CEFIC (European Chemical Industry Council) Chemical Trends Report for March, 2009 states that output in the EU chemical industry (excluding pharmaceuticals) decreased by 22 percent in January 2009 in a ‘year-on-year’ comparison. All chemicals sectors registered an output decline ranging from 8 percent to 33 percent. Price data shows that chemical products (excluding pharmaceuticals) remained stable in January 2009 (0.1 percent more expensive compared to January 2008). Confidence in the EU chemicals industry (including pharmaceuticals) declined by 5 points in March 2009. The worsening business climate of chemicals reflects a general deterioration in most of its underlying components. Managers reported a fall in the production trend observed. Their assessment of the current overall order book and export order book is increasingly negative.

Time to Secure Access to Market for Exporters of Chemicals to Europe

Manufacturers of chemical substances outside the European Union (EU) must start registering their products with the European authorities if they are to continue selling on this market.

The simple words "no data, no market" catch the true meaning of the REACH Regulation. While the rules apply equally to domestic and foreign manufacturers, there is one difference between them: manufacturers outside the EU cannot themselves register substances while domestic producers can.

Registering substances with the European Chemicals Agency (ECHA) in Helsinki is no mere bureaucratic task. The REACH Regulation requires proof of the safety or otherwise of the substances. There is a need to communicate regularly with the community of producers of the same substance within the Substance Information Exchange Forums (SIEF) which have been mandated by the regulation and within the supply chain of the substance.

Exporters to the EU have two options: they can leave the registration to importers, which places the burden on them, or they can designate what is called an "only representative" to do it for them. This option has the advantage of relieving importers from a task they may not relish and the relationship between manufacturer and importer is unchanged.

Maintaining access to the European market can best be achieved by the exporter designating a qualified only representative based in the EU and recognized by ECHA. Only representatives can be manufacturers, importers or independent from either.

In the latter case, "the neutrality of the representative to the market is more easily achieved," said Pierre Garçon, president of EcoMundo, adding "should the representative be designated by several exporters, which is allowed, he will file separate reports for each of the exporters he represents. This protects the confidentiality of the data of the exporter."

About EcoMundo

EcoMundo is recognized by the European chemicals agency as a qualified only representative. Human health and environmental protection is the keystone of the EcoMundo Company which creates web-based software tools to manage the lifecycle of chemical substances.

North American Chemical Project Cancellations for Second Quarter Nearly Double From One Year Ago

Industrial Info Resources reports economic upset across the world has taken a significant bite out of capital and maintenance spending originally planned for the second quarter of 2009 in North America's Chemical Processing Industry, with more than $780 million project cancellations identified. This is almost double the level of project delays and cancellations for the same quarter last year, which was recorded at $402 million representing 46 individual projects. Despite these setbacks, this still leaves an estimated $1.7 billion in active projects with the potential of beginning some phase of construction during the quarter.

Battery Plants Gain Ground

Lithium-ion battery makers move ahead with U.S. facilities

Tapping into public and private money, lithium-ion battery developers are expanding production in the U.S., C&EN reports. If all of the projects move ahead, new facilities could create thousands of jobs in the manufacture of millions of batteries for electric vehicles that are scheduled to be launched in the next few years.

Recently, the State of Michigan granted tax incentives of more than $540 million to four battery developers—Johnson Controls-Saft (JCS) Advanced Power Solutions, LG Chem, KD Advanced Battery Group, and A123Systems—for building facilities in the state.

In Kentucky, the National Alliance for Advanced Transportation Batteries (NATTBatt) selected a site in Glendale for its proposed $600 million contract manufacturing facility. And Argonne National Laboratory, an adviser to the 50-member NAATBatt consortium, agreed to create a National Battery Manufacturing R&D Center with the state and two universities there.

JCS announced recently that it would spend $220 million to build its first U.S. plant, in Holland, Mich., with an initial capacity of 15 million lithium-ion cells per year. It already has a plant in France and will be supplying batteries to automakers Mercedes-Benz, BMW, Azure Dynamics, and Ford.

A123Systems intends to invest more than $600 million in a Livonia, Mich., facility from which it can provide batteries to Chrysler and Chinese carmaker SAIC. The Watertown, Mass.-based firm also raised $69 million last week from General Electric and other investors.

