Rohm and Haas Wins Right to Trial in Row with Suitor

Dow's decision to back out of acquisition going to court
By Dave Hannon -- Purchasing, 1/28/2009 9:23:00 AM

Rohm & Haas’ has received approval for a speedy trial in its lawsuit with Dow Chemical after Dow missed its deadline to close on its acquisition of Rohm & Haas. Chemcial giant Dow announced Monday it would not be able to close the deal this week, as scheduled. In a statement, CEO Andrew Liveris said Dow “remains interested in discussions to find a solution to complete the acquisition of Rohm and Haas, but recent events have made closing untenable at this time.”

Dow pointed to the macroeconomic trends and last month's implosion of Dow's planned $17.4 billion joint venture with Petrochemicals Industries Company of Kuwait (PIC) as reasons for tabling the Rohm & Haas deal. As reported on Purchasing.com, Kuwait’s Supreme Petroleum Council chose to pull out of a joint venture with Dow Chemical called K-Dow, and Dow is pursuing its own legal fight on that front.

“The world has changed significantly and we still do not see the bottom of this unprecedented demand destruction which only accelerated through the fourth quarter and brought December operating rates to historic lows,” Liveris said in the statement.

 According to Dow Jones Newswires, Rohm & Haas contends in the suit that Dow engaged in “surreptitious, wrongful and deliberate efforts” to delay antitrust clearance of the merger. Dow Jones also reports that Liveris met with Rohm & Haas executives last week and asked for an extension until June 30 to close the deal. But Liveris refused to commit to going through with it even if Rohm & Haas granted the extension, the suit contends. Last week, Rohm & Haas said it was cutting 5.5% of its workforce.

source: www.purchasing.com

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Weak Demand, Excess Supply Depresses Copper

Buyers probably will continue to see lower copper prices in coming weeks, says the CRU Group of London in a research note to clients. The market researchers see continued weak global demand, insufficient production cutbacks and bearish sentiment among investment fund managers. Bloomberg agrees that “the slumping global economy (has) slashed metal demand and led to surging warehouse inventories,” which are key indicators of weak commodity pricing.

Copper for immediate delivery this month on the London Metal Exchange (LME) is $1.46/lb and for two-month delivery on the New York Commodity Exchange is $1.47. That’s higher than the $1.39 world price average on the LME in December but lower than the $1.69 price average for November. The world price for copper averaged $3.15/lb last year but the consensus forecast of 14 analysts polled by Purchasing.com is $1.59 for 2009.

Buyers polled by Purchasing.com The CRU analysis says that “the drop in industrial output points to a sharp decline in copper demand this year (and) lower prices through the first half.” Other analysts agree: Inventories are “no doubt weighing on sentiment,” Edward Meir, an analyst at MF Global Ltd. in Darien, Conn. says in a note to clients that, “for all practical purposes, we still seem to be firmly mired in recessionary conditions (so) we expect copper prices to fade.” The Bloomberg story quotes Logic Advisors partner William O’Neill in Upper Saddle River, N.J., as saying “the economy remains quite weak and copper will continue to struggle.” in January remain cautious in buying copper, with only 9% planning to make buys in the near future.

Analysts have pinned second-half copper-demand improvement on government efforts worldwide to stabilize the financial system and stimulate economic growth. Some other economists, however, don’t see improvement in copper demand until housing, nonresidential and infrastructure construction show sustained pickup in 2010.  

Platts Metals Daily subscription newsletter says that “so far, the producer response to the collapse in the price of copper had been minimal.” Of the major mining companies, only Freeport McMoRan and BHP Billiton have announced major mining and smelting cutbacks. “Production cuts would have to be larger for the market to be brought back into balance (and) to provide a floor to the copper price,” CRU says.

source: www.purchasing.com

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Cabot to Close Four Manufacturing Plants

Carbon black producer Cabot Corp. announced that due a “significant reduction in global demand” it will close four of its manufacturing plants in 2009 and mothball two others while delaying the launch of new capacity in China.

Boston-based Cabot did not say which of its 39 manufacturing sites it would be closing.

The company has also implemented shorter worktimes at one facility, reduced capital spending plans by $50 million this year and made a host of other cost reduction efforts. Cabot hopes to cut $80 million in costs as a result of the restructuring.

Cabot said overall volumes for its rubber blacks declined 29% globally in the most recent quarter and 22% in North America, due mainly to the automotive slump impacting demand for tires. CEO Patrick Prevost said “Demand in the [upcoming] quarter is likely to be weak. We continue to be concerned about the automotive and construction sectors.”

Cabot also reported that its Rubber Blacks Business recorded an $11 million unfavorable adjustment in order to reduce inventory values to current market prices. According to Purchasingdata.com, carbon black prices plunged in the fourth quarter of 2008. In September, they were $1.40/lb and in January, prices were 94¢/lb. 

source: www.purchasing.com

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Dow Chemical Confirms Rohm and Haas Acquisition Will Not Close On or Before January 27, 2009

The Dow Chemical Company (NYSE:DOW) confirms it has informed Rohm and Haas that Dow will not close the proposed acquisition on or before January 27, 2009. 

Dow has determined that recent material developments have created unacceptable uncertainties on the funding and economics of the combined enterprise. This assessment is based on several macro-economic factors such as the continued crisis in global financial and credit markets combined with the dramatic and stunning failure of Petrochemicals Industries Company of Kuwait (PIC) to fulfill its obligation to complete the formation of the K-Dow joint venture in late December 2008.

 "Our long term strategy remains unchanged and the proposed acquisition of Rohm and Haas is consistent with this strategy," said Andrew N. Liveris, Chairman and CEO. Since Dow learned in late December of PIC's failure to close the K-Dow transaction, Dow has been aggressively engaged on multiple paths seeking ways to enable the Rohm and Haas transaction. Dow remains interested in discussions to find a solution to complete the acquisition of Rohm and Haas, but recent events have made closing untenable at this time.

"Dow Chemical has a long history of resiliency in responding to changing market conditions, and that resiliency continues," said Liveris, "but the world has changed significantly and we still do not see the bottom of this unprecedented demand destruction which only accelerated through the fourth quarter and brought December operating rates to historic lows. The Company's commitment to remain financially strong is part of the DNA of this 112-year old company."  

