Hungary to rely on exports for chemicals recovery

BorsodChem, TVK, MOL and others are in for a tough 2010 as a new report suggests there will be no recovery before 2011. Hungary's chemical industry has suffered from plummeting domestic demand as well as falling demand from export countries, particularly Germany.

See the full story here http://www.icis.com/blogs/east-european-chemicals/2010/04/hungary-to-rely-on-exports-for-chemicals-recovery.html

Nord Stream pipeline will benefit chemical producers

Construction of the E8.8bn Nord Stream gas pipeline from Russia into Germany officially began last week. This should be good news for European chemical manufacturers who rely on natural gas as a feedstock, or for those planning to introduce more flexible feedstocks to their manufacturing capability. For the full entry click here http://www.icis.com/blogs/east-european-chemicals/2010/04/nord-stream-pipeline-will-benefit-chemical-producers.html

DuPont cooperates in Hungary

Hungarian paint company Poli-Farbe and US-headquartered chemicals giant DuPont will put a jointly developed family of paint products on the market in the framework of a licensing contract, according to the Budapest Business Journal.

Click here for the full story http://www.icis.com/blogs/east-european-chemicals/2010/04/dupont-cooperates-in-hungary.html

Poland chemical privatization firm ZChP still waiting for bailout

Poland's largest nitrogen phosphorus potassium (NPK) fertilizer producer, Zaklady Chemiczne Police, is still waiting for a zloty (Zl) 150m ($51.4m, €38.7m) state bail out to be approved by the European Commission. Follow this link for the full story

Brenntag highlights antitrust in IPO prospectus

In its recently published IPO prospectus, German chemical group Brenntag raises the prospect of "substantial fines" and the forced divestment of assets at below market prices if it is found to be in violation of antitrust rules.
Click here to read the full article http://www.icis.com/blogs/east-european-chemicals/2010/03/brenntag-highlights-antitrust-fines-in-ipo-prospectus.html

Hellenic Petroleum petrochemical assets could be for sale

Burdened by at least $406bn in national debt, Greece is now considering the sale of many assets, including its 35.5% stake in Hellenic Petroleum which produces chemicals including MTBE, caustic soda, chlorine and PVC at its main Thessaloniki plant.
Follow this link for the full story http://www.icis.com/blogs/east-european-chemicals/2010/03/hellenic-petroleum-petrochemical-assets-could-be-for-sale.html

Univar pushes into Romania and Russia

Univar plans to expand into Romania and Russia in the coming years as part of a growth strategy in central and eastern Europe (CEE), the global chemical distributor told my colleague, Elaine Burridge, today.
Follow this link to see the full story: http://www.icis.com/blogs/east-european-chemicals/2010/03/univar-pushes-into-romania-and-russia.html

Slow recovery in foreign direct investment for Eastern Europe

Only a slow recovery in foreign direct investment for Eastern Europe. Follow this link for the full story:
http://www.icis.com/blogs/east-european-chemicals/2010/03/slow-recovery-in-foreign-direct-investment-for-eastern-europe.html

Lack of info in Dow Styron sale to Bain shows confidence returning to m&a

Lack of info in Dow Styron sale to Bain shows confidence returning to m&a. Follow this link to story:
http://www.icis.com/blogs/east-european-chemicals/2010/03/lack-of-info-in-dow-styron-sale-to-bain-shows-confidence-returning-to-ma.html

Brenntag IPO draws near?

Could Brenntag be closer to an initial public offering? See link to my new blog.

Looking East for Chemicals blog shifting to ICIS platform

My Looking East for Chemicals blog is shifting to become an ICIS blog. Please add the following link to your favourites: http://www.icis.com/blogs/east-european-chemicals/. Thanks for your interest. I hope to give you even more on chemical industry strategy and events in central and eastern Europe and elsewhere on the new site. All Blogger entries have been transferred. Many thanks from Will Beacham, ICIS Chemical Business Deputy Editor and London Bureau Chief.

