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Thursday, May 28, 2009

Aramco Completes Eco-Friendly Operations

DHAHRAN: Saudi Aramco project teams from the Oil and Gas Upstream Pipelines Division and the Offshore Projects Division working at Berri Offshore Oil Field and Abu Ali Island recently accomplished two environmentally significant operations.

The first was the completion of Saudi Aramco’s longest underground pipeline sections installed using horizontal directional drilling (HDD) methods. The 3,200-meter sections of 24-inch crude pipeline and 30-inch water-injection pipeline were installed as much as 32 meters beneath the seabed between Abu Ali Island and the end of Berri Causeway, using state-of-the-art drilling equipment.

The other major accomplishment was the first use by Saudi Aramco of HDD technology in the installation of a pipeline running from the shoreline into the sea. The 30-inch water-injection pipeline contained an underground section that stretched from the edge of Abu Ali Island to an exit point more than 1,500 meters into the Berri offshore oil field.

HDD has a significant advantage over conventional practices in that it avoids the environmental impact associated with dredging. That was an important factor at Berri and Abu Ali Island because of the sensitive nature of the local marine environment, where several endangered species of coral are found.

HDD also had the added cost advantage over dredging at Berri due to shallow local seabed conditions. Extensive access dredging would have been required just to reach the pipeline dredging zone. The use of HDD for this particular application saved Saudi Aramco approximately $54 million.

HDD is a sophisticated engineering technique that enables the laying of underground sections of pipeline without the need to trench or dredge the pipe route. The first stage of the process involves drilling a pilot hole between two ground entry points. Electronic positioning/steering instrumentation is used to guide the drill head along the specified path. Once the pilot hole is completed, a series of reaming passes are made using progressively larger tools to expand the hole to the required size. The final stage involves pulling the new pipeline through the newly formed tunnel.

The HDD work at Berri and Abu Ali was undertaken by Drilltec and Digital Connection Co. Ltd. through main contractors Global Al-Rushaid Offshore Co. Ltd. and Al-Robaya Est.


quoted from: Arab News

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Japan Exports See 'Modest Recovery'

Japan's economic slump appears to be easing slightly, with exports registering a smaller decline in April than in March.

Government data released on Wednesday showed that exports in April fell 39.1 per cent year-on-year, less than the 45.6 per cent decline posted in March.

That resulted in a trade surplus of about $725m for April, down 85 per cent year-on-year, but the third straight month of surplus following a record deficit in January amid a collapse in worldwide demand for big ticket items such as cars and electronics.

The improved result from March reinforced market views that the worst of the global slump in trade may be over.

Naoki Murakami, chief economist at Monex Securities, told the AFP news agency that the finance ministry data on Wednesday "confirmed exports were recovering" after volumes increased for two consecutive months.

Japan's factory production rose for the first time in six months in March and data due out on Friday is expected to show the first back-to-back increases in output in more than a year in April.

Stronger shipments to China

"Exports are likely to recover gradually from now on and the Japanese economy is expected to follow suit"

Yoshiki Shinke, 
senior economist, Dai-ichi Life Research Institute

Shipments to China, Japan's biggest trade partner, fell 25.8 per cent in April from a year earlier, narrowing the margin of decline for a third straight month and suggesting Beijing's $585bn stimulus package was having an effect.


Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute, said the positive signs were due to "progress in inventory correction overseas and a pickup in shipments to China".

"Exports are likely to recover gradually from now on and the Japanese economy is expected to follow suit," he told the Reuters news agency.

Japan posted an annual deficit last year, its first in 28 years. And last week it announced that its economy suffered its sharpest contraction on record in the three months to March, shrinking four per cent compared with the previous quarter.


In an effort to ease the recession, the government has announced a series of economic stimulus packages, including a $163bn injection unveiled last month.


The government upgraded its assessment of Asia's biggest economy for the first time in more than three years this week, saying that while the situation was still tough "the tempo of worsening has become moderate".

Masaaki Shirakawa, the Bank of Japan governor, said on Monday that the country's economy may return to positive growth in the quarter to June, predicting a "mild recovery".

Caution

Some analysts remain cautious, however, on whether global demand will recover enough to prompt Japanese companies to go beyond restocking after a heavy run-down of inventories.

Monex Securities' Murakami conceded that "the pace of the recovery in exports is not very strong".

And Takeshi Minami, the chief economist at Norinchukin Research Institute, told Reuters that "China's economy is doing better than other countries mostly because of government spending".

"But like Japan, China's economy is driven mostly by exports, so unless we see a stable pickup in global demand its recovery will be limited.

"That bodes ill for Japanese companies," Minami added.


quoted from: Al Jazeera.Net

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GM Bankruptcy 'Inevitable'

General Motors, the US car manufacturer, is facing bankruptcy after creditors rejected a proposal to swap $27bn in debt for 10 per cent of the company's stock.

The struggling firm has until June 1 to complete a government-ordered restructuring that includes debt reduction, labour cost cuts and plant closures.

The Obama administration has said it would only provide more funds if 90 per cent of the bondholders, as well as unionised workers, agreed to concessions that substantially reduced GM's costs.

General Motors said on Wednesday that "substantially less" than the 90 per cent threshold had been reached and that none of the exchange offers would be accepted.

The US automobile industry has been hit hard by a slump in sales amid a US recession and a global financial crisis and Chrysler, another of the so-called big three Detroit-based vehicle manufacturers, has already entered bankruptcy proceedings.


The company told Al Jazeera on Wednesday it now has $185bn in liabilities it will seek to shed through bankruptcy.


The US government is likely to become the majority shareholder in the company after it enters bankruptcy, reports said.

The Canadian government and the United Auto Workers union are also set to own smaller shares in the firm, according to reports.

Workers hit hard

John Pottow, a professor at the University of Michigan who specialises in bankruptcy, said GM evading bankruptcy now is almost impossible.

"They said no. That's it. They tried. That's why they're going to have to file for bankruptcy," he said.

Al Jazeera's Rob Reynolds in Washington said that current and former workers were likely to bear the brunt of the costs of GM restructuring as medical benefits were cut and that sales were likely to be hit further by bankruptcy proceedings.

Tens of thousands of workers have already been sacked by GM in recent months.

Fears are also growing over the future of GM's European subsidiaries, which include Opel and Vauxhall, which also employ of tens of thousands of staff.

GM's board has approved a plan to place Opel and Vauxhall under a separate holding company in an attempt to keep them safe from bankruptcy while it assesses bids for the firm.


quoted from: Al Jazeera.Net

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Friday, May 22, 2009

Oil Tanker Market to Stay in Doldrums in 2009

LONDON - A crude oil rally above $60 will not provide much comfort for the oil tanker market as weak global demand and a growing fleet of vessels will dog hopes of a recovery in seaborne freight rates. 


The International Energy Agency (IEA), energy adviser to 28 industrialised countries, forecast this month that world oil demand this year will post the sharpest annual fall since 1981. 

Pledges by the Organization of the Petroleum Exporting Countries to cut production has also taken its toll. 

“With oil demand contracting this year and with a lot of the associated reduction in oil production coming from OPEC countries which support seaborne crude trade, the tanker market is getting hit from both sides,” said Tim Smith, shipping analyst with consultants Maritime Strategies International (MSI). 

Ship broker Lorentzen & Stemoco forecast average rates for Very Large Crude Carriers (VLCCs) — among the biggest vessels in the world tanker fleet — falling to $30,000 per day in 2009 from $90,000 on average last year. 

Rates for the benchmark shipping route from the Middle East Gulf to Japan have hit record lows in recent weeks. 

The overall Baltic Exchange dirty tanker index, a composite of various shipping routes for crude oil, also remains sluggish. 

“Volumes are down and unemployed ships are plentiful,” said Erik Jensen, a shipping analyst with Lorentzen & Stemoco. “Around 90 vessels are expected to enter the Middle East Gulf during the next 30 days, a clearly bearish sign.” 

Oil prices fell from record highs over $147 a barrel in July 2008 to a low of $32.40 in December, hit by recession. 

The IEA has said the recent rise in oil prices was due to sentiment rather than evidence of higher consumption. 

Growth in the number of vessels coming onstream is set to compound difficulties. 

“The outlook is quite grim at the moment,” said Parul Bhambri, research manager with shipping consultants Drewry. “There is really not too much incremental demand to support the tanker supply.” 
Storage option 

Jensen forecast 67 VLCCs were expected to be delivered in 2009 taking the total fleet of that class of carriers up to 568 vessels. That compared with 39 VLCCs delivered last year. 

“The tanker market balance will suffer as a consequence, making business conditions very challenging for tanker owners,” he said. 

There are estimated to be in the region of 1,760 crude carriers including VLCCs above 10,000 deadweight tonnes. 

“Many are looking to the prospects of cancellations as a panacea for the impending oversupply situation,” ship broker Poten & Partners said in a report. 

“Regardless of whether owners explicitly cancel their contracts, the overwhelming majority of the ships on order will likely find a way into the market.” 

