met 62% of needs in 2007. The share of domestic producers will rise in 2009, although this is in the context of a decline in overall sale volumes."

Asian takeover of BorsodChem?

An investor from Asia is reportedly eyeing Hungary's pvc maker, BorsodChem. According to realdeal.hu, an Asian investor has been buying up tranches of the East European chemical company's debt.

This is worrying for the comapny's CEO, Wolfgang Buchele, who is worried that the group's technology may be exported and his plants shut down. This all has echoes of the early 2000's, when rumours flew around about a stealthy Russian takeover of the group. It is quite near the border with Ukraine and pipelines link it to that country. It seemed at the time a natural target for Russian petrochemical companies looking for access to Europe.

From the Asian story: An Asian investor may have "bought a significant part of BorsodChem's mezzanine loans with the involvement of investment banks could be a source of uncertainty at the Hungarian chemicals company as the investor has not yet informed BorsodChem in writing of its role, chairman-CEO Wolfgang Buchele told [Hungarian news agency] MTI on Monday in Kazincbarcika.

"We see hostile intentions in the events because if interests were mutual, there would be no need to involve investment banks," Mr Buchele said. He added that BorsodChem's central strategy had always been to use its cutting edge technology to become one of Europe's leading isocyanate makers: if this technology goes to Asia, Hungary would not only lose a production unit, but the chance of further developments, and ongoing investments would be halted.

The management of BorsodChem, which is deep in debt, has been in talks with the government on a loan from the state-owned Hungarian Development Bank (MFB).

BorsodChem was profitable in both June and July because of favourable market conditions, but also because of cost-cutting measures, Mr Buchele said. Costs were reduced without making mass layoffs, he added."

Thursday, 20 August 2009

Global map of major ethylene cracker projects

Download this global map of major ethylene chemical cracker projects by clicking here. This is on our forum ICIS connect and you may have to register first. This is a small price to pay for such a valuable resource!

Wilton, Teesside Sabic LDPE plant set for September startup

Sabic will be hoping demand grows quickly to soak up production from its new low density polyethylene (LDPE) chemical plant at Wilton, Teesside, UK.

This long-delayed project is now scheduled for startup in September, according to the UK's Institute of Chemical Engineers.

With all the other chemical plant closures at the UK site, Saudi Arabia's Sabic will be relying on this plant to soak up excess ethylene from its 800,000 tonne/year world scale cracker. My recent feature "Wilton closures highlight challenges for Europe chemical sites" highlight this issue.

According to IChemE: "The plant, owned by Huntsman until Sabic’s takeover, had an original start-up date of the fourth quarter of 2007. This was put back to February 2008 following delays to construction work, which eventually began in 2006. Full capacity is expected to be reached during 2010. Sabic says that the commissioning work at the plant is “well advanced”.

The 400,000 t/y plant will be the largest of its kind in the world, and has been built at a cost of £250m ($407m). Around 110 permanent jobs have been created at the site."

Picture credit IChemE

Monday, 17 August 2009

Another blow for Teesside chemicals; more Artenius layoffs

More workers at the Wilton, Teesside chemical site were laid off last week after administrators Deloitte decided to mothball the PET plant belonging to Artenius, the UK division of La Seda de Barcelona which is cutting costs.

A further 58 workers have been axed from a Teesside chemical plant which went into administration last month, according to nebusiness.co.uk.
"This leaves just 49 staff at the plant. This follows the 137 workers who were laid-off when administrators Deloitte were called in at the end of July."

Deloitte is trying to find buyers for this plant. Read the background to the Wilton chemical site's shutdowns and its future in my latest article in ICIS Chemical Business: The Domino Effect
Listen to me talking about it on our weekly chemicals podcast.

View North UK chemical cluster in a larger map

Tuesday, 11 August 2009

Russia chemical imports plunge

It looks like Russia's economy is still in the doldrums. The country imports a lot of non-commodity chemicals as the industry there is not highly specialised.

According to the Kyiv Post
, for the first six months of 2009 there was a 37.8% drop in purchases of polymers and rubber; soap and synthetic cleaning materials fell by 24.4%, perfume and cosmetics - 21%, organic and non-organic chemical products - 18.4% and pharmaceutical products - 18.2%.

The low oil price is really hitting this country's economy. I recently interviewed chemical distributors with business in Russia and they were candid about the problems there.

