CHEMICAL UPDATE
AUGUST 2013
McIlvaine Company
TABLE OF CONTENTS
EPA Issues Electronic Submission Rule for TRI Chemical Data
ACC Reports Finds U.S. on Track for $71 billion in New Natural Gas Investments
US Resin Sector Up 85 Percent in 10 Years
Clariant to Expand in Louisville
Clariant, Ashland Put Foundry Chemical Venture up for Sale
AzkoNobel to Increase Capacity of Colloidal Silica Production
$1 Billion Chemical Industrial Project in Louisiana Breaks Ground
Honeywell Plans Plant Projects in Louisiana
BASF to Build Polymerization Plant in Shanghai
Solvay Specialty Polymers expands range in China
Sasol, Ineos Forming JV to Produce HDPE in North America
The Environmental Protection Agency (EPA) is requiring businesses that release toxic substances to report those emissions though agency-provided software.
Under the new rule, industries will be prevented from submitting the Toxics Release Inventory (TRI) data via paper forms or on CD-ROM. The measure does not apply to trade secret information.
"Electronic reporting of TRI forms provides numerous benefits, including making it easier for facilities to report accurate information, expediting form completion due to the pre-population of many form elements, decreasing the cost to EPA of processing forms, and providing TRI information more quickly to the public," the agency said in its rule.
Abundant supplies of natural gas from shale have created significant economic opportunities for the U.S. chemical industry that could result in US$71.7 billion in new investments and more than 530,000 permanent new jobs, according to a new report from the American Chemistry Council (ACC).
The report is based on a detailed examination of the 97 chemical industry projects that have been announced as of March, 2013, ACC said. It explains that the US$71.7 billion in capacity expansion will engender an additional US$66.8 billion in chemical industry output, a 9% gain above what otherwise would have been the output in 2020.
The report predicts that nearly US$30 billion of the expenditures will go towards purchasing processing-related equipment. Twenty six percent will be allocated to major process equipment and products such as pumps, pressure vessels, heat exchangers, compressors, etc. Another 8% will be spent on process instrumentation, 5% on valves and piping and 4% on electrical equipment.
The report further predicts that US$12 billion will be spent in 2014 and another US$15 billion will be invested in 2015. By 2020, the report concluded, these projects can lead to 46,000 new chemical industry jobs, another 264,000 jobs in supplier industries and 226,000 “payroll induced” jobs in communities where workers spend their wages, and can generate US$20 billion in federal, state and local tax revenue. Nearly 1.2 million additional, temporary jobs can be created between 2010 and 2020, during the capital investment phase.
"The U.S. has become a magnet for chemical industry investment, a testament to the favorable environment created by America's shale gas as well as a vote of confidence in a bright natural gas outlook for decades to come," said ACC president and CEO Cal Dooley. “The large number of foreign chemical firms investing in the U.S. is unprecedented in recent history and underscores that nowhere else in the world is the outlook as bright when it comes to natural gas.”
The plastics resin sector in the United States generates $87.1 billion in revenues annually, having grown by more than 85 percent in the last decade according to a new report from the American Chemistry Council.
In addition to being a robust industry, the report says the 54,900 people directly employed by plastic resin manufacturers are doing better than a vast majority of their counterparts in other industries.
While it has grown, the plastics industry has also gotten greener, according to the ACC. “Since 1974…. fuel and power use per pound of plastic has improved 63 percent,” the report says. “And while plastic resins do consume energy in their production, their use in homes, vehicles, and packaging reduces energy consumption well beyond that required to produce them.”
Most of the plastic produced in the U.S. ends up taking the form of packaging and consumer goods and stays in the country, though nearly 15 billion pounds of thermoplastic resin was exported in 2012, PVC being the most popular of the resin exports at 40 percent, to the tune of $31.2 billion.
The report also attempts to quantify how much of a boon the recent shale gas deposit discoveries in the U.S. have been for the plastics industry in terms of production capacity, export capacity and job growth.
