Details are emerging about how the Obama administration is spending funds from the multi-billion dollar economic stimulus package enacted in February, with billions going into green vehicles and over $700 million (£419 million) allocated to scientific research and infrastructure, Chemistry World reports.

On 5 August the US Department of Energy (DOE) announced that nearly $2.5 billion in stimulus funds will go to support the manufacture of next generation batteries and electric vehicles. This represents the single largest investment ever made in advanced battery technology for hybrid and electric-drive cars.

The department will fund 48 new projects, intended to help the US establish leadership in next generation advanced vehicles.

'These are incredibly effective investments that will come back to us many times over - by creating jobs, reducing our dependence on foreign oil, cleaning up the air we breathe, and combating climate change,' stated DOE's secretary, Steven Chu. The efforts will also help achieve President Obama's goal of putting one million plug-in hybrid vehicles on the road by 2015, and launch an advanced battery industry in America.

The DOE estimates that the investment, combined with an additional $2.4 billion contributed by the awardees, will generate tens of thousands of manufacturing jobs in the US battery and auto industries.

Dow Chemical, which will receive $161 million of the funds through its joint venture with Townsend Kokam of South Korea, will use the award to establish manufacturing operations, including a new 800,000 square foot facility in Michigan to produce advanced lithium polymer battery technology.

BASF has also been awarded a $24.6 million grant, which will go towards building what it says will be North America's largest cathode material production plant at a new lithium-ion battery materials production facility in Ohio.

But the most sizeable chunk of the award money goes to the struggling auto industry. Ford, General Motors and Chrysler will receive a combined total of over $400 million for research and development in areas including plug-in hybrid vehicles, electric vehicles, and high-volume battery packs.

Stimulus funds of $327 million will go towards scientific research, instrumentation, and laboratory infrastructure projects. The awards will benefit ten of the DOE's national laboratories in six US states, as well as academic researchers. Approximately one-third of the funding will go to universities, non-profit organizations, and private firms.

The new approved projects focus on areas including enhancement of high-intensity light sources, integrated climate research, upgrading facilities and equipment at national labs and the DOE Bioenergy Research Centers, and initiatives looking at Smart grid technology and civilian supercomputing.

A further $377 million has been allocated to establish 46 new Energy Frontier Research Centers to 'accelerate the scientific breakthroughs needed to build a new 21st century energy economy'. Of the funds, $277 million comes from the Recovery Act, with the remaining $100 million from the DOE's 2009 budget. Researchers at theses centers will make use of capabilities in nanotechnology, high-intensity light sources, neutron scattering sources and supercomputing to make advances in solar energy, biofuels, transportation, energy efficiency, electricity storage and transmission, clean coal and carbon capture and sequestration, and nuclear energy.

Naphtha Demand Recovery

A significant rise in demand for naphtha could be one of the first indications from the oil world that a recovery in fuel use -- and the economy -- is under way. Demand for naphtha -- used by the petrochemical industry to make car parts and plastic packaging -- has been decimated because of its close ties to the manufacturing sector.

But trade sources have reported a demand surge in Europe and prices have in August jumped to 10-month highs as petrochemical companies have ramped up production.

Naphtha for delivery into northwest Europe fell to more than six-year lows of $235 a tonne in December and have since nearly tripled to hit $645 on Aug. 13, according to Reuters data.

In the United States, Energy Information Administration data on Wednesday showed feedstock inventories, including naphtha, had fallen for a fourth consecutive week to 158.2 million barrels, although they were still nearly 10 percent above last year's levels.

The drop represents a fall of more than 3 percent since stocks peaked in early July.

"Naphtha is the product where you get the first indication of a slight bounce back in the economy," said Global Insight analyst Simon Wardell.

Increased industrial activity would have a knock-on effect on freight and transport, boosting demand for fuels such as diesel a so-called middle distillate.

"If there's a revival in manufacturing we would expect a recovery in commercial transport and that would take about four to six weeks to hit middle distillates," he added.

Analysts said the main factor behind the demand boost had been government car scrappage schemes, started in Europe and then brought to the United States, aimed at reviving the ailing manufacturing sector. Through such programmes, buyers are given discounts off new cars if they bring in their clapped-out models. To an extent the stiumulus is artificial, but it could herald more genuine demand as it helps to kick-start the hard-hit manufacturing sector.

Ford Motors Corp. has revised production targets up 18 percent compared with last year after it reported in July the first monthly sales jump since November 2007. The world's largest car manufacturer General Motors was expected to follow suit.

