EU chemicals production recorded a 1.9% decrease in the first four months of 2012 compared with the same period in 2011, according to the latest Cefic Chemicals Trends Report. Monthly data for April 2012 showed a 1.9% decline compared with April the year prior. April 2012 data show that the EU chemicals production level remains 5.2% below the peak in 2007.

Prices for chemicals in the European Union continued to climb on a year-on-year basis in April, up 3.2% during the month against the comparable month in 2011. The price increase was led yet again by the overall price increase in basic inorganics.

Latest trade data show the EU chemicals trade net trade surplus improved through the first quarter of 2012 by €2.4 billion compared with the same period of last year, reaching €12.5 billion.

Year-on-year April chemicals output lower

Consumer chemicals was the only subsector to avoid a drop in the April EU chemicals production index, up 1.6% in April 2012 compared with April 2011. Specialty chemicals and basic inorganics production decreased in April by 4.2% and 3.8% respectively on a year-on-year basis. Polymers production declined in April 2012 by 2.7% against the comparable period the year prior. Petrochemicals experienced no change in the same period. Monthly data for April 2012 showed a 1.9% decline for the EU chemicals industry compared with April the previous year.

EU trade surplus improved

2012 trade data indicate a €12.5 billion overall EU chemicals net trade surplus. An EU net trade surplus with the NAFTA region contributed significantly to the additional surplus generated in January-March, reaching €3.3 billion, up €1.3 billion compared with the period from January to March 2011.The EU net trade surplus with the Rest of Europe was €3.4 billion in first quarter 2012, up €0.5 billion compared with first quarter 2011.

A €1.5 billion surplus occurred with Asia, excluding Japan, and China, which fell €0.5 billion compared with first quarter 2011.

Prices for basic inorganics climbed

Year-on-year EU chemicals prices rose in April by 3.2$, driven by the price for basic inorganics, which increased by 4.4% during the period. Prices for petrochemicals climbed by 2.0%, while pharmaceuticals prices edged down by 1.2 percent in April as compared with the year prior.

EU sales in January-March 2012 6.1% higher than 2008 pre-crisis period

EU chemicals sales for March 2012 were 1.4% lower compared with March the year prior. The overall sales level continues to surpass the pre-crisis peak reached at the beginning of 2008. Compared to full-year sales levels in 2008, the total value of sales through the first three months of 2012 was 6.1% higher.

EU chemicals confidence indicator (CCI) falls in May 2012

According to the latest EU Commission report (business and consumer survey results, 30 May, 2012), confidence in the EU chemicals industry deteriorated markedly (-5.4) in May 2012, based mainly on a strong deterioration in managers' expectations for the months ahead (-8.5). Moreover, managers' assessment of their companies' current level of order books deteriorated sharply (-4.2). Also, the assessment of the adequacy of current level of stocks of finished products worsened. And also managers' assessment of their companies' past production and current level of export order books deteriorated. Employment plans were further revised down. At the same time, selling price expectations decreased modestly.

EXPANSIONS

Arkema Expanding Fluoropolymers Capacity

Fluoropolymers leader Arkema will spend almost $90m to increase capacity for that material by 50% at a French plant.

The investment will increase capacity for Kynar-brand PVDF fluoropolymer resin at Arkema’s site in Pierre-Benite, France, by 2014, officials said in a statement. The project also will include installation of a new high-purity process and a new effluent treatment plant.

“This ambitious program will provide long-term visibility for fluorochemicals activity as a whole in France,” officials said.

Global fluoropolymer demand is growing at more than seven percent per year. Common applications for Kydar include oil extraction, cable manufacturing, chemical engineering and semiconductor production. Officials listed drinking water filtration, lithium ion batteries and photovoltaic panels as “emerging markets” for Kydar.

Colombes, France-based Arkema claims to be the world’s largest fluoropolymers maker. In addition to Pierre-Benite, the firm has fluoropolymer production in Zaramillo, Spain, and Calvert City, Ky, as well as at three sites in China. Arkema also makes fluoropolymer feedstocks at a plant in Saint-Auban, France.

News of the expansion caps off a busy first half of 2012 for Arkema. In April, Arkema sold its US-based Tuffak-brand polycarbonate sheet business to Bayer MaterialScience. Media reports also surfaced that Arkema was looking to sell its PVC stabiliser unit.