“Between 2005 and 2012, the US went from being among the highest cost producers of ethylene (a key plastic building block) to among the lowest cost producers globally,” the report says. “To capitalize on the US shale advantage, nearly $80 billion dollars of new investment in new chemical manufacturing capacity has been announced, including $7 billion of investments in new thermoplastic plastic resin capacity. These investments will add more than 25 percent capacity in thermoplastic resins.”
The report anticipates a 25 percent increase in U.S. thermoplastic resin capacity and a more than 10 percent increase in thermoplastic resin exports as a share of production over then next year as a direct result of dropping North American liquid natural gas prices.
Switzerland-based chemical company Clariant Corp. is expanding its industrial catalyst operations in Louisville, Kentucky Gov. Steve Beshear announced recently.
The company will add 34 jobs and invest more than $65 million for a new manufacturing plant, according to a news release.
Clariant now employs more than 380 at three facilities in Louisville, where the company produces industrial catalysts used in the chemical and petrochemical industries, the release said.
The company has signed long-term cooperation agreements with major polypropylene technology licensor Lummus Novolen Technology. The two companies will combine to ramp up research and development efforts to develop improved polypropylene catalyst and donor technologies, the release said.
The new plant is expected to be operational in 2015. China had also been considered for the expansion project.
Clariant received preliminary approval from the Kentucky Economic Development Finance Authority for as much as $500,000 in state tax incentives, as well as approval for state sales tax rebates of $500,000.
The company, which has its U.S. headquarters in Charlotte, N.C., previously operated in Louisville as Sud-Chemie Inc.
Clariant, Ashland each hold 50 pct in ASK Chemical
Divestment comes as co-owners focus on less cyclical ops
Unicredit to run the sale, Permira to take look-sources
Swiss chemicals maker Clariant and U.S. peer Ashland are putting their German foundry chemicals venture up for auction as both companies restructure their operations, two people familiar with the plans told Reuters.
The sale of ASK Chemicals, which has about 25-30 million euros ($33-$40 million) in annual core earnings and relies on volatile demand from steel and metal makers, comes as both Clariant and Ashland try to focus on products that are more profitable and less exposed to cyclical swings in the economy.
Ashland, owner of the Valvoline motor oil brand, said last month it might sell its water treatment unit. Activist investor Jana Partners pushed for the company to do more to boost value for shareholders.
Clariant, for its part, sold businesses including textile and paper chemicals to U.S. private equity firm SK Capital last year and is trying to divest its leather chemicals, detergents and intermediates units.
Hilden, Germany-based ASK, which has 1,800 staff, is under operational control of Clariant, even though the venture partners each hold a 50 percent equity stake. Its main rival is unlisted Huettenes-Albertus GmbH, also Germany-based.
The sources said Unicredit has been mandated to run the sale, which the owners hope will yield about 5-7 times annual earnings before interest, tax, depreciation and amortisation (EBITDA). That would value the group at 125-210 million euros.
Information packs on ASK are to be sent out by late September, the sources said.
Rival Asian foundry chemical makers are seen as prospective buyers and Permira, among other buyout firms, will also take a look at the business, the sources said.
Clariant, Permira and Unicredit declined to comment. Ashland and ASK were not immediately available for comment.
AkzoNobel’s Pulp and Performance Chemicals business has announced its intention to increase capacity at several of its colloidal silica production sites. The planned expansions - at facilities in Asia and Europe - should be completed in the latter half of 2014.
Colloidal silica is used in a wide variety of everyday products, with the company’s main markets including electronics, paper, construction and coatings. The planned investments are in line with AkzoNobel’s strategy of focusing on global leadership positions in pulp bleaching, paper chemicals, colloidal silica and expandable microspheres.
Cornerstone Chemical and Incitec Pivot have broken ground on a $1 billion project in Louisiana. The project consists of construction of Dyno Nobel’s $850 million ammonia plant with Cornerstone Chemical’s $175 million investment in upgrades and infrastructure expansion at Cornerstone’s Fortier Manufacturing Complex in Louisiana. Incitec Pivot, based in Australia, is the parent company of Dyno Nobel, which is building a plant with an annual ammonia capacity of 800,000 metric tons.