KD Advanced Battery Group—a joint venture of Dow Chemical, Kokam America, and Townsend Ventures—plans to build a $665 million facility in Michigan. Likewise, Compact Power, a U.S. subsidiary of South Korea's LG Chem, will invest $200 million in a plant to supply batteries for General Motors' Chevrolet Volt electric vehicle. LG already supplies automakers Hyundai and Kia.

According to LG, electric or hybrid vehicles account for less than 1 percent of the 72 million cars sold annually worldwide. But it expects the market for batteries for these vehicles to grow from $700 million in 2008 to $3.2 billion by 2012.

COMPANY NEWS

Dupont Lowers Outlook, Sets New Job Cuts

Chemical maker DuPont reported a 59 percent fall in quarterly profit, trimmed its full-year outlook and said it would cut more jobs as weak economic conditions continued to constrict demand, reports Reuters. The U.S. chemicals industry has been hard hit in recent months by the recession that has shrunk sales of its products from the autos, construction and electronics industries. The Wilmington, Delaware-based company, said it would seek $200 million in cost reductions, including cuts to contractor positions and work schedule reductions, and announced a 12.5 percent cut to its 2009 spending plans to $1.4 billion. The company is planning further restructuring plans that will be finalized in the second quarter. In December, the company said it would lay off 2,500 employees and 4,000 contractors. For the second quarter, DuPont expects revenue growth to be limited by continuing weak demand in non-agriculture markets and the negative impact of currency.

Dow Chemical Sells Morton Salt to Germany's K+S

The Associated Press reports that Dow Chemical Co. will sell Morton Salt to German fertilizer maker K+S Aktiengesellschaft in a deal valued at $1.675 billion. The sale is part of Dow's plan to sell off non-core Rohm & Haas assets to pay down the hefty debt it had to take on to complete the purchase of the chemical maker. Dow said the Morton Salt divestiture is expected to close in mid-2009. The company said that the sale, together with prior actions such as slashing its dividend and negotiating better terms on its bridge loan, would trim Dow's bridge loan debt to about $7.5 billion from $13 billion. Dow said it has now almost replaced the $7.5 billion cash shortfall created by the failure of its Kuwaiti joint venture transaction to close.

Netherlands' DSM Inaugurates 20,000-Ton Engineering Plastics Facility in Maharashtra

DSM NV, Netherlands, a leading global life sciences and material sciences company, recently inaugurated a greenfield facility to manufacture engineering plastic compounds near Pune in Maharashtra. The new 25-acre manufacturing complex is located in the Maharashtra Industrial Development Complex Ranjangaon industrial zone, located about 60 kilometers from Pune. The plant was set up at a cost of $26 million and has an installed production capacity of 20,000 tons per year of plastic compounds. DSM has started commercial production at the new facility.

The Ranjangaon plant has tripled the firm's production capacity in India of high-grade polymers such as Akulon PA6--a high-viscosity unreinforced polyamide resin, Arnite polybutylene terephthalate and polyethylene terephthalate, and Stanyl PA46--a high-performance polyamide. The facility is currently the largest polyamide and polyester compounding plant in India. The compounds produced in the facility will be used in the domestic electrical, electronics, automotive and consumer goods industries for making molded components.

DSM offers a range of products and services for diverse industries such as pharmaceuticals, nutrition, performance materials and polymers. The firm has embarked on its "Vision 2010" strategic program to increase profitability through market-driven innovation and growth, increased presence in emerging economies, and achieving operational excellence. The investment in the Ranjangaon facility is part of DSM's Vision 2010 strategy to increase its presence in emerging economies such as India that have an average GDP growth of 7 percent. DSM's presence in China has also been rapidly growing as the company boasts of a 20 percent increase in annual sales in the country. The firm also plans to develop a manufacturing plant for automotive parts at Ranjangaon.

Westlake Chemical and ChemPoint.com Team Up to Market and Sell Epolene Polymers

Westlake Chemical Corporation and ChemPoint.com announced a new partnership allowing ChemPoint to represent Westlake's Epolene® polymers in the U.S. and Canada. Beginning April 1, 2009, ChemPoint will provide marketing, technical sales, customer service and order fulfillment for less-than-truckload quantities.