Arkema in February finalized a partnership to develop renewable specialty polymers with Elevance Renewable Sciences, at technology firm based in Woodridge, Ill. Also in April, Arkema announced that it would be consolidating its US acrylic sheet production from Kensington, Conn., to a plant in Louisville, Ky.

Arkema has annual sales of more than $7bn and ranks as the world’s largest maker of acrylic resin and sheet, which it sells under the Plexiglas and Altuglas trade names.

DuPont Investment Builds Work in Tonawanda, NY

The latest generation of DuPont’s Corian product is now being manufactured at the company’s Tonawanda, NY Yerkes plant.

DuPont, based in Wilmington, Del., invested an estimated $6 million to make the transition. The facility was also aided by New York state grant money that totaled nearly $500,000.

The Yerkes plant has about 600 employees, with production as well as research and development work. The plant makes Corian, which is used in a variety of surfaces including countertops, and Tedlar, a film used in applications such as aircraft and solar panels.

North America is the main market for the company’s Private Collection Corian product, which is used to make countertops. It had been manufactured in South Korea. But DuPont has shifted some production of that series - to supply markets like North America, South America and Europe - to the River Road plant. The Korean plant still makes the Private Collection product for the Asian market.

New Bio-Based Chemical Plant in Northeast Louisiana Aided By Loan Guarantee

The U.S. Department of Agriculture has approved a $25 million loan guarantee for the Myriant Corp. to help complete construction of a Lake Providence, La., manufacturing plant that will produce a bio-based chemical used as a sweetener in the food and beverage industry. Myriant officials said they closed a $25 million private bond placement using the guarantee, and already has signed multi-year customer contracts for the facility's products.

The plant will use grain sorghum, a sustainable crop, to produce 15,000 tons per year of succinic acid, the sweetener chemical, and 18,000 tons per year of ammonium sulfate. Normally, succinic acid is produced from butane, a gas created from petrochemicals.

"This project will support the president's 'all-of-the-above' energy strategy and create job opportunities for American workers," said Agriculture Secretary Tom Vilsack, in a news release announcing the guarantee. "The facility will bring opportunity to an area of Louisiana that has been battered by hurricanes, and has lacked new development. It will also expand a market for farmers."

The Myriant facility in northeastern Louisana had earlier received $44 million in grants from the U.S. Department of Energy, $10 million from the Louisiana Department of Transportation. The Lake Providence Port Commission had earlier spent $13 million to develop the construction site.

According to Myriant officials, when the plant is completed in the first quarter of 2013, it will provide more than 50 permanent jobs, and 300 indirect jobs. Building the plant has created 250 construction jobs.

"Rigorous analysis has shown, and our direct experience is proving, that U.S. based manufacturers of renewable chemicals derived from natural sources can be the world's lowest cost producers of these products," said Myriant chairman and chief executive officer Stephen Gatto, in the company's news release announcing the loan guarantee. "This means that the chemicals manufacturing sector in the U.S., which has seen a trade surplus of $13.4 billion in 1998 shrink to a loss of $2.7 billion by 2008 and a loss of 130,000 jobs to outsourcing, can be revived and accelerated in new renewable, eco-friendly ways for a return to world-leading growth in innovation and the associated prosperity it can deliver here in the United States."

The company also is working to create methods to use non-food cellulose sources for making the sweetener and a second chemical, lactic acid.

The manufacturing process at the Lake Providence plant will use what the company calls "biocatalysts" to turn a combination of sorghum and carbon dioxide into the sweetener chemical. The process produces less carbon dioxide than the use of butane, in part because of the carbon dioxide created in the refinery process necessary to create butane, Myriant officials said.

Linde to Boost Ultra-High Purity Bulk Gases Supply to Pacific NW Semicon Maker

Linde North America is expanding its capacity to supply ultra-high purity (UHP) gases to one of the world's largest semiconductor manufacturers located in the Pacific Northwest.

Linde will expand its facility, located in Hillsboro, Oregon, by adding an additional plant to manufacture ultra-high purity nitrogen and oxygen. These products will be delivered by pipeline to the customer. The new plant is in addition to the two existing ultra-high purity nitrogen and oxygen plants already operating at the Linde site. In addition, Linde will supply all bulk electronic gases, such as hydrogen, helium and argon, to the customer from its reliable infrastructure of production facilities across North America.