Incitec Pivot manufactures a range of industrial explosives, fertilizers while Dyno Nobel manufactures industrial explosives and blasting services. Cornerstone Chemical Company manufactures key intermediate chemicals.
“This groundbreaking symbolizes the potential brought by the new energy economy in the U.S. Gulf and Louisiana, and along with the Cornerstone team I am excited to welcome Incitec Pivot as a key partner at our site,” said Zoglio.
“This project will be the first new ammonia plant built in the state in over 25 years and is a shining example of the changes in Louisiana made possible by the advent of shale gas and a growth-oriented state government” Zoglio added. “This project will be one of many that will upgrade natural gas and natural gas liquids to value-added chemicals primarily for consumption within the U.S.”
Dyno Nobel plans to begin ammonia production in mid- to late 2016, with Cornerstone Chemical Company completing six years of maintenance and infrastructure work that will help support the ammonia plant. The project will create 65 new direct jobs, with 60 new personnel at Cornerstone Chemical and another five employed by Dyno Nobel.
Dyno Nobel will develop the ammonia plant to support its U.S. industrial explosives business as well as external customers. Cornerstone currently produces acrylonitrile, melamine and sulfuric acid at the Fortier complex, where the ammonia plant will be integrated with Cornerstone’s existing plant infrastructure.
“This site at Cornerstone Chemical met our needs for a number of reasons: a competitive gas price, a responsive government regulatory process, a brownfield site and a professional business environment which combined, makes for a compelling investment in Louisiana,” said Incitec Pivot Limited Chairman Paul Brasher. “This plant will be the benchmark, the standard to which others hold themselves. Waggaman will be the place where other companies come to learn how to operate one of the safest and most-efficient ammonia production plants in the world.”
To secure the project, the state offered an incentives package that will include the Industrial Tax Exemption and Quality Jobs programs for Dyno Nobel. Cornerstone Chemical will receive a Modernization Tax Credit of $3 million to be claimed over five years, along with the services of LED FastStart, the nation’s top-ranked state workforce training program. Cornerstone Chemical also is expected to utilize the Industrial Tax Exemption and Quality Jobs programs.
Honeywell International Inc. plans to invest more than $200 million in new manufacturing projects at four Louisiana production facilities, including two in Baton Rouge and one in Geismar.
Andreas Kramvis, president and CEO of Honeywell’s performance materials and technologies division, and Gov. Bobby Jindal announced the projects at a recent joint news conference.
“Two years ago, we announced Honeywell’s $33 million investment to manufacture new, environmentally preferable products here in Baton Rouge because the company took notice of the work we were doing to improve Louisiana’s business climate,” Jindal said. “Our partnership continues today through an additional round of projects in Ascension, Caddo and East Baton Rouge parishes.”
Honeywell, a Fortune 100 company headquartered in New Jersey, has a subsidiary, UOP, formerly known as Universal Oil Products, with facilities in Baton Rouge and Shreveport. Honeywell also has fluorine plants in Baton Rouge and Geismar.
Of the company’s investment, $169 million will be used for engineering and new production capacity for new products, while $39 million will be used to support ongoing operations of catalysts, refrigerants and absorbents.
The biggest share of the money earmarked for new projects — $89 million — will go to the Shreveport facility, said Joe Coussan, spokesman for Louisiana Economic Development. The two Baton Rouge plants will receive $76 million, while the Geismar facility will receive $4 million.
The $39 million for ongoing operations will be used for upgrades at all four sites, Coussan added.
The Geismar facility is the world’s largest producer of hydrofluoric acid, while the Baton Rouge fluorine plant produces the world’s most advanced and environmentally-preferred refrigerants, company officials said.
In addition to the $208 million Honeywell has committed, Kramvis said the company also is exploring the possibility of an additional $1 billion in investment over the next decade that would bring approximately 150 more direct jobs to the state.
Chemical company BASF has announced plans to build a new polymerization plant with a capacity of 100,000 metric tons per year in Shanghai, China.