Top 10 chemical companies 2015

The top 10 chemical companies in 2015 will be dominated by Middle East and Asian players according to global consultancy KPMG. Take alook at their latest white paper on the chemical industry in Europe. The rank assumes historical growth rates will continue. I've pulled the list off:

Top 10 chemical producers, 2015/16
Rank Company Country
1. SABIC Saudi Arabia
2. BASF Germany
3. Reliance India
4. Exxon Mobil US
5. Sinopec China
6. Sinochem China
7. Dow Chemical US
8. Saudi Aramco Saudi Arabia
9. Dupont US
10. ADNOC / IPIC Abu Dhabi
Source: KPMG in the UK, December 2009

Kpmg Europe Chemicals

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Could Poland fertilizer agreement signal a merger?

Zaklady Azotowe Pulawy (ZAP), Poland’s largest fertilizer producer, and Zaklady Chemiczne Police (ZChP), the country’s second-largest fertilizer producer, today signed a business cooperation agreement.

With the two groups in the midst of privatisation, I wonder if potential purchasers might look to merge the two groups, with all the consequent savings in overheads. ZAP produces nitrogen fertilizer, melamine and caprolactam, while ZChP produces nitrogen phosphorus potassium (NPK) fertilizer and titanium dioxide (TiO2) so there are obvious synergies in terms of prduct portfolio.

Any moves entailing job cuts or plant closures will attract fierce opposition in Poland, where social considerations have stymied previous attempts to rationalise outdated operations.

According to ICIS news, the agreement would initially address possible joint activities in optimising production processes, investing in and repairing fertilizer and ammonia units, and pushing ahead with environmental protection and energy initiatives, the companies said.

It replaced a previous cooperation agreement drawn up in 2008, which was abandoned because of the economic downturn.

Greece economic crisis a worry for chemical producers

The news that the International Monetary Fund is standing by to bail out Greece must be a worry to chemical producers regionally. So far we've had no reports of a negative impact on demand for chemicals at ICIS. But financial instability is bound to affect the buying habits of consumers and a negative impact on GDP growth.

Greece's problems have hit the Euro, which has fallen sharply against major currencies. This could be an unexpected benefit for Eurozone chemical producers who will benefit from cheaper exports and more expensive imports.

Let's hope the newly-elected government there can act swiftly to resolve a deficit worth 12.7% of GDP. According to The Independent "Earlier [last] week, investors showed unexpected appetite for Greek debt when the market responded with €25bn-worth of demand for its issue of €5bn-worth of five-year bonds, allowing the government to raise the issue to €8bn."

Image source http://www.sxc.hu/browse.phtml?f=download&id=1233814

New gas agreement gives hope to Poland chemical privatisation

Good news for Poland's chemical industry this week as a long term gas supply agreement is finally signed off, guaranteeing feedstocks for many chemical firms there. Lack of an agreement could have threatened the privatisation of the country's second-largest Polish fertilizer producer Zaklady Chemiczne Police (ZChP), and others currently under offer.

According to ICIS news, Under the ‘Yamal contract’, Gazprom has agreed to increase annual gas supplies to Poland to a maximum of 10.2bn cubic meters a year. Without it, Poland, which imports about two-thirds of its gas from Russia, would from this year lack 2.5bn cubic metres. The gas deal still needs to be approved by Warsaw, but the treasury ministry said the government stood ready to sign it.

Image credit http://www.sxc.hu/photo/579069

Artenius UK sold to KP Chemicals

It seems our sources were right (see last entry)! Administrators Deloitte yesterday confirmed that its assets have been sold to KP Chemical Corporation subsidiary Lotte Chemical UK.

The PTA and PET assets at Wilton will give KP a manufacturing base in Europe, which could be fantastic news for them if markets improve. PET and PTA have been hit hard by the downturn, suffering falling demand and over-supply.

The next question is: what investment plans do they have. How will they capitalise on this acquisition to gain market share in Europe? I'd also like to know how much they paid for these assets.

According to ICIS news, regional development agency One North East has approved a £1.8m ($2.9m, €2.1m) grant to help Lotte Chemical UK acquire the Artenius assets, which could also create 132 new jobs at the Wilton plant.

KP Chemicals nears deal for Wilton Artenius assets

South Korea's KP Chemicals will buy the PTA and PET assets of bankrupt Artenius UK at Wilton, northeast UK within the next few weeks, a source familiar with the deal has told me.