Mark Quinn, vice president of Bulk Electronic Gases and Onsites for Linde Electronics and Specialty Gases, said, "Linde is delighted to have the opportunity to supply this long-term customer with their high purity bulk gas needs as they expand their operations. Our facilities and personnel in Hillsboro are world class professionals who understand the needs of our most

demanding semiconductor customers and this expansion is testimony to Linde's commitment to the Pacific Northwest and Linde's commitment to the success of this customer."

Cliff Caldwell, vice president and general manager of Electronics and Specialty Gases stated, "Linde's line of Spectra® high purity nitrogen plants are designed to provide the highest purity of nitrogen and oxygen at the lowest total cost of supply. We have engineered these plants to produce high volume gases with less than 1 part per billion impurities and with extraordinary power efficiencies. The supply scheme will support the world's most advanced technology and high volume semiconductor manufacturing site in the world. We are very proud of the team effort that went into this design solution to support our customer."

Linde has been supplying high-purity gaseous to several semiconductor and solar manufacturers in the Hillsboro area since the early 1990s.

The Linde Group is a world-leading gases and engineering company with around 50,500 employees in more than 100 countries worldwide. In the 2011 financial year, it achieved sales of EUR 13.787 bn (USD 18.1 billion).

LANXESS Sets Its Sights on Turkey's Growing Market

Specialty chemicals company LANXESS plans to expand further in the Turkish market. It takes one important step in this direction recently by officially opening its new subsidiary in Istanbul. LANXESS Kimya Ticaret Ltd. Şti. will manage the company’s business in this growing market in the future. LANXESS generated record sales in Turkey in 2011 amounting to some EUR 125 million, nearly triple the amount achieved in 2009.

"The establishment of our new subsidiary in Turkey represents another milestone on our global growth path. Turkey is tremendously important to LANXESS, not only because of its geographical location between East and West, but also as an engine for growth in the entire region," remarks Axel C. Heitmann, Chairman of the Board of Management of LANXESS AG. The company anticipates that the Turkish economy will grow between 4 and 5 percent a year between 2013 and 2016, significantly faster than Western Europe.

LANXESS markets its entire range of products in Turkey, from high-performance polymers and specialty chemicals to quality chemical intermediates. Activities focus on high-performance rubber products, rubber chemicals and high-tech plastics for the automotive sector, as well as color pigments for the construction industry. LANXESS previously organized its operations in the country via external distributors.

The most important sectors in Turkey for LANXESS are the automotive and tire industries. The company expects the automotive industry in Turkey to grow by 8.5 percent in 2013 and then 3.5 percent per year from 2014 to 2016. In the construction industry, LANXESS foresees growth rates of between 4 and 5 percent in the upcoming years.

The new company will initially start off with 20 employees under the management of Ömer Bakir, general manager of LANXESS Kimya Ticaret Ltd. Şti.

Technical rubber products from LANXESS, the leading global supplier of synthetic rubber products, are in high demand in the Turkish automotive industry: the oil and ozone as well as waterproof and oxygen impermeable LANXESS products are used, for instance, in vehicle engine compartments. Here they ensure that cable insulation, (brake) hoses, seals, (drive) belts and other rubber components remain tight in spite of heat, strong temperature fluctuations and aggressive fluids. Rubber chemicals from LANXESS facilitate vulcanization and protect rubber from premature aging.

As technology leader in specialty chemicals, LANXESS further develops applications that make "Green Mobility” possible: used in premium tires with low rolling resistance, performance rubber grades from LANXESS provide for greater safety, lower fuel consumption and thus lower CO2 emissions. LANXESS also supports the trend towards lightweight construction in the automotive industry. Already today, high-tech plastics from LANXESS are making vehicles more lightweight, safer and more comfortable – and this trend is on the rise. Less weight and "Green Tires” mean lower emissions and reduced fuel consumption, and that is good for both the environment and consumers' wallets.

Celanese Plans Methanol Plant for Houston

Celanese Corporation (NYSE: CE) recently announced its intention to construct and operate a methanol production facility at its Clear Lake, Texas acetyl complex. As one of the world’s largest producers of acetyl products, the company plans to utilize its existing infrastructure to capture the opportunities created by abundant and affordable U.S. natural gas supplies.