"We are pleased to establish our relationship with a partnership-oriented organization like ChemPoint who recognizes the need for a unique approach to marketing specialty chemicals and polymers," said Carla Toth, Commercial Manager for the Epolene polymers business at Westlake. "In today's economic environment, our customers seek alignment with suppliers that consistently add value to their business by providing high quality polymers with exceptional service. We know that ChemPoint can deliver this value to our customer base."

Epolene polymers are medium to low molecular weight polyethylene or polypropylene polymers. They are useful in the plastics industry as lubricants for PVC, processing aids, mold release agents, dispersion aids, and coupling agents. They are also widely used as base polymers for hot-melt adhesives and pavement-striping compounds as well as petroleum wax modifiers for use in candles, investment casting, cable filling, and various paperboard coatings.

BASF to Cut Hours For Up to 3,000 Ludwigshafen Staff in June

BASF is preparing short-time working for up to 3,000 employees at its Ludwigshafen, Germany, production hub as a response to weak demand, the chemicals major said recently.

“Capacity utilisation rates at many plants have remained very low since the beginning of the year, and there are no signs of a sustained improvement in orders from key customer industries in the foreseeable future,” said the head of human resources at the site, Harald Schwager.

The situation was being assessed unit-by-unit to determine which plants would introduce shorter working hours. The short-time working would take effect on 1 June.

“At the moment, around 600 employees in Ludwigshafen are working temporarily in other plants. Unfortunately, we are now reaching the limits of what is possible,” he added.

BASF said it would look at further measures if the situation does not improve in the second half of the year, including the extension of short-time working beyond production units.

The company said it would announce how many units and employees would be affected by short-time working by the middle of May. It was expecting between 2,000 and 3,000 staff to be affected out of the 32,800 working at the Ludwigshafen site.

“Employees will receive a net wage of approximately 90 percent as a result of short-time work compensation provided by the German government as well as a payment from the company under the terms of the collective wage agreement for the chemical industry,” BASF said in a statement.

“Rapid re-introduction of normal working hours is possible at any time, should demand for BASF products pick up,” it added.

At the end of 2008 BASF, the world’s largest chemicals producer, said it would shut down 80 production units worldwide on a temporary basis and run more than 100 at reduced rates, affecting approximately 20,000 employees worldwide.

The cutbacks are a response to a huge decline in demand for chemicals amid the global economic downturn.

Source: ICIS news

BWA Water Additives Plans Growth and Acquisition

The Chemical industry is experiencing declining revenues, but if US-based BWA Water Additives is any indication, water treatment may prove to be one of those charmed markets that pass through the global economic storm unperturbed atop buoyant sales, ICIS news reports.

Since leaving the Chemtura fold in 2006, BWA has achieved annual revenue growth of about 20 percent, and the year ahead is unlikely to be any different, says Paul Turgeon, president and chief operating officer.

Indeed, he expects the growth to continue for the foreseeable future, and he is maintaining his prediction that the company will double its sales to between $250m-$300m within the next five to seven years.

Revenues at the US-based supplier of water-treatment chemicals totaled about $130m (€96m) in 2008.

In part, the growth will result from continued expansion in the water purification market, which contributes 40 percent of BWA's revenues, says Turgeon. About 100 water purification plants will be coming on line over the next 12-18 months in Australia, India, China and the Middle East. The industrial segment, which comprises oilfield as well as cooling systems and boilers, accounts for the remainder of BWA's revenues.

The company's optimistic growth projections also stem from BWA's strong product portfolio, which has expanded continually since the company was sold by US specialty chemical producer Chemtura in 2006.

Turgeon says BWA's new product development is targeting four major trends driving demand for new products bringing dramatic performance improvements: water scarcity; water reuse; severe service performance requirements; and public health and safety.

BWA's biocide Bellacide 350, which is three to six times more effective than alternatives, is an example of such a product, he says. And though the product has only been on the market for two years , a second-generation version of Bellacide 350, which offers five to 10 times greater effectiveness, is already in the works and on target to be launched in the next 12-18 months.

BWA's revenues in the US and Europe have not escaped the effects of the current recession, he acknowledges. However, growth larger than expected in Asia-Pacific and the Middle East and of new products has made up the difference, Turgeon says.

BWA is looking for acquisitions, Turgeon says, pointing to the strong backing of Bahrain-based Seera Investment Bank, which bought BWA from Close Brothers Private Equity in September.

