CHEMICAL UPDATE
DECEMBER 2010
McIlvaine Company
TABLE OF CONTENTS
Dow Reports Third Quarter Results
Dow Highlights Material Advances at K2010
BASF to Realign Paper Chemicals Ops Toward Growth Markets
Otto Bock Polyurethane Technologies Plant Expansion
Plasan Carbon Composites Expansion
Cymbet Corporation New Battery Manufacturing Facility, Lubbock, TX
Exergonix Battery Plant, Lees Summit, MO
Toner Plant Expansion, Webster, NY
Atlas Resin Proppants Plans New Plant in Merrillan, WI
DAK Americas to Acquire Eastman’s U.S. Integrated PET Business
Eastman Chemical Raising Production at Tenn. Site
BASF New Plant in Elyria, OH for Lithium-Ion Batteries Materials
NC County Awards $50,000 Grant to Dupont
Mitsubishi Chemical to Produce Electrolyte in Memphis
AzkoNobel Opens $385 million Manufacturing Site in China
The Dow Chemical Company (NYSE: DOW) delivered sales of $12.9 billion in the third quarter of 2010, a 23 percent increase compared with the same period last year. Top-line growth was driven by a 14 percent increase in volume and a 9 percent increase in price. Double-digit sales gains were reported in all geographic areas, with the largest increases in North America (27 percent) and Latin America (24 percent). All operating segments reported double-digit sales increases.
Net income from continuing operations excluding certain items was $705 million, up compared with $357 million in the third quarter of 2009.
Broad-based price gains were achieved in all geographic areas, led by Latin America (13 percent) and North America (12 percent). All operating segments reported year-over-year price increases except Health and Agricultural Sciences (down 7 percent) and Electronic and Specialty Materials (down 1 percent). The largest price gains were reported in the combined Basics segments, which collectively posted a 17 percent increase. The Company's price gains more than overcame a $585 million increase in purchased feedstock and energy costs.
At a Company level, volume grew 14 percent, with gains reported in all geographic areas and in all operating segments. Double-digit demand growth was reported in all operating segments, with the exception of Basic Plastics (up 5 percent) and Coatings and Infrastructure (up 1 percent).
On a geographic basis, the largest demand growth was reported in Europe, Middle East and Africa (EMEA) (16 percent) and North America (15 percent). Demand in Latin America rose by 11 percent, primarily due to strong volume growth in Health and Agricultural Sciences. Volume in Asia Pacific increased 8 percent, led by gains in Electronic and Specialty Materials.
At a Company level, EBITDA excluding certain items rose more than $350 million to over $1.9 billion. This represents the highest EBITDA level since the second quarter of 2008. EBITDA margin at a Company level was 15 percent, rising nearly 200 basis points year-over-year.
EBITDA margin in the combined Performance segments again expanded, excluding certain items. This was primarily driven by the Performance Systems and Performance Products operating segments, which together reported a 30 percent increase in EBITDA and margin expansion of more than 275 basis points. The combined Performance segments have now expanded EBITDA margin year-over-year for five of the last six quarters.
For Dow Chemical Co., K 2010 was an opportunity to shine a spotlight on the firm’s advances in several materials.
Bill Fordyce, global polyethylene R&D director for Midland, Mich.-based Dow, covered several recent developments in a news conference at K 2010. Dow highlights included:
• Clairilite-brand cap and closure resins, part of Dow’s PE and polypropylene line, with consistent taste and odor performance and reduced costs. Aimed at beverage bottles and containers for pharmaceuticals and cosmetics.
• Dowlex-brand PE-RT for industrial pipe, can provide long-term hydrostatic strength at high temperatures. Previously available only in smaller pipes.
• Inspire-brand PP with low shrinkage for non-pressure pipes, can offer 10 percent line speed increases.
• New high-performance PE grades for rotomolding, with improved strength.
• Five new high melt flow PP grades for rigid packaging containers.
• Durelast-brand reinforcement systems for bathtubs, based on a polyurethane spray.
• Amplify TY-brand functional polymers for multilayer food packaging.
• Sealution-brand “peel polymers” for easy-open packaging.
• Enlight-brand polyolefin encapsulation films for photovoltaic modules.
• Ecolibrium-brand seed oil-based bio-plasticizers for PVC wire applications, that can reduce greenhouse gas consumption by as much as 40 percent. Fordyce described Ecolibrium as “a groundbreaking advance in sustainable chemistry.”
German chemicals company BASF SE (BAS.XE) said recently it will pivot its paper chemical operations toward growth markets.
The company will reorganize business structures to better serve the paper chemical and dyestuff markets in China, Indonesia and India.
BASF said it will exit production of paper optical brighteners in Europe, and close production of these in Grenzach, Germany. Additionally, BASF's paper dye product range will be reduced and relocated to Ankleshwar, India from Grenzach.