“The positive developments in the U.S. energy complex and the current and emerging natural gas surplus make it advantageous for us to produce our own methanol requirements for U.S. acetyl production,” said Mark Rohr, chairman and chief executive officer of Celanese. “Utilizing existing Celanese infrastructure helps reduce capital requirements while capturing advantages of state-of-the-art technologies.”

Following necessary approvals, Celanese intends to construct a 1.3 million metric ton per year facility with anticipated start-up after July 1, 2015. A significant portion of the methanol produced would be used to support the company’s operations. The company expects to partner with one or more additional entities interested in the remaining methanol.

The company currently produces acetic acid and vinyl acetate monomer at the facility and is finalizing construction of its TCX ethanol technology development unit. The company’s global acetyl research and development center is also located at the facility. The additional methanol production builds on the company’s current position in the Houston region and would incrementally bring several hundred jobs to the area through the construction and start-up phases.

BASF to Build New Formic Acid Plant in Geismar, Louisiana

BASF recently announced its plans to build a state-of-the-art production plant for formic acid at its integrated “Verbund” site in Geismar, Louisiana. The new plant will create 20 new jobs and have an annual capacity of more than 50,000 tons.

It will be the only formic acid plant in North America and will allow BASF to serve strategic markets in North and South America better, including applications for pharmaceuticals, energy, animal nutrition, leather and cleaning products. Start-up of the new plant is expected in the second quarter of 2014.

BASF’s customers use formic acid as an eco-efficient solution in a wide range of applications such as in animal feed where it provides protection of the feed and supports the health of the animal itself.

Potassium formate, a salt of formic acid, is an environmentally friendly and highly efficient de-icing agent used on roads and airport runways. It is easily biodegradable, thereby, protecting aquatic wildlife in nearby rivers and watersheds.

Both formic acid and potassium formate are also used in the oil field industry as part of the drilling and completion process, as well as in shale gas exploration to promote extraction. Formic acid is an excellent de-scaling agent as well, and is used in industrial cleaning to remove various mineral deposits from desalination plants, refineries and other processing industries.

“The new plant further strengthens our position as a leading supplier of chemistry for sustainable solutions,” said Hans Engel, Chairman and Chief Executive Officer of BASF Corporation, who made the announcement during a press conference at BASF’s new regional headquarters building in Florham Park, New Jersey.

BASF currently operates two formic acid plants located at the company’s integrated Verbund sites in Ludwigshafen, Germany, and Nanjing, China, with a total annual capacity of 255,000 metric tons.

“This investment demonstrates our commitment to the increasing market demand in North and South America driven by current and new applications of this versatile product. We will be able to serve our customers better with shorter lead times and greater supply reliability. It also reinforces BASF’s global leading position in formic acid with production in Europe, North America and Asia,” said Soeren Hildebrandt, Senior Vice President of BASF’s Chemical Intermediates division.

In line with the company’s “We create chemistry” strategy, BASF focuses on sustainable development of its products such as formic acid, which not only has an excellent sustainable profile in use, but also in its production as part of the company’s Verbund concept.

The Verbund concept is one of BASF’s greatest strengths, linking production and energy requirements in an efficient manner. BASF’s Geismar production site incorporates the Verbund concept and allows BASF to maximize the production efficiencies of formic acid while helping to protect the environment and surrounding communities by reducing waste and cutting emissions, and keeping resource consumption and transportation to a minimum.

Dow Kokam Expanding Midland Battery Park with New Pack Assembly Plant

Dow Kokam recently said it will add a 60,000-square-foot facility to its Midland Battery Park.

The new facility will house production of advanced energy storage packs that will provide a casing for Dow Kokam's lithium-ion cells and battery management systems.

Established in 2009, Dow Kokam is a joint venture of the Dow Chemical Co., TK Advanced Battery, LLC — based in Lees Summit, Missouri — and Groupe Industriel Marcel Dassault, a French company.

Construction, which will be handled by Lansing-based Clark Construction Co., is slated to begin in July, with production expected to begin in the first quarter of 2013.