Journalists at ICIS have been working hard to get KP Chemicals or people from Artenius' administrators, Deloitte, to confirm strong market rumours over the past few weeks but with no success.

My contact confirmed the accuracy of this ICIS report from 13 January. A deal is expected within weeks.

This purchase would be good news for KP CHemicals, giving it a manufacturing foothold in Europe, allowing the company to be more responsive to customer requirements. It currently produces 955,000 tones/year of PTA and 446,000 tonnes/year of PET at it s South Korea plant based at Ulsan. Adding the Wilton plant’s production capacity would also improve its ranking amongst global PET producers. It currently claims to be No7 worldwide in PET.

The purchase comes against a background of poor market conditions for PET with low demand and oversupply in Europe.

Excerpt from ICIS story:
Deal close for Artenius UK PET, PTA assets - source

Administrators for the Artenius UK polyethylene terephthalate (PET) and purified terephthalic acid (PTA) assets in the UK are close to securing a deal with a major player in the business, a source close to the matter said on Wednesday.

There has been persistent talk on both the supply and customer side of the business that Korea’s KP Chemicals was in final negotiations to secure the production facilities located at Wilton in the northeast of England."

Sources suggested it had been talking to customers of the plants, some of which had moved to other suppliers.

It was believed that only unnamed legal issues remained before a deal on the takeover was closed.

Administrators Deloitte were unavailable for comment on Wednesday.

Artenius UK went into administration in July. Owners La Seda de Barcelona closed the 500,000 tonne/year PTA plant at the site as it cut back operations sharply as part of a wide-ranging restructuring plan.

Ukraine auto production plummets, chemicals hit

Chemical producers in the Ukraine and exporters of polymers to the country's auto industry must be facing a devastating drop in demand according to new figures out today.

According to a new report by Companiesandmarkets.com, it is still suffering from the effects of the global recession, with signs of a recovery still few and far between in autumn-2009. New car sales fell 78% y-o-y to 15,760 in October 2009, a contraction of 17% from the previous month.

"With such figures being posted it is not yet clear whether the market has bottomed out. Oleh Nazarenko, the director general of the All-Ukrainian Association of Automobile Importers and Dealers (VAAID), estimates November sales will be roughly the same as October. However, the director general of Auto International (importer of Mazda Motor and Suzuki Motor), Olena Dunina, expects car sales to increase 10-15% in December.

We believe reports earlier in the year claiming the market had reached the bottom have proved optimistic, and serious downside risks remain. One problem in Q409 has been an influenza outbreak which has discouraged customers from visiting showrooms, although this will not be a long-term impediment to autos sales in the country. Industry insiders say the sector can grow in 2010 only if the right conditions are in place. Nazarenko has forecast that – with the current legal and taxation environment – new car sales will reach only 165,000-170,000 units, around the level that VAAID is expecting for 2009, or could even fall another 5% from 2009, which is likely to be a bad year itself.

Nazarenko is hopeful that an economic recovery and greater availability of consumer credit will help the market revive somewhat. He also expects car makers to offer credit at almost 0% interest with the aim of stimulating demand. If these schemes are successful, and there are no further legal and tax burdens put on dealers, Nazarenko estimates that sales could grow by 20-30%. However, this would still be from 2009’s very low base."

Central and Eastern Europe chemicals industry call for ideas

I'm currently planning a special issue of ICIS Chemical Business magazine focussed on the central and eastern Europe and Russian chemicals industry. Please send me any good ideas for articles to explore this fascinating region.
I'm thinking about CEO interviews, Poland privatisation update, BorsodChem, Spolchemie, Russian chemical projects update and much more.

Billionaire Kulczyk bids for Poland fertilizer firms

Poland's billionaire businessman, Jan Kulczyk, is in talks to acquire the country’s two largest fertilizer firms, a source at the ministry told ICIS news this week.

The entrepreneur, owner of Warsaw-based Kulczyk Holding and international investment house Kulczyk Investments has had behind-the-scenes talks with senior Polish treasury ministry officials, said the source.