Turgeon expects BWA to make more than one acquisition within the next 24 months. The acquisitions could extend BWA's product lines, bring new intellectual property or provide a new regional focus, he says.

Two-thirds of BWA's production is supplied by former parent Chemtura from four facilities in the US and Europe.

Turgeon says there was never any worry that Chemtura, which recently filed for bankruptcy protection under Chapter 11, might leave BWA short of supply. As soon as the company went private, it developed secondary and tertiary sources for all of its products.

PROJECTS/ EXPANSIONS/ACQUISITIONS

Beijing Holds Up Japanese Takeover of Lucite

The Financial Times reports that Chinese competition authorities are holding up the acquisition of Lucite, a UK acrylics maker, by a Japanese materials group in the latest example of Beijing flexing its muscles over an international deal. The Japanese group, Mitsubishi Rayon, had agreed to the $1.6 billion takeover late last year and originally said it expected to complete the deal by January. Several people involved told the Financial Times that China’s Ministry of Commerce had withheld its approval-the sole anti-trust regulator worldwide to do so. China drew widespread criticism last month by rejecting a planned $2.4 billion takeover by Coca-Cola of Huiyuan, the largest Chinese juice producer. Neither party in the Mitsubishi Rayon-Lucite deal is based in China, but both companies have sales and manufacturing operations in the country and require Ministry of Commerce approval to combine them.

Foreign observers said a decision by the Chinese government to block or impose conditions on the Mitsubishi deal would give rise to fresh concerns about protectionism as a force in Beijing’s anti-monopoly regime. A new Chinese anti-trust law that came into effect last August gives Ministry of Commerce wide latitude to block deals on economic and national security grounds. If the takeover were completed, Mitsubishi Rayon would control roughly 40 percent of the global production capacity for methyl methacrylates, an acrylic product used to make resins and plastics. Lucite, a specialist in the material, has 25 percent of the market.

Japan's Mitsubishi Chemical and China's Sinopec to Join Forces in Petrochemicals

Facing dismal prospects for its petrochemical business in Japan, Mitsubishi Chemical has reached an agreement in principle to team up with China's oil and petrochemical giant, Sinopec, C&EN reports.

The two companies have released few details concerning their new partnership. But they envisage that it will involve joint research projects, new joint ventures, sharing raw materials and logistics, and exchanging personnel. Mitsubishi says the agreement represents "a new business model" for building a chemical business in Asia.

Sinopec and Mitsubishi have had numerous business relationships in past decades. In the 1970s, the Japanese firm licensed processes for making ethylene and polyethylene to Shanghai Petrochemical, a Sinopec company. The two have had a joint venture for automotive compounds for more than a decade. Sinopec and Mitsubishi are gearing up to form another venture to produce bisphenol A and polycarbonate in China.

A Mitsubishi spokesman tells C&EN that even though the details of the new partnership are still sketchy, it may help Mitsubishi source p-xylene from Sinopec, for example, or develop organic photovoltaic modules more efficiently.

Scotland's Impact Laboratories $43 Million Polymers Research Center in Saudi Arabia

Impact Laboratories, Scotland, a research and technical support services provider to the plastic and polymer industries and a BP associated company, has secured a contract to develop a $43 million polymers research and technical center at the Al Jubail industrial city in eastern Saudi Arabia. The research and technical center will come up as part of the $1 billion petrochemical complex being developed at Al Jubail by National Industrialization Company, also known as Tasnee Petrochemicals. Although the value of the contract has not yet been disclosed, the deal is reportedly the largest secured to date by Impact in Saudi Arabia.

Under the contract, Impact will function as the technical advisor to Tasnee and design the research center, select processing and lab equipment to be installed in the facility, ensure knowledge management, set up information technology infrastructure, and train the workforce. The research and technical center is scheduled for commissioning later this year and will employ about 35 personnel.

Tasnee, Saudi Arabia's second-largest petrochemical and industrial group, has developed a petrochemical complex comprising an ethylene cracker with a capacity of 1 million tons per year, a polypropylene plant with a capacity of 750,000 tons per year, a 400,000-ton-per-year high-density polyethylene unit and a 400,000-ton-per-year low-density polyethylene unit.

