CHEMICAL UPDATE
JUNE 2011
McIlvaine Company
TABLE OF CONTENTS
P&G and ZeaChem to Develop Bio-based Chemicals for Green Packaging
BASF Expanding Portfolio for Lithium-Ion Batteries
Styrochem Launches Biodegradable Expandable Polystyrene
ACQUISITIONS/ EXPANSIONS/ JOINT VENTURES
LyondellBasell to Purchase Olefins Pipeline System
Styron Receives Tax Break for Plant Expansion
LANXESS to Build €200m Synthetic Rubber Plant in Singapore
BASF to Invest $72 million in Yeosu, South Korea MDI Plant Expansion
BASF to Build World’s Largest Single-train TDI Plant in Europe
EU Commission Approves Formation Styrolution—BASF and INEOS JV
Ashland to Acquire International Specialty Products Inc.
Bayer Continues Investment in China
Procter & Gamble Co. has inked a deal with cellulosic ethanol start-up ZeaChem Inc to convert plant material and other biomass used for ethanol into chemicals for household products and packaging.
The multiyear joint development agreement between the world's largest household products maker and the biofuel company is keyed to a trend among top consumer products players to try to make packaging more environmentally friendly, and thus more appealing to consumers.
Procter & Gamble has set a goal of replacing 25 percent of its petroleum-based materials with renewable materials by 2020. The company has already announced a shampoo bottle made with sugar cane.
Beverage and snack company PepsiCo Inc, recently unveiled a new bottle made from switch grass and other natural materials.
"As part of its long-term environmental sustainability vision, P&G is committed to using 100 percent sustainably sourced renewable or recycled materials for all products and packaging," said Len Sauers, P&G's vice president for global sustainability, in a statement.
"Novel innovations from our suppliers ... are critical to us achieving this vision," Sauers said.
ZeaChem plans to use a 250,000 gallon-per-year cellulosic biorefinery currently under construction in Boardman, Oregon, to manufacture the bio-based chemicals for Procter & Gamble, as well as laboratory facilities in Menlo Park, California, and a pilot facility in Golden, Colorado.
The agreement calls for Procter & Gamble and ZeaChem to jointly research, develop and commercialize the new bio-based chemicals.
ZeaChem's process uses renewable feedstocks such as poplar trees and agricultural residues for biofuel development.
BASF is entering the business of electrolytes for lithium-ion batteries (LIB) and is forming a global electrolytes team in its Intermediates division for this purpose. By adding electrolytes to its existing portfolio for the LIB industry, BASF is able to offer another key component for the battery technology.
Electrolytes are complex formulations that are essential for the transport of electronic charge inside batteries. High-quality electrolytes are prerequisites for improving the battery performance.
BASF is already developing specific formulations for high-quality electrolytes based on organic carbonates for customers in the battery and automotive industries. For instance, BASF is one of the licensed suppliers of the Argonne National Laboratory’s Nickel-Cobalt-Manganese cathode materials, which employ a combination of lithium and manganese-rich mixed metal oxides. In October 2010, BASF broke ground on a $50+ million facility in Elyria, Ohio to produce advanced cathode materials for automotive lithium-ion batteries.
The first products will be commercially available by the end of this year.
StyroChem has launched a material that the firm says is the market’s first biodegradable expandable polystyrene (EPS).
Montreal-based StyroChem made EVRgreen-brand EPS commercially available May 30. The firm has completed two successful test runs of the product at its Montreal plant. EVRgreen also can be produced at StyroChem’s plant in Fort Worth, Texas.
“One of the stigmas facing EPS foam has been its lack of biodegradability, and the perception that it takes up a lot of space in landfills, although studies have shown that’s not true,” StyroChem President Glenn Wredenhagen said in a May 26 phone interview.
EVRgreen is expected to find a home in EPS products that aren’t construction-related. That includes food-service items like cups and bowls, as well as various types of shape packaging. One StyroChem customer already has assembled a marketing campaign that identifies its use of EVRgreen. And Wredenhagen said that a large number of customers also have asked for samples of the material.