The prognosis for the refined products tanker market is similarly weak. 

While transatlantic freight rates from Europe have been steady in recent weeks, helped by arbitrage opportunities for gasoline, many analysts expect the downturn in appetite for products including middle distillates to stay soft. 

The sector also faces an oversupply of vessels. 

“There can probably be short-term spikes, but overall the picture for 2009 is quite grim for the products segment,” said Drewry’s Bhambri. 

Weaker freight rates have also meant oil companies have resorted to leasing ships to store both crude oil and products. 

An oil market structure known as contango — when oil for prompt delivery is cheaper than oil for later delivery — has made it profitable to buy oil for storage, which has helped take some vessels out of circulation. 

Estimates have ranged from 100 million to 130 million barrels of crude oil stored at sea in 50 to 53 vessels. At least 30 million barrels of petroleum products are estimated to be stored at sea with at least 20 vessels being deployed in Europe alone. 

But many question whether the current price structure will last, leaving vessels to once again become available. 

“That will then free up ships engaged in storage activity and that will further add to the tonnage supply,” said Mark Jenkins, shipping analyst with broker Simpson Spence & Young. 

Fleet growth is set to also dampen hopes for next year. 

“Our forecast in 2010 is continued deterioration because of the supply side overhang, despite an upturn in demand and despite high levels of scrapping,” said MSI’s Smith.


quoted from: Khaleej Times

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Monetary Union: Options Still Open

Haseeb Haider and Bruce Stanley 
22 May 2009 
ABU DHABI — The government on Thursday left the door ajar to the possibility that it could be persuaded to rejoin the planned regional monetary union, a day after announcing that it would abandon the project. 


Senior ministers pinpointed the reason for the UAE’s withdrawal as the government’s unhappiness about the Gulf Co-operation Council’s decision to base its future central bank in Saudi Arabia. 

Foreign Minister Shaikh Abdullah bin Zayed Al Nahyan said that the UAE had pulled out of the project for a single regional currency because Gulf Arab heads of state had decided against basing the joint central bank in this country. At the same time, however, he signalled a willingness of the UAE to reconsider its position. 

“I do not say that the door has been firmly closed. In politics, nothing is over,” the official Wam news agency quoted him as telling reporters during an official visit to Riga, Latvia. “Nevertheless, I say we are not interested for the time being.” 

The UAE was the first of the six GCC member states to ask to play host to the central bank, in 2004, and the government considered its role as the bank’s headquarters to be “part of the arrangements for entry into the Council’s monetary union,” according to a Wam report. Wam noted that the UAE currently is not the headquarters for any organisation affiliated with the GCC. 

Minister of Economy Sultan bin Saeed Al Mansouri, speaking in the capital, said that if Saudi Arabia were to decline its selection and let the UAE be home to the central bank, this would build a strong case for the UAE to rejoin the single currency project.

“We wanted to locate the GCC central bank in Abu Dhabi because the nation has a most suitable financial infrastructure required for such an organisation,’’ Al Mansouri told reporters after a meeting of the UAE-Algeria Joint Economic Ministerial Commission.  

The UAE had long supported the group’s efforts to form a monetary union, and its voice grew after Oman pulled out of the scheme in 2006 and Kuwait stopped pegging its currency to the dollar in 2007. The UAE has the second-largest economy in the GCC after Saudi Arabia. Its economy is also the most diversified, with large banking, construction and tourism industries and a comparatively small share of its wealth coming from exports of oil and gas. The UAE’s withdrawal dealt a severe blow to an already shaky project.

Qatar, meanwhile, reaffirmed its support on Thursday.

“We don’t believe in failure. We believe in the monetary union of the GCC countries, and we will continue to work on that,” Qatar’s Al Arab daily quoted Ibrahim Al Ibrahim, an economic advisor to the Qatari Amir, as saying. 

Al Ibrahim called the UAE’s withdrawal regrettable. “There are things that are going positively and others that are going negatively.” 

His comments amplified those that Kuwaiti Finance Minister Mustapha Al-Shamali made on Wednesday.  

Gulf leaders chose on May 5 to put the central bank’s headquarters in the Saudi capital Riyadh, which is already home to the GCC Secretariat.

“We believe that the UAE was the best choice for the headquarters,” the UAE Foreign Minister said in Riga. “It is not about selecting Saudi Arabia, it is about not selecting the UAE.”

The UAE is a financial centre and has the region’s most-transparent economy, making it well suited for the headquarters, he said. 

“We thought that the decision made by the GCC was not based on merit, it was based on different issues altogether.” — With inputs from Wam, Reuters


quoted from: Khaleej Times

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Zinc Prices to Rise Slightly


The average world zinc price for the rest of 2009 will remain just slightly above the current year-to-date average of 58¢/lb (compared with 85¢ in 2008), suggests analyst Adam Rowley of Macquarie Bank.

Speaking to the media on the sidelines at the recent at Metal Bulletin seminar on zinc in Düsseldorf, London-based Rowley says there has been “an absolute collapse in zinc demand this year.” And, although producers have reacted to limit the amount of new metal entering the market, London Metals Exchange (LME) inventories of zinc have increased 27% from the start of the year to 320,675 metric tons this week.

In his latest report to clients, Rowley says it now appears that the pickup in zinc prices this year from 50¢ in January to May’s month-to-date 68¢ has been due to investment purchasing of futures, what he terms “the building of long positions” that could boost the full-year price as high as 65¢. The price inflation certainly isn’t due to purchasing by steel mills for the galvanizing material since International Lead Zinc Study Group data shows annualized use falling at least 7%.

World construction indicators outside China are down year-on-year by about 25%, he says, noting that even China is showing only a 4% annual average growth in purchasing. He says China’s so-called massive purchase of zinc by the country’s Strategic Reserve Bureau only has amounted to 159,000 metric tons so far this year, which actually has helped put a floor under zinc prices.

However, Rowley worries about continued erratic LME pricing ahead. He says that any mid-summer investor-driven rise in the LME zinc price “raises the potential that a few producers who idled mine supply and smelter capacity earlier could come back into the market”--which, of course, would drive prices back down.


quoted from: Purchasing.com

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Crude-Oil-Futures Prices Rise

Crude oil futures prices for July delivery are trading at $61.50/barrel today in New York because of a government report that U.S. crude stockpiles have dropped for a second week and because of disruptions at three domestic refineries--which have boosted gasoline prices above$2.30/gallon.

The Energy Department says U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.1 million barrels last Friday from the previous week to 368.5 million barrels. The week previous, inventories had dropped by 4.7 million barrels from 375.3 million barrels May 1.

The inventories have declined by 6.8 million barrels this month mostly because of the decline in crude oil imports into the U.S., the world’s biggest crude user. For example, the Energy Department says supplies brought into the country fell 12% to 8.71 million barrels a day in the week ended May 8, the lowest since September. Data on imports through May 15 will be made available this afternoon by the Energy Information Administration. Analysts expect that imports will have continued to decline.

Petroleum futures prices also have risen because of disruptions at U.S. refineries. The catalytic cracker was shut after a fire this week at Flint Hills Resources’s Corpus Christi plant in Texas. A catalytic cracker is used to make products such as gasoline and diesel.

Meanwhile, Sunoco has shut a gasoline-making unit at its Marcus Hook, Pa., plant following a fire last week. And, Valero Energy’s Delaware City, Del., plant released sulfur dioxide from its fluid catalytic cracking unit on May 18, forcing a shutdown.

The Energy Department report will probably show U.S. refineries operated at 81.8% of capacity last week, down from 83.7% the previous week. Refinery operations usually climb for the peak gasoline-consumption period, which lasts from the Memorial Day weekend in late May to Labor Day in September. However, U.S. crude oil refinery inputs of 14.1 million barrels/day during the week ending May 15 dropped 315,000 barrels/day from the previous week's average.

Gasoline production remained relatively unchanged from last week, averaging 8.7 million barrels/day. Distillate fuel production also remained unchanged from last week, averaging 4.1 million barrels/day. However, the Energy Department’s report shows that motor gasoline stocks fell 4.34 million barrels and distillates dropped 672,000 barrels. For gasoline, that may explain why today’s national average price of regular unleaded at the pump is $2.31/gallon. (Note: The Energy Informational Administration is forecasting regular unleaded gasoline’s 2009 price at $2.30/gallon.). 

quoted from: Purchasing.com

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Friday, May 15, 2009

BASF Plans more Short-Time Working for 1,000 at Ludwigshafen


LONDON (ICS news)--A further 1,000 BASF employees will be put on short-time working over the next four months, the German chemicals major said on Thursday.

The reduced hours would be introduced at 20 plants at its main production site in Ludwigshafen, Germany, mainly on pigments, intermediates, petrochemicals and inorganics units, BASF said.

Most of the cutbacks would be made in June but the plan will extend into September, the company said. 

BASF employs 32,765 at the Ludwigsafen site.

Currently, 5,200 employees from its group companies are on short-time working at 19 sites in Europe, with approximately 4,000 in Germany. This total includes workers at the former Ciba Specialty Chemical sites.