Dow previously announced a series of wide-ranging actions to address global economic conditions and is accelerating those actions based on continued deteriorating demand. "We are well-prepared to take the appropriate steps to ensure we retain our options and financial flexibility to see our way through what we anticipate will be an extremely challenging year," said Liveris.

source: http://kaznak.web.infoseek.co.jp

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FTC Intervenes in Dow Chemical's $18.8 Billion Acquisition of Rohm & Haas

Commission Order Requires Divestiture of Acrylics and Other Industrial Chemical Assets to Preserve Competition

Dow Chemical Company has settled Federal Trade Commission charges that its proposed $18.8 billion acquisition of rival chemical manufacturer Rohm & Haas Company would be anticompetitive and would violate federal law. Under the proposed consent order allowing the transaction to proceed, Dow will sell a range of assets to an FTC-approved acquirer, including its acrylic monomer, hollow sphere particle, and acrylic latex polymer businesses. Dow also must put procedures in place to ensure it does not have access to competitively sensitive non-public information regarding any businesses it acquires from Rohm & Haas.

“Dow and Rohm & Haas are direct and significant competitors in certain markets for acrylics and other industrial chemicals used to make coated paper products, paints, and adhesives,” said David P. Wales, Acting Director of the FTC’s Bureau of Competition. “The FTC consent order announced today will ensure that consumers continue to benefit from competition in the markets for these important products and will not face the prospect of higher prices as a result of the acquisition.”

According to the Commission’s complaint, Dow’s proposed acquisition of Rohm & Haas would reduce competition in the North American markets for the research, development, manufacture, and sale of certain acrylic monomers - including glacial acrylic acid, butyl acrylate, and ethyl acrylate - as well as hollow sphere particles and acrylic latex polymers for traffic paint used to mark lines on streets and highways.

Each of the relevant acrylic monomer products is made from crude acrylic acid. Glacial acrylic acid is used in the production of super-absorbent polymers which are used in personal care and hygiene products. Butyl acrylate and ethyl acrylate are acrylate esters used to make the latex polymers that are used in paints, architectural coatings, and pressure-sensitive adhesives. Hollow sphere particles are a type of specialty polymer used in the manufacture of coated paper to provide gloss, brightness, and opacity. Acrylic latex polymer for traffic paint is a quick-drying polymer used to mark highway traffic lines. 

The FTC contends that each of the relevant product markets is highly concentrated and that the proposed acquisition would lead to fewer competitors in each market. For the acrylic monomer markets, the deal would reduce the number of significant competitors from four to three, with the combined Dow/Rohm & Haas having a significant share of each market. The combined firm would have a more than 40 percent share in the market for glacial acrylic acid; a nearly 75 percent share in the market for butyl acrylate; and a nearly 90 percent share in the market for ethyl acrylate. The markets for hollow sphere particles and acrylic latex polymer for traffic paint are even more concentrated, the complaint states, as Dow and Rohm & Haas currently are the only two suppliers. In those markets, the proposed acquisition would be a merger to monopoly.

Finally, the complaint alleges that the proposed acquisition would eliminate direct and substantial competition between Dow and Rohm & Haas in the relevant markets, reducing competition and increasing Dow’s ability to exercise market power unilaterally. The complaint also alleges that the proposed transaction would increase the likelihood of coordinated interaction for glacial acrylic acid, butyl acrylate, and ethyl acrylate. New entry or fringe expansion in these markets is unlikely to counteract the alleged anticompetitive impact of the acquisition.

The FTC’s order is designed to remedy the anticompetitive impacts of the proposed transaction. It requires Dow to divest a single part of its acrylic monomer and polymer research and development and production assets to a Commission-approved buyer. These assets include: 1) Dow’s acrylic monomer production facility in Clear Lake, Texas; 2) its acrylic polymer production assets in St. Charles, Louisiana; 3) its acrylic polymer production facility in Alsip, Illinois; 4) its acrylic polymer production facility in Torrance, California; 5) its acrylic monomer research and development group in South Charleston, West Virginia; 6) its acrylic latex polymer research and development group in Cary, North Carolina; and 7) other assets related to these businesses. The divestitures will include all of the technology related to these businesses, and the order also will require Dow to licence any intellectual property to the acquirer that is not directly related to, but is used in, those businesses.

To ensure the successful transition of the acrylic monomer and polymer assets and the viability of the acquirer, the order requires Dow to provide certain input processes and transition services to the acquirer for a short time. The order also requires Dow to continue to provide the acquirer with site services related to the acrylic polymer production assets in St. Charles, Louisiana, where the acquirer will be operating a separate business on the grounds of a larger Dow facility.

The consent order remedies the competitive impact in the markets for hollow sphere particles and acrylic latex polymer for traffic paint by requiring Dow to sell intellectual property primarily used to make these products and to license certain other intellectual property. Dow also must supply hollow sphere particles and acrylic latex polymer for traffic paint to the acquirer at its manufacturing cost, until the buyer can develop its own manufacturing processes.

Next, the order requires Dow to put procedures in place to ensure that it does not have access to any competitively sensitive information obtained from the businesses and facilities to be divested or to use any information it already has in an anticompetitive matter. Further, the order will allow the FTC to appoint an interim monitor to ensure Dow complies with its obligations. If Dow does not sell the assets it is required to divest within 240 days of when the consent order is accepted for public comment or 240 days from the acquisition date, whichever is later, a Commission-appointed divestiture trustee may sell the assets on its behalf. The order also contains reporting and record keeping requirements to ensure Dow’s compliance with its terms. 

The Commission vote to accept the complaint and consent order and place copies on the public record was 4-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The complaint, consent order, and an analysis to aid public comment can be found now on the Commission’s Web site at http://www.ftc.gov/os/caselist/0810214/index.shtm. 

The agreement will be subject to public comment for 30 days, beginning today and continuing through February 23, 2009, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. 

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

source: http://kaznak.web.infoseek.co.jp

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Critical Time for PET

21 January 2009 00:00 [Source: ICB]

With a triple whammy of low demand, continued growth in recycling, and new capacity coming onstream, the outlook for PET is challenging to say the least
Consultants corner: Stewart Hardy and Hope Lam/Chemsystems

THE GLOBAL economic downturn has taken a heavy toll on thepolyethylene terephthalate (PET) chain, with producers feeling the pressure from both upstream and downstream. The record high oil prices of 2008 led to volatile feedstock prices, while recession and uncertainty weakened demand. The dramatic increase in PET recycling further impacted demand for PET feedstocks.

Especially hard hit in 2008 were the West European and North American PET bottle grade markets, which faced a major reversal in consumption growth. Having previously averaged growth of more than 5%/year in each region, demand dropped sharply due to a combination of high derivative prices, de-stocking, lower household expenditure and light-weighting. The mineral water sector was hardest hit in 2008, as a result of reduced household expenditure on items deemed to be non-essential, and increasing criticism over environmental concerns. 

CAPACITY UP, CONSUMPTION DOWN

The cyclically high operating rates and favorable market conditions enjoyed in much of the PET chain from 2005-2006 have resulted in new capacity, which came to market in 2008, unfortunately coinciding with the downturn in demand. 

