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.