BASF to Close Polyamide 6 Plant at Rudolstadt

LONDON (ICIS news)--BASF is to discontinue production of polyamide 6 (PA6) at its Rudolstadt site in east Germany at the end of 2010, the chemical company said on Tuesday.

It also plans to reduce PA6 capacity at its Ludwigshafen plant and will eliminate a total of 77 jobs from the two facilities, the company said in a statement.

A BASF spokeswoman said that by taking these steps the company would be reducing its PA6 capacity in Europe by 40,000 tonnes/year. It currently has a capacity of 410,000 tonnes/year in Europe.

The decision to restructure was prompted by BASF wanting to remain competitive in the polyamide market. The company was therefore focusing on its backward integrated plants, she added.

BASF’s Performance Polymers division head, Harald Lauke, said in a statement: “By focusing on the large, backward-integrated Verbund sites, we are improving our cost basis and safeguarding our competitiveness in the European polyamide 6 market.”

BASF will continue to operate a compounding plant for the production of engineering plastics in Rudolstadt.

A major PA6 buyer said the reduction in capacity would not be felt because of the number of players in the market.

“Taking 40,000 tonnes out of the market is not going to have much impact,” he added.

A European producer said that the timeframe set for the closure meant it would not shift the market dramatically.

PA6 producers have suffered from severely reduced margins this year as they failed to pass on higher feedstock costs to customers earlier in the year.

Since the beginning of 2009 contract prices for PA6 feedstock caprolactam have risen by €507-522/tonne as a result of benzene price increases. During the same period, prices for PA6 increased by just €100-150/tonne.

quoted from: ICIS.com

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Europe September P-Wax Prices to Rise on Demand - Sources

LONDON (ICIS news)--European paraffin wax (p-wax) prices will increase by €20-30/tonne ($29-43/tonne) in September due to high demand, as suppliers reported successfully implementing further price rises over the course of August, sources said on Tuesday.

Prices were rising in line with feedstock costs and because of increased demand due to high season in the candle market, sources said. However, a trader noted that demand was still poor due to the vast amount of players on holiday.  

“Demand for candles is down in comparison to previous years and the market will take longer to recover after the summer holiday lull,” the trader said.

A candle maker said that 56-58°C grade material was at a minimum of €960/tonne FD (free delivered) NWE (northwest Europe). 

“There were successful increases throughout August, although there are not expected to be any significant price movements in September,” the source said.

Another candle maker said: “An increase of €40/tonne had been successfully implemented over the course of the month and producers will wait until the end of September before making any further price announcements.”

The majority of participants believed that a rise of between €20-50/tonne in September would incorporate the increases seen throughout the month of August.

Prices for 52-54°C material were assessed at €830-870/tonne FD NWE, 56-58°C grade was at €880-920/tonne FD NWE and 60-62°C product was at €940-980/tonne FD NWE, according to global chemical market intelligence service ICIS pricing.

P-wax is used in the production of candles as well as in the food, packaging and petroleum-jelly industries.

quoted from: ICIS.com

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Nissan in Jobs Boost for UK

Nissan, the Japanese carmaker, has announced a $329m investment for a new British plant, securing the future of hundreds of jobs and creating a further 350.

The company, which gained financial support for the development from the UK government, said it planned to build the plant, which will produce batteries for electric cars, at its Wearside factory in the northeast of England

The announcement comes five months after the firm sought 800 voluntary retirements from the same factory, which is located near the city of Sunderland.

Gordon Brown, Britain's prime minister, said: "Nissan's investment in a new battery plant ... here in Sunderland is great news for the local economy".

"Sunderland could now be a strong contender to produce electric vehicles for Nissan in Europe, and we will continue to work with Nissan to ensure this happens," he said.

Global downturn

Carmakers around the world are exploring plans for mass electric-car production as the industry seeks to haul itself out of a devastating downturn sparked by the global recession.

Nissan intends to build a similar plant to the British one in Portugal as part of a scheme to manufacture and sell the environmentally-friendly cars.

Each plant would produce 60,000 batteries a year.

"The two governments have offered to extend financial assistance and other support to ensure that Nissan locates the proposed plants within their respective countries," the company said.

A spokeswoman for Nissan said details of grants and loans from the governments had yet to be finalised.

