The American Chemistry Council forecasts that U.S. chemical output will increase by 3.0% this year, according to the World Chemical Outlook published by the American Chemical Society’s Chemical & Engineering News. The European Chemical Industry Council is predicting a 4.7% rise in output for that region’s industry. These modest gains won’t offset the losses of 2009.

Global chemical industry output is forecast to increase 4.6% in 2010, according to ACC estimates. The council states that as more markets recover, a 5% gain in global output is expected in 2011, and a 5.1% gain in 2012.

Emerging markets production growth will advance 7% in 2010, led by China at 12% in response to government stimulus. ACC’s production forecast also states 2010 growth of 8% in India, 7% in Brazil, and 5% in Russia. Korea, Singapore and Taiwan will also present good growth prospects through 2012. The chemical industries of the emerging nations will increase 6.9% in 2010, and 7.6% in both 2011 and 2012.

Growth in developed nations will average 3.3% per year in the 2010-1012 period, limited by new capacity in emerging markets and anemic growth in domestic demand. Among the developed nations, the US will experience some of the strongest growth, aided y a low dollar and competitive natural gas prices, according to ACC.

Regardless of the region, some chemical markets will be more robust than others. For example, after collapsing in 2009, sales of electronic materials will jump by 18% in 2010, predicts Semiconductor Equipment & Materials International, a trade association. And Dow Chemical sees the photovoltaic market expanding by 35% this year and for several years thereafter.

The outlook for coatings and other construction materials is not as optimistic: Growth predictions from industry executives range from 0 to 4% this year. Falling in the middle, U.S. chlorine demand could rise 10%, Occidental Chemical expects, thanks to a robust export market for U.S.-made polyvinyl chloride.

The fate of certain markets this year depends on more than just the economy. For example, any recovery in demand for petrochemicals around the world may be swamped by a flood of long-dreaded new production capacity in the Middle East.

Success for pharmaceutical companies in 2010 will require circumventing the approaching patent expiration “cliff” with great new products or, barring that, big-ticket acquisitions. Likewise, manufacturers of pharmaceutical fine chemicals also need great new products from their drug industry customers or, barring that, more outsourcing of existing products.

President Obama Awards $2.3 Billion for New Clean-Tech Manufacturing Jobs

President Obama recently announced the award of $2.3 billion in Recovery Act Advanced Energy Manufacturing Tax Credits for clean energy manufacturing projects across the United States. One hundred eighty three projects in 43 states will create tens of thousands of high quality clean energy jobs and the domestic manufacturing of advanced clean energy technologies including solar, wind and efficiency and energy management technologies.

This effort, along with other Recovery Act investments, will drive significant growth in the renewable energy and clean technology manufacturing sectors and give the United States the ability to lead globally in these markets. The investment tax credits, worth up to thirty percent of each planned project, will leverage private capital for a total investment of nearly $7.7 billion in high-tech manufacturing in the United States.

While projects selected for this tax credit generally must be placed in service by 2014, approximately 30 percent of them will be completed in 2010.

The projects announced address the broad spectrum of manufacturing capabilities. Qualifying manufacturers will produce solar, wind, and geothermal energy equipment; fuel cells, microturbines, and batteries; electric cars; electric grids to support the transmission of renewable energy; energy conservation technologies; and equipment that captures and sequesters carbon dioxide or reduces greenhouse gas emissions. Projects in the chemical industry include:

Dupont will expand production of high-performance polyvinyl fluoride films at its Circleville, OH facility. These films are used to produce the critical protective backsheet component of solar photovoltaic modules.

Dow Corning - Solar Silane will build a new monosilane facility with 60% of production dedicated to the solar PV market. Monosilane is a key component in the production of amorphous thin-film solar panels.

Hexcel Corporation, Windsor, CO will establish a technologically advanced manufacturing facility to produce high-performance epoxy, glass, and carbon fiber composite materials. The composites will be used in the manufacture of wind turbine blades.

FINANCIALS

Dow Reports Fourth Quarter and Full-Year Results

Dow reported sales in the 4^th quarter increased 15 percent, to $12.5 billion compared to reported sales in the same period last year.

Quarterly volume on a pro forma basis increased 33 percent in emerging geographies versus the same period last year. On a pro forma basis and excluding divestitures, volume increased sequentially in all geographic areas except North America, which declined 1 percent.

EBITDA on a pro forma basis excluding certain items increased $809 million versus the same quarter last year, with the combined performance segments up more than 85 percent. EBITDA from all operating segments was higher except Health and Agricultural Sciences, which was down $36 million year-over-year largely due to increased research and development (R&D) investments in Dow AgroSciences.