The report says he is looking at acquiring Poland’s largest nitrogen fertilizer producer, Zaklady Azotowe Pulawy (ZAP), and the country’s largest nitrogen phosphorus potassium (NPK) fertilizer producer, Zaklady Chemiczne Police (ZChP).

A quick search shows that Kulczyk may be trying to build a large fertilizer manufacturing base. According to Ukranian News, he is also interested in taking part on the privatisation of the Odessa Portside Factory, a huge ammonia producer.

Kulczyk Investments already owns Poland's solvent producer, POCH, located at Gliwice.

Chemicals bloggers compete in the snow

Readers of Paul Hodges' Chemicals and the Economy blog will have been impressed by the image of him facing a 400m descent down the side of Hampstead Heath, London.

Here is a short video showing my more modest descent in Crystal Palace park a couple of days ago.

Hungary's troubled PVC maker BorsodChem may be in deeper trouble, according to portfolio.hu. It quotes a local newspaper saying the company is not even close to negotiating a E100m loan it needs to help it restructure debt and continue operating.

BorsodChem has a huge amount of potential and had been modernising aggressively to transform itself into one of Europe's leading PVC manufacturers. Let's hope it can solve its problems,

Excerpt from, story: "Hungary’s chemicals producer BorsodChem should not expect to receive the awaited EUR 100 million loan from the Hungarian Development Bank (MFB) any time soon, although it badly needs the capital to restructure its debts and ensure its operations, local daily Népszabadság reported on Friday. The issue is not even on the table at the bank, it added.

View BorsodChem in Hungary in a larger map


The BorsodChem project officially does not exist at state-owned MFB, simply because the company has not put in an official request. There is nothing to talk about, Népszabadság learned.

Previously, there were talks with the Kazincbarzika-based company, but there were "not overly serious" therefore BorsodChem’s pending loan is in a "very initial phase", the paper said.

The bank remains open to negotiations and an agreement with BorsodChem if the company is to submit an official request.

The paper contacted BC, but no officials were willing to comment."

Emissions Trading System or Scheme - Eurocrats confuse

A sorry tale of confusion highlights an excellent example of the use or misuse of language by the bureaucrats at the European Commission.
Over the past few days there has been much debate here at ICIS about the correct way of expressing the European Union's "ETS". Having referred to it in an article as the "Emissions Trading Scheme", our US editor checked the Europa site and found press releases using both terms.
In the US the word "scheme" has negative connotations such as the word "scheming" would have in the UK and other English speaking countries.
The confusion deepened when we spoke to the Commission's environment press officer, Lena De Visscher, who initially told us the ETS has been known as the "Scheme" for a couple of years.
Later, however, the plot thickened when Lena clarified what she'd said: "In fact it's a bit more complicated I discovered when checking: legally it is still Scheme, so even in the revised directive it is called Scheme. However, for clarity's sake we started end 2005 calling it System and this is the word used in all texts except legal texts."
For anyone aware of the ETS, this is plain folly. I don't know anyone who calls this a "System" but our beloved Eurocrats have taken it upon themselves to change the name without telling anyone about it. Even my colleagues at ICIS Heren, which publishes a daily carbon report, refer to this as the "Scheme".
Now us British love to bash the EU with its "barmy bureaucrats" and this, to me, is on a par almost with the famous EU bendy banana regulation. UK tabloid newspapers gleefully reported on Commission Regulation (EC) 2257/94 which stated that bananas must be "free from malformation or abnormal curvature". "Extra class" bananas must be straight as a die, but Class 1 bananas can have "slight defects of shape", and Class 2 bananas can have full-on "defects of shape".
There is a whole host of apocryphal stories about barmy rules which, the tabloids claim, are ruining our great British way of life.
How about rules which some claimed would stop us being able to buy a pint of milk (rather, a liter), and prevent us asking for a pound of tomatoes (only by the kilo you understand).
We are also under pressure to stop using the mile, acre and ounce. In 2005 the Sun newspaper reported that miserable European bureaucrats wanted to force barmaids to cover up their cleavage due to the risk of skin cancer from exposure to the sun.
Thank God that ruling never saw the light of day.