Nissan's announcement comes less than a week after Toyota, another Japanese carmaker, said it would produce its first European-built hybrid car in Britain from 2010.

A hybrid car is part-powered by electricity and is more fuel efficient than traditional vehicles.

quoted from: Al Jazeera.net

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Perstorp Oxo Declares Force Majeure on Oxos Production

LONDON (ICIS news)--Sweden’s Perstorp Oxo has declared force majeure on oxo-alcohol and plasticiser deliveries from its Stenungsund site due to a production stoppage at its raw material supplier, the company said on Monday.

Perstorp Oxo declared force majeure on supplies of butanols, 2-ethylhexanol (2-EH), 2-ethylhexyl acrylate (2-EHA), propionic acid, dioctyl phthalate (DOP), n-butyraldehyde, iso-butyraldehyde and propionaldehyde, the company said in a 17 July statement to its customers.

A breakdown on 15 July at Perstorp Oxo's main raw material supplier, also based in Stenungsund, forced the company to close down its oxo-alcohols facility, the statement added.

Perstorp Oxo’s upstream supplier is Borealis. However, Borealis was unavailable for comment.

A source from Perstorp Oxo said that the facility was still running but at very low rates.

Due to a lack of raw materials, various lines at Stenungsund would be shut down intermittently for as long as feedstock supply was restricted, the source said.

Perstorp Oxo was unable to assess how long the shutdowns would last, as it would be determined by its raw material supplier, the source said.

The Perstorp Oxo source said it was trying to minimise the impact of the force majeure on its customers and was currently attempting to source oxo-alcohols from fellow producers.

“Inspection and an impact assessment are presently being conducted at our supplier. On the basis of the results hereof, we will revert to you as soon as possible with further information on our delivery capacity in the short term and when we expect full production to be resumed,” Perstorp Oxo said in its statement to customers, which was dated 17 July.

The company’s Stenungsund facility consists of a range of plants, including a 100,000 tonne/year n-butanol plant, a 120,000 tonne/year of 2-EH unit and a 65,000 tonne/year DOP plant.

quoted from: ICIS.com

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Eurozone Rates on Hold as Banks Digest Loan Feast

FRANKFURT - While markets absorb last week’s record eurozone loan offer, interest rates will stay at an all-time low when European Central Bank governors meet on Thursday in Luxembourg, analysts say. 


“The ECB looks almost certain to leave interest rates on hold at 1.0 percent this month, where we expect them to remain until at least the end of 2010,” said Capital Economics economist Jennifer McKeown. 

Bank policymakers are focused on how to support bank lending and can point to a “particularly successful” 12-month loan offer on Wednesday that doled out 442 billion euros (619 billion dollars) at the reference rate, she added. 

It was the biggest single loan operation in the ECB’s 11-year history, its first offer of funds with a 12-month maturity, and attracted more than 1,100 banks which leapt at what was perhaps a unique chance to lock in the cash at a 1.0 percent interest rate. 

The dramatic move was aimed at boosting credit by commercial banks to the broader economy, though it was not certain that the full amount would find its way into strained corporate treasuries or tight household budgets. 

Having soaked up the equivalent of 1,300 euros for every eurozone resident, commercial banks might simply borrow less from the ECB when other refinancing operations come around. 

But the Frankfurt-based bank’s offer was a clear echo to a call by the Organisation for Economic Cooperation and Development (OECD) for authorities to support the financial sector until a sustained recovery takes hold. 

The ECB is now under less pressure to lower further its key rate — currently at a record low of 1.0 percent after a series of cuts — especially since economic indicators suggest the worst global recession in at least six decades is beginning to ease. 

“With the economic data improving in many places around the globe, the need for aggressive monetary easing becomes less compelling,” UBS analysts said. 

The central bank is to meet in Luxembourg for one of two yearly gatherings of policymakers in a eurozone member country, hosted by Jean-Claude Juncker, head of the Eurogroup of finance ministers from the 16-nation bloc. 

And the OECD’s recommendation that the bank lower its main rate further, to levels close to zero like those reached by the US Federal Reserve, Bank of Japan and Bank of England, is likely to fall on deaf ears. 