BASF will invest more than two billion euros (2.6 billion dollars) in Asia by 2014, with more than half the sum earmarked for China, a senior executive said recently.
BASF will invest "two-billion plus euros" into some 100 Asian sites, board member Martin Brudermueller told the Financial Times in an interview, at least half of which would flow into China.
In the first nine months of this year, Asia accounted for 23 percent of BASF's sales, which totaled 39.6 billion euros.
About half of the Asian sales came from China, now the group's third largest market.
In the past 20 years, the German chemical giant has invested 3.5 billion euros in China, more than 20 percent of all German direct investment in the country, according to the Financial times.
SIC Code: Plastics Materials, Synthetic Resins, and Nonvulcanizable Elastomers
Estimated Value: $13.3 million
Location: Rochester Hills, MI.
Details: Plans call for the expansion of the Otto Bock Polyurethane Technologies plant. The company will invest in a facility that will produce polyurethane parts.
As of 12/14/10, the Michigan Economic Development Corporation recently announced tax credits to help this project move forward.
Contact Information: Tom Matwiczyk, Project Manager
Penn Center West Three, Suite 406, Pittsburgh, PA 15276-0104
PH: 412-519-6681, http://www.ottobockus.com
SIC Code: Carbon and Graphite Products
Estimated Value: $3.2 million
Location: Wixom, MI.
Details: Plans call for a Customer and Technical Development Center for Plasan Carbon Composites, a manufacturer of carbon composite automotive components.
As of 12/14/10, the Michigan Economic Development Corporation recently announced tax credits to help this project move forward.
Contact Information: Denise Jarrus, Director of Business Development
139 Shields Drive, Bennington, VT 05201, PH: 802-445-1700 ext. 2025
Fax: 802-442-4978, http://www.plasancarbon.com
SIC Code: Drugs, Drug Proprietaries, and Druggists' Sundries
Estimated Value: $12 million
Location: Sanford, NC. 1400 Broadway Road.
Details: Plans call for the expansion of the existing Coty plant. Work will include the addition of a new nail polish production line. As of 12/17/10, this project has been announced by company officials.
Contact Information: Fred Douglas, Operations Executive
1400 Broadway Road, Sanford, NC 27332
PH: 919-776-7113, Fax: 919-895-5374, http://www.coty.com
Porvair Filtration Group of Fareham, England, has revamped its Ashland, Va., plant to cope with increased North American demand for porous plastics, especially for medical applications.
The subsidiary of King’s Lynn, England-based filtration specialist Porvair plc said the changes were to accommodate additional U.S. production of its Vyon and BioVyon sintered porous plastics.
Trevor Waghorn, Porvair’s director of North American sales and marketing, said in an Oct. 7 telephone interview with Plastics News that the Ashland plant would receive additional sintering equipment from U.K. plants and that changes had been made to improve workflow and ergonomics on the production floor.
The Virginia facility employs 20, he said.
According to a news release, the products are available in sheet, tube, and three-dimensional moldings in 10-100 micron sizes, and are Food and Drug Administration compliant.
Tom Liddell, managing director of Porvair Filtration Group, said that a recent merger of competitive suppliers and consequent rationalization of their product offerings caused Porvair to expand U.S. manufacturing facilities and technical support staff.
“Porvair Vyon and our new NanoPure BioVyon porous plastics have been qualified in a growing number of applications at U.S. companies where supply chains may have recently been threatened or prices increased,” he said in a news release.
In September 2009, HLTH Corp. sold its porous plastic filters company, Porex Corp. of Fairburn, Ga., to California private equity firm Aurora Capital Group for $142 million. Porex Corp. in November 2009 closed its MicroPore Plastics Inc. subsidiary in Tucker, Ga.
Porex is based in Fairburn and has additional operations in Germany, Scotland and Malaysia. Porvair plc employs 500 at plants in the U.S., United Kingdom, and Germany.
For the first half of 2010, Porvair plc reported profit of 1.3 million pounds ($2.1 million) on sales of 29.7 million pounds ($47.3 million).
Porvair reported full-year 2009 profit of 1.1 million pounds ($1.8 million) on sales of 55.2 million pounds ($88 million) for 2009.
North American business made up 46 percent of Porvair’s 2009 profits, the company said.
SIC Code: Electrical Equipment for Internal Combustion Engines
Estimated Value: $5~25 million
Details: Plans call for a new battery manufacturing facility for Cymbet Corporation. Work will include renovating an existing facility. As of 12/14/10, state and company officials have announced this project, which will be financed via a partnership with the Lubbock Economic Development Alliance (LEDA), Texas Economic Development Bank, X-FAB Texas, Inc., and Cymbet Corporation.