Wednesday, 5 August 2009

Artenius Wilton workers lobby in Spain

Beleaguered workers from the Artenius site at Wilton, Teesside, are going to Spain in the hope of convincing parent company La Seda de Barcelona's shareholders that this site is worth saving.
The blog is not convinced: the Artenius PTA plant relied on Sabic's aromatics unit at Wilton for paraxylene feedstocks. This site closed at the end of 2008.
The downstream PET unit relies on ethylene glycol from a Dow plant which is also scheduled to close early next year. Where will these plants get their feedstocks from?

World map of ethylene cracker projects

My colleague, journalist Anna Jagger, has just created a free-to-view map of the world's major ethylene cracker projects. It is up-to-date and useful. Contact the blog for a copy as it is too large a file to download onto blogger.

Monday, 3 August 2009

ECHA distances itself from Reach consulting companies

Woman Holding Hands to Temples


The European Chemicals Agency has today issued a statement saying it does not endorse any of the multitude of consultancy firms which have sprung up to help industry's headaches as they try to implement Europe's chemical regulation Reach.

I've been to conferences where there are swarms of "consultants" with varying degrees of expertise milling around in search of needy chemical companies suffering over Reach.

A statement picked up by chemie.de says: "ECHA does not accredit consulting companies
03 Aug 2009 - The European Chemicals Agency does not accredit or endorse companies providing advice or hands-on support to others on regulatory compliance. No companies can claim that they have been accredited by ECHA.

ECHA is making this statement in response to reports by third countries that EU legal or consulting companies are claiming to be accredited or somehow endorsed by ECHA, especially in the context of substance registration or SIEF formation. This is not the case. Companies are not accredited by ECHA. ECHA may have a contractual relationship with consultants and ask them to, for example, collect information on its behalf. In all such cases, the companies will be able to present clear documentation mandating their work."

Picture credit http://www.picapp.com/Search.aspx?term=headache&cats=Creative&pre=C&frompage=BetaHomePage5&region=10

Friday, 31 July 2009

Closures at Wilton, Teesside, chemical site threaten UK industrial base

The blog has been researching an article on the Wilton, Teesside chemical cluster. This site - a key part of the UK chemical industry - has suffered a spate of closures in the last 12 months, accelerating in the last few weeks.

With little scope for exporting large amounts of surplus ethylene, the future of Sabic's cracker must now be under discussion.

Here is the latest on the site from local paper The Northern Echo

"EFFORTS to safeguard Teesside’s chemical industry were stepped up yesterday as both the Government and the debt-ridden owner of a threatened plant were warned of the potentially catastrophic effect of the sector’s demise.

Numerous companies in the sector’s supply chain have come together to write to the Government, stressing the necessity for both financial and skills support to be given during this turbulent time, which has seen several plants on Teesside announce their closures, and more left with question marks hanging over their futures.

Over 1,000 jobs have been, or are set to be, lost through the closures of the Invista and Elementis plants, the impending closures of Dow and Croda, the administration of Artenius, and the lingering doubts over the North Tees Petroplus refinery – a number which could increase ten-fold nationally, as their demise hits the supply chain.

In a statement, the companies involved said that although emphasis now seems to be on emerging technologies, the traditional skills must not be lost.

It said: “Our main concern is that the job losses in our businesses will result in a reduction in the total engineering expertise and capacity in the region and the UK.""

Ukraine ammonium producer Stirol: you learn something every day!

The blog has just met a new colleague at ICIS who told me about Stirol, a company I'd never heard of which may be one of Ukraine's biggest chemical groups. I can't find any financial information on the site to back up this claim.

Stirol was the first company in the Soviet Union to produce ammonia from coke oven gas, according to its chairman NA Yankovski.



I am about to start compiling the ICIS Top 10 list of chemical companies in central and eastern Europe and Russia. Any suggestions, please contact me: it is very difficult getting correct information from this region.