The material uses StyroChem’s EcoPure-brand technology, which incorporates an additive company officials describe as “a catalyst to biodegradation.” The additive interacts with micro-organisms found in landfills to break down the EPS resin at the molecular level.
In testing that simulated a biologically active landfill, EVRgreen has biodegraded at an average of more than 14 percent in less than 140 days.
StyroChem employs 90 and operates a total of about 180 million pounds of annual EPS capacity at its two plants. The firm has annual sales of more than $100 million and is owned by private equity firm Tennenbaum Capital Partners LLC of Santa Monica, Calif.
Tennenbaum also owns the former WinCup food-service packaging business, which it operates in tandem with StyroChem as New WinCup Holdings Inc. Wincup is a major customer of StyroChem, officials said.
LyondellBasell (NYSE: LYB) recently announced the signing of an agreement to purchase approximately 200 miles of pipeline near Houston from BP by its Equistar Chemicals, LP subsidiary.
The pipelines and metering stations comprise a Houston area olefins distribution system transporting ethylene and propylene production from Channelview, Texas to Equistar's storage terminal at Mont Belvieu, Texas and facilities in Deer Park, La Porte and the Bayport Industrial District in Pasadena, Texas. The purchase also includes a natural gas liquids (NGL) feedstock supply line into Channelview.
Equistar currently holds a long-term lease for use of the pipelines, which are owned and operated by BP. Acquiring the pipelines provides Equistar with a secure, cost-effective transportation system for its ethylene and propylene production in the Houston area.
Equistar's pipeline group currently operates and maintains approximately 1,200 miles of pipeline in Texas, and transports approximately 20 billion pounds of product and 80 million barrels of feedstock annually. An undetermined number of BP pipeline employees will join Equistar with the purchase.
The transaction is subject to government review and is expected to close in August. Terms of the transaction were not disclosed.
A company spun off from The Dow Chemical Co. one year ago plans to expand its latex production plant in Midland with a $1.13 million investment.
Styron LLC received tax incentives recently from the City of Midland to bring the new equipment to its facility within Dow's Michigan Operations site.
Catherine Maxey, Styron's vice president of public affairs, said the project will help retain one or two of the company's almost 200 positions in Midland.
"We've focused on job retention right now, but if it takes off, it could go beyond that," Maxey said of the new chemistry that will be used at the plant.
Styron is a Pennsylvania-based plastics, rubber and latex company with $5 billion in sales, 2,100 employees and 67 production units around the world. It is privately owned by Bain Capital LLC.
Midland employees serve in the plant, research and development lab and in management and administrative functions. The company has five engineer positions open in Midland as well as three other open positions in the state. Maxey said it's good that the company is investing in people to fill positions.
"I think it demonstrates we're here to grow and we're a part of Michigan and Midland," she said.
The company received a 12-year rebate of personal property taxes from the city. Styron still will pay $52,988 to all taxing authorities over the 12-year period, with the city's share at $24,503. The Midland City Council also approved transferring to Styron the remaining years of a tax exemption certificate issued in 2008 to Dow.
Styron faces competition from low-cost producers overseas, so receiving tax exemptions helps the company invest in America, Maxey said.
Styron announced in April that it will change its name to Trinseo later this year.
LANXESS is planning to build the world’s largest neodymium polybutadiene rubber plant in Singapore, the German specialty chemicals maker said recently.
The 140,000 tonne/year plant will be built at a cost of €200m ($290m) on Jurong Island, next to LANXESS’ new 100,000 tonne/year butyl rubber plant, which is currently under construction and is scheduled to come on stream in the first quarter of 2013, the firm said in a statement.
Neodymium polybutadiene rubber is part of a tire’s compound and reduces energy consumption more efficiently than many other tire rubbers, according to the statement.
Construction of the 100,000 tonne/year butyl rubber plant is progressing according to schedule, it said.
The new neodymium polybutadiene rubber plant is expected to start up in the first half of 2015, the statement added.
Singapore was chosen as the site for the new neodymium polybutadiene rubber plant because of its excellent infrastructure, pool of highly skilled workforce, large sea port and close proximity to growth markets, said Ian Wood, managing director of LANXESS in Singapore.