Approximately 25% of the company's production capacity has been off line this year. 

“Capacity utilization rates at many plants have remained very low since the beginning of the year, and we do not expect any improvement over the summer months,” said Harald Schwager, BASF’s executive director for human resources and head of the Ludwigshafen site.

“Short-time work is an appropriate measure to temporarily bridge the decline in orders. Without these measures, short-time work would have already been introduced for thousands of BASF employees in Ludwigshafen,” Schwager said.

BASF said in April that it was considering short-time working for up to 3,000 employees at Ludwigshafen.

Short-time working lets BASF cut working hours by between 20% and 40% for up to four months while employees receive a net wage of about 90% provided by the company and by the German government.

The rapid re-introduction of normal hours would be possible at any time should demand pick up.

Similar government-backed schemes are available in Belgium and Italy.

BASF has warned, however, that 2009 will continue to be difficult, with demand likely to be depressed. 

It said it was expecting to cut its global workforce by at least 2,000 this year, including divestments, but excluding any restructuring of newly acquired Ciba.

BASF had 92,000 employees at the end of 2008.


quoted from: www.ICIS.com

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APIC ’09: Thai Petchem Group Sees Economic Recovery in H2

SEOUL (ICIS news)--Thailand’s petrochemical association is hopeful of an economic recovery in the second half of the year when the government’s massive fiscal stimulus will have taken root, boosting consumer and business confidence.

In a report presented to the 9th Asia Petrochemical Industry Conference (APIC ‘09) on Thursday, the Petrochemical Industry Club (PIC) said the government’s Baht (Bt)1,517bn ($44bn) investment in infrastructure projects over the next three years would be a major boost to the domestic economy.

Prime Minister Abhisit Vejjajiva had announced a Bt117bn stimulus package in January, followed by another Bt1,400bn as the global economic crisis proved to be much harder to contain.

But the export-oriented Thai economy would still shrink this year by about 1% this year after having been badly hit in the first half, according to data from the National Economic and Social Development Board (NESDB). The economy reeled as demand from major western markets collapsed.

In 2008, the financial and economic turbulence of the last four months of year led to a 4% fall in consumption of major polymers and a 3% decline in production volumes, the PIC report said.

Ethylene consumption had been stable for the whole of last year due to the 20,000 tonne/year expansion of Thai Plastic Chemical’s vinyl chloride monomer (VCM) unit, the report added.

Production volumes of the chemical in the country, however, dipped 6% as cracker operators slashed utilisation rates in response to poor demand.

Propylene output also showed an 8% decline while consumption slipped 5% in 2008.

APIC is an annual gathering of petrochemical industry players. The 2009 conference in Seoul, South Korea will run from 14-15 May.

At the start of the summit on Thursday, the conference hall that can accommodate about 1,000 people was half empty when the first few presentations were made.

Concerns about the global outbreak of H1N1 flu had prompted some petrochemical companies to forego attendance to one of the largest industry gatherings in Asia. The host country South Korea has some confirmed cases of H1N1 flu infection.


quoted from: www.ICIS.com

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US Chemical Output Cuts Reduce Only Some Q1 Inventories

HOUSTON (ICIS news)--Dramatic cutbacks in US chemical production since the third quarter of 2008 have only partly offset declining demand, with some sectors still building inventories in the first quarter, according to industry data issued on Thursday.

The first-quarter data compiled by the National Petrochemical & Refiners Association (NPRA) is based on voluntary reports from chemical companies, and the industry association does not include data if the reporting pool is too small to preserve anonymity.

The most significant gap between production and inventories appears to be in benzene, with output down 11% from the fourth quarter to an estimated 301.6m gal (1.14bn litres) – continuing a trend that has been evident since the start of 2008.

Despite the steady drop in supply, the data – based on input from 29 companies – showed US benzene stocks swelled to 136.3m gal in the first quarter, up 21% from the fourth quarter and the highest total in more than two years.

The build-up in benzene inventories also occurred despite some recovery in downstream aromatics production.

Styrene output rose to 2.035bn lb (923,000 tonnes) in the first quarter, up 12% from a low point of 1.821bn lb in the fourth quarter. Styrene production in the latest quarter was still running 29% below year-earlier levels, though.

Paraxylene (PX) also showed up as a brighter spot for chemical producers. 

The NPRA did not include running tallies on production, but the data showed inventories were at 422.6m lb at the end of the first quarter, down by 21% from 535.4m lb in the fourth quarter and down 44% from 750.6m lb a year earlier.

US PX demand slumped in late 2008, but has since recovered in part due to rising demand in Asia, where prices have hit a nine-month high.

Improved Asian demand also appeared to be a factor in a bounce in US monoethylene glycol (MEG) production. 

MEG output in the first quarter was 725m lb, up 7.4% from 675m lb in the fourth quarter but still down 41% from 1.230bn lb a year earlier, NPRA said.

In olefins, the picture was mixed, with ethylene production picking up after a steep fall over the previous two quarters, while propylene and butadiene (BD) output continued to slide.

US ethylene producers had shut several crackers in the fourth quarter and reduced operating rates as demand plunged. 

But the advantage of cheaper natural gas-based feedstocks helped improve margins sufficiently to get some crackers restarted.

US natural gas prices have hit seven-year lows this year as the economic downturn sharply reduced industrial demand, tilting producers further toward lighter feedstocks.

Ethylene production in January-March was 10.91bn lb, up by 2% compared with 10.70bn lb in the fourth quarter. But output was still down by 19% from 13.53bn lb one year earlier, according to the NPRA figures. 

US crackers were estimated to have run at an average operating rate of around 70% in the first quarter, up from 68% in the fourth quarter but down from an estimated 85% in the same period of 2008.

Output of propylene was 7.22bn lb, down by 7.4% from 7.80 lb in the fourth quarter and down 17% from 8.67bn lb one year earlier.

BD production in the first quarter was 634m lb, down 21% from 806m lb in the fourth quarter and down 38% from 1.03bn lb a year earlier. 

The data showed that the production cutbacks in olefins in the fourth quarter had succeeded in reducing first-quarter inventories.

US ethylene inventories were at 771m lb, down by 29% from the fourth quarter, but still up by 0.3% from a year earlier.

Propylene stocks fell to 1.57bn lb, down by 15% from the fourth quarter, but up by 31% from a year before.

BD inventories were 182m lb, down by 26% from the fourth quarter but up by 32% year on year.


quoted from: www.ICIS.com

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Chemistry Plays Key Role in Advancing Electronics

Chemists have always played a fundamental role in the dramatic advance of electronics

EVERY YEAR, computers fall in price even as they advance in capability, consistently fulfilling Moore's Law as if it were a natural principle. Consumers upgrade their systems and show appreciation by ranking the computer industry at the top of reputation indices.

But when the subject of chemicals comes up, the smile disappears and a look of confusion takes its place. A consumer might recall stories about endocrine disrupters in baby bottles, explosives in drinking water or something else seen on the internet.

It would almost certainly never cross their mind that computers and the rest of today's electronics are inseparably tied to chemistry, or that their manufacture relies on some of the most demanding chemistry practiced at scale.

But Gordon Moore - the scientist who actually formulated Moore's Law - would know it quite well. Moore cofounded electronics innovator Fairchild Semiconductor in 1957, and made his career in the electronics industry, but he took his PhD in physical chemistry and physics, and he considers himself a chemist to this day.

Moore and countless other chemists have played a central role in the advancement of electronics, beginning with their fundamental work on silicon and extending into the present.

ONLY THE BEGINNING

Silicon lies at the heart of today's ubiquitous computing technologies, but that was not always so. Vacuum tubes were once the cutting edge of electronics, essential components in early radios, televisions and even computers. 

Scientists had been interested in the peculiar characteristics of silicon and other semiconductors since the late 19th century. These materials were neither highly conductive metals nor nonconducting insulators, but somewhere in between - hence the name. Unlike metals, their resistivity did not increase with temperature. However, they did respond to exposure to light, even producing a current. They also had the peculiar ability to restrict an electric current to passing in one direction, transforming (or rectifying) AC current into DC current. 

Although semiconductor rectifiers were used early in the 20th century to detect radio signals, these "crystal detectors" were soon displaced by vacuum tubes. In the 1930s, however, interest revived when researchers at US-based Bell Labs found that vacuum tubes were unable to rectify very short radio waves.

Early silicon rectifiers had been unreliable, but Russell Ohl, a chemist at Bell, suspected that their erratic performance resulted partly from the presence of impurities. Ohl and his colleagues applied themselves to the problem, and by 1940 they could produce high-purity polycrystalline silicon. 

With their highly pure material, the Bell researchers determined that the electrical behavior of silicon could actually be modified by the selective inclusion of impurities. Boron, aluminum and other elements from the third column of the periodic table resulted in silicon with a deficit of electrons and "positive" electrical characteristics, which they called "p-type" silicon. Elements such as phosphorus from the fifth column, on the other hand, yielded material with an excess of electrons and "negative" electrical characteristics, or "n-type" silicon. Pushing these revelations further, Ohl found that the junction between between p-type and n-type regions acted as a rectifier. 