Lubrizol Q4 Profit Tops View; 2010 Forecast Strong

Lubrizol Corp. posted a better-than-expected fourth-quarter profit as sales of its specialty chemicals surged in Asia, and it forecast 2010 earnings above Wall Street forecasts.

Lubrizol also said it was resuming its share repurchase program, with about 3.8 million shares available under its current allotment.

"While we are not expecting sharp recoveries in 2010 for some of our end-use markets such as construction, we project a volume increase this year due to emerging market growth, continued inventory replenishment and the recovery of some deferred demand," Chief Executive James Hambrick said in a statement.

For the fourth quarter, the company posted net income of $134.2, or $1.92 per share, compared with a loss of $281 million, or $4.16 per share, a year earlier.

Revenue rose 9.3 percent to $1.19 billion. Both revenue and operating income increased at its two main units -- additives and advanced materials -- with growth in Asia primarily fueling the jump.

For 2010, Lubrizol expects volumes to rise 5 percent to 6 percent, with gross margins of about 32 percent.

Solutia Reports Q4 profit; Sees Higher Revenue in '10

Solutia Inc reported a fourth-quarter profit, helped by higher sales volumes and lower costs, and forecast revenue growth of 5 to 10 percent in 2010.

In the latest quarter, the specialty chemicals and materials company posted a net income of $7 million, or 6 cents a share, compared with a loss of $615 million, or $6.60 a share, a year ago. Net sales improved 10 pct to $470 million.

The company saw revenue jump 14 percent in its largest saflex segment.

The company said it expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $415 million to $455 million for 2010.

Albemarle 4th-Qtr Profit Up Sharply

Specialty chemicals maker Albemarle Corp reported sharply higher quarterly profit recently on increased sales of brominated flame retardants.

Albemarle posted net income attributable to the company of $62.3 million, or 68 cents a share, in its fourth quarter ended Dec. 31, up 375.5 percent from $13.1 million, or 14 cents a share, a year earlier.

The Baton Rouge, Louisiana-based company reported net sales of $558.2 million in the quarter, up from $517.7 million a year earlier.

Albemarle, which sells specialty chemicals to companies that make electronics, packaging, auto parts and other goods, said it expects its performance to track gradually improving market conditions in 2010, despite higher costs for raw materials and energy and pension expenses.

COMPANY NEWS

Dow to Shut Down Freeport, Texas TDI Plant

Dow Chemical Co. said recently that it will permanently shut down its 100-kilotonne-per-year capacity toluene diisocyanate (TDI) production plant in Freeport, Texas, in the second quarter.

Midland-based Dow said the plant will close “because manufacturing TDI there is no longer economically viable.”

According to the company, “Dow Polyurethanes has secured an alternative supply source and will continue to provide consistency, quality, and supply reliability.” The company did not specify what this alternative TDI source is.

Dow’s nearest TDI plant to Freeport is a 60 kilotonne plant in Camaçari, Brazil. The company had said in mid-2008 that it was thinking of expanding that unit and would carry out a study to assess the potential.

Dow Polyurethanes said it will offer a “seamless transition” for North American customers.

“To remain competitive, businesses must continually optimize production units around the globe, and operate only those facilities that meet requirements for efficiency, overall cost-competitiveness and long-term sustainability,” the announcement continued.

Dow’s Freeport TDI plant was closed for nearly a month in October as a result of an equipment breakage, forcing the company to declare force majeure on supplies.

The Freeport facility has 54 employees. Dow Polyurethanes said it will work with Dow Texas Operations to minimize the impact of this decision on the workforce.

The major outlets for TDI are flexible foam for furniture and bedding, and demand in North America has been shrinking as a result of strong competition from China.

Other major suppliers of TDI in the United States are BASF Corp. and Bayer MaterialScience LLC.

Arkema Integrating Assets Purchased From Dow Chemical

French chemicals specialist Arkema SA recently said it's integrating the assets purchased from Dow Chemical after formally completing the acquisition Jan. 25. Details include:

· The Clear Lakes Acrylic Monomers production site in Texas is being integrated into the existing Acrylics business unit, within the Industrial Chemicals business segment.

· The Acrylic Latex Polymers activity forms a new business unit dedicated to the paint, coatings, adhesives and construction product markets - Arkema Emulsion Systems. This new business unit will be part of the Industrial Chemicals business segment.

· Richard Jenkins has been appointed Managing Director of this newly created business unit.