LANXESS has signed an agreement with the Petrochemical Corporation of Singapore (PCS) on the long-term supply of butadiene feedstock via pipeline, it said.
Butadiene is the key raw material for the production of neodymium polybutadiene rubber.
PCS, at the same time, will receive raffinate II via pipeline from LANXESS’ upcoming butyl rubber plant, the statement said.
The neodymium polybutadiene rubber plant is aimed at capturing the demand for high-performance tires in Asia, which is growing at 14% per year, LANXESS said.
“Demand is being driven by the megatrend [of] mobility as well as motorists calling for higher environmental and safety standards in performance tires,” it said.
Demand will also be boosted by legislation in the EU, which mandates that as of 2012 all new tires sold in Europe have to be labeled for fuel efficiency, wet grip and external rolling noise, according to the statement.
Japanese tire manufacturers have voluntarily introduced tire labeling at the start of 2010 and the topic is under discussion in South Korea, it added.
The annual global demand for performance butadiene rubbers is estimated at 2.5m-3m tonnes, according to Joachim Grub, the global head of LANXESS’ performance butadiene rubbers business unit. About half of all demand for performance butadiene rubbers is currently coming from Asia, Grub added.
Apart from tires, performance butadiene rubbers are used for the modification of plastics in the manufacture of high-impact polystyrene (HIPS) for injection-moulding applications, the statement said. Other application areas include golf balls, running shoes and conveyor belts, it added.
Germany's BASF is investing Won 80 billion ($72 million) in the expansion of its diphenylmethane diisocyanate plant at Yeosu, South Korea, the company said in a statement recently.
The 190,000 mt/year MDI plant will see its capacity raised by 32% to 250,000 mt/year by 2012, the statement said.
"According to our Asia Pacific Strategy 2020, we will invest Eur2.3 billion ($3.33 billion) in the Asia Pacific region between 2011-2015," said Albert Heuser, President of Market and Business Development BASF Asia Pacific.
The Yeosu plant site also houses a 160,000 mt/year toluene diisocynate plant and a 20,000 mt/year carbonyl chloride derivatives plant.
The expansion at Yeosu is BASF's second investment in capacity growth this year.
BASF received approval for a new 400,000 mt/year MDI plant at Chongqing, China at the end of March. The project, built at an estimated investment of Yuan 8 billion ($860 million), is expected to start up by 2014 and includes a nitrobenzene plant and an aniline plant.
MDI is a core component for the production of polyurethanes.
BASF will build the world’s largest single-train TDI (toluene diisocyanate) plant in Europe. The plant will have a capacity of 300,000 metric tons per year and will be fully integrated with precursor production. The TDI plant will be located at one of the company’s integrated Verbund sites in Antwerp, Belgium or Ludwigshafen, Germany and will start production in 2014. Engineering is underway and the final site selection will be announced shortly. TDI is a key component used for polyurethane foams.
Dr. Martin Brudermüller, Vice Chairman of the Board of Executive Directors of BASF SE and responsible for the Plastics segment, said: “This new investment supports BASF’s growth strategy, underlines our leading position as the largest TDI producer and reinforces our strong commitment to the TDI market. BASF will have the ability to serve its customers’ demand through local world-scale production in the largest markets North America, Europe and Asia, in particular China. We have a superior technology and outstanding safety procedures. Moreover, our unique Verbund concept provides us with excellent cost structures."
“With this new plant, we will complement our strong global network of integrated world-scale TDI facilities to serve our customers’ growing demand ,” said Wayne T. Smith, President of BASF’s Polyurethanes division. “We expect the global TDI market to grow faster than GDP in the coming years, with strong contribution from Central and Eastern Europe, Middle East and Africa. This growth is driven by ongoing urbanization and increasing standards of living.”
TDI is a key component for the polyurethanes industry. To a large extent it is used in the automotive industry (e.g. seating cushion and interior applications) as well as in the furniture segment (e.g. flexible foams for mattresses, cushions or wood coating).
BASF is a leading supplier of basic products for polyurethanes and operates TDI plants in Geismar, Louisiana; Schwarzheide, Germany; Yeosu, Korea; and Caojing, China.