Contact Information: Cymbet Corporation
18326 Joplin Street Northwest, Elk River, MN 55330
PH: 763-633-1780, Fax: 763-633-1799, http://www.cymbet.com
SIC Code: Storage Batteries
Estimated Value: $32.9 million
Details: Plans call for construction of a 275,000-square-foot facility for Exergonix, a start-up company that that produces batteries that can store and distribute wind and solar energy. As of 12/10/10, Lee's Summit approved tax abatements of between $10.9 million and $11.5 million for this project. Another city is also trying to entice this plant to locate there, however.
Contact Information: Exergonix, Don Nissanka, Owner
4201 Northeast Lakewood Way, Vacant Pfizer property on M-291, Lee's Summit, MO
PH: 816-875-4790, http://www.exergonix.com
SIC Code: Office Machines, Not Elsewhere Classified
Estimated Value: $25 million
Details: Plans call for construction of an expansion of the Xerox toner plant. This project was announced on 12/7/10.
Contact Information: Xerox, Jean-Noel Machon, Manufacturing Vice President
45 Glover Avenue, P.O. Box 4505, Norwalk, CT 06856
PH: 203-968-3000, http://www.xerox.com
SIC Code: Industrial Sand
Estimated Value: $5~25 million
Details: Plans call for the construction of a new manufacturing facility for Atlas Resin Proppants. Atlas is an international corporation that manufactures industrial silica sand and produces resin-coated sand products. As of 11/23/10, this project would be the fourth plant for Atlas Resin Proppants.
Contact Information: Atlas Resin Proppants, Erica Grant, Manufacturing Executive
N7530 County Road P, P.O. Box 100, Taylor, WI 54659
PH: 715-662-2200, Fax: 715-662-2424, http://www.atlasresinproppants.com
DAK Americas LLC (DAK) has agreed to acquire the integrated PET and PTA business of Eastman Chemical Company (“Eastman”). Total cost for the transaction is expected to be approximately $600 million. The transaction is expected to close in the fourth quarter or this year pending regulatory approvals.
“DAK Americas is extremely excited about the acquisition as it further reinforces DAK ‘sposition as an important regional player in the global PET marketplace,” said Hector Camberos, president and CEO, DAK Americas.
Jose Valdez, president of Alpek , ALFA’s petrochemical group said,“Alfa and its Alpek business remain committed to PET Resin and PTA in the Americas and the value they bring to DAK’s PET Resin customers and the market place.”
The acquisition includes three production facilities in Columbia, SC,including two PET Resin units and one PTA(Monomers/Ingredients) unit. The transaction includes the intellectual property for IntegRex PET and PTA.Both PET Resin production units have a combined annual capacity of 675,000 tons. The PTA unit has an annual production capacity of 600,000 tons.The operations being acquired currently employ approximately 415 people.
Jorge Young, executive vice president, Resins, DAK Americas, added, “The acquisition allows DAK to continue to innovate, grow, and serve customers needs by expanding the asset base.”
"Added technology options will allow DAK to expand its PET Resin product offerings,” said Tom Sherlock, Resins business director, DAK Americas.
Eastman Chemical Co. has announced plans to add production of cellulose triacetate at its Kingsport, TN site.
The material is used in the liquid crystal display industry in the manufacture of polarizer films for computers, televisions, monitors and handheld devices.
The project will increase Eastman's total CTA capacity by almost 70 percent. The company said in a news release that startup is expected in the first quarter 2012.
Eastman, based in Kingsport, has approximately 10,000 employees around the world, 7,000 in Kingsport.
A company spokeswoman said the addition would require no new positions but will require new resources to complete the expansion.
German chemical giant BASF broke ground recently on a plant in Elyria valued at more than $50 million to produce advanced cathode materials for lithium-ion batteries that will power the hybrid and full-electric vehicles of the near future.
"This new facility will put BASF and the state of Ohio at the leading edge of the North American cathode materials market," Frank Bozich, president of BASF's Catalysts division, said.
The new plant is being built with the help of a $24.6 million grant from the U.S. Department of Energy under the American Recovery and Reinvestment Act.
BASF is one of only two licensed suppliers of Argonne National Laboratory's patented Nickel-Cobalt-Manganese cathode materials, which employ what the company said is “a unique combination of lithium and manganese-rich mixed metal oxides.” BASF said the plant when fully operational in 2010 “is expected to be the most advanced cathode materials production plant in North America.”
The Lenoir County, NC Board of Commissioners unanimously approved a $50,000 incentive grant to DuPont recently, which is part of a $5.4 million investment the company is making to upgrade its Kinston plant.
In a statement, officials with the Wilmington, Del.based corporation said the grant will help DuPont maintain its “cost-competitive advantage” as it continues to produce its trademark Sorona bio-based polymer in Kinston.