A dramatic increase in PET recycling has further impacted on demand upstream. High prices contributed to a doubling in PET recycling over the past four years, to 6m tonnes in 2008. And recycling will continue to increase, despite the recent collapse in prices. Most growth has been in the recycling of post-consumer PET bottles into fiber. China accounts for around three-quarters of global recycling, leading the market both in terms of its own recycle rate, and in the import of post-consumer PET from other regions. 

The combined effects of PET recycling, lower demand growth and capacity additions, forced PTA operating rates down by 5% in 2008. Consumption growth fell to 3%/year, the lowest level on record, while capacity additions over the past two years totaled 5.6m tonnes, representing a 13% increase over 2006. Nearly 9m tonnes of new capacity is currently under development, which will further depress operating rates until 2011-2012. 

The substitution of dimethyl terephthalate (DMT) by purified terephthalic acid (PTA) accelerated over 2007-2008. DMT-based consumers lost competitiveness due to the ageing of their facilities and the higher energy costs incurred in polymerizing DMT. Global DMT demand fell by more than 10% in 2008, and producers in Asia and Europe were forced to exit the market, taking out nearly 500,000 tonnes/year of capacity. 

Monoethylene glycol (MEG) consumption experienced a slowdown of unprecedented severity in 2008, with global growth falling below 1%, hit by weakness in both the PET and automotive sectors. Meanwhile, operating rates fell by 5% in 2008 due to significant capacity additions in the Middle East and Asia-Pacific. A further 3m tonnes/year of capacity will be added over the next two years in the Middle East. The coincidence of this expansion and low demand growth will accelerate the long-anticipated closure of laggard plants in other regions. 

Weak economic growth is expected until 2011-2012, at which point most products in the PET chain are expected to reach their cyclical trough in operating rates. The widespread losses are, however, accelerating restructuring and the closure of laggard plants, which will allow a recovery of operating rates post 2012.

The bankruptcy of Wellman, the long-standing US PET resins and fiber producer, illustrated the inability of much of the installed capacity base to generate profits. Only fiber producers with a genuine specialty portfolio appear to have a future in developed regions. Many loss-making PET assets have been offered for sale, but very few buyers have access to the credit required to take them on. 

Despite the current market situation, there remains substantial long-term growth potential. Central and Eastern Europe, and Africa will grow at the highest rates. Asia-Pacific has low rates of per capita consumption of both PET resin and textiles, and thus has the greatest long-term growth potential. The contraction in PET demand in North America and Western Europe in 2008, however, heralds a phase of much lower growth rates in both regions. Investments will now focus on integration and the pursuit of cost leadership rather than market share. The shakeout among producers will continue, but with little appetite for the acquisition of distressed assets.

Companies with established production in the Middle East and Asia, and less exposure to ethylene and derivatives, are the most likely to make it through the trough intact.

source: www.ICIS.com

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China to Seek up to 90,000t February Naphtha on Shortage

China, normally a net naphtha exporter, has emerged to seek spot cargoes of the petrochemical feedstock for February delivery to fill a shortfall in domestic production, regional traders said on Tuesday.

Traders estimated that the country could need 60,000–90,000t of naphtha to plug the gap, as its top refiners cut runs to their lowest in about two-and-a-half years due to slow overall fuel demand.

"Some of the naphtha has also been used as a gasoline blendstock, as sellers take advantage of the lucrative auto fuel prices," a Singapore-based trader said.

This has compounded the naphtha supply woes in China and the rest of Asia, prompting traders to say that the recent naphtha recovery ahead of the Lunar New Year could stretch beyond February into March.

"I don't usually get enquiries from China, but in the last two weeks, requests started streaming in (from Eastern China)," said another trader.

Naphtha crack spreads – premiums or losses obtained from refining Brent crude into the petrochemical feedstock – had rebounded strongly to $55.38 a tonne premium on Monday, versus a historical low of $189.75 discount on 4 November, when demand was in a slump, led by China's absence.

Strength to last to March

The world's second-largest energy consumer exported a total of about 1.46 million tonnes of naphtha between January and November 2008, and imported a total of 546,302t for the same period, or about 50,000t a month.

This reflects a surplus of 913,689t of the feedstock last year versus an excess of 670,789t for 2007.

Although a net exporter of naphtha, China faced sporadic shortages in August and November last year, official data showed.

In November, China's imports exceeded exports by 10,881t.

"It is very hard to tell how many cargoes China needs (for February), but it will definitely need more than 60,000t," the first trader added.

The second trader estimated that China could need about 90,000t of naphtha to fill the void.

These shortages came at a time when South Korean buyers are aggressively seeking spot barrels as they ramp up crackers' output to cash in on the Lunar New Year festive demand. Overall, cracker output in South Korea – which has a total nameplate capacity of about 7.3 million tonnes of ethylene a year – were raised to an average of 90–95% compared to 70–75% in November.

Unlike earlier expectations, the strong naphtha demand could extend beyond the festive period.

"Demand could still be there in March, slowly tapering off in April," said an Asian seller, who added that a slump could follow from May, as the global economic crisis deepened. 

By Seng Li Peng, Reuters. (www.chemicals-technology.com)

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Woodchip Facility may Spur Cellulosic Ethanol, says USDA

Ethanol production from wood chips, grass and other plant material could "explode" by 2012 if a commercialised facility to produce the second generation of biofuels is successful, US Agriculture Secretary Ed Schafer said Thursday.

Schafer told reporters he expected that by 20 January USDA will award a loan guarantee to Range Fuels, based in Colorado, to build a commercial-size plant capable of producing 100 million gallons of ethanol annually from woodchips.

It would be the first guarantee issued through a programme created in the 2008 farm law to speed development of new biofuels. Schafer would not say how much the loan would be.

"If that investment is made and that facility gets up and running, it will jump, I believe, by two years the goal of producing on a commercialised basis ethanol from non-corn sources or non-food based sources," he said.

"If this first-commercialised production capacity works then I think it will explode the opportunities in second-generation biofuels."

Corn is the feedstock for almost all US ethanol, with large-scale production of second-generation biofuels estimated at five or six years away.

The 2008 farm law allows USDA to issue loan guarantees of up to $250m per project to develop, build or retro-fit a commercial-size plant for production of biomass fuels.

Advanced biofuels are those that do not rely on the corn kernel starch. Cellulosic ethanol can be made from switch grass, corn stover, forest waste, fast-growing trees, wood chips and other plant material.

The so-called US renewable fuels standard requires the use of 11.1 billion gallons of renewable fuels in 2009, with much of the output coming from corn.

