According to American Chemistry Council’s “Year-End 2014 Chemical Industry Situation and Outlook,” chemistry output expanded in the last year, despite weakness in key markets and adverse winter weather, manufacturing.net reports.

The big surprise this year, explains Dr. Thomas Kevin Swift, chief economist and managing director of ACC, is the impact of recessions in countries such as Japan, EU nations and Brazil.

According to the report, “Basic chemicals (inorganic chemicals, petrochemicals, plastic resins, synthetic rubber and man-made fibers)…were the hardest hit by economic slowdown in other nations, despite improving demand from important customer markets such as light vehicles and housing.”

“The other surprise is the collapse of oil prices,” Swift says.

That’s one of the key trends nudging the U.S. chemistry industry upward—despite global downturns—both by decreasing the feedstock costs for manufacturers and improving consumer confidence.

The numbers behind other indicators also paint a rosy picture. Employment in the chemical industry is expected to have grown 1.2 percent in 2014, completely reversing a downward fall in jobs from previous years.

Capital spending has also surged, with over 215 new chemical production projects values at over $135 billion have been announced, according to the report.

Key end-use markets such as vehicles and housing are breaking out of their slump, though some segments remain below pre-recession levels. On the whole, the ACC report predicts that the future will indeed be bright.

“U.S. chemical output is expected to rise 3.7 percent in 2015 and 3.9 in 2016,” the report states, adding that the U.S. chemical industry will grow faster than the overall U.S. economy.

Swift’s biggest concern is the state of the global industry when you get away from North America, the U.K. and a few other nations. “China worries me because if you look at the statistics, it’s hard to take comfort in them…and gauge what’s going on there,” he explains.

Despite those trouble spots, growth in several sectors—such as inorganic chemicals, organic chemistry, plastic resins, agriculture chemicals and synthetic rubber, along with pharmaceuticals towards the end of the decade—coupled with lower oil prices on home soil will keep chemical manufactures well into the black.

“As the surge of shale-driven chemical capacity starts to come online in 2017 and beyond, growth will accelerate, especially along the Gulf Coast,” the report says.

By 2019, ACC predicts that American chemistry revenues will exceed $1 trillion. By then the U.S. chemical industry will also post record trade surpluses.

European Polymer Industry Faces Continued Pressure

The European polymer industry has come under pressure this year from producers in the United States and the Middle East, where cheap feedstocks have led to an expansion in capacity.

Logistics group InterBulk said last week that its dry bulk business has been hit by temporary and permanent chemical plant closures in the polymer sector in Europe in 2014, and little relief is expected in 2015.

According to InterBulk, the market is still adjusting to the pressures on global flows and pricing from substantial capacity additions using cheap feedstock in the Middle East. In the coming years, the wave of new plastics capacity being constructed in the U.S. Gulf based on ethane from shale gas will pile further pressure on European producers.

The company, which provides logistics to the chemical, polymer, food and mineral industries, reported a pretax loss of £31.8 million ($49.4 million) for the 12 months ended September 30, compared with a loss of £12.9 million ($20 million) a year earlier, as revenue in the dry bulk unit declined and a reappraisal of revenue growth projections led to a goodwill impairment provision of £32.3 million ($50.2 million).

Transportation activity in the dry bulk division was down 11 percent year on year, and revenue from temporary storage declined by 18 percent. The major factor was plant closures in the U.K., which reduced export opportunities and resulted in a higher rate of empty repositioning back to the continent, InterBulk said.

"It will take some time to mitigate these plant closures given the continued pressure on European polymer producers from regions with access to cheap feedstock and energy," the company added.

COMPANY NEWS

Air Liquide to Increase Production of Oxygen, Nitrogen and Argon in East Texas

Air Liquide Large Industries U.S. LP (“Air Liquide”) hosted a groundbreaking ceremony recently for a new Air Separation Unit (ASU) that will produce oxygen, nitrogen and argon at its production facility in Port Neches, Texas.

The new state-of-the-art ASU will produce 2,400 tons per day of oxygen and 2,600 tons per day of nitrogen, enabling Air Liquide to triple its production capacity of oxygen and double the production capacity of nitrogen of its Port Neches facility. The additional capacity from the new ASU will feed into Air Liquide’s extensive Gulf Coast Pipeline System, which spans approximately 2,000 miles in Texas and Louisiana and supplies mainly oxygen, nitrogen and hydrogen to customers in the chemicals, petrochemicals, refining and steel industries. The additional capacity will support increasing demand from large industry customers throughout the region and ensure greater reliability.