The EU Commission has recently given its approval for the formation of the joint venture Styrolution. BASF SE, Ludwigshafen, Germany, and INEOS Industries Holdings Limited, Lyndhurst, UK, now have EU clearance to combine in Styrolution their global business activities in styrene monomers (SM), polystyrene (PS), acrylonitrile butadiene styrene (ABS), styrene-butadiene block copolymers (SBC) and other styrene-based copolymers (SAN, AMSAN, ASA, MABS) as well as copolymer blends. Pro forma sales of the combined businesses were €6.4 billion in 2010. Expandable polystyrene is not part of this transaction. BASF and INEOS will retain their respective businesses.
With Styrolution, BASF and INEOS will establish the leading company in the global styrenics market. Styrolution has an excellent global position with production sites in Europe, Asia and North America.
The EU Commission has approved the formation of the joint venture subject to the requirement that the parties sell an ABS production site in Tarragona, Spain. This site accounted for less than 3% of Styrolution’s pro forma EBITDA for the year 2010. The formation of the new joint venture has already been approved by the U.S. Federal Trade Commission without any remedies.
BASF and INEOS will continue to operate as strictly independent companies until the completion of the deal, which is anticipated in 2011, subject to remaining approvals from antitrust authorities in other countries.
Styrenics are mainly used for household and office products, for electrical and communication devices and for packaging. Styrene-based copolymers are thermoplastic resins based on styrene and acrylonitrile. They are mainly used in automotive and technical applications as well as for many everyday products.
Ashland to Acquire International Specialty Products Inc.
Ashland Inc. (NYSE:ASH) and International Specialty Products Inc. (ISP) recently announced that Ashland has agreed to acquire privately owned ISP, a global specialty chemical manufacturer of innovative functional ingredients and technologies. Under the terms of the stock purchase agreement, Ashland will pay approximately $3.2 billion for the business in an all-cash transaction. At closing, ISP’s advanced product portfolio will expand Ashland’s position in high-growth markets such as personal care, pharmaceutical and energy. For the 12 months ended March 31, 2011, ISP generated sales of approximately $1.6 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $360 million.
ISP is a leading global supplier of specialty chemicals and performance enhancing products for consumer and industrial markets. Through its unique offerings, ISP will bring high-value water soluble polymers and other advanced technologies into Ashland’s functional ingredients business, as well as complementary additives for Ashland’s food and beverage, energy, coatings, adhesives and water treatment markets. The acquisition is expected to significantly strengthen Ashland’s functional ingredients active patent portfolio and its team of research and development scientists. The result will be a stronger, global functional ingredients business with proven technological and application capabilities to solve customers’ unique formulation challenges.
The transaction, which is expected to close prior to the end of the September quarter, is subject to satisfaction of customary closing conditions and receipt of U.S. and European Union regulatory approvals.
The latest in a string of investments being made in China, Bayer MaterialScience AG recently announced an agreement to develop a polycarbonate color competence and design center, as well as a polyurethane systems house, in the western Chinese city of Chongqing, according to an article in Plastics News.
In December, Bayer announced plans to double capacity in the polyurethane raw material MDI at its Shanghai facility by 2016. The company plans to invest 110 million euros ($155 million) in downstream facilities by 2012. In addition, Bayer is in the process of moving its global headquarters for polycarbonates to Shanghai.
“We want to increase group sales in Greater China to around 5 billion euros by 2015,” said Marijn Dekkers, chairman of Bayer AG, in a statement. “MaterialScience is expected to contribute at least half of this amount.”
The Shanghai expansion will increase capacity to 500,000 tons per year, adding two new lines. The first step of the expansion will be to install the two lines and then debottleneck them in phases until 2016 when they will run at full capacity, Rainer Rettig said in the article. Rettig is the head of Bayer’s polycarbonates Asia Pacific business unit.
“For the time being, China is still importing a lot of material,” Rettig said. “We still bring in a lot of material from Europe.” By bringing up capacity, Rettig hopes to bring their production closer to customers.
McIlvaine Company
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