In 2022, the energy law requires the US gasoline supply to include 36 billion gallons of renewable fuels, 15 billion gallons from corn-based ethanol and 21 billion gallons from advanced biofuels, such as ethanol from cellulose.

By Christopher Doering, Reuters. (www.chemicals-technology.com)

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Rhodia Downbeat Despite McIntyre Deal

French chemicals group Rhodia struck a downbeat note for its 2009 results as it announced the acquisition of McIntyre, a privately-held US company with estimated 2008 sales of $146m.

Chief executive Jean-Pierre Clamadieu told French newspaper La Tribune that Rhodia had paid around $100m for McIntyre Group Ltd, which makes surfactants, polymers, chemical specialities and cosmetic preservatives.

McIntyre is based near Chicago and has about 200 staff.

Rhodia said it expected major synergies from cross-selling opportunities and hoped to double the EBITDA (earnings before interest, tax, depreciation and amortisation) of McIntyre by 2011.

"This 'bolt-on' acquisition is an additional illustration of our well-established strategy to deliver profitable growth in activities where we have leading positions. It will reinforce our presence in innovative markets which are largely resistant to economic downturns," Clamadieu said in a statement.

"Poor" visibility on results

Rhodia returned to profit in 2006 following years of restructuring and the company has kept a tight control on its costs in recent years.

However, in December the company cut its 2008 core earnings target as the global economic slowdown caused a decline in demand for its products in several of its markets.

Clamadieu said in an interview due to appear in Tuesday's edition of La Tribune that visibility for its 2009 results was "poor."

Asked how its fourth quarter results were so far, Clamadieu replied: "It is difficult to give precise indications in such a turbulent environment."

"We think that the first quarter will be mediocre and we are not too optimistic over the second quarter. The question is whether the economic recovery will take place this summer or only in 2010."

Clamadieu said the company could step up cost cuts if the economic climate remained difficult.

Rhodia shares closed down 2.5% at €4.76, giving the company a market capitalisation of around €480m ($643.3m). The stock has risen around 6% since the start of 2009, having fallen 83% last year.

By Sudip Kar-Gupta, Reuters. (www.chemicals-technology.com)

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Sinopec Group's Ethylene Output Falls to 2006 Level

State-owned Sinopec Group's ethylene production in 2008 fell to levels last seen two years ago as it cut output to boost fuel supplies ahead of the Olympics and curbed operation later on slumping chemical demand.

The group, which runs most of its key businesses via listed Sinopec Corp, said it produced 6.35 million tonnes of ethylene last year, a volume 5.14% lower than in 2007 and roughly the same as in 2006.

China in recent years has been aggressively expanding its production capacity of ethylene, a key building block for plastics, synthetic rubber and chemical fibre, since local output was insufficient to meet booming demand fuelled by fast economic growth.

Sinopec had to jack up output of refined oil products and cut ethylene production to meet market demand when supply was tight because of political requirements, said Liu Junan, former president of a Sinopec thinktank.

Collapsing prices and demand for chemicals in recent months might have also eaten into its ethylene production, a Shandong-based analyst said.

Despite the growth of crude throughput slowed to 4.34% in 2008 from 5.91% in 2007, Sinopec's output growth of gasoline, diesel and kerosene picked up to 9.03% last year from 6.16% in 2007. 

Domestic sales of refined oil products totalled 123 million tonnes, the group said in a report on its website.

The volume was 3.4% higher than the 119 million tonnes of fuel sold in 2007.

Sinopec Group produced 41.8 million tonnes, or 836,000 barrels per day, of crude oil and 8.26 billion cubic metres of natural gas in 2008, the report said.

Based on earlier company figures, oil output was 1.75% higher than in 2007 while natural gas production was 3.25% more than a year earlier.

It said that overseas equity oil, output it entitles from overseas oilfields, totalled at 9 million tonnes last year, the same as earlier plans. 

By Jim Bai, Reuters. (source: www.chemicals-technology.com)

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Japan's Showa Denko Likely to Keep AA Plant Idle until End 2009

Tokyo (Platts)--21Jan2009

Japan's Showa Denko will likely keep production of Acetic Acid (AA) at its Oita complex shut until the end of the year as it is more economical to buy AA than to produce it, a source close to the company said Thursday. 

Production at the 130,000 mt/year AA plant has been shut since early January, and the company was importing AA from Malaysia's BP Petronas Acetyls instead, the source said. 

The source said the company was, however, not planning to scrap the plant, keeping the possibility of restarting it again in the future open. 

The company needs around 120,000 mt/year AA to feed its 175,000 mt/year vinyl acetate monomer plant at the complex, according to industry estimates. 

The company had been selling surplus acetic acid to purified terephthalic acid producers in Japan, but it has canceled all contracts for 2009, the source said, indicating the AA plant would not be restarted this year.

Source: www.platts.com

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Sasol Lowers 2009 Profits Outlook on Poor Market Conditions

21 January 2009 16:23 [Source: ICIS news]

LONDON (ICIS news)--Sasol on Wednesday revised its financial year 2009 earnings outlook and said it was reviewing its capital expenditure plan in light of deteriorating economic conditions, the South African oil and petrochemicals group said.

The group revised its outlook for the financial year ending 30 June 2009 from the “robust growth forecast” seen in September, to “a moderate reduction in earnings compared to the prior year”.

Sasol said it was also reviewing its planned capital expenditure of rand (R) 16bn ($1.6bn) for the three years 2009-2011 in light of the changed market conditions. 

“Market conditions have deteriorated in recent months due to the global economic downturn, with lower than expected crude oil and product prices as well as lower product demand,” said Sasol in a statement, adding that it would be partially mitigated by the weakened rand.

Sasol expected earnings per share (EPS) for the first half of its financial year, ended 30 December, to increase 55-65% compared with the same period a year earlier, it added.

Increased profitability was expected to be driven by the weakening of the rand against the dollar and increased prices for crude oil and derivatives.

Sasol said product volumes were also higher during the period due to additional capacity and improved operations.

source: www.ICIS.com

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Rohm & Haas to Cut 5.5% of Workforce

By Maria Varmazis -- Purchasing, 1/21/2009 11:45:00 AM

Following labor cuts of about 900 employees in June 2008, Rohm & Haas this week announced it will cut an additional 900 employees, freeze employee salaries and shut down “underutilized” plants in an effort to reduce costs and save approximately $90 million. The Philadelphia-based chemical company says the cost-cutting measures are needed given its pending acquisition by Dow Chemical as well as the market downturn and slumping chemical demand. The company has not yet disclosed specifically which plants it aims to idle or shut down.