These discoveries proved to be a major turning point in the development of semiconductor electronics, for it is this ability to manipulate the properties of semiconductor materials by adding impurities - or doping, as it is called - and distributing junctions that enables the engineering of diodes, transistors and, ultimately, integrated circuits consisting of millions of these devices. 

Chemists made other important contributions to early semiconductor work. Gordon Teal, another Bell Labs chemist, in collaboration with John Little, an engineer, developed techniques for producing single crystals of the semiconductor germanium, enabling creation of the first junction transistors by Bell physicist William Shockley in 1951. 

Teal and his colleagues soon adapted these techniques to producing single crystals of silicon, which performed at higher temperatures than germanium. Bell scientists ran with this development, producing a host of new transistor types that included the diffused junction transistor, whose tight junction greatly improved performance. 

Bell chemist Morris Tanenbaum advanced this technology in 1955 by making the first doubly diffused junction transistor, a form that would dominate solid-state electronics for the next 10 years. 

MATERIAL FITNESS

Every advance in electronics has been tied to the properties of materials, and many advances are possible only because new materials were created to incorporate specific properties. 

"As soon as you look at how advances are made on a materials basis, then you are involving the chemist," remarks Cathie Markham, global research and development (R&D) director at Dow Electronic Materials. "And in electronics, the materials change any time the customer device changes."

The steady improvement Moore predicted in the performance of integrated circuits has been achieved by shrinking features so that more and more devices can be packed into the same space, a task that has required continual materials innovation, says Markham.

"It may be that you need to change the conducting characteristics of a metal, or the insulating characteristics of a polymer, and even the semiconductor layers themselves," she says. "And every one of those boils down to a chemistry problem and a materials selection."

Markham offers photoresist, a polymeric material that plays a key role in the photolithographic process used to fabricate microchips, as an example.

"Photoresists create patterns at extremely small-length scales, which are getting so small that if one little polymer [molecule] has an arm sticking out in the wrong direction, you can mess up the whole thing," she says. "So we are trying to control these chemistries at tighter and tighter tolerances."

Chemists do not work in isolation, however. Markham's R&D group of over 600 scientists includes engineers, physicists and various technicians as well as chemists, all collaborating closely, not only among themselves, but also with customers. 

"A lot of innovation in materials is actually done jointly with customers who are creating chips and circuit boards, displays and so forth from those materials," she says. "So the research tends to be very focused and very collaborative with the customer base."

Markham likes to view the relationships in terms of scale, with chemists working near the smallest scale. 

"It's about materials that can facilitate or enable miniaturization, speed, brightness and lower power consumption. The engineers putting these devices together hit a limit. Then they say, I want this piece smaller. They try to design it out of existing materials, but they hit a brick wall," Markham says. 

"That creates the problem for chemists. They are the molecular thinkers."

DEFINITIONS

Moore's Law: The observation, made by Gordon Moore in 1965, that the density of transistors on a microchip doubles every two years. Actual performance would be expected to increase as, or more, quickly.

Diode: A two-terminal semiconductor electronic device having a p-n junction, used primarily as a rectifier.

Transistor: A three-terminal semiconductor electronic device that can be used for amplification, switching, voltage stabilization, signal modulation and other functions. In a three-terminal device, the voltage or current between two of the terminals can be controlled by the application of a voltage or current to the third terminal.

Integrated circuit (or microchip): A miniaturized electronic circuit consisting mainly of semiconductor devices, manufactured in the surface of a thin substrate of semiconductor material.


quoted from: www.ICIS.com

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Fats and Oils Aim for Industrial Comeback

After decades on the back burner, will fats and oils return to prominence as renewable chemical feedstocks?

IN THE beginning, there were fats and oils - and most of them, squeezed from plants, fish and animals, were made into useful consumer products and chemicals.

That was then, but many in the chemical industry are hoping it will be so again. The petroleum industry may have taken over many of the industrial applications that the fats and oils industry once supplied, but trends toward environmentally friendly and renewable-based products are expected to drive a comeback.

History notes that soap was already being produced from animal fat and wood ash around 100-200 AD, but the animal fats market only began to boom in the late 1700s to early 1800s, according to a Fats and Oils Chronology reported by the Journal of American Oil Chemists Society (JAOCS) in November 1987.

Back then, animal fat started to become widely used in the manufacture of soap and candles.

In 1768, the candle industry in New England, US, which used spermaceti (wax from sperm whales) and tallow, had already begun shipping 500,000 lbs/year (227 tonnes/year) of candles to the West Indies and large quantities to England. Glycerin was discovered in 1779, and in 1806 Colgate started its first soap production in New York City.

"The modern fats and oils industry evolved first with the animal fats, such as butter, lard and beef tallow, which lasted from about the end of the Civil War [1865] until about 1900," says Gary List, retired lead scientist at the US Department of Agriculture (USDA) and former JAOCS editor.

In the 1800s, tallow from a slaughtered cow, especially on the West Coast, was said to be worth more than the meat, says Kent Swisher, vice president, International Programs at the National Renderers Association (NRA). "The rendering industry really developed when companies discovered that it was more efficient to produce tallow to sell to the soap manufacturer than to make tallow, turn it into soap and then market and sell the soap," Swisher says.

On the East Coast, one of the earliest companies in the rendering industry was Corenco, now part of California-based Baker Commodities. On the West Coast, Peterson Tallow Company was formed in thelate 1800s. 

"San Francisco hog farmer Nels Peterson collected waste suet and bones from local butcher shops to supplement his animal diet. His wife boiled off the fat on their kitchen stove and the accumulated tallow was shipped to the East Coast soap industry," he notes.

Peterson later became a part of Texas-based Darling International. 

According to a March 1897 article published by Oil, Paint and Drug Reporter (OPD), a predecessor of ICIS Chemical Business every New York soap manufacturer at the time depended largely upon the house grease being collected by men who went from house to house with pails. "Today no manufacturer buys any but the regularly rendered tallow and grease," the OPD said.

THE FALL AND RISE OF OILS

For lubrication and burning purposes, whale and sperm oils were the kings of industrial oil in the mid-1800s, according to the OPD. 

The waterfront of New Bedford, Massachusetts, US, was had acres of wharves loaded with sperm oil, whale oil, and oils from porpoise, walrus, blackfish, sea elephant, and other marine creatures.

In the 1850s, production of sperm oil averaged over 100,000 bbl/year, and whale oil over 250,000 bbl/year, according to the OPD.

But by around 1870, growing availability and increasingly low price helped petroleum rapidly displace marine oils from lighting and lubrication.

"Nature seems to have destined petroleum [to be] not only... a cheap illuminant but the best and most effective lubricant for all classes of machinery," reported the OPD in 1897. "Even the progress of petroleum wax in the United Kingdom, which a few years ago only consumed 5,000 tons for candle use, is now in the neighborhood of 45,000 tons, representing 95% of the candle-making material used in that country," the article noted.

By 1893, the stock of sperm oil was only 5,500 bbl and 710 bbl for whale oil. "Whale oil lamp now embellishes the windows of the auction mart and curiosity shop, while brass candlesticks are now but souvenirs and heirlooms," said William F. Nye of New Bedford, Massachusetts, in the OPD. 

The use of marine oil might have been virtually extinguished, but a new era for vegetable oil was emerging.

"Around 1900 saw the dawn of the cottonseed oil industry," List notes. "In that year, David Wesson developed a process to refine cottonseed oil and this leads to the introduction of compound shortenings which were blends of liquid cottonseed and lard or beef tallow."

A major development occurred in 1910 when US consumer products giant Procter & Gamble (P&G) introduced a process for hydrogenating vegetable oils, says List. By June 1911, Crisco shortening was on grocery store shelves and the object of a massive advertising promotion by P&G.

"It was advertised as a healthier alternative to animal fats and more economical than butter," says List. "Crisco became popular almost immediately. Sales in 1912 rose to 2.6m lb and reached 60m lb by 1916."

Shortly after Crisco hit the market, another vegetable shortening called Kream Krisp appeared, manufactured by Berlin Mills of New Hampshire, US. 

"This produced a long court battle over hydrogenation patents," says List. "The P&G patents were invalidated by the US Supreme Court, which resulted in the expansion of hydrogenation as a processing tool in the vegetable oil industry."

The golden age of the US fats and oils industry, however, occurred around 1935-1940, with increasing research for industrial use, List adds. 

THE BIRTH OF OLEOCHEMICALS

Fatty acids production went big time in the 1920s and 1930s as a way of making soap more quickly and cheaply than the kettle boiling process, says oleochemical consultant Alan Brunskill, a former managing director of Malaysia-based FPG Oleochemicals.

"This was important because of the introduction of soap powders for laundry use as a major improvement for bars. Washing machines also started to become available at the same time," he explains.

In the mid 1930s, Ralph Potts, of Chicago-based Armour & Co, developed a method for the fractional distillation of fatty acids, while in 1936, the University of Illinois established a laboratory for studying industrial applications for soybeans, according to the JAOCS.