Here is the list from last year: apologies for formatting. You can see the original story by clicking here: Sibur rises in CEE/Russia Top 10

Company name Sales '07 % Change to '06* Operating profit '07 % Change to '06* Net profit '07 % Change to '06*
PKN Orlen (chems/petchems) 6,741 1.2 537 46.6 - -
Sibur 4,846 11.8 1,282 15.7 - -
Salavatnefteorgsintez 3,960 40.0 - - 1,630 50.0
MOL (petchems division) 2,300 12.0 236 75.0 - -
Agrofert 2,870 3.0 - - - -
Nizhnekamskneftekhim 2,400 24.0 287 (profit from sales) 20.0 1,670 23.0
Lukoil (petrochemicals) 2,300 26.0 - - - -
Petkim 1,860 -2.0 96 -3.0 61 23.0
BorsodChem 1,510 19.0 - - - -
Uralkali 1,190 87.0 - - - -
Note: OMV is excluded because it includes petrochemicals with refining and marketing *In local currencies
sources: company data, Accenture, CIREC

ICIS pricing launches Africa polymers report

Hot globe exploding

This blogger is a journalist working for ICIS, the global chemical intelligence group. I write chemical-industry news and analysis for the magazine ICIS Chemical Business. But the largest part of the ICIS group is its pricing service.

This has just launched new weekly price reports for polypropylene and polyethylene in Africa. This is a really small but fast-growing and dynamic market. With increasing chemical industry activity, there is now a need for accurate pricing information.

The new reports provide price assessments for polyethylene and polypropylene, CFR north and southern Africa, FD South Africa, plus commentary on the west and eastern African markets.

If any readers would like to request sample copies of the reports go to tinyurl.com/nbtj5u or alternatively email your request to sales.uk@icis.com.

Picture credit http://www.picapp.com/Search.aspx?term=africa&cats=Creative&pre=C&frompage=BetaHomePage5&region=10

Tuesday, 28 July 2009

Poland chemical industry privatisation plans in question

Poland's chemical industry has been trying for years to privatise parts of its chemical industry. The blog has been following these developments for nearly 10 years and there has been little progress.

Political inertia is caused by succesive governments altering or abandoning existing plans. And overstaffed, unmodernised factories have remained unreformed as strong unions and succesive govenrments have failed to tackle the issue.

Now, according to Poland's Gazeta, the latest set of plans are under threat. It says: "Mr Grad's privatisation plan was to be discussed by the cabinet today. But it won't be. 'The Council of Ministers' Permanent Committee has asked for legal opinions concerning the planned sale of certain companies,' Treasury spokesperson Maciej Wewiór told Gazeta last night."

ICIS news says that last week, Poland said it was has expanded its privatisation programme, with major stakes in fertilizer, titanium dioxide (TiO2) and biofuel producers a key element.

"A minority stake in the second-largest Polish refiner and biofuels producer, Grupa Lotos, was among the assets newly announced as available to investors.

The treasury ministry also reiterated its determination to see Poland’s largest fertilizer maker, Zaklady Azotowe Pulawy (ZAP), as well as the country’s second-largest fertilizer producer, Zaklady Chemiczne Police (ZChP), sold off during next year.

Initial bids for the flagship package of the process - Ciech, Zaklady Azotowe Kedzierzyn (ZAK) and Zaklady Azotowe Tarnow (ZAT) – need to be lodged by 10 September."

Monday, 27 July 2009

La Seda Wilton plant to close


Another plant is to close at the beleaguered Wilton, Teesside, chemical site, according to ICIS news. I'm researching an article on chemical sites and clusters in the downturn, and have been focussing on Wilton.

It has suffered recent closures of Dow's ethylene oxide plant as well as Invista's adipic acid plant. Sabic closed its aromatics unit at the end of 2008.

Would be interested to hear anyone's views on the future of this site.

Picture credit http://www.flickr.com/photos/parksy/50019865/sizes/o/

BorsodChem gets state bailout

Struggling Hungarian pvc-maker BorsodChem is being rescued by the country's government. I visited the company at its main site in Kazincbarcika in the east of the country, towards the border with Ukraine. This is a really depressed part of the country with high unemployment so it is no surprise the state is willing to step in. BorsodChem is one of the few major employers in the region.


View BorsodChem in Hungary in a larger map

According to the Financial Times, the Hungarian government is throwing a lifeline to one of eastern Europe’s biggest private-equity deals by offering a €100m ($142m) loan to Borsodchem, the chemicals group acquired by UK buy-out house Permira for €1.6bn in 2006.

The loan from the state-owned Hungarian Development Bank is conditional on Permira reaching an agreement with Borsodchem’s lenders to restructure its excessive debt in a way that is acceptable to Budapest.
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