“We will continue to aggressively protect our company from the challenges of deteriorating market conditions and a weakening economy," says CEO Raj L. Gupta, in a statement. The actions “are intended to adjust our operations to current business conditions, which reflect softening markets worldwide," says Pierre Brondeau, president of Rohm & Haas, in a statement. "We will continue to control costs in order to compete effectively, while preserving our capacity to accelerate performance when markets recover.” 

Dow Chemical was supposed to buy Rohm & Haas for $15.3 billion, but was put on hold after a Kuwaiti company backed out of a $17.4 billion joint venture just days before it was to close. Dow had counted on using some of that money to fund the acquisition of Rohm & Haas. Analysts tell the International Herald Tribune that the cuts by Rohm & Haas are just the latest signs of trouble in the chemical sector, and are not tied to the deal with Dow. “I don't think this is company specific," says Dmitry Silversteyn of Longbow Research. “This is a response to a tough environment.”

www.purchasing.com

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Gold Analysts’ Consensus Sees 2% Slide to $855/ounce

By Tom Stundza -- Purchasing, 1/21/2009 12:09:00 PM

A survey of market mavens finds them forecasting the London fix price for gold averaging $855/troy ounce in 2009, a marginal 2% decline from the $872 average of 2008. However, there are some bullish analysts who suggest that a surge in investment demand will keep gold pricing elevated and cause higher price adjustments as the year moves along

Interestingly, price predictions are all over the map. The highest forecast for the precious metal is an average $910, according to the median forecast of 20 analysts, traders and investors surveyed by Bloomberg News Service. However, other forecasts range from $906 (Mitsui & Co.) to $800 (J.P. Morgan Securities). The other forecasts are $901 from MKS Finance, the Geneva-based precious metals and financial services group; the London Bullion Market Association, $881; Patricia M. Mohr, vice president of economics for the Scotiabank Group, $850; Purchasingdata.com, $838, and Abare (the Australian Bureau of Agricultural and Resource Economics), $810.

“Given the upheavals of the last six months, it is not surprising that the forecast prices are mixed,” says the London Bullion Market Association. In the second half of last year, gold’s monthly price ranged from a high of $940 to a low of $760.

Philip Klapwijk, executive chairman of GFMS Ltd. of London forecasts that gold prices hit fresh highs of $915 in the first half of 2009--as compared with $841 in the second half of 2008. That’s because he expects a surge in investment demand by speculators who still see gold as a safe haven in the face of ongoing financial uncertainty and malfunctioning stock and bond markets. On the other hand, he believes that six-month world jewelry demand will be weak--falling 11% year-over-year to 881 metric tons--due to high and volatile gold prices ahead and generally weaker global economic growth.

Source: www.purchasing.com 

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Higher European Cracker Rates Boost Demand for Spot Naphtha

london (Platts) -- 19 Jan 2009

An increase in European steam cracker rates this month has led to a slight rise in naphtha buying interest, although underlying demand for petrochemical products has yet to demonstrate a sustained recovery from recent depressed levels, market sources said Friday.

Several cracker operators reported an increase of around 10% in operational rates in January, when compared with December.

"Our crackers are running at around 85% now," one olefin producer said, while other sources reported utilization rates of 65-80% at their facilities. "Our plants are no longer at minimal technical tolerance levels as downstream demand has picked up a little," a source from one petrochemical major said.

Ethylene off-take for January was on average also up by around 10% from December, but was still around 25-30% down from normal consumption levels, market sources said.

"The cracker margins are still very poor...but I'm very optimistic for the second half of the year; the system is finding an equilibrium and slowly restarting," said another petrochemical producer.

Platts contract cracker margins have fallen sharply so far this year on lower olefin contract values to an average of $178/mt or Eur131/mt during the first 15 days of January, compared with an average of more than $1,500/mt in December.

With margins weak and naphtha prices rising so far this month, petrochemical producers are wary of emerging too strongly as buyers of naphtha. 

The recovery in petrochemical demand is still very modest, market sources said, with some adding that they were yet to be convinced that the current uptick in consumption was sustainable. 

"There is also some re-stocking going on now in the whole production chain, as inventories were driven to very low levels in December; I am still skeptical about the recovery of intrinsic downstream demand," an ethylene buyer said. 

"Demand is still pretty relaxed in NWE," one naphtha market source said, while another said he expected to see "more spot activity in the next three weeks." Some of the main naphtha buyers in Europe are now buying at full contractual volumes again, having been trying to minimize their commitments throughout the fourth quarter of last year, traders said.

"Petrochemical end-users might buy for H2 January-H1 February if they get the right price. They don't want to chase the market if the premiums are going up," another source said, describing the recovery as "tentative."

Some sources said the increased naphtha buying activity could also be due to the fact that some petrochemical producers have reduced their contract deliveries of naphtha for 2009 or have not signed any term contracts at all, forcing them into the spot market to secure supplies.

Some other olefin producers also sounded a note of caution, saying demand for petrochemical derivatives had not yet demonstrated sustainable strength to justify a marked increase in steam-cracking rates.

"We increase the rates and start running full blast now and then suddenly downstream demand collapses again and we have to go through the whole pain of reducing cracker rates again and it's a no fun, costly exercise," one olefin producer said.

--Ilana Djelal, ilana_djelal@platts.com --Maria Gradobitova,
maria_gradobitova@platts.com

Quoted from: www.platts.com

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BASF Issues Profits Warning, Introduces Short-Time Working

19 January 2009 13:32 [Source: ICIS news]
By Nigel Davis

LONDON (ICIS news)--BASF issued a profits warning on Monday saying that the decline in business was greater than expected in November and would negatively affect earnings. 

The world’s largest chemicals group said it would introduce short-time working for 1,680 employees at German facilities manufacturing products for the automotive industry.

Such arrangements could be implemented rapidly elsewhere in Europe, it suggested, warning that job losses could be necessary in other regions.

BASF said in November in a first warning on 2008 profits that it did not expect full year operating profits before special items (EBIT – earnings before interest and tax - before special items) to reach the 2007 level of €7.6bn ($10.1bn) against the backdrop of the sharp chemicals downturn. 

December was not as good as expected in November, a company spokesman said. 

The €58bn-turnover chemicals giant generated an operating profit of €6.3bn in the first nine months of the year, driven to a great extent by the high and rising oil price through much of the period.

“The situation remains tough and difficult to predict, CEO Jurgen Hambrecht said. “We do not expect the economic environment to improve in the coming months.”

Average capacity utilisation now is less that 75%, BASF said on Monday. Only demand for crop protection products and chemicals for the good industry remains high, it added. 

It cut capacity utilisation at it six major global production sites in mid-November and said capacity utilisation was down between 20% and 25%. 

In November 80 of its plants were idled and 100 operating at reduced rates. The downturn currently affects a similar number of units with 50 idled and 130 running at reduced capacity.