The new ASU is expected to begin commercial production by the end of 2015. To support the expansion Air Liquide will increase its workforce in Port Neches, hiring additional operators and technicians.

BASF to Invest Up To $625 Million in New Superabsorbent Polymer Technology

BASF has announced that it plans to make a major investment in a “pioneering superabsorbent technology” that enables design of thinner and more comfortable diapers. The investment will include up to €500 million ($625 million) during the next 2–3 years to establish droplet polymerization capacity worldwide. Existing plants will be revamped, starting in Europe, followed by Asia and the Americas, BASF says. The company plans to launch its new superabsorbents under the trademark Saviva from the end of 2016.

BASF and Jiahua Energy Chemical to Build Sulfuric Acid Plant in China

BASF and Jiahua Energy Chemical Co. Ltd. (“Jiahua”), a wholly owned subsidiary of Huafang Textile Co. Ltd., have signed an agreement to set up a new sulfuric acid plant at the seaport town of Zhapu, Zhejiang Province in China.

BASF will begin the groundwork to build its new electronics-grade sulfuric acid (H2SO4 EG) production facility at the Jiahua production site in Zhapu. Jiahua will be the key raw material supplier for the new BASF plant.

“BASF’s new electronics-grade H2SO4 plant in China is another step towards our continued growth and expansion in China’s electronic materials market,” said Lothar Laupichler, Senior Vice President of BASF’s Electronic Materials Business Unit. “Establishing our plant within the Jiahua site will allow us to provide electronic grade sulfuric acid locally, in order to better serve the needs of China’s fast-growing semiconductor industry.”

The new BASF H2SO4 EG production plant in Zhapu is scheduled to begin construction within the next year and to start up in 2016. H2SO4 EG products from the site will primarily be used by the semiconductor industry in China.

About BASF Greater China

BASF has been a committed partner to Greater China since 1885. With major investments in Nanjing, Shanghai and Chongqing, BASF is one of the largest foreign investors in the Chinese chemical industry, and maintains the BASF Asia Pacific Innovation Campus in Shanghai as a research and development hub for the Asia Pacific region. In Greater China, BASF posted sales of over €5.48 billion in 2013 and employed 7,606 people as of the end of that year.

MERGERS/ ACQUISITIONS

Coatings Maker Hempel Makes Another Acquisition

Global coatings specialist Hempel has expanded its business with the acquisition of Dutch coatings manufacturer Schaepman, and said it will benefit from Schaepman's proven expertise in protective coatings. Financial terms were not disclosed.

The deal follows Hempel's acquisition of U.S.-based protective coatings manufacturer Blome International Inc. in 2012 and is in line with the company's five-year growth strategy. Hempel is aiming to become one of the world's top-10 largest coatings suppliers by the end of 2015.

Schaepman is a supplier of specialized industrial, protective and decorative coatings. Its CEO, Berend ten Doeschate, believes that joining forces with Hempel will allow the business to broaden its customer, geographical and technological base.

Hempel's group president and CEO, Pierre-Yves Jullien, also welcomed the acquisition. He said: "We are focused on developing or acquiring new solutions that add real benefits to our customers. Schaepman represents what we were looking for. It has a solid position on the local market, a strong brand, innovative R&D and specialist products that will enrich our global assortment. In addition, Schaepman's expertise in the industrial coatings segment will help open new business possibilities for Hempel in this market."

Further acquisitions are planned by Hempel in the future: the company said that it expects to continue increasing its market presence through strategic acquisitions within its key segments.

Mitsui Chemicals and SKC to Form Polyurethane Joint Venture in South Korea

Mitsui Chemicals and South Korean firm SKC have entered into an agreement to form a 50:50 joint venture (JV) company. Under terms of the deal, the companies will combine their polyurethane material businesses.

The JV company, which will be headquartered in South Korea, will be engaged in development, manufacturing and sales of polyurethane materials, and is expected to generate revenues of around $2bn per year by 2020.

It will leverage the global network of MCI and SKC across Far East Asia, China, the ASEAN region, Europe and the Americas.

"The facilities will produce toluene diisocyanate, methylene diphenyl diisocyanate, polymethylene polyphenyl isocyanate and polyols."