“The Pack Assembly Plant is an investment for Dow Kokam to provide turn-key solutions to our diverse customer base; and is a commitment to help further expand Michigan’s manufacturing renaissance in the advanced energy storage industry,” said David Pankratz, Vice President of Operations of Dow Kokam.

Clark Construction will be responsible for the hiring of subcontractors, the company said.

Construction on the 400,000-square-foot Dow Kokam facility kicked off in May 2010. Dow Kokam said it is on track to begin large-scale production this year. The advanced batteries are already being used in many applications, including the powering of electric motorcycles. Dow Kokam's Midland Battery Park, which currently employs 95 people, is scheduled to open officially this summer.

In a release, the company said more than 700,000 hours have gone into the construction of the existing Dow Kokam facility, with more than 90 percent of those hours being worked by Michigan residents.

“We are excited to expand our manufacturing capability in Michigan to meet current and future market demand. The Pack Assembly Plant will enable Dow Kokam to provide advanced energy storage systems along with our high performance cells,” said Ravi Shanker, chief executive officer of Dow Kokam. “With a complete cell and pack offering, Dow Kokam will provide lithium-ion advanced energy storage systems that achieve advantages in energy, power, lifetime, safety and cost.”

Cytec Announces Carbon Fiber and Composites Manufacturing Expansions

Cytec Industries Inc.’s (NYSE:CYT) Board of Directors has approved restart of a carbon fiber manufacturing expansion project at the company’s Piedmont, South Carolina facility as well as commencement of a prepreg manufacturing expansion project at the company’s site in Greenville, Texas. Both projects support growing demand for Cytec’s composite materials in the aerospace industry.

The project in South Carolina will provide additional capacity for manufacture of our polyacrylonitrile-based (PAN-based) carbon fiber production including precursor manufacturing and carbonization. Cytec uses these fibers in the manufacture of carbon fiber reinforced composite prepregs which are widely used in both commercial and military aerospace applications. Construction is expected to be completed by the end of 2013 with industrial fiber production expected in 2015 and aerospace qualified fiber production expected in 2016.

The Greenville, Texas project includes a building expansion and associated infrastructure to support a new impregnation line which will increase the site’s prepreg capacity by 20%. Commercial production in the new facility is expected to begin in 2015. David Snyder, Vice President of Operations for Engineered Materials, added, “We are excited about the growth of our production capabilities in Greenville and Piedmont and what it means for both our customers and the communities in which our facilities operate. We look forward to continuing our strong relationships and to continued growth and success of our operations at both sites.”

In addition to the above expansions, Cytec’s Michigan site is increasing its KM polymer capacity, an important raw material used in the production of certain prepregs. The first phase of this project is expected to be completed by the end of 2012 and will increase capacity by 25%. A second phase of expansion is also planned which will double the capacity for this material by early 2014.

The combined expansions will provide capacity for growing demand from the Joint Strike Fighter, new Boeing progams such as 787 and 747-8, new Bombardier programs, and general build rate increases in Cytec’s legacy civil transport, business jet, and helicopter businesses. “Aerospace manufacturers are increasingly turning to composite materials to reduce aircraft weight and improve fuel efficiency. Our investments in carbon fiber and prepreg show our commitment to supporting the industry growth by optimizing supply capability for our customers,” said Bill Wood, President, Engineered Materials.

COMPANY NEWS

Dow Grows North East Technology Presence with Move to Collegeville, PA

The Dow Chemical Company (NYSE: DOW) announced recently an agreement that will position the nation’s largest specialty chemical and advanced materials company for future growth by locating its North East USA Technology Center in Collegeville, Pa.

Dow scientists will begin operations next year in a state-of-the-art research and development facility owned by the pharmaceutical company Pfizer Inc. Employees at Dow’s Spring House, Pa. campus will begin moving to the new site as early as the first quarter of 2013. It is estimated that more than 800 jobs will remain in the county as both Spring House and Collegeville are cities within Montgomery County.

“This premier new location provides Dow’s world-class researchers with a new collaborative and innovation centric space, enhanced capabilities and best in class tools to create differentiation for our customers,” said Andrew N. Liveris, Dow’s chairman and chief executive officer. “Establishing operations in Collegeville will allow us to remain competitive in a global market and continue as a major employer in Montgomery County, and Pennsylvania."