The new working arrangements would affect workers in Munster, Germany, but could be extended to employees at its main manufacturing site in Ludwigshafen and to its plants in Antwerp, Belgium, BASF said. Short-time working can be avoided at the Ludwigshafen and Antwerp sites currently because of flexible manpower planning, it said.

The company has used flexible working time arrangements, such as reduced overtime and holidays, to cope with the downturn but said these were no longer sufficient to absorb the affects of production cuts everywhere.

Agreements were already in place to allow the rapid introduction of short-time working in Ludwigshafen Germany if necessary, the company said.

In Germany employees can work fewer hours or not at all for a maximum period of 18 months so as to avoid redundancy. Plant closures in North America and Asia affecting 200 jobs have already been announced but more job losses could follow, the company warned.

Financial analysts at investment bank Cazenove said they were assuming a near 30% sales decline for BASF in its core Chemicals and Plastics businesses and a sharp margin decline.

BASF's shares dropped sharply on the news and were down 4.97% at €22.60 at 12:58GMT on Monday.

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Downadup Virus Exposes Millions of PCs to Hijack

By Barry Neild CNN
 

LONDON, England (CNN) -- A new sleeper virus that could allow hackers to steal financial and personal information has now spread to more than eight million computers in what industry analysts say is one of the most serious infections they have ever seen.

Experts say a single infected laptop could expose an entire network to the worm.

The Downadup or Conficker worm exploits a bug in Microsoft Windows to infect mainly corporate networks, where -- although it has yet to cause any harm -- it potentially exposes infected PCs to hijack.

Mikko Hypponen, chief research officer at anti-virus firm F-Secure, says while the purpose of the worm is unclear, its unique "phone home" design, linking back to its point of origin, means it can receive further orders to wreak havoc.

He said his company had reverse-engineered its program, which they suspected of originating in Ukraine, and is using the call-back mechanism to monitor an exponential infection rate, despite Microsoft's issuing of a patch to fix the bug.

"On Tuesday there were 2.5 million, on Wednesday 3.5 million and today [Friday], eight million," he told CNN. "It's getting worse, not better."

Hypponen explained to CNN the dangers that Downadup poses, who is most at risk and what can be done to stop its spread.

How serious is it?

It is the most serious large scale worm outbreak we have seen in recent years because of how widespread it is, but it is not very serious in terms of what it does. So far it doesn't try to steal personal information or credit card details.

Who is affected?

We have large infections in Europe, the United States and in Asia. It is a Windows worm and almost all the cases are corporate networks. There are very few reports of independent home computers affected.

What does it do?

It is a complicated worm most likely engineered by a group of people who have spent time making it very complicated to analyze and remove. The real reason why they have created it is hard to say right now, but we do know how it replicates.

How does it spread?

The worm does not spread over email or the Web. However if an infected laptop is connected to your corporate network, it will immediately scan the network looking for machines to infect. These will be machines that have not installed a patch from Microsoft known as MS08-067. The worm will also scan company networks trying to guess your password, trying hundreds and hundreds of common words. If it gets in, even if you are not at your machine, it will infect and begin spreading to other servers. A third method of spreading is via USB data sticks.

How can I prevent it infecting my machine?

The best way is to get the patch and install it company-wide. The second way is password security. Use long, difficult passwords -- particularly for administrators who cannot afford to be locked out of the machines they will have to fix.

What can I do if it has already infected?

Machines can be disinfected. The problem is for companies with thousands of infected machines, which can become re-infected from just one computer even as they are being cleared

Source: CNN.com

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Obama at Concert: The Dream of Our Founders will Live On

WASHINGTON (CNN) -- Inauguration revelry began Sunday afternoon as thousands of people packed the National Mall in Washington for a free concert featuring big stars.

President-elect Barack Obama addressed a roaring crowd after 90 minutes of high-energy acts such as U2, Mary J. Blige, Usher and Beyonce. 

"Welcome to this celebration of American renewal," he said.

"In the course of our history, only a handful of generations have been asked to confront challenges as serious as the ones we face right now." 

"I stand here today as hopeful as ever that the United States of America will endure," Obama said. "That it will prevail; that the dream of our founders will live on in our time."  

Obama spent the morning visiting Arlington National Cemetery and attending church before heading to the "We are One: Opening Inaugural Celebration" at the Lincoln Memorial. It was nothing but good vibes -- a brief respite for an incoming president who will face huge problems after he takes office Tuesday.

Bruce Springsteen opened the concert with his song "The Rising," singing, "How far I've gone/How high I've climbed/On my back's a 60 pound stone/On my shoulder a half mile line."

Along the National Mall, between the Capitol and the Washington Monument, people watched the concert on massive screens and sang along with "America the Beautiful" and "This Land is Your Land." 

During U2's performance of "Pride (In the Name of Love)," a tribute to the Rev. Martin Luther King Jr., frontman Bono referenced the civil rights leader's "I Have a Dream" speech, saying that it was also, "an Irish dream, a European dream, and African dream, an Israeli dream, and a Palestinian dream."  

Obama mentioned the Washington Monument and the Lincoln Memorial, and also referred to King's "I Have a Dream" speech, which took place in the same spot where he was standing. 

"Directly in front of us is a pool that still reflects the dream of a King and the glory of a people who marched and bled so that their children might be judged by their character's content," he said. 

Obama said what gives him "the greatest hope of all is not the stone and marble that surrounds us, but what fills the spaces in between. It is you -- Americans of every race and region and station who came here because you believe in what this country can be and because you want to help us get there."

Vice President-elect Joe Biden also spoke, pointing to those "marble domes" and towers of Washington surrounding the crowd which represent the "majesty of a great nation -- all built stone by stone by American men and women."

Work is about "dignity" and "respect," he said, praising the ethic of hard-working Americans. "We owe them the chance to go to work each day knowing they have the thanks of a grateful nation." 

Comedians and actors such as Steve Carell and Jamie Foxx brought some comic levity to the inauguration of a president who will face some serious problems in just a few days. 

Foxx, always the showman, urged "Chi-town" to "stand up!"

Joined by his wife Michelle and their children, the President-elect stood up, laughing and clapping.

Foxx did an impression of Obama's speech election night, as Obama laughed. 

Stevie Wonder belted out "Higher Ground" with Shakira and Usher. Herbie Hancock backed Sheryl Crow and will i. am. as they sang Bob Marley's "One Love."

Garth Brooks sang the 1971 folk rock classic "American Pie" followed by a choir-backed version of "We shall be free." Denzel Washington, Tom Hanks, Jack Black and Rosario Dawson also addressed the crowd.

The celebration caps Obama's shortened version of President Abraham Lincoln's 1861 rail trip to Washington. Obama will be inaugurated as the 44th president in Washington on Tuesday.

