Friday News Round Up

Friday again, so time to update on some previous posts and share some other news

• In the UAE, Borouge has announced that preparatory work has started on the site for the Borouge 3 project. The contract for the 1.5 million tonne ethane cracker was awarded to Linde Group back in July. The complex will also include PP, PE, butane and associated infrastructure and marine facilities.

• Evonik has annouced that it will permanently close two plants at the Munchmunster Chemical Park, impacting over 100 jobs. The plants, which produced cyanuric chloride and acetocyanahydrin had been idled since the end of 2008.

• A fire in a PVC unit at Rompetrol Rafinare's Petromida Refinery has killed two workers and injured two others. The cause of the fire are not yet known. The incident follows another fatality at the site in October due to gas intoxication.

• A key US Senate committee has approved the 'cap and trade' bill. The committee approved the vote by 10-1 although opponents have criticised the committee, which is made up entirely of Democrats, for putting US jobs at risk. The bill must pass through 4 further committees before it can go to the Senate for a vote.

• Finally, the UK Daily Telegraph has reported the story of a man, Darren Young, who has become allergic to his wife due to an intolerance to polyethylene glycol. Any contact with the chemical causes swelling and a soaring heart rate. This means that he cannot go near his wife if she is wearing any kind of cream or body lotion. The allergy started after Mr. Young was given a steroid injection to treat a problem with his foot.

Huntsman - 2010 and 2011 Will Be More Difficult Than 2009

We can expect 2010 and 2011 to be difficult years for commodity chemical producers. That's the view expressed by Peter Huntsman, CEO of Huntsman Corporation in his interview with India's Economic Times.

Huntsman's view is that the emerging superpowers in the chemical industry such as SABIC and Reliance will start to assert themselves in global markets, with the impacts of large scale, state-of-the-art investments imposing themselves on global supply.

This new and high quality supply will make things very tough for the ageing, smaller scale plants in the US and Europe.

Nothing particularly new in this analysis. We are already seeing new plants coming on stream and further investment in capacity such as Borouge 3 in Abu Dhabi. Investment levels are increasing again, and the only thing constraining further Middle Eastern expansion is the increasing tightness of ethane feedstock availability due to the relatively slow exploitation of the gas fields in the region.

Due to what Peter Huntsman saw as an inability to compete, his company moved out of commodity chemicals and into speciality chemicals. Huntsman's current product portfolio is based on technology and innovation, where these factors are more important than price or raw material availability.

His view is about right, we cannot expect major investments in commodity chemical production in Europe and North America, although we can expect some of the current commodity chemical plants to have a reasonable future if they are innovative, flexible and well maintained. However for innovation in speciality chemicals and green technologies, the future can be positive in Europe and North America, as long as governments and industry take care to maintain the infrastructure and skill base.

Top 100 Feedback

I've had some interesting feedback on the recent top 100 posting, regarding which companies are likely to dominate in the future. Three main themes are emerging.

Companies that are integrated through the entire petrochemical value chain through to commodity polymers/chemicals have a far greater chance of making it to the top 10. This means that the likes of ChemaWEyaat, SATORP and Borouge could join the 'top table'.

Companies with excellent product & application innovation can also be strong. The model followed by DuPont is a good example of this.

Finally, major players could emerge from oil and gas rich states (Russia and Venezuela are good examples), where feedstock is plentiful and cheaper, so further large, integrated facilities could develop.

Whatever the theme, the absolute key to success is to have a clear strategy, backed up by excellent implementation.

Top 10 Chemical Companies in 2008 and in 1998

ICIS has recently published its fascinating analysis of the top 100 chemical companies in 2008 (ranked by sales). The names in the list will not be a surprise to many; BASF, ExxonMobil, Dow Chemical, LyondellBasell, Du Pont and Shell figure prominently in the list.

What is more interesting is to look back to the top 10 in 1998 and look at the differences. BASF, Dow and Du Pont were all present but other names have disappeared completely; ICI, Hoechst and Rhone Poulenc were very big 1998.

New additions to the top 10 are the likes of SABIC, Sinopec, LyondellBasell and Ineos, with SABIC and Sinopec growing very quickly in recent years. LyondellBasell and Ineos are, of course, new companies formed in recent years and which have grown through successions of acquisitions.

The brave amongst us might like to try and predict what 2018 might look like. New names like Borouge and ChemaWEyaat may well appear, with some European and North American companies coming under some pressure?