“We no longer expect further cuts in the (ECB) policy rate,” Goldman Sachs economist Erik Nielsen said. 

The ECB’s “easing by stealth” through its massive 12-month loans “is huge, whichever way you look at it,” he noted. 

It should allow the central bank to address concerns about tighter credit in the eurozone and the financial health of banks facing potentially large losses from loan defaults. 

The ECB has said commercial banks might have to take another 283 billion dollars (202 billion euros) in writedowns by the end of 2010 to account for risky loans. 

That would make a total of nearly 650 billion dollars since the financial crisis erupted two years ago. 

The central bank is nonetheless pressing banks to lend more to support the economy. 

In a reference to the ECB’s market-friendly credit policy, its executive board member Lorenzo Bini Smaghi said last week in Rome: “They must pass it along.” 

At the same time, the ECB and eurozone governments must prevent a flood of cheap credit from fueling another crisis, because public debt has soared as governments try to stimulate slumping economies. 

In 2008, eurozone public debt amounted to 69.3 percent of gross domestic product, or around 6.4 trillion euros — 19,900 per inhabitant. 

The EU Commission estimates that in 2010, the debt will reach 83.8 percent of GDP. 

That, the cost of an ageing population and potentially slower growth “raise concerns about public finance sustainability,” the commission warned last week.

quoted from: Khaleej Times

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BASF to Close the Styropor (EPS) Plant

BASF to close the Styropor (EPS) plant and further adjust its production services at its Tarragona site
85 BASF jobs affected
Measures to safeguard sustainable future of BASF in Tarragona, Spain
Iberian Styropor market to be supplied from Ludwigshafen, Germany

BASF will shut down the Styropor® plant (EPS, expandable polystyrene) at its site in Tarragona, Spain. The closure is scheduled for August 2009. As a direct consequence of the plant closure and due to the current downturn in BASF's key markets in Spain, the company will also adjust the structure of production services in Tarragona. In total, 85 BASF employees working in production and related services such as maintenance, engineering and logistics are affected by these measures. This amounts to 9 percent of all jobs of BASF Española S.L..

　

The Styropor plant has become uneconomical due to its relatively small production capacity which has resulted in an unfavorable cost-structure. “The decision to close the Styropor plant does not mean that BASF will retreat from the Iberian EPS market," said Giorgio Greening, head of the Global Business Unit Foams. "BASF will continue to supply the region with high-quality EPS from Ludwigshafen, Germany and intends to defend its market share”

quoted from: New Kaznak

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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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Europe Phthalic Anhydride Producers Predict May Rises

LONDON (ICIS news)--European phthalic anhydride (PA) profits are now so pressed that producers can no longer avoid passing on further cost increases to customers, producers and consumers said on Friday. 

Some manufacturers went further, saying that prices may increase by more than an expected rise in May feedstocks, restoring some of the historic margins that had eroded since the start of 2009.

“There may be some re-capture of the lost differentials,” said a producer.

PA producers were anticipating increases in May feedstock orthoxylene contracts of €20-50/tonne ($27-67/tonne) on average, predominantly due to tightening supply levels as well as continued strong performance in the related paraxylene market, sources said.

“Every euro cent increase in raw materials has to be passed one-to-one into the PA market,” said a trader.

PA producers had suffered from reducing margins since the beginning of 2009 due to low demand, preventing cost increases being passed on to consumers. 

Although consumption was generally still seen by sources as significantly below 2008 levels, some optimism was returning to the market. A number of producers noted an increasing order book in May, fuelled by increased appetite from the Asia Pacific region - specifically China - and eastern Europe, leading to hope that easing conditions could facilitate a recovery of margins. 

“The indications are that consumers are looking more optimistic on market conditions,” one producer said.

“PA has to go up to restore margins,” added another. 

A trader said it was offering customers spot material at an increase of €35/tonne in anticipation of feedstock hikes and was “optimistic this may work”. 

Several traders and sellers observed an increase in enquiries in April compared to January-March. One producer reported an increase of around 15% in contract demand for April from March.

quoted from: www.ICIS.com

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INEOS Sees Profits Rise in March on Asia Demand

LONDON (ICIS news)--INEOS saw some market improvement towards the end of the first quarter and produced a replacement cost operating profit, excluding depreciation and amortisation (RC EBITDA), in March of €73m ($96m), the company said on Friday.