Further evidence the stimulus programmes have started to generate real demand would be if petrochemical firms chose to restart some of the major moth-balled plants. Trade sources have already reported a sharp rise in European cracker utilisation rates from around 70-80 percent at the end of last year to around 90 percent this summer.

German Chemical Output Hit Bottom, Expected to Improve

Industry group VCI said German chemical production has reached bottom and output of basic chemicals is set to improve during the remainder of the year, Bloomberg reports.

Full-year production will drop about 10 percent from 2008, the biggest year-on-year decline since 1975, said VCI, whose members include BASF SE, the world’s biggest chemical maker, and Lanxess AG, the country’s largest publicly traded specialty chemical maker.

Weak demand from industrial consumers at home is one of the main factors for this decline, VCI said. Total sales dropped about 17 percent in the first half to 70 billion euros, with exports and domestic sales declining by a similar percentage.

BASF and peers including Lanxess, Bayer AG and Wacker Chemie AG are facing falling earnings as the global recession hurts demand for everything from car tires to plastic packaging and crop chemicals. German chemical production dropped by 15.5 percent in the first half compared with a year earlier as companies continue to cut production.

German chemicals companies employed about 439,500 people in the first half of 2009. VCI estimates some 50,000 staff are currently on short-time work.

INDUSTRY

FDA to Reconsider BPA's Use in Food Packaging

Several environmental and health organizations have called for BPA to be banned. Plastic makers maintain that it is safe.

Jesse Goodman, the FDA's chief scientist, told the agency's Science Board that a group of FDA scientists will conduct a new review of all the studies on BPA. That review will be assessed by a group of government scientists not affiliated with the FDA, the Journal Sentinel reports.

Commissioner Margaret Hamburg will then decide whether the chemical is safe for use in food packaging.

Last year, Canada declared BPA to be a toxin and outlawed its use in baby bottles. Minnesota and Connecticut have banned BPA in baby bottles and sippy cups, as have the City of Chicago and New York's Long Island. Massachusetts has issued a health advisory to pregnant women and parents of young children. A federal ban has been introduced in the House and Senate.

The FDA ruled last August that BPA was safe for all use. The FDA's own advisory board rejected the ruling, noting that it was based on two studies, both of which had been financed by the plastics industry.

The new review will include more than 100 new studies, including those at low doses.

The Journal Sentinel found e-mails between FDA scientists and lobbyists for BPA makers discussing how to write the government assessment. Government scientists relied heavily on industry lobbyists to establish certain safety data and allowed them to write entire sections of their findings, the e-mails showed.

FINANCIALS

Cytec Announces Second Quarter 2009 Results

Cytec Industries Inc. (NYSE:CYT), New Jersey, announced a net loss for the second quarter 2009 of $24.8 million on net sales of $685 million.

Shane Fleming, Chairman, President and Chief Executive Officer commented, “Sales declined across all specialty chemicals segments in the second quarter compared with the prior year due to the weak economy compounded by customer destocking activity. However, we are encouraged by our specialty chemicals sales growth of 18% from the first quarter 2009 and month-to month improvement during the second quarter, which supports our view that our customers have completed the bulk of their destocking initiatives. Engineered Materials was also impacted by the destocking actions that are ongoing within the large commercial transport sector, as well as significantly reduced build rates in the business jet and industrial sectors.”

2009 Outlook

Mr. Fleming explained, “While the first half of this year has been extremely challenging, we have begun to see some positive signs of demand improvement in our specialty chemical segments.” Based on our current volume projections and the progress we have made with our cost reduction actions, we affirm our recently updated guidance for 2009 full year adjusted diluted earnings per share to be in a range of $0.60 to $0.90 per share.”

Hexion Second Quarter Report

Hexion Specialty Chemicals Inc. slashed its second-quarter loss but said recently it’s stepping up a cost-cutting plan that will include the restructuring of manufacturing facilities and more than 1,000 job cuts.

The Columbus-based chemical maker said it lost $71 million in the second quarter, compared with a loss of $181 million in the same period a year ago. Hexion last year took on $167 million tied to a now-defunct deal to buy Salt Lake City-based Huntsman Corp. (NYSE:HUN). This year’s second quarter included a $66 million charge for cost-cutting measures, including the idling of some plants, partly offset by a $14 million gain tied to a securities buyback.