A CNN/Opinion Research Corporation survey released Sunday morning suggests most Americans see Obama's inauguration as a chance for a divided America to unify.

"You know the country is in the middle of a honeymoon when 6 in 10 Republicans have a positive view of Obama," said CNN Polling Director Keating Holland. 

CNN's John King interviewed Obama this week in Ohio. King noted that Obama will take the oath of office on the steps of a Capitol built on the backs of slaves and live in a house built on the backs of slaves. 


"This has to be incredibly overwhelming," King said.


Source: CNN.com

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Middle East Liquidity Dries Up

In the soccer world, the UAE has been making headlines this week. It is proposing to fund the first-ever £100m ($150m) transfer - of the Brazilian player, Kaka, to Manchester City. But behind the scenes, the collapse of the oil price has been playing havoc with the economies of the Gulf countries (GCC).

HSBC, for example, is warning that the region faces its most severe downturn in 20 years. It expects only the UAE and Kuwait to balance their budgets this year. Other countries will have to use their reserves to finance spending plans. And even the UAE is exposed to the major downturn now underway in Dubai.

Patrick Townsend of Instrata Capital tells the blog that "the mood in the GCC has become more despondent and redundancies are a fact of life - but not much reported. There are not many banks in the Middle East that have any lending appetite, and there is a large overhang of projects (especially power projects) waiting to get financed." 

Current petchem projects in the Region are already financed, but as Patrick notes, future projects will only go ahead once the lending backlog has cleared. He also adds that clients now expect "to achieve meaningful cost savings" from their engineering contractors, and "are delaying orders" until these have been achieved.


quoted from: http://www.icis.com/blogs/chemicals-and-the-economy

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Asia Soda Ash Contracts May Fall Further in Q2

19 January 2009 04:15 [Source: ICIS news]
By Hong Chou Hui

SINGAPORE (ICIS news)--Asian soda ash contracts for the second quarter this year could drop by another 12% from current levels on the back of weak downstream demand, buyers and sellers said on Monday.

Term material for the months of January through March have been settled at $250-260/tonne (€187.5-195/tonne) CFR (cost and freight) Asia, down by about 26% from deals concluded in December 2008.

“We’re going to re-negotiate our contract in February and will ask for a reduction of $20-30/tonne. Given the poor demand and glut of material, we don’t expect our supplier to put up much of a fight,” said a northeast Asian trader, who purchases material from China, in Mandarin.

Some soda ash makers concurred that downstream end-users had the upper hand in price negotiations for 2009.

“It’s a buyers’ market now. If we don’t do something to accommodate them, we could be very well out of business,” said a source from a major supplier of soda ash to south Asia.

“In the past, we always concluded our contracts on an annual basis but this year, we’ve gone with buyers’ wishes for quarterly term agreements to secure their business,” added the source. 

Soda ash contracts in 2008 were pegged at $290-310/tonne CFR Asia for the first half before they were revised upwards to $300-350/tonne CFR Asia on the back of tight supply.

The current global economic downturn eroded demand from downstream glass and detergent sectors from late 2008. Major northeast Asian automobile makers reduced output at their plants, while construction activity across Asia and the Middle East has slowed significantly.

Soda ash is used to make float glass for construction and consumer goods such as glass bottles and detergent.

Major producers of soda ash include Belgium’s Solvay, China’s Shandong Hai Hua and FMC Corporation from the US.

The big buyers of soda ash are Japan’s Asahi Glass, Procter & Gamble and Unilever.

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Petrochemical Demand will Continue to Slide in 2009

By Tom Stundza -- Purchasing, 1/15/2009

source: www.purchasing.com 

At the end of 2008, the economic growth needed to support petrochemicals purchasing was stalled: The U.S. is in recession, economic growth in the rest of the world has slowed considerably and several emerging nations also have fallen into recession. Economists agree with buyer Charles Covington at Rutherford Chemicals in Bayonne, N.J., who says "commodity and specialty chemical demand has dropped sharply (and) an overall chemical business downturn is expected in 2009."

A broad-based decline in U.S. petrochemicals output occurred across segments and across regions during November, reports the American Chemistry Council. Overseas, global production of chemicals also fell in November. And early December data suggests that for the entire fourth quarter, year-ago comparisons will be negative.

Forecasting 2009 chemicals demand and pricing at this point in time "involves considerable uncertainty," says Kevin Swift, chief economist of the American Chemistry Council, "but the general consensus is that the recession is spreading across the globe and will be characteristic of the business environment during 2009." He believes the global chemical market grew by only 2.2% last year to $3.18 trillion but will slide by 1.5% or more in 2009.

Swift suggests that the housing crisis and slowdown in manufacturing emanating from light vehicles and housing-related industries engendered a slowdown in the economic environment that accelerated into 2008. "End-use customer industry prospects are morose, which will present challenges in 2009 with the U.S. business of chemistry facing economic headwinds," he says.

With the escalation of energy prices in 2008 chemical shipments were estimated at $699 billion. The effects of the recession will be present in 2009 and shipments will slip to $689 billion. Overall operating rates slipped to an average of 76.8% in 2008. "Softness in chemical industry production volumes will push operating rates lower in 2009," says Swift.

The poor North American demand from automotive and construction end markets have kept chemical prices lagging. In fact, the recent decline in energy costs and weak chemical volumes likely caused producers to give back many of their earlier price gains. So, the December ethylene price of 36¢ is a 45% drop-off from the 66¢ cyclical peak of last July. It last was 36¢ in March 2007.

The bottom dropped out in December for prices on several basic chemicals: Benzene at $1.21/gallon is 72% cheaper than it was at its cyclical peak of $4.33 in September; toluene at $2/lb is 49% off its July peak of $3.96, and propylene at 45¢/lb is 40% off the July peak of 75¢. As a group, resins tracked by Purchasingdata.com are 20% cheaper than they were at the peak in September.

Prices of aliphatic, aromatic and solvent chemicals closed 2008 lower than they started 2007. Coating, inorganic and pulp and paper chemicals also closed the year well off the peak.

Ethylene operating rates down Global ethylene industry operating rates are projected to fall from 92% in early 2008 to below 90% throughout 2012, according to industry and market watcher Chemical Market Associates (CMAI) in Houston. The Persian Gulf producers will maintain strong long-term advantages, CMAI says, including world-scale assets and a leading feedstock cost position. "Many of these new plants will use dirt-cheap Middle Eastern ethane feedstock," writes CMAI. However, "Mideast producers, just like everyone else, should be clear not to upset supply/demand balances too much," says Florian Budde, a director in the chemical practice at McKinsey & Co.