The big oleo producers at that time were also the big soapers - for example, P&G, Lever (now the Anglo-Dutch consumer product giant known as Unilever) and their German rival Henkel, says Brunskill.

P&G was already selling glycerin under the brand Star by 1858, says P&G Chemicals spokesman Ross Holthouse. The company started building its fatty acid and glycerin facilities in the US and Europe in the 1930s.

"P&G began producing candles in 1837 using stearic acid and reselling red oil (oleic acid) as a coproduct in Cincinnati, Ohio," says Holthouse. "Star glycerin, one of P&G's first and oldest branded products, remains one of our key products today."

Soap for laundry use was severely curtailed with the entrance of synthetic detergents, especially after the Second World War. 

"The soapers after that were looking for alternative uses for capacity no longer needed, and the oleochem business as we know it was born," Brunskill says.

EXPLOSIVE GROWTH

The Second World War saw a rise in animal fat demand for explosives and artillery. One pound of fat was said to contain enough glycerin to make a pound of black powder, enough for six 75mm shells.

The US government formed the Fat Salvage Campaign in order to reclaim used kitchen fats. The National Renderers Association, along with the Association of American Soap and Glycerine Producers, forerunner of the Soap and Detergent Association (SDA), joined the American Fats Salvage Committee to collect household fat totaling over 924m lb, according to the SDA, .

"Housewives turned in fat in one pound-cans to local meat dealers and were paid from 5 cents to 15 cents/lb of fat. The estimated collection of cans would have stretched 43,795 miles [70,466km] if lined up," the SDA notes in its 2006 book The Evolution of Clean.

POSTWAR CHANGES

After the war, the US soap industry turned to petrochemical-based detergents in a key turning point for animal fats producers. Tallow producers lost 40% of their market, says Swisher, and fat prices dropped to less than 3 cents/lb in just a couple of years.

"The rendering industry decided to work on promoting its products to the global marketplace," he notes. "By 1956, at least half of tallow and grease production was exported, making up for the lost market domestically."

For the vegetable oil industry, the dark age began in the 1970s, notes List.

"Many mergers took place, and companies either stopped doing research altogether or reverted to doing quality control and customer trouble-shooting," he says. "The dark age was further accelerated by attacks on saturated and trans fatty acids by consumer groups and uneducated popular press, which started in the mid-1980s."

Although the USDA has found many industrial uses again for fats and oils such as lubricants, inks, hydraulic fluids and biofuels, List notes that even today, only a handful of companies are doing basic research.

"The main lesson to learn from history is that not doing research is counterproductive," he says.

The animal fats industry is optimistic that long-term growth and development for US fats-based industrial products will be stronger, although the NRA admits it is currently struggling. 

"Of course, the current economic crisis has curbed demand for products that are derived from animal fats, and prices for animal fats have become very volatile," says Swisher. "Also, the future use of animal fats for biofuel is an important variable and is very much dependent on the price of crude oil and natural gas."

One use for fats that is gaining attention, he notes, is substitution for residual fuel oil or natural gas in industrial applications.

The biodiesel boom, although beneficial for the fats and oils industry, was regarded as a catastrophe for the oleochemical businesses, Brunskill notes. Glycerin is a by-product of biodiesel production.

"It has ruined the revenue from the glycerin stream," says Brunskill. "Still, the best thing that happened post-biodiesel is the new uses being developed for glycerin." 

TALL OIL: A SHORT TALE

Another fatty material source competing with the vegetable oil and animal fats is crude tall oil (CTO), a by-product of the kraft pulping process for paper production.

The US Department of Agriculture (USDA) first reported commercial production and sale statistics of [unfractionated] CTO in 1937, says Don Stauffer, president of US-based consultancy International Development Associates. CTO production at that time was 4,717 tonnes, he says.

"The first successful separation of CTO into high-purity tall-oil fatty acids (TOFA) and tall-oil rosin (TOR) was performed by Arizona Chemical at Panama City, Florida, in 1949," Stauffer notes. "Commercial production and sale of TOR was initiated in 1950 by the USDA, with production between 1951-1953 averaged 7,961 tonnes/year."

By 1961, there were 13 tall-oil fractionation plants in the US. The industry reached its golden age in 1966, says Stauffer, when it recovered a total of 576,500 tonnes of combined TOR, TOFA and distilled tall oil.

Research and development (R&D) was also high at that time, as well as in the 1970s, says Walter Jones, president of the US-based Pine Chemicals Association (PCA). The group was first formed as the Tall Oil Association in July 1947. 

"During the 1960s and '70s, a number of new tall oil fractionating plants were constructed with increasing levels of efficiency. A number of new tall oil products were also developed during that period for inks, coatings, and adhesives," he adds.

On the R&D front, the period of lowest productivity was in the 1990s, says Jones. "Very little in the way of new products were developed, but considerable effort went into improving existing processes."

Production of tall oil products had been irregular since 1997, says Stauffer, and dropped to as low as 447,000 tonnes in 2001. 

"Because of continuing loss of production of paper pulp in the US for the near future, we see little hope for continuing growth of the CTO fractionation industry in the US," notes Stauffer.

Jones, however, is optimistic. "Given the emphasis on green chemistry today, I think the outlook for tall oil products and derivatives is positive," he says. "With the renewable raw material base for tall oil derivatives, where else can you find a product that is clean as well as green?"


quoted from: www.ICIS.com

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Monday, May 11, 2009

Basics of Islamic Finance

The Islamic finance industry is becoming popular worldwide. This popularity has not come without certain misunderstandings or misconceptions.

One major issue is the question of how Islamic finance is different from conventional finance when the “rates” (or profit margins) charged by Islamic financial institutions from borrowers are the same as those charged by conventional financial institutions. The layman does not differentiate between the Islamic finance contract and the conventional finance contract when the repayment schedule of a financing transaction looks similar.

The conceptual difference between an Islamic finance and a conventional finance transaction lies in the fact that in conventional finance, the financial institution generally lends cash for a length of time, often direct to the client or borrower, of course based on a credit rating or evaluation, on the basis that the borrower would return the borrowed amount plus an interest amount. The interest amount and the original borrowed amount is required to be repaid to the lender over the loan period or by the end of the loan period. Thus the transaction in essence is the lending of cash against the return of a higher amount of cash, and not necessarily for a specific purpose. One of the basic ideas behind the interest rate is the time value of the money lent. The excess cash returned to the lender over and above the borrowed amount is considered “riba” in Islamic finance.

In Islamic finance, there is no direct lending of cash against return of a higher amount of cash, unless the transaction is “asset backed” implying that the transaction has to involve the sale and purchase of an asset. In a typical financing transaction, the Islamic financial institution will purchase assets required to be financed by a borrower at a price and sell them to the borrower at an agreed (higher) price allowing the financial institution to make a profit. This purchase and sale of an asset basically renders the financing as “Shariah-compliant.” Islamic Shariah laws allow cash to be lent, but generally only as “Qard Hassan” where only the same amount of cash is required to be returned, if returned at all.

The point to note is that in an Islamic finance transaction, the financier takes an element of risk, that of ownership of an asset and consequent non-payment by the client of the asset’s sale price. Any default penalties imposed to encourage payment on time do not accrue for the benefit of the lender but get paid to charity. There are other inherent risks in the transaction but the idea is that this risk-taking is what allows the Islamic financial institution to make a profit on the financing transaction. Therefore, even though the payment terms in a conventional and Islamic financing contract may look alike, there are differences in the conceptual structure of the transaction. Usually the profit margins charged by Islamic financial institutions are about the same as interest rates of conventional financial institutions, but this is largely due to competition, the required profits of shareholders of such institutions, and also quite possibly driven by higher legal and administrative costs pertaining to the financing transactions.

It can be logically derived that Islamic financiers would need a deeper understanding of a borrower and his business to allow minimizing risks of borrowers defaulting on purchase of the asset underlying a finance transaction. This effectively results in lending to real businesses and not speculative and high risk businesses, quite a relevant topic these days. Even Qard Hassan generally implies money moving into productive activities since lenders would not in general fund leisure or speculative activities of any borrower.

In conclusion, using Islamic finance or even regulating it, requires an understanding of concepts that underlie the industry — in this case the Islamic code of law — the Shariah. An understanding of Shariah and its goals or maqasid will greatly enhance one’s perception of Islamic finance and economics.


quoted from: Arab News

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Experts See Opportunity in Crisis

JEDDAH: The global economic and financial crisis has dampened equity issuance and foreign investment in Saudi Arabia. Debt capital markets are in a nascent stage of development and private equity investment has retreated. “All this underscores the continued critical importance of the banking sector in providing funding for Saudi industry. However, recent macroeconomic and monetary movements have raised questions about Saudi banks’ ability and willingness to perform this function to the desired degree,” Jarmo T. Kotilaine, chief economist of NCB Capital, said in his presentation at the two-day 3rd Saudi International Banking and Investment Conference (SIBIC 2009), which concluded yesterday. 