The company said second-quarter revenue fell 43 percent to $947 million from $1.67 billion on lower sales volume, unfavorable currency translation and lower costs for raw materials that were passed on to customers.

CEO Craig Morrison said in a release that the company is fighting a weaker market with a range of cost-cutting measures that will include a 20 percent cut in its 6,800-person worldwide work force over the next six to 18 months. Hexion employs about 300 in Central Ohio.

The company also has cut expenses by $177 million this year through various measures such as trimming utility and travel costs. Future cost cuts, including employee reductions, are expected to result in one-time charges of about $32 million. But the company is targeting more than $180 million in savings.

Hexion in the first half earned $45 million, compared with a loss of $193 million last year. Revenue in the first half fell 44 percent to $1.86 billion from $3.3 billion.

Hexion, formerly Borden Chemical Inc., makes binder, adhesive, coating and ink resins for a variety of industrial applications. The company is owned by New York-based investor Apollo Management LP.

Lanxess Q2 Net Profit Falls 69 Pct

German chemical company Lanxess AG said recently its second-quarter net profit fell 69 percent as global chemical demand declined sharply during the recession.

The Leverkusen-based company said it earned euro17 million ($24 million) in the April-June period, compared with euro55 million in the second quarter of 2008.

Sales fell nearly 30 percent to euro1.2 billion from euro1.8 billion in the second quarter of 2008.

The earnings are, however, an improvement over the first quarter of this year when the company recorded a net loss of euro14 million.

Lanxess makes a number of products for markets like the automotive and industrial sectors, including rubbers, plastics, and pigments. The areas closely associated with the tire and automobile industries were worst affected.

"While there are signs of a slight recovery in demand in the Asian countries, all that can be said for North America is that there is no apparent further deterioration. For the remainder of the year, we expect continued growth in Asia, particularly China. In the other regions we anticipate only a very slow recovery," the company said.

COMPANY NEWS

Syrgis Sells H&S Chemical to IofinaBusiness Courier of Cincinnati

Specialty chemical firm Syrgis Performance Products said it has sold its H&S Chemical Co. Inc. to Iofina Chemical LLC and will move its headquarters from Covington to Blue Ash.

Iofina, whose U.S. operations are based in Greenwood, Colo., paid $8.5 million for H&S, including $7.5 million in cash and more than 700,000 new shares in the company.

H&S manufactures specialty chemicals that use iodine, and Iofina is involved in the exploration and production of iodine and natural gas.

H&S will maintain operations in Covington, after Syrgis moves to Lake Forest Drive in Blue Ash.

Syrgis said in a news release that the sale will give it the resources to grow its other specialty chemical companies: Lycus Ltd. in El Dorado, Ark.; P Chem Inc. in Houston; and Syrgis Performance Initiators in Helena, Ark., and Stockholm, Sweden.

Syrgis is funded in part by Edgewood Capital Partners in Cleveland. Iofina is a unit of London-based Iofina plc.

Novolyte Technologies Awarded $20.6M in Stimulus Funds

Specialty chemicals maker Novolyte Technologies Inc. of Independence, Ohio has been awarded $20.6 million in federal stimulus money, which it will use to expand its plant in Baton Rouge, La., so it can produce more chemicals for automobile batteries.

As part of the expansion, funded by the American Recovery and Reinvestment Act, the company plans to add four employees at its research facility in Independence and 30 at the Baton Rouge plant.

The plant for more than 30 years has been producing electrolytes for lithium batteries. Lithium ion batteries are expected to be used in electric vehicles, such as the upcoming Chevrolet Volt.

The money is part of $2.4 billion that the federal government is using to spur investments in the production of batteries and other parts used in electric vehicles.

Chemical giant BASF previously announced that it will receive $24.6 million of that money, which it plans to use to build a battery materials production plant in Elyria.

DSM to Sell Eco-Friendly Chemical

DSM, the Dutch life and material sciences group, is set in December to begin selling an environmentally-friendly version of a widely-used chemical that could reduce costs dramatically for manufacturers.

The Financial Times reports the company has received customer orders for a "green" plant-based version of succinic acid, which is used in polymers, resins, food and pharmaceuticals and normally made from oil and gas. Succinic acid becomes cost-efficient when oil prices are above $80 a barrel, according to the article.

Production involves fermentation of the acid from plant starch, eliminating the need for petrochemical inputs and consuming carbon dioxide.