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Dow Chemical Begins Layoffs

Dow Chemical Co. has begun laying off workers in Texas and in other regions and will close a third manufacturing plant in the state as part of a corporate restructuring announced last month.

Layoffs started this week at all of the Midland, Mich.-based chemical giant’s operations in Texas, where the company employs 6,000 people at manufacturing sites in La Porte, Freeport, Texas City, Clear Lake, Seadrift and an administrative office in Houston, Dow spokeswoman Tracie Copeland said.

Dow, the nation’s largest chemical maker, also will shut down a production unit at its manufacturing complex in Texas City. The unit, which makes solution vinyl resins, also called SVR, will close later this year, and the company hopes to reassign its 58 workers, Copeland said. The Texas City unit joins two plants at the Freeport complex - a styrene unit at Plant B and a chlor-alkali unit at Oyster Creek - also being shuttered as part of the restructuring.

Quoted from: http://kaznak.web.infoseek.co.jp

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Flood in Jakarta: Water Remains in Most Areas

Agnes Winarti , THE JAKARTA POST , JAKARTA | Fri, 01/16/2009

What lies beneath the stagnant brown flood water that is now an all-too-common site on Jakarta’s streets is a sewerage system that has proven time and again incapable of carrying away the heavy rainfall that hits the city each new year with the regularity of clock work.

Bumper to bumper: Hundreds of cars are stuck in gridlock at the Taman Mini toll gate in Jakarta on Thursday. Floods that have inundated many parts of Jakarta due to heavy rains on Wednesday night have rendered many roads impassable and caused heavy congestion. (JP/J. ADIGUNA)

Power cuts Thursday left many residents alone in the dark in their flooded homes, and those whose houses had not taken on water were not willing to stray far from their homes in fear that more rain could come.

“I cannot rest or sleep well these days,” Agung, a resident of Kelapa Gading in North Jakarta, told The Jakarta Post on Thursday.

Every night at midnight starting Tuesday, he has woken up to check on the level of the water flooding the street in front of his house.

“If the worst happens, I will evacuate my wife and children to a relative’s home,” said the 38-year-old father of two.

Last year, his house took on nearly half a meter of water.

Debby, a resident of Sungai Bambu in Tanjung Priok, North Jakarta, and Maria, who lives in Bekasi, watched in horror as water began to inch into their homes Tuesday.

“The knee-high flood water entered my house on Wednesday,” said Debby, adding that she had been forced to take the day off work.

“Our neighbors who live in houses that are lower than ours have been evacuated to a nearby market,” 27-year-old Maria said, adding that the electricity had been switched off in nearby residential complexes.

“Yesterday, I opted to go to work because I didn’t want to lose more holiday days because of this. As a result, I ended up having to wade through waist-high water, and I arrived at my office soaked.”

With nowhere else to go, the water continued to rise, including into state high school SMAN 8 in Bukit Duri, South Jakarta, where students watched brown water creep into their classrooms, forcing the school’s more than 1,000 students to vacate the building.

“We just inspected the school’s condition, and we’ve decided to move school activities outside so that the students can concentrate on their studies without being distracted by the fear of possible flooding,” Mursid, head of the South Jakarta Education Agency, said as quoted by beritajakarta.com

Starting Friday, the students will study at the agency’s training office in Kuningan, South Jakarta.

The flood came to the doorsteps of houses that have never flooded before.

Including that of Indra Tri, who lives and works in Tanah Abang, Central Jakarta. She bemoaned having to take lengthy, congested alternative routes in order to move around the city.

“Last night, I drove from Menteng [in Central Jakarta] to Pancoran [in South Jakarta] for about one-and-a-half hours because I had to take alternative streets to avoid areas of inundation and fallen trees on the main road in the Semanggi area.” 

On a normal day, the journey might take 15 minutes by car.

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Carbon Steel Plate Demand and Prices are Tumbling

By Tom Stundza -- Purchasing, 1/14/2009 12:03:00 PM (source: purchasing.com)

Significant declines are being reported in steel plate prices as more and more capital spending projects are being postponed or cancelled. Even oil country goods and wind tower development have fallen off recently. Plate supply has loosened as consumption has fallen; production is down, but consumption is down more. So, at this point this month, cut plate is selling for about 19% below the $1,114/ton price average of December.

Prices for carbon steel plate in coils is down to $880 while cut-to-length plate is down to $900 on the spot market, according to buyers. That’s a cumulative drop at $150/ton in the past month and more than $400 off the peak of last August. Prices for strip mill plate are down, likewise, to the point where 72-inch wide product and thinner (60 inch and 48 inch) are now selling for around $550/ton with some deals reported as low as $520.

Plate demand is falling rapidly worldwide as all industrialized countries and many developing economies are entering deep recession, says analyst John Anton at IHS Global Insights in Washington. A key plate market, construction, is falling very deeply in North America and Europe, he says, and is less positive than expected in Asia. “Heavy equipment manufacturing thus will decline in 2009 and barely recover in 2010,” Anton forecasts.

In the U.S., some mill and service center sources believe the infrastructure stimulus package soon to be presented to Congress by President-elect Barack Obama will spark plate demand. Some say a turnaround will be felt even before the package is passed as steel service centers build inventory in advance of anticipated demand increases. But, there is no agreement between suppliers and market analysts about the size and timing of steel plate demand from infrastructure-stimulus funding.

Some suppliers believe projects will be fast-tracked so that major plate orders will be evident by midyear. However, some analysts and economists caution that engineering and bidding procedures will keep plate-buying programs backed up from six to nine months into the third and fourth quarters. Also, some projects will be held up as states or local governments try to work out what funds come from their coffers and what funds will be available from the federal government

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LURGI to build an Acrylic Acid Plant in China

Lurgi GmbH, Frankfurt, a company of Air Liquide, France, in November received a contract from CNOOC Energy Technology & Services Limited, a subsidiary of China National Offshore Oil Company, to build a plant for the production of acrylic acid from propylene.

The product will in turn be used for the production of acrylates for paints and varnishes. The acrylate technology is provided by China Petroleum Engineering Company, Jilin.

The scope for the single-train plant with a capacity of 140,000 t/a of estergrade acrylic acid to be realized in Huizhou in the Chinese province of Guandong comprises the license, basic engineering, certain equipment as well as technical support. The total order value amounts to around EUR 38 million. The plant is scheduled to go on stream in spring 2011.

For Lurgi this is the first order for an acrylic acid plant in China utilizing the state of the art Lurgi / Nippon Kayaku Acrylic Acid Process. The state of the art catalyst produced by Nippon Kayaku, Japan as well as Lurgi’s experience in the field of process engineering will allow for an excellent product yield and on stream efficiency.

Quoted from http://kaznak.web.infoseek.co.jp

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