“We appreciate this ongoing support from Lenoir County,” plant manager Harold Thomas said in the statement. “Providing this grant is another indication of the long-standing partnership we’ve had with the county.”
DuPont has had a 60-year relationship with Kinston and Lenoir County; company officials announced in 1950 they planned to build a textile plant in the community. That plant opened on N.C. 11 North in 1953 and employed 3,500 people at its peak.
DuPont was not immune to the decline of Kinston’s textile manufacturing base, and today only about 150 are employed in one section of the plant making Sorona, a project that commenced in 2005.
The polymer, which is made from “agricultural feedstocks” instead of fossil fuels, is used in carpet fibers, apparel or engineering plastics.
Company officials will use the county’s grant to replace coal-fired boilers in the Kinston plant with natural gas boilers.
“Installation of the natural gas package boilers is also good news for the community from an environmental standpoint, as it will reduce our already low carbon footprint,” Thomas stated.
Pope said that, while it will not immediately bring more jobs to the plant, the money is part of making the facility more attractive, which could stimulate job growth.
“This gives us a little bit of a competitive advantage with the Sorona project,” he told the commissioners.
Pope said the grant is a performance-based incentive, and funds will be given out over two years as DuPont follows through with the capital investment.
Memphis will be one of two sites for a new Mitsubishi Chemical Corp. electrolyte manufacturing operation.
The company, which acquired Lucite International Inc. in 2009, is investing $13.1 million in the new operation.
Lucite’s production facility is located on Fite Road. The company also has its North American headquarters at 7275 Goodlett Farms Parkway.
Lucite announced earlier this year that it would invest $90 million to upgrade the manufacturing facility and its headquarters, which would allow the company to retain the 200 jobs it has in the city. That investment could reach $135 million in the next few years.
Mitsubishi Chemical hasn’t released the number of jobs the new site would create, but it would have a capacity to manufacture 10,000 metric tons of electrolyte annually. The operation will be housed in Lucite’s existing facility on Fite Road.
Mitsubishi Chemical is also planning a manufacturing site in Billingham, Stockton-on-Tees in the United Kingdom.
Electrolyte is used to manufacture rechargeable batteries. Mitsubishi Chemical manufactures the four components of lithium batteries.
Production at the Memphis facility could begin in the summer of 2012.
Dutch coatings and chemicals company AkzoNobel opened a 275 million euro ($385 million) manufacturing base in Ningbo recently to boost its portfolio in the Chinese market.
The project, which is also the company's largest single investment, is expected to produce chemical products for industries including construction, cleaning, food preservation, oil, personal care and pulp.
A substantial part of the project's products will be for the Chinese market, which is one of the fastest-growing for AkzoNobel, said Hans Wijers, chief executive officer of the company.
The opening of the manufacturing site "shows how committed we are to expanding organically in the exciting and vibrant Chinese market", Wijers said.
AkzoNobel also recently announced its medium-term targets, which include achieving total revenue of 20 billion euros in about five years.
As for China, the company aims to double its sales revenue to $3 billion in the meantime.
The Ningbo project "underlines the fundamental role new investment will play in those growth ambitions", Wijers said.
The Netherlands-based company will continue to add manufacturing facilities in China and some of the facilities will go toward the western regions of the country, Wijers said.
The company will also attach increasing importance to research and development (R&D) in the country.
"We not only produce in China, but also make innovations in the country," he said.
Eleven percent of AkzoNobel's global R&D resources are now based in China. Its technology center in Songjiang in Shanghai municipality is also a "global center for excellence" of the company, he said.
Wijers said the company will also achieve its growth target in China mainly through organic expansion.
But the company will not exclude mergers and acquisitions opportunities in the market, he said. The company acquired Changzhou Prime Automotive Paint Co Ltd (Prime) in September to increase its presence in the market. Based in Jiangsu province, Prime develops, manufactures, markets and distributes automotive coatings, primarily for the refinishing market.
Compared with Western countries, China's chemical market is still fragmented. "This is good and challenging news for us," Wijers said.
Admitting that the Chinese market is very competitive, Wijers said the company is now looking forward to many opportunities.
"There is no fairytale market in the world. Compared with North America and some European countries, we are now in a very good position to do business in China," he said.
AkzoNobel has 27 manufacturing sites in China, with revenue for 2009 totaling $1.5 billion. The company currently employs about 6,500 people in the country.
AkzoNobel said in October its third-quarter net profit rose by 20.8 percent due to strong demand in its chemicals business. The company posted a net profit of 238 million euros for the quarter, compared with 197 million euros a year earlier.
The company's sales rose 12.9 percent to 3.87 billion euros due to growth in emerging markets.
McIlvaine Company
Northfield, IL 60093-2743
Tel: 847-784-0012; Fax: 847-784-0061
E-mail: editor@mcilvainecompany.com
Website: www.mcilvainecompany.com