The shift marks the latest efforts by parts of the beleaguered global chemical industry to raise margins by tapping into advances in science and biotechnology in an effort to reduce costs and introduce more innovative products.

It also heralds growing interest in green production methods for materials, with some estimates suggesting 20-30 per cent currently derived from petrochemicals could be made in future using alternative techniques, according to the article.

Assuming the pilot program - developed in conjunction with the French company Roquette - goes well, a company spokesman quoted in the article said a final decision on whether to build a large-scale factory would be taken in 2010.

PROJECTS/ EXPANSIONS/ACQUISITIONS

Univation Building Catalyst Plant in China

Univation Technologies LLC is building a new polyethylene catalyst manufacturing facility in China with a scheduled 2011 start-up. The factory, with expansion capability, is located in Zhangjiagang, Jiangsu province.

The Houston-based company announced that the new facility will produce UCATT J High Productivity Catalyst, which is used in the production of a broad range of linear low and high density polyethylene products.

China has more than 20 Univation’s Unipol PE process reactors in operation or under construction, the company said in a news release, and this particular investment reinforces its commitment to the region.

“We continue to seek ways to help our customers operate reliably and cost effectively. Our new facility creates a solution that brings this high value catalyst closer to our customers,” noted President Kenneth Glover. The China plant will meet the growing needs for licensees of the Unipol PE gas-phase process.

Univation, a joint venture between ExxonMobil Chemical Co. of Houston and Dow Chemical Co. of Midland, Mich., said it will continue to provide UCAT conventional catalysts, XCAT metallocene catalysts, and Prodigy bimodal catalysts from several facilities located in North America.

Dow and Siam Cement Reinforce Plans for Asia Elastomer Plant

The drop in global chemicals demand will not slow a specialty elastomer plant in Thailand planned by a joint venture of Dow Chemical Co. and Siam Cement Group, the two companies said Aug. 10.

The world-scale facility, in the Asia Industrial Estate in Rayong province, will come on stream in 2011 as planned, as part of the company’s plans to bolster its Asian operations, according to the statement from SCG-Dow Group.

Dow on July 30 said it was spinning off a Malaysian olefins derivates unit, Optimal Group, to its joint venture partner there, the Malaysian-government owned petrochemical firm Petronas.

“Despite the plunge in chemical demand triggered by the worldwide economic downturn and the very challenging economic environment, Dow remains focused on its strategy to invest in its downstream performance businesses and to drive growth in Asia Pacific,” said Heinz Haller, executive vice president of Dow’s Performance Products and Systems unit.

The plant will supply products globally but may in time ship only within Asia, as demand there fully develops, he said.

The plant will manufacture the company’s Affinity polyolefin plastomers and its Engage polyolefin elastomers.

SCG-Dow is a joint venture formed in 1987 between Dow and Siam, which is Thailand’s largest industrial conglomerate. The JV makes polystyrene, polyethylene and other products.

BASF Delays China MDI Plant as Market Declines

BASF SE is delaying the construction of an MDI (methylene diphenyl diisocyanate) plant in Chongqing, China, and has not yet received the final go-ahead from Chinese authorities, Plastics News reports.

Gareth Rees, spokesman for Ludwighafen-based BASF, said the Chongqing authorities are still reviewing how the new plant will impact the market in the region. As the global MDI market is expected to decline in 2009, BASF has had to redraw plans for the project, he explained.

The company’s Environmental Impact Assessment (EIA) application is also under review by the National Development and Reform Commission (NDRC), he told European Plastics News.

However, Rees remains confident that the construction of the plant will go ahead, although he cannot specify when it will begin. “We are proceeding with the approval process … and are continuing the preparatory work with all the shareholders,” he said.

Once built, the 400 metric tonnes-per-year plant will provide MDI for companies in China. MDI is used to make polyurethanes for construction, refrigeration, furniture and transport. BASF has an MDI plant near Shanghai, as well as plants in Belgium, the United States and South Korea.

BASF’s total annual capacity for MDI currently stands at 1,280 metric tonnes per year.

International Petroleum Completes Acquisition of Nova Chemicals

Abu Dhabi investment firm International Petroleum Investment Co. said recently its purchase of Nova Chemicals Corp. has been completed.

Nova Chemicals, Canada's biggest plastics producer, will continue to operate its chemicals and plastics business from its North American base.

Chemicals agreed to be acquired by International Petroleum for $6 per share, or about $499.2 million, in February.

McIlvaine Company

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