The research and technical center will consist of nine laboratories that will undertake product development activities, provide assistance to manufacturing units, support downstream activities, provide technical support for customers and train in-house staff and customers. Research work will be conducted on polypropylene, polyethylene and ethylene.

CNOOC Invests $735 Million in Chemicals Project

Construction of the $735 million, 2 million-ton-per-year fine chemical project by China National Offshore Oil Corporation (CNOOC), Beijing, has started in the Dongfang Industrial Zone in the Hainan Province, Industrial Info Resources reports.

This fine chemical project is being funded by CNOOC's wholly owned subsidiary CNOOC Refining and Chemical Company Limited. This is the second large industrial project recently launched by CNOOC in Hainan and is occurring within 100 days of the start of an 800,000-ton-per-year methanol project.

This project is an olefin chemical project and is one of the key projects listed in the Hainan Provincial Development Plan for the Eleventh Five Year Plan (2006-2010) Period. This project relies on the rich oil and natural gas resources that exist in the locale of Hainan Island and is based on the principal of cycling economy, clean production and green chemical production. The plant will manufacture propylene, liquefied natural gas, methyl tertiary butyl ether and naphtha. This project will fully tap the resources that CNOOC produces in and around Hainan Island in order to extend upstream and downstream production, providing a solid foundation for CNOOC's development in Hainan in related industries. This project will also provide olefin and other chemical materials for the Hainan petrochemical industry in general.

The basic design of the project is expected to be completed by June of this year. The detailed design of the project is scheduled to be done by December. The installation of machinery is slated to be finished by February 2011, and the trial run should be carried out in May 2011.

New Chemicals and Plastics Plants to be Developed in Qatar and Saudi Arabia

Middle East petrochemical and plastics projects are continuing to develop, despite the fall in commodity and raw material prices in the credit crunch, with new plants to be set up in Mesaieed, Qatar and in Rabigh and Al-Jubail in Saudi Arabia. With large available feedstock and equally large investments leading to economies of scale, the region is well placed to take a large share of the global petrochemical growth, Industrial Info Resources reports.

State-owned Qatar Petrochemical Company is setting up a low-density polyethylene plant with a capacity of 250,000 tons per year at an estimated cost of $410 million. The plant will use excess ethylene produced by Qapco's ethylene cracker in the Ras Laffan Industrial Complex and other sources owned by the firm. It is scheduled for commercial production in the first quarter of 2011. The plant will be constructed adjacent to three other plants owned by Qapco in Mesaieed Industrial City and will be able to share infrastructure with these existing plants.

Qapco recently invited bids for the engineering, procurement and construction contracts for the project. Among the firms that have placed bids are Uhde GmbH, Germany, a subsidiary of ThyssenKrupp AG, Maire Tecnimont SpA, Italy, and Simon Carves Limited, United Kingdom, a part of the Punj Lloyd Group, Haryana.

In Saudi Arabia, Global Petrochemical Marketing Company (GPMC), Bahrain, plans to invest $100 million to produce 175,000 tons per year of thermoplastic compounds at a new plant in the 240-hectare Rabigh Conversion Industrial Park. GPMC will build the new plant in a joint venture with Saudi Aramco, Saudi Arabia, Sumitomo Chemical Company Limited, Japan, and Rabigh Refining and Petrochemical Company (Petro Rabigh), Saudi Arabia. Petro Rabigh is a joint venture of Saudi Aramco and Sumitomo Chemicals. The Rabigh Conversion Industrial Park is located next to Petro Rabigh's existing petrochemical and refining complex. The King Abdul Aziz International Airport and the Jeddah Islamic Port are within 180 kilometers of the industrial park and provide excellent connectivity for exports to Europe as well as local transportation of goods.

In another development in Saudi Arabia, Shaw Group Incorporated, Louisiana, secured a contract to provide front-end engineering and design services for a new 200,000-ton-per-year acrylonitrile butadiene styrene synthetic rubber plant to be built in Al-Jubail. The Shaw Group, which has also secured the engineering, procurement and construction contract, will provide equipment to be installed at the plant. Emulsion technology for the ABS product will be supplied by SABIC Innovative Plastics Technologies Incorporated, Saudi Arabia.

McIlvaine Company

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Tel: 847-784-0012; Fax: 847-784-0061

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