Speaking on “Debt funding capacity of the Kingdom’s banking sector,” Kotilaine discussed the sector’s capacity for funding the Kingdom’s growth, alternative sources of financing and potential steps to increase bank lending. He said bank funding was critical for the Kingdom’s economic growth and, in fact, funding needed to grow in spite of the economic slowdown. 

“Every economic crisis comes with an opportunity, which should be utilized to help the process of recovery,” he said and emphasized that the Kingdom’s banks were healthy in the face of the global crisis. “The Saudi economy will be among the first to bounce back once a global recovery gets underway,” Kotilaine added.

Faysal bin Ibrahim Alaquil, manager of business development at Construction Products Holding Co., said the Kingdom’s policies were meant to encourage investment and support the private sector to be a strategic partner in the development process. “The challenges of the current financial crisis shows how fragile are the economies of some countries,” he said, adding that investors should look for secured and stable places and study the policies of countries open for investments. 

Hasan Al-Jabri, NCB Capital’s managing director and head of investment banking, spoke about the impact of economic turbulence on the Saudi capital markets and discussed the emerging trends and resultant opportunity framework for inorganic and organic growth. He presented an overview of the real estate sector and offered solutions for its developers and investors. 

William George, head of investment banking, Al-Khabeer, outlined the reaction of the global investment banks to the changing conditions and past upheavals. He suggested the necessary changes to the investment banking landscape and discussed the future direction of the Saudi investment banks.

He suggested steps to improve the capital market efficiency. He favored promoting sukuk and bonds as an efficient alternative way to raise capital for companies, alternative products for investors with low risk profile. Above all, he strongly recommended for the continuance of education and awareness among investors.

Adel A. Shakoor, president of XS Conferences and Exhibitions, which organized the event, said the support of Prince Sultan College for Tourism and Business and the financial stock committee of JCCI added more value and credibility to the conference.


quoted from: Arab News

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Europe C3 Spot Prices Close to Breaking Contract Value

LONDON (ICIS news)--European propylene (C3) spot prices are being talked at six-month highs, and at or above the May contract value of €520/tonne ($694/tonne) for the first time since November 2007 because of tight supply and better than expected demand, market sources said on Friday.

Propylene was performing very well relative to ethylene (C2) because a wide open Asian arbitrage window in April, had led to better than expected demand for propylene and its derivatives. 

“It's been a double effect, [weak] ethylene drives the crackers so there is less propylene output, and there is export of propylene or via derivatives into Asia” an integrated producer said.

While the propylene window was now closed, export demand for primarily the key derivatives polypropylene (PP) and acrylonitrile (ACN), was still fuelling demand for propylene.

“There are still exports of derivatives going on, so we have pretty high consumption [of propylene],” a producer said.

“The derivative chain is empty [because of the economy], so export possibilities have had a significant effect,” a trader said. 

Most sources reported tight availability, especially for polymer grade propylene, and numerous enquiries for additional volumes.

“We asked our supplier for more volumes, but they said they had no additional material,” a consumer said, adding “we had to look elsewhere and it was being offered at CP (contract price) or CP plus”.

Weak ethylene and firming naphtha values were not an incentive for cracker operators to increase utilisation rates at crackers. European operating rates on average were being pegged at around 75-80% of nameplate capacity.

“Reduced ethylene means even less propylene,” a source said. 

As a result, propylene was currently looking better placed than ethylene to withstand the summer slowdown which olefins players said would start to get under way in the second half of June and last through until the end of August.

“Our view is that the first half of June will still show an upward trend, but this will then disappear,” the consumer said.

“Our May demand compared to April is fairly stable, but we are in danger of the summer hole if [we are] missing export opportunities,” a large propylene consumer said.

“The propylene arb window is already closed, how long will derivative demand last with the summer hole just around the corner?” said a source.  

The short-sightedness of the market was still making longer term planning and expectations difficult.

“The real big issue of the industry is that we have lost the vision, my customers don’t know what they will consume any more than a month in advance,” said a producer.

“The best that we can do is run our system very carefully in order that we have flexibility to absorb the swings that will come with the seasonality. There is always seasonaility but the difference now is that swings are sudden, and quicker and more dramatic than in previous years,” said another integrated producer.

“Maybe some relief Q3 ( third quarter) could be seen due to delays to Middle East capacity start-ups and possible ongoing demand from Asia, but new capacity would certainly be seen by Q4,” said a major net ethylene and propylene consumer.


quoted from: www.ICIS.com

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Toyota Reports Record Loss

Toyota Motor, the world's largest vehicle manufacturer, has reported a loss of $7.7bn for the first three months of this year, its worst result ever.

The Japanese company's latest fiscal results are a dramatic turnaround after it made a record profit of 2.27 trillion yen last year.

It warned on Friday that its net loss would deepen throughout the year because of the global slump in sales, which have fallen 15 per cent over the past year.

Katsuaki Watanabe, Toyota's president, said the loss was a result of "the significant deterioration in vehicle sales particularly in the US and Europe, the rapid appreciation of the yen against the US dollar and the euro and the sharp rise in raw materials".

The world's biggest automaker also said that net losses would deepen to 550 billion yen for the fiscal year through March 2010.

Toyota has cut thousands of temporary jobs in response to the financial crisis, and its president said more cost cutting measures would be introduced to help the company return to profit.

Robert Wiseman, professor of business at Michigan State University, said Toyota should emerge in good shape in the long run.

"I would expect all global car manufactures to report a loss this fiscal year since car sales are way down," he told the Associated Press.

"What Toyota can do as it waits for the economy to turn around is invest in the next generation of vehicles and work on improving quality control in its production facilities," he said.


quoted from: Al-Jazeera.Net

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Chem Demand to Benefit from Stimulus Measures - US Huntsman

HOUSTON (ICIS news)--Global chemical industry market indicators showed slight improvement throughout the first quarter due largely to government stimulus packages, providing optimism that the worst of the current market could be over, US chemicals producer Huntsman said on Friday.

“March was a stronger month than January or February,” CEO Peter Huntsman said during an earnings conference call. “The industry appears to have stabilised, and we’re beginning to see some signs of recovery, particularly in China where customers have finished destocking.”

Huntsman posted a net loss of $290m (€217.5m) in the 2009 first quarter, down from a $7m gain in the same period last year due to lower demand across businesses, the company said.

Group sales dropped 33% year on year to $1.69bn, compared with $2.54bn in the first quarter of 2008.

Huntsman's chief executive credited China’s economic stimulus programme with a broad recovery in Asian demand, and said it gave the company optimism that the US economy would also rebound as projects funded through the US stimulus bill roll in over the next several months.

He expressed particular optimism on the future of global demand for methyl di-p-phenylene isocyanate (MDI), which he anticipated increasing due to stimulus spending in China and the US related to energy conservation and green energy projects. MDI is unique in its ability to fill some of those applications, he said.

MDI is a critical component of the company’s polyurethanes segment, which is the largest of its divisions. The segment’s sales dropped 40% in the first quarter, to $600m from $1bn in the prior-year period, as MDI volumes decreased due to the worldwide economic slowdown.

Moreover, MDI selling prices declined as well due to competitive pressures, lower raw material costs and the strength of the US dollar, the company said.

That more than offset increased volumes for propylene oxide (PO) and methyl tertiary butyl ether (MTBE), which had stronger demand in the quarter. As such, the segment recorded an 80% slump in earnings before interest, tax, depreciation and amortisation (EBITDA) to $27m.

Orders in the polyurethanes segment were up marginally across the board in April, Peter Huntsman said. 

However, Peter Huntsman cautioned that the company would only be “aggressive” in its polyurethane operating rates in Asia, where demand has shown some signs of recovery. Elsewhere, operating rates would remain at only about 50%, he said.

The company’s performance products division - its second largest segment - showed the least decline, with sales falling 21%, to $500m from $631m. This was due to “continued robust demand” from agricultural chemical products, as well as stable demand for personal care items, Peter Huntsman said.

Huntsman’s advanced materials, textile effects and pigments segments had sales fall by 32%, 37%, and 31%, respectively, all attributable to the global economic slowdown, the company said.

“We’re not waiting for the economy to kick in and improve our earnings,” Peter Huntsman said. “We’re still cutting inventories and costs where we can. We are ahead of our planned $150m cost reduction plan.”

On 17 April, Huntsman said it had obtained a credit agreement waiver with the lenders of a $650m credit facility, providing the company with more liquidity.

The company did not give any specific earnings or sales forecasts for the rest of 2009.


quoted from: www.ICIS.com

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Thursday, May 07, 2009

Fiat Aims for GM Europe Merger

The head of Italian car firm Fiat has outlined plans to create Europe's biggest car maker by taking over General Motors' European operations, including the British Vauxhall and German Opel brands.

Sergio Marchionne met German ministers to tout what he called a "marriage made in heaven" on Monday, but the deal would require billions of dollars in financial support from governments.

Marchionne's plan includes merging the companies with Chrysler, the bankrupt US car maker, with which he sealed a partnership deal last week.