Mitsui Chemicals said in a statement: "The [joint venture company] JVC will secure global top cost competitiveness by optimising resources / maximising efficiency and taking advantage of parent company raw materials.

"The knowledge and information accumulated by MCI and SKC over the years will be shared and utilised by the JVC to provide total solutions to customers."

Subject to the receipt of relevant approvals and licenses, the transaction is expected to be completed by 1 April 2015.

The JV is planned to operate facilities in Omuta, Nagoya, Tokuyama and Kashima in Japan; Yeosu and Ulsan in Korea; and Gujarat, India.

The facilities will produce toluene diisocyanate, methylene diphenyl diisocyanate, polymethylene polyphenyl isocyanate and polyols.

The company will also produce system products, such as a mixture of polyols and other raw materials and additives in Tianjin, Suzhou Foshan and Beijing in China; Thailand; Indonesia; Malaysia; the US and Poland.

BASF Transfers Automotive Refinish Coatings Business in India to Würth

Chemicals giant BASF is to transfer its automotive refinish coatings business in India to Würth.

The company revealed this week that Würth India will take over the import, distribution and technical service in India of Glasurit, a premium automotive refinish paint brand, with effect from January 1, 2015. Financial terms of the deal were not disclosed.

Produced in Europe since 1888, Glasurit is used in the passenger car and commercial vehicle refinishing sector.

BASF and Würth are both leading suppliers in the automotive sector, according to Dr. Raman Ramachandran, chairman and managing director of BASF India and head of BASF in South Asia. He said that this deal will give customers better access to first-class automotive refinish solutions.

"This partnership of BASF with Würth underlines our commitment to delivering premium automotive refinish products to bodyshop customers in India," said Christophe Cazabeau, head of Coatings Solutions at BASF India.

"The extensive distribution network of Würth, coupled with their expertise in the automotive aftersales market, make them the ideal partner. Our Glasurit team in India, comprising product and technical experts, will also be transferred to Würth to support a smooth transition and to ensure the high-quality service to our customers remains uninterrupted," he added.

Ferro Sells U.S. Plastics Additives Business

Ferro Corp has sold its North American polymer additives business to a private equity firm for $154m (£99m).

The sale to HIG Capital of New York includes plants in Cleveland and Walton Hills, Ohio; Bridgeport, New Jersey; and Fort Worth, Texas. Those plants make plasticisers based on benzyl phthalate, benzoate ester and polyadipate ester.

HIG will rebrand the business and operate it as Valerus Specialty Chemicals, based in Independence, Ohio.

Valerus will make polymer modifiers, lubricants and stabilisers at six plants, in Ohio, New Jersey, Louisiana, Texas and the UK. The company expects to generate more than $200m (£128m) in sales in 2014.

Valerus will be headed by CEO Paul Angus, who joins the company from Ferro.

Eastman Completes Acquisition of Commonwealth Laminating & Coating

Eastman Chemical Company (NYSE:EMN) recently announced that it has completed the acquisition of Commonwealth Laminating & Coating, Inc. The acquired business is part of Eastman’s Advanced Materials business segment, and is expected to be accretive to 2015 earnings excluding acquisition-related costs and charges.

“This acquisition will help us better serve the broad and diverse customer base for window and protective films while supporting expansion of our product offerings and the use of window films,” said Brad Lich, executive vice president. “We’re also very excited about adding the SunTek® brand to our performance films products portfolio.”

The addition of Commonwealth’s expertise, paint protection technology, brand and sales channels, and experienced workforce is expected to support growth of our performance films products.

“Eastman is committed to providing continued superior products, service, and support to customers worldwide as we integrate these two businesses,” said Travis Smith, vice president and general manager, performance films. “We’re excited to bring Commonwealth employees together with our world-class global performance films team to benefit customers and support our growth,” Smith said.

Commonwealth had 2013 sales revenue of approximately $100 million. The acquisition includes Commonwealth’s manufacturing facility and master distribution center in Martinsville, Va., and nine sales distribution centers that serve the global market.

Eastman Completes Acquisition of Specialty Chemical Company Taminco

Eastman Chemical Co. announced recently the completion of its acquisition of global specialty chemical company Taminco Corp. for a total of $2.8 billion in cash and assumed debt.