· The Polyphobe Rheology modifiers formerly in the UCAR Emulsion Systems product line are being integrated into Arkema's Coatex subsidiary. By supplying Polyphobe products, Coatex will extend its portfolio for the Paint and Coatings industry to the United States, Canada, Mexico and Puerto Rico markets.

ConocoPhillips Launches PP Business

ConocoPhillips Co. has launched its own Copylene-brand polypropylene business. The Houston-based business will operate as ConocoPhillips Specialty Products Inc. and will handle sales and marketing of PP produced at a PP plant in Linden, N.J. Material produced at that plant had been marketed by LyondellBasell Industries for several years, but the contract between the two firms expired at the end of 2009.

The Linden site has annual capacity of about 775 million pounds of PP and is able to produce both homopolymer and impact copolymer grades.

Rajiv Singh will serve as general manager of the PP business. PP market veteran Greg Osterholt will serve as sales and marketing director for the new unit. He will be joined on the management team by technical service and development director Ming Wu, product manager Charlie Capshew and customer service supervisor Marcy Ria. The unit’s initial account managers are Grant Gilbert, Leonard Combs and Todd Stautzenberger.

Huntsman Sets Up Polyols JV in China

Huntsman Corp.'s polyurethanes division has created a new, China-based joint venture with Jurong Ningwu Chemical Co. Ltd. to research, develop, manufacture and sell base polyether polyol products.

The joint venture will be known as Jurong New Ningwu Chemical Co. Ltd., and will be based in Jurong City, in Jiangsu province. It will be run as a standalone operation, led by Ying Jun, who has been apppointed general manager of the JV.

“We are committed to the long-term development of our business in China and the joint venture with Ningwu is the latest step in our program to build capability in this dynamic growth market,” said Tony Hankins, president of Huntsman’s polyurethanes division, in the company's announcement.

Describing Jurong Ningwu Chemical as one of the major polyols producers in the country, Hankins said Huntsman is looking forward to “combining our unique talents to achieve sustained success.”

ACQUISITIONS / EXPANSIONS

Dorf Ketal to Buy DuPont Business

According to the Associated Press, global specialty chemical company Dorf Ketal Chemical said that it had acquired the specialty catalysts business of DuPont Chemicals and Flouroproducts. The terms of the deal were not disclosed. The deal will give Dorf, based in India, a bigger footprint in products and commodities such as oil and gas, paints and coatings and inks. The company also has facilities in Texas. DuPont will continue to make products for Dorf Ketal for a year while Dorf Ketal builds a new plant.

Braskem to Acquire Sunoco Chemicals for $350 Million

Sunoco Inc. reached an agreement to sell its chemicals arm to petrochemical and resin producer Braskem SA for about $350 million.

The struggling refiner also announced it has permanently closed its idled Eagle Point plant in New Jersey "due to continuing weak economic demand for refined products and unfavorable market conditions." In October when it idled Eagle Point, Sunoco became the first oil company to say it would shutter a U.S. refinery.

The refining business has been ailing for more than a year amid slumping margins. Since becoming chief executive nearly two years ago, Lynn Elsenhans has talked about changing the company's focus over the next decade, including selling the chemical operations.

Sunoco expects to record a pretax loss of around $190 million this quarter on the deal, which includes three of Sunoco's polypropylene manufacturing plants in the U.S. and a research and technology center in Pittsburgh. Sunoco will keep its phenol and derivatives business.

Braskem is a Brazil-based petrochemicals giant that has been on the lookout for acquisitions. Braskem in January said it would pay 870 million Brazilian real ($478 million at the time) to buy rival Quattor Petroquimica SA.

DSM Buys Full Ownership of Georgia Nylon Plant

Royal DSM NV has acquired full ownership of a nylon 6 resin plant in Augusta, Ga.

DSM, based in Heerlen, the Netherlands, previously had operated the plant as Nylon Polymer Co. LLC, a joint venture with carpet maker Shaw Industries. Terms of the deal were not disclosed.

DSM will incorporate the plant into its DSM Engineering Plastics unit, which is based in Evansville, Ind. Akulon-brand nylon 6 made in Augusta is used in automotive parts, luggage, electronics, packaging films and sporting goods.

Fully owning the Augusta plant “represents a major expansion of our polymerization capabilities in the Americas,” DSM EP Americas President Koen Devits said in a new release. “It helps us to fully exploit our strong backward integration at the Augusta site.”

For DSM, it’s the second nylon transaction in less than a year. In June, the firm announced it would swap its Xantar-brand polycarbonate business for the nylon operations of Mitsubishi Chemical Corp. of Tokyo by the end of 2009. The deal gave DSM access to nylon 6/6/6 resin for the first time.