If realised, the combined group would be the world's second-biggest car maker with sales of about six to seven million vehicles a year and $107bn in revenues.

Karl-Theodor zu Guttenberg, Germany's economy minister, one of the ministers to meet Marchionne in Berlin, said Fiat wanted to take over GM's Opel unit without running up debt and would preserve its three main German assembly plants if successful.

Klaus Franz, Opel's labour leader, reacted cautiously.

"We will not be hostile to anyone but we will undertake a very careful risk analysis," he said.

'Social cost'

Opel employs about 25,000 people in Germany and the government is keen to save jobs at the Opel unit ahead of a September election.

The company also has plants in Spain, Belgium and Britain.

Analysts said planned job cuts could be a stumbling block to a deal.

"The big hurdle we can see is social cost. I'm not sure if the Italian or German governments have the appetite for the job losses a merger would entail," Michael Tyndall, an analyst at Nomura International, said.

While Opel's three assembly plants would be safe under Marchionne's plan, an engines and parts factory in Kaiserslautern, in western Germany, may be hit, Guttenberg said.

State guarantees

The minister said he would look at the details of the Fiat plan but was also considering other options.

He said that Fiat was not planning on taking on new debt but that it would require about $6bn to $9bn in bridge-financing and was seeking state guarantees from around Europe.

Previously, Opel had said it required $4.37bn in state guarantees.

Angela Merkel, Germany's chancellor, has said she is open to guarantees but has cautioned that a decision will depend on the feasibility of Opel's plans and on its finding a partner.

There are other potential investors interested in Opel, including Magna, an Austrian-Canadian car parts maker.

Fiat's shares were up 7.3 per cent in Milan in afternoon trading.


quoted from: Al Jazeera.Net

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Crisis Forces Producers to Optimize Processes

The global recession has set alarm bells ringing for producers, prompting an efficiency drive and more flexibility within their production setups

THE GLOBAL economic crisis is motivating chemical producers to optimize their production processes. As the focus changes to "make to order" from "make to stock," they are cutting their operating rates and idling capacity.

Before the global economic crisis, there was little incentive to drive innovation in process engineering, says Alison Smith, US-based AspenTech's vice president of marketing strategy and research. Now, however, chemical producers are rethinking their production setups.

Companies need to invest in reengineering now, so that they are in a better position when they emerge from the downturn, says Smith, whose company supplies manufacturing optimization software. Software tools such as predictive modeling and supply network optimization can be used to build flexibility into production processes. Crucially, they can enable cuts in energy inputs and environmental emissions. 

Faced with dwindling demand and customer destocking, chemical producers around the world are cutting back their production (see related story on page 18). Germany-based BASF idled as much as 25% of its production capacity in late 2008 and US-based Dow Chemical's operating rate in the fourth quarter was just 64%, the lowest in 25 years.

"I think you will see that as we come out of this recession, maybe two or three years from now, companies that made the investments during this time are going to catapult ahead of their competition globally," says Smith. Otherwise they could end up being acquired by more successful companies or could simply go out of business, she adds.

"As much as this downturn is awful for everybody globally, I think it's an important wake-up call," continues Smith. "One of the things that comes out of it will be a tremendous amount of innovation on the process design side of the world."

FOCUS ON COSTS
Attempts by companies to design out unnecessary costs, relating to energy use, raw materials and catalysts, for example, have accelerated during the current downturn, agrees Mark Matzopoulos, chief operating officer at UK-based Process Systems Enterprise.

The challenge is to reduce the variable costs, Matzopoulos says. "The focus has shifted from producing as much as possible to operating within the tightest margins. It's all about reducing material and energy costs at this point."

It is particularly difficult for large-scale producers to run their plants at reduced rates, as much of their equipment is purpose-built and specifically designed to handle a particular reaction, observes Matzopoulos. "Even the more generic configurations, such as large continuous tank reactors, are specially optimized for a particular reaction. This means you will always be operating at non-optimal conditions in a number of the production modes."

The difficulties involved in ramping up and down production rates in continuous process plants often result in plants being idled instead, says Smith. "Because of the way these processes were designed up front, once you start operating outside the optimal design envelope, there are inherent inefficiencies in the process, from the way you consume energy to the way you convert raw materials."

Despite these difficulties, companies have been impressed by how their plant engineers have been able to maintain continuous processes at much lower operating rates, achieving new levels of energy efficiency. The ingenuity of process operatives and engineers has been exemplary, company officials have remarked.

In future, plants could be designed with wider optimum operating envelopes, to better cope with variations in demand. Batch production could also become more popular, particularly in specialty chemicals.

"Companies are going to realize we do need to handle that higher-mix, shorter-run, more-efficient-batch kind of capability in order to survive these kinds of market shocks," says Smith.

PREDICTIVE MODELING
Process Systems Enterprise builds predictive models that allow customers to explore different modes of operation. A key application area is terephthalic acid, where modeling can allow a reduction in the paraxylene (PX) and acetic acid feedstock. "Simply doing that can release something like $2m [€1.5m]a year in terms of savings in raw material feedstock costs," says Matzopoulos.

Models can be used to perform "before the event" verification of the economics of potentially expensive capital expenditure decisions, such as impeller replacement. They can also help companies understand how to ramp up and down safely and economically, and allow the optimization of production on a daily basis as raw material price ratios fluctuate.

"Modeling enables the exploration of different aspects of process operation," explains Matzopoulos. "You can iron out the operating risk of moving the process to an unknown state and you can also optimize the process at that new state."

In batch processes, software can be used to minimize the changeover time between different product grades. As well as increasing throughput, this can reduce the amount of off-spec material produced during the changeover period, says Matzopoulos. "If you want to get to a new operating state, you want to minimize the time that your process is going up and down, and you want to get there as quickly as possible."

For producers with a global network of production sites, decisions about where to produce a particular product and where to cut back production are critical. Supply network optimization software can be used to help companies decide which plants in the network can produce a particular product or product mix most profitably. Production can then be diverted to those plants, while other facilities can be idled.

Adding instrumentation can provide visibility into how plants are operating in real time. This is a "huge trend," not just in chemicals but industry wide, Smith says.

At a time when companies are cutting back on large-scale investments, and are canceling or delaying projects to build new capacity, investing in process optimization can offer an attractive return on investment (ROI). Software tools provide a low-cost means of improving companies' production, says Matzopoulos. "A typical project takes us three months, and the payback is six to 12 months. We provide a rapid means to improve production."

Even companies that are idling plants are continuing to invest in innovation, says Smith. "Despite the fact that economically, globally, the picture is not very pretty, leading companies are continuing to invest and looking for areas to innovate."

The difference now, she says, is that companies are stipulating higher ROIs. They are only investing in process optimization projects if they can see an ROI of about 80%, whereas previously the ROI threshold might have been 30-40%, she adds. 

"They need more flex in the process in order to move to "make to order." It's funny that for years now, we've worried about how to scale up profitably. Now industry is faced with just the opposite, how to scale down profitably."


quoted from: www.ICIS.com

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Commodity Markets Cautiously Shift Strategy

LONDON - A credit crunch, economic downturn and now swine flu have knocked down expectations of a swift return to a commodities super-cycle, but signs have emerged of more adventurous trading strategies. 


As proof of investor interest, flows of new money into commodities in the first quarter have been estimated at record levels as cheaper markets provided buying opportunities. (For related factbox, please click on) 

London Metal Exchange copper has risen by around 50 percent so far this year and U.S. benchmark crude futures have gained 22 percent. 

The most investment in the first quarter went into single-commodity exchange-traded funds (ETFs), also known as exchange-traded products, which allow investors to buy a share in raw materials in a similar way to acquiring an equity stake in companies. 

Daniel Wills of ETF Securities, an ETF specialist, said investors had become bolder after a period of carefully focusing on individual commodities. 

“What we’ve seen more recently is investors starting to broaden their exposure and come out of their shell a little bit,” he said. 

“Initially that was into perhaps less of the safe-havens, moving away from gold. The next round of flows we saw were into silver. Most recently we’ve started to see a pick-up in the more industrial-related precious metals such as platinum and palladium.” 

After “massive deleveraging” at the end of last year out of the commodity indices, or baskets of commodities traditionally favoured by long-only investors, there were tentative signs of positioning for economic recovery, said Olivier Jakob of Petromatrix. 

“The composition of the passive investment has been different,” he said. 

“But a trend is starting to be visible...it could be investors are heading back to the broader indices to have a broader exposure and position for a potential recovery later in the year.” 

In addition, traders and analysts have said some appetite for risk had returned as under-investment in new production because of price weakness was expected to drive strong rallies as soon as a firmer economy stimulated commodity demand. 

“We believe that this is very bullish for commodity prices over the medium term. Only a small recovery in end-user demand is likely to push many commodity prices sharply higher — most likely in the second half of 2009,” said Shaun Port of British-based Fitzwilliam Asset Management. 
Outlyers 

Base metals are considered among the most sensitive to early signs of economic recovery and increased industrial output. 