In a prepared release, Eastman said the acquired Taminco businesses are expected to be accretive to 2015 earnings per share by greater than $0.35, excluding acquisition-related costs and charges, and to 2016 earnings per share by greater than $0.60.

"We are pleased to complete this transaction and welcome Taminco employees to the global Eastman team," said Mark Costa, Eastman's chairman and CEO. "Taminco's world-class alkylamine technology platform and strong presence in attractive niche end markets will further strengthen our position as a leading specialty chemical company. We are committed to successful integration of Taminco and look forward to delivering the projected synergies of this transaction."

During a presentation to analysts earlier this year, Eastman executives pledged the Taminco acquisition would strengthen Eastman's presence in agricultural and personal care business lines.

Taminco's former Specialty Amines and Crop Protection businesses will be operated as part of the Additives & Functional Products segment and its former Functional Amines business will be operated as part of the Specialty Fluids & Intermediates segment, according to Eastman.

Taminco stockholders are entitled to receive $26.00 in cash for each share of Taminco common stock. Taminco's common stock has been delisted from trading on the New York Stock Exchange.

Eastman, headquartered in Kingsport, employs approximately 14,000 people around the world.

PPG Enters Negotiations to Acquire Automotive Materials Manufacturer REVOCOAT

PPG Industries (NYSE:PPG) recently announced that it has entered into exclusive negotiations with the AXSON Group to acquire REVOCOAT, a global supplier of sealants, adhesives and damper products for the automotive industry.

PPG expects the transaction to close in the first quarter 2015, following the French works council consultation process, regulatory approvals and other customary closing conditions. Financial terms were not disclosed.

REVOCOAT, headquartered in France, is part of the AXSON Group, a world leader in high-performance operational polymer formulation. REVOCOAT employs more than 500 people and operates seven manufacturing facilities and one research and development center.

“Acquiring REVOCOAT will enable PPG to continue to strengthen its specialty materials offerings to global automotive customers,” said Cynthia Niekamp, PPG senior vice president, automotive coatings. “The business represents a true adjacency with our core automotive original equipment manufacturer (OEM) coatings business, strengthening PPG’s existing offering of sealant and adhesive products for this industry.”

“Combining the expertise of the REVOCOAT team with PPG’s footprint will enable us to serve our customers around the world with an enhanced product portfolio,” said Jean-Marie Greindl, president, PPG Europe, and vice president of PPG’s automotive OEM coatings business in Europe, the Middle East and Africa.

“During the last six years, the management team and employees of REVOCOAT have driven the business to become a strong global competitor in the automotive OEM adhesives and sealants market,” said Charles Churet, AXSON president. “PPG’s automotive OEM coatings business is the best possible vehicle to bring REVOCOAT to the next level of performance, providing customers with a broader and stronger product offering and REVOCOAT employees with more opportunities for growth and personal development.”

REVOCOAT is a supplier of sealants, dampers and adhesives for the automotive industry. The business offers a range of complementary epoxy-based products, polyurethanes and water-based emulsions. REVOCOAT is part of AXSON Group, a world leader in high-performance operational polymer formulation.

Solvay Enters Skin Care Market with Acquisition of Dhaymers in Brazil

Solvay announces recently that it is acquiring Dhaymers, a Brazilian manufacturer of specialty esters, entering the skin care market and expanding its presence in industrial lubricants and mining industries in Latin America.

Solvay's Global Business Unit Novecare has been strengthening its foothold in fast-growing market segments in Latin America. The customized product portfolio of Dhaymers complements Novecare’s acquisition in April of the specialty chemical assets of Erca Química and further increases production capacity.

Through Dhaymers, Solvay Novecare will extend its home & personal care (HPC) portfolio with ingredients for skin care products for consumers in Brazil, which is growing fast as the world’s third largest HPC consumer, and across Latin America. The specialty esters produced by Dhaymers are also used to make emulsions for mining and in lubricants for the metal working industry.

“With Dhaymers, Solvay Novecare bolsters Novecare's portfolio, its locally produced technology and production capacity to supply domestic and export markets,” said Emmanuel Butstraen, President of Solvay Novecare. “Our expansion in the region reflects our commitment to support our customers and will accelerate Solvay Novecare's growth in Latin America.”

Dhaymers is located in Taboão da Serra, 20 km from São Paulo city and its sales reached more than € 8 million in 2013.

McIlvaine Company

Northfield, IL 60093-2743

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

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Website: www.mcilvainecompany.com