The plant, which will be built at the Shanghai Chemical Industry Park in Caojing, will produce Ultramid® polyamide molding compounds, the company said.
"As part of our long-term strategy, we aim to locate production close to our customers in the Asia Pacific region, so that we can better support their growth, operate more efficiently and collaborate more closely. BASF intends to grow two percentage points above the market in Asia Pacific and maintain our commitment to environmental protection as well as ensuring a positive contribution to society for a sustainable future," said Dr. Albert Heuser, president and chairman Greater China and Functions Asia Pacific.
"The demand for polyamide products in the engineering plastics, fiber and film industries will grow strongly, particularly in China," said Hermann Althoff, senior vice president of the Global Polyamide and Intermediates Business Unit. "The investment enables us to participate in this growth and supply our Asian customers with locally manufactured high performance products."
BASF also operates Ultramid® polymerization plants in Ludwigshafen, Germany; Antwerp, Belgium; Freeport, Texas and São Paulo, Brazil.
Solvay Specialty Polymers has expanded the range of compounds made at its Chinese plant and also has opened six new global warehouses since the start of the year.
Solvay SP – an Alpharetta, Ga.-based unit of global chemicals maker Solvay Group of Brussels – in January began making compounds based on its KetaSpire, AvaSpire and Torlin high-performance resins in Changshu, China. KetaSpire is a polyetheretherketone (PEEK), AvaSpire is a polyaryletherketone (PAEK) and Torlon is a polyamide-imide (PAI).
The Changshu plant opened last year and had been compounding other Solvay resins. But the time was right to add the “ultrapolymer” lineup of PEEK, PAEK and PAI, Solvay executive Chris Wilson said in a recent phone interview.
“We had been supplying (China) by export from India, the U.S. or Europe,” said Wilson, who serves as senior vice president of the firm’s ultra-performance materials business. “But our sales (in China) had reached critical mass, so now was the right time to expand. Sales for high-performance materials are expanding in that part of the world.”
Markets using these high-end materials include transportation, healthcare, electronics, oil and gas and semiconductors. Solvay’s total investment in the Changshu plant now stands at more than $27 million.
Solvay also has expanded its supply chain for these products by adding two U.S. warehouse locations – one in the Houston area and another in the Minneapolis area — and four in Asia, including sites in China, Singapore, Japan and South Korea.
In a news release, officials said that the warehouse expansions “place these ultrapolymers in close proximity to the markets in key geographies around the world.” They added that in the U.S., consumption of these resins is concentrated because of the strong presence of companies involved in oil and gas exploration and production.
Wilson said PEEK, PAEK and PAI are being used in equipment used to explore and produce shale gas in the region, especially with discovery efforts going deeper into the ground and experiencing hotter temperatures.
Although growth in the U.S. is “quite strong,” Wilson said Solvay has no current plans to expand its compounding assets in the region. The firm operates U.S. compounding sites in Alpharetta and Augusta, Ga.; Greenville, S.C.; West Depford, N.J.; and Marietta, Ohio.
Sasol, Ineos Forming JV to Produce HDPE in North America
South African-based Sasol and Switzerland-based Ineos will team up to produce high density polyethylene in the US, the companies said recently, announcing plans for a joint venture which would include a 426,000 mt/year HDPE plant.
"This partnership will leverage the expertise of two global players in the chemical market. Together we will develop a world-scale HDPE plant which will allow us to monetize ethylene and supply a high quality product," Andre de Ruyter, Sasol senior group executive for global chemicals and North American operations, said in a statement.
"The joint venture expands on our greater North American strategy and will complement the products produced from the ethane cracker and derivatives project in southwest Louisiana."
A final investment decision is expected to be made in the first half of 2014 with start-up of the plant expected at the end of 2015, the companies said.
Sasol has previously announced plans to build a 420,000 mt/year low density polyethylene plant, and a 450,000 mt/year linear low density polyethylene plant in Lake Charles, Louisiana.
Ineos already operates a 794,000 mt/year HDPE plant in LaPorte, Texas.
McIlvaine Company
Northfield, IL 60093-2743
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