Oil, as the most liquid of all commodities, would also be expected to respond quickly. 

Its price has been moderated by huge levels of inventory, but supported by rapid action from the Organization of the Petroleum Exporting Countries, which has reduced output at a record rate. 

“The differentiating feature is how quickly supplies have been curtailed in response to the price collapse and demand contraction,” said Lawrence Eagles of JP Morgan in a note. 

“The furthest ahead in the process seems to be oil and some of the base metals.” (For related factbox, please click on) 

Reuters’ latest poll of oil analysts found they had raised their forecast for the first time since July last year. 

The survey predicts an average of nearly $51 in 2009 for U.S. crude, just short of Tuesday’s price of around $54. 

The market is still far from last year’s record of nearly $150 and more cautious analysts point to the bearish factors. 
Excess of enthusiasm? 

World stock markets have this week climbed to four-month highs as traders anticipated a return to economic growth before the end of the year. 

Some analysts have argued the equities strength could be premature and would therefore fizzle out. 

In particular, the risk the swine flu outbreak that began in Mexico could worsen has increased the chances the economy could take longer than previously expected to recover. 

Most commodities would be dragged back down in sympathy with any stock market correction, analysts have said, unless they shake off this year’s habit of taking direction from equities. 

Readjusting focus to the fundamentals of supply and demand would not necessarily push markets higher. 

Even the ability of China — a major consumer of raw materials that has maintained growth while the rest of the world has dipped into recession — to support commodities is less than certain. 

Richard Batty of Standard Life Investments said investors believed China could keep growing, but not to the extent that would send commodity prices surging. 

“The market appears willing to believe a 6-8 percent GDP growth level in 2009 is possible — a subdued growth rate by recent standards and not a sustained driver of commodity prices in the years ahead,” Batty said.


quoted from: Khaleej Times

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Sugar Dips, Cocoa Rebounds on Industry Buying

LONDON - Sugar futures eased on Tuesday in a modest setback after last week’s rally to a 2-3/4 year high, while London cocoa rebounded from early losses on industry buying, dealers said. 


Arabica coffee rose with the market’s strong performance during the last few days triggering chart-based buying.

Cocoa futures in London were steady, with industry buying helping the market recoup early losses driven by weakening global demand.

Dealers noted that Macquarie Bank commodity strategist Kona Haque had said that global cocoa grindings were forecast to fall 4-5 percent year-on-year in 2008/09.

“It’s a significant drop,” she told Reuters financial television. “They (global grindings) haven’t had a significant drop like this for, I think, 5 years.”

Responding to Haque’s grindings forecast, one London dealer said, “It may even be a little bit worse. There is a lot of bearish news out there.

The dealer said the drop in global grind in 2008/09 could be between four and seven percent.

Haque said she expected the April-September 2008/09 mid crop in Ivory Coast, the world’s top cocoa grower, to be 275,000-300,000 tonnes, down from about 320,000 tonnes in 2007/08. Her forecast was in line with the market consensus.

Dealers also noted disappointing Q1 grindings data from Malaysia, Asia’s largest cocoa grinder, down 17.9 percent.

July cocoa in London was unchanged at 1,672 pounds a tonne at 1430 GMT. The contract earlier touched 1,653 pounds, its lowest level since February 24.

“There is quite a bit of industry support here,” one dealer said. 
Sugar physical demand fades

Cocoa futures on ICE were higher, underpinned by the weakness of the dollar against the pound, with July up $53 at $2,374 a tonne.

Sterling rose broadly on Tuesday, hitting a four-month high against the dollar, buoyed by an improvement in risk appetite which also propelled shares higher.

Sugar prices slipped back slightly after last week’s strong advance with demand in the physical market largely drying up after a rally to a 2-3/4-year high on Friday.

“There is a lack of buying from end-users,” said Nick Hungate, a softs trader with Rabobank.

“I think we could fall at least 1 cent (per lb) without impacting the bullish cornerstone of the market.”

He was referring to India’s appetite for sugar after the world’s largest consumer swung to net importer from exporter.

A European broker said industry buyers were likely to wade in on the dips.

“Whether the market has to come back to end-buyer levels or end-buyers simply have to pay up at some point, the market still needs sugar,” the broker said in a daily report.

Sucden Financial said in a daily market report, “It is more than likely the weight of producer selling will, in the short term, have July testing 14.70-14.60 cents a lb.”

ICE July raw sugar futures were down 0.13 cent to 14.89 cents per lb at 1430 GMT.

London August white sugar futures were down $2.70 at $439.30 per tonne.

Coffee prices were higher with arabica futures on ICE climbing to a three-month high.

Dealers said the market’s strong performance during the last few days had triggered chart-based buying.

July arabica futures rose 2.15 cents to $1.23 per lb with July robustas up $15 at $1,510 a tonne.


quoted from: Khaleej Times

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LyondellBasell Restructuring to Continue Under New jv

HOUSTON (ICIS news)--LyondellBasell would carry on its restructuring process under US bankruptcy protection despite changes in the ownership of the company, corporate parent Access Industries said on Wednesday.

Access Industries has entered into an agreement with Germany’s ProChemie Holding to form a joint venture (jv) - to be named ProChemie GmbH - that will control LyondellBasell.

The joint venture will be equally owned by Access Industries and ProChemie Holding.

“The members of the new joint venture will both support LyondellBasell’s restructuring process and seek to identify and pursue global business opportunities,” Access said in a statement.

LyondellBasell's US operations filed for bankruptcy protection on 6 January in the US. The holding company followed with its own US filing for bankruptcy protection. 

The company plans to emerge from bankruptcy by the end of 2009.

The change in ownership provides Access Industries with the flexibility to participate in the restructuring of LyondellBasell in ways that are tax neutral for the chemical company, Access said.

Access Industries said it would contribute its equity ownership in LyondellBasell in exchange for a 50% interest in ProChemie GmbH.

The initial assets in the joint venture will comprise Access’ equity in LyondellBasell and assets currently owned by ProChemie Holding, an Access Industries spokesperson said.

No further financial details were available. ProChemie could not be reached for comment.

Access Industries has already filed documents in Europe notifying regulators of its intent to change the ownership structure of LyondellBasell, a LyondellBasell spokesperson in Houston said.

The spokesperson said the ownership change would have no impact on LyondellBasell’s day-to-day operations.


quoted from: www.ICIS.com

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Asia Styrene Snaps Losing Streak, May Gain Further

SINGAPORE (ICIS news)--Asian styrene monomer (SM) spiked 10%, snapping three straight weeks of losses, as buying interest picked up with renewed optimism that the global economic downturn has started to bottom out, traders said on Thursday.

Encouraging data on US energy consumption and on China’s industries helped crude futures to rally in crude futures above $56/bbl on Thursday, influencing SM prices, they said.

SM fixtures were heard at $910-925/tonne (€682.5-693.8/tonne) CFR (cost and freight) China, traders said, with expectations that prices could gain further ground on the back of tight supply in China.

Qilu Petrochemical has shut its 200,000 tonnes/year SM unit in Shandong, northern China, in mid-April for a month long turnaround while Maoming Petrochemicals’ 100,000 tonnes/year facility in southern China met with mechanical issues this week. 

Maoming intends to shut the unit early next month for repairs. 

Secco Petrochemical, on the other hand, will take its 500,000 tonnes/year SM plant in eastern China off line in mid-May for a 75-day maintenance and debottlenecking works. 

Some SM sellers said they were cautiously optimistic that demand in China would improve in tandem with the bottoming out of the US economy. China is still gunning for an 8% GDP expansion this year with the help of heavy government spending.

SM goes into a wide variety of plastic resins and synthetic rubbers. Orders for finished products at Chinese factories in the seasonally busy third quarter could be better than expected, some sellers said.

“The orders could start filtering through in May and June as the global economy shows signs of stabilising,” said another resin trader in Hong Kong. 

“The expectation for the SM and resins sector had been set so low this year that some positive news, data or expectations could move prices up,” said a SM trader. 

But SM recovered in three days nearly half of the 20% value loss it had in the three weeks to end-April that some market players said speculation could be at play.

“The price reversal was too sudden and [the] uptrend too sharp. Some traders could be pushing up the markets to turn a quick profit,” said an end-user in Taiwan. 

Before the sharp increase this week, SM prices in the key Chinese market had trended down with great rapidity to $835/tonne CFR, according to global market intelligence service ICIS pricing.

“Demand for styrenic resins remained very weak, so the jump in SM values appeared to be speculative rather than based on fundamentals,” said a resin trader in Hong Kong.

Sustaining the uptrend may be difficult as SM consumption from downstream styrenic resins sector has remained weak judging from the build up of inventories this week, market sources said.

SM inventories along the Chinese shore tanks doubled to 40,000 tonnes this week, they said. 

Most resin traders and producers had anticipated a poor performance in the Chinese manufacturing season this year, with orders likely to be just about half their size in 2008. 

Recent positive indications on the global economy allowed market players to hope for some improvement in market conditions.


quoted from: www.ICIS.com

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