With over 750,000 square feet of laboratory and office space, the facility will also have room to accommodate potential job growth in the future. After conducting a comprehensive feasibility study, Dow determined this opportunity as the best option to reach research objectives.

“This strategy bolsters our company’s long-standing commitment to Pennsylvania by putting our R&D operations on a long-term path forward,” said Jerome Peribere, executive vice president of The Dow Chemical Company and president and chief executive officer, Dow Advanced Materials headquartered in Philadelphia. “We are proud residents of the Delaware Valley region and look forward to continuing the tradition of innovation that our company began here more than 40 years ago.”

Dow’s Spring House location, acquired via the Company’s Rohm and Haas acquisition in 2009, has been a center for strategic research and development since 1963. From this site, the company’s scientists have invented products ranging from acrylic technology for high-quality latex paints to water purification products and polymers used in laundry detergents, shampoo, lotion, and conditioners.

Clariant to Make Strategic Changes

Speciality chemicals company Clariant said it aims to implement strategic options for three business units within 18 months in an ongoing effort to improve margins as it grapples with sluggish demand and the strong Swiss franc, Reuter’s reports.

The Swiss group said in February it would organise three units - textile chemicals, paper specialities and emulsions, detergents & intermediates - to be independently run. Options include a sale or entering into a joint venture, Clariant said.

The company gave the update at this year's Capital Markets & Media day held in Munich, Germany.

The group also reiterated its goal to increase operating profit margins to above 17 percent by 2015 from the 13.2 percent achieved in 2011, and to achieve a return on invested capital above its peer group average through innovation and by growing market share in emerging markets like India and China.

"We will implement these portfolio management measures with the same speed and determination as that of our activities in the restructuring phase. They are an important pre-requisite for reaching our targets by 2015," said Chief Executive Hariolf Kottmann in a statement.

He said that by that time the group would generate more than 70 percent of its sales from non-cyclical business units.

The chemical industry's dependence on highly cyclical machinery makers, car manufacturers and builders makes it especially vulnerable to economic downturns.

The company also said its acquisition of Sued-Chemie had already contributed significantly to the company's results in 2011, and would be accretive to earnings in 2013 by when synergies from its integration were expected to contribute an additional 90-115 million Swiss francs to operating earnings.

BASF Sees China Sales More Than Double by 2020

German chemical giant BASF said it expects sales in China to more than double within eight years thanks to fast urbanisation in the world's second-largest economy.

The largest chemical firm in the world aims to achieve sales of 29 billion euros ($36 billion) in Asia by 2020 and "roughly half of that is China", said Martin Brudermueller, vice chairman of the board of executive directors.

That will be more than double the company's 6.5-billion-euro sales last year in China -- the world's top chemical market.

He said the upbeat prediction was underpinned by fast urbanisation in China, where increasing consumption of goods is creating a huge demand for chemicals that are crucial in manufacturing.

The world chemical market will be worth $3 trillion by 2020 -- up 50 percent from now -- and half of that increase will come from China, Brudermueller said.

BASF announced in 2010 that it would devote half its total planned investments to China until 2014 -- or more than one billion euros.

A. Schulman Announces Joint Venture to Produce Polypropylene Compounds in Saudi Arabia

A. Schulman, an international supplier of high-performance plastic compounds and resins, has entered into a joint venture agreement with National Petrochemical Industrial Company of Jeddah, Saudi Arabia, a subsidiary of Alujain Corporation.

The 50-50 joint venture, expected to be named NATPET-Schulman Engineering Plastic Compounds, will produce and globally sell polypropylene compounds.

The joint venture is planning to build a polypropylene compounding plant in Yanbu, Saudi Arabia, where it expects to begin production by the end of calendar-year 2014.

"Several aspects of this deal will accelerate A. Schulman's expansion and visibility in its priority growth markets of Africa, India and the Middle East while better serving our existing global customers with high-quality polypropylene compounds," said Bernard Rzepka, general manager and chief operating officer of A. Schulman, Europe, Middle East, Africa. "At the same time, these actions will allow us to serve global customers more effectively by creating an efficient, cost-effective and state-of-the-art manufacturing facility in the Middle East."

McIlvaine Company

Northfield, IL 60093-2743

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

E-mail: editor@mcilvainecompany.com

Website: www.mcilvainecompany.com