DSM also in 2009 opened its first nylon 6 resin plant in China.

BASF Sells Aurora Films Business to RMS Packaging

BASF Corp. has sold its Aurora-brand specialty films business to startup investor RMS Packaging Inc.

Terms of the deal were not disclosed. RMS — owned by investor Sheldon Rosenberg and his father, Reuben — will operate the 12-employee business at a BASF facility in Peekskill, N.Y.

BASF, based in Florham Park, N.J., will continue to own the facility, where it also makes pigments.

The purchase includes four manufacturing lines. Aurora films are based on polyester, polycarbonate, oriented polypropylene and other resins and are sold into packaging, labels, displays, gift wrap and household goods. The special-effect, iridescent films can be used alone or with other films, graphics, background colors or embossing.

“We see this as a good business opportunity,” Sheldon Rosenberg said. “Markets for these products are growing and there’s a good technological foundation here.” Rosenberg added that his family has experience in the plastic film market, but he declined to provide details.

The specialty films business was started in Peekskill by Mearl Corp. in 1976 and later sold to Engelhard Corp. BASF acquired the business in 2006.

For BASF, the sale is part of the firm’s ongoing portfolio review and represents “another step in our process to realign our business to ensure long-term profitable growth,” dispersions and pigments group vice president Uwe Liebelt said in a news release.

ExxonMobil Expanding Alcohol Plant

The ExxonMobil chemical plant in Baton Rouge is expanding its isopropyl alcohol production, described by the company as the largest plant of its type in the world.

An 800-ton crane today is lifting a large vessel into place at the Scenic Highway chemical plant, where the expansion is under way, according to a company news release.

An oxygenated solvent, isopropyl alcohol is used extensively in personal care products, pharmaceuticals, coatings, cleaning products for electronics and as a component for making agricultural chemicals.

The company’s Web site shows ExxonMobil isopropyl alcohol production at a dozen locations worldwide.

Cereplast Moves to Indiana / Launches Presence in Germany

Hawthorne, Calif.-based Cereplast is pulling all of its operations and research and development efforts out of California in an effort to cut costs.

Though it plans to maintain its headquarters through a small office in California, Cereplast is relocating 45 minutes outside of Indianapolis. The move is expected to take about a month, Cereplast founder and CEO Frederic Scheer told the Cleantech Group.

The company specializes in manufacturing proprietary bio-based sustainable plastics. The technology produces bio-based resins, used to replace a significant portion of petroleum-based plastics through the use of renewables such as starches from tapioca, corn, wheat, potatoes and rice.

The move to Indiana is intended to provide the company with cost savings in terms of real estate, utilities, as well as a lower, more attractive cost of living for its employees. The company has about 25 staff, down from about 70 from before the global economic recession. The company has an existing manufacturing plant in Indiana.

Cereplast also announced a new distribution agreement this week with Akron, Ohio-based A. Schulman, an international supplier of high-performance plastic compounds and resins, used as raw materials in a variety of markets. The agreement includes all of continental Europe and is for an open ended period of time, he said, adding that it’s expected to be evaluated after the first year.

“In about 24 months, I would expect to be manufacturing in Europe, and [Schulman] could be the manufacturer of choice,” Scheer said. “I’m not saying they are going to be.”

He said a soft agreement was formed about a year ago, related to work in France and Benelux, allowing the companies to learn more about each other.

“They were wondering about the existence of the bioplastics market, and realized after a year it was a growing market with lots of possibilities,” Scheer said.

Schulman is a $2.5 billion-a-year company with a presence including factories and distribution centers in many countries.

Cereplast does have a small facility in Amsterdam, where its resin is shipped from the United States, but Scheer said the Schulman distribution agreement would enable Cereplast to expand its distribution to many more countries.

Cereplast already maintains a presence in France and a holding company in Luxembourg, but is opening a location in Germany at the end of January to support its efforts with Schulman.

One of Cereplast's R&D efforts involves a technology to transform algae into bioplastics. The company is planning to launch a family of algae-based resins at the end of 2010 or early 2011, though Scheer said it’s been difficult to find the right supplier that can produce the consistent supply of biomass his company needs.

Eastman Chemical Closes Deal in China

Eastman Chemical Co. said Friday that it has completed its acquisition of Tongxiang Xinglong Fine Chemical Co. Ltd., a specialty polymers manufacturing facility near Shanghai.

Terms were not disclosed.

Eastman Chemical, based in Kingsport, TN., said the acquisition will provide it additional capacity to meet growing demand in China for its coatings, adhesives, specialty polymers and inks segment.

McIlvaine Company

Northfield, IL 60093-2743

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

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