The uptick against the backdrop of what the company called a “challenging” start to the year was partly led by increasing demand from Asia, it added in a trading update.

RC EBITDA for the first quarter, which is EBITDA adjusted to exclude inventory holding gains or losses, was in the region of €170m. Historical cost EBITDA was €200m.

INEOS in November forecast a full-year 2008 EBITDA in the range of €1.7bn-1.8bn before inventory holding losses of €400m and exceptional events of €180m. Its sales in 2008 are estimated by ICIS news at $40.5bn.

INEOS, which negotiated a waiver of certain debt covenants towards the end of last year and agreed to present a new business plan to its lenders this April, said that the group was in line to achieve fixed cost reductions of €200m in 2009. It had cut physical inventories by 20% at the end of the quarter compared to historical levels.

The group had €560m in cash at the end of the quarter, having made a repayment under its securitisation facility of about €210m and paid bank interest of €210m in March. Its net debt at the end of March was €7.5bn.

“INEOS has successfully implemented the short term action plan as set out in the lender presentations made in November 2008,” it said. 

The company plans to close two polypropylene (PP) lines at Battleground in Texas and per/trichlorethylene facilities in Runcorn, England. A cumene plant in Port Arthur, Texas, has been mothballed. INEOS said it would cut capital spending this year to €250m.

INEOS said its olefins and polyolefins (O&P) business had experienced weak market conditions in the first quarter but that there had been some improvement for O&P in North America.

Both its refineries were run at maximum rates for most of the quarter, it said, led by firm middle distillate demand.

The intermediates businesses, including phenols, oxides nitriles and chlorvinyls had lifted from December/January lows helped by sales to Asia. Demand into durables, automotive and construction markets remained weak, INEOS said, although sales into consumables remains relatively firm.

quoted from: www.ICIS.com

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AkzoNobel Posts Q1 Loss of €7m; Volumes Drop Across Segments

SINGAPORE (ICIS news)--AkzoNobel has reported a first-quarter loss of €7m ($9.1m) as a result of “tough trading conditions” due to the severity of the global economic downturn, the Netherlands-based paint and chemicals major said on Thursday.

The loss for the three months reverses a net profit of €105m in the first quarter of 2008.

“Our first-quarter results across all areas of our business reflect the depth of the global economic slowdown,” said AkzoNobel CEO Hans Wijers.

“We still have limited forward visibility, but there were some early indications in March that conditions in a number of our markets may be stabilising,” he said.

Revenue for the period dropped 13% to €3.27bn, down from €3.77bn in the previous corresponding period.

On a segment basis, volumes tumbled 16% in the company’s decorative paints division as the global economic downturn continued to negatively impact the business, AkzoNobel said.

However, the company said that savings from the ICI acquisition continued ahead of plans.

Revenue decreased 14% in the performance coatings segment, while sales dropped 11% in the specialty chemicals arm.

“Forward visibility remains limited, which makes it difficult to predict with any certainty,” the company said.

The company said it remains focused on achieving its medium-term target of an earning before interest, tax, depreciation and amortisation (EBITDA) margin of 14% by the end of 2011 and to deliver the €340m in ICI synergies through continued cost management efforts.

The company’s management focus for 2009 would be to “continue to service customers, manage the cost base, generate cash and capture the synergies and benefits of the ICI acquisition”, said chief financial officer (CFO) Keith Nichols.

Nichols said there would be further production cuts and closures to come in addition to those already announced, but would not specify what areas.

He said cost-cutting measures would be "broad, affecting all businesses", and would "not be confined to particular geographies".

AkzoNobel announced several cost cutting measures towards the end of 2008, which Nichol said would save the company €200m. The company expects to cut about 3,500 jobs by 2011.

AkzoNobel posted a massive €1.5bn loss for the fourth quarter of 2008, which was largely due to a one-off €1.2bn impairment relating to the decorative paints and national starch businesses.

quoted from: www.ICIS.com

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UK's RBS to Axe Another 9,000 Jobs

Royal Bank of Scotland (RBS) has said it is to cut a further 9,000 jobs over the next two years, in a move union leaders described as "devastating".

The bank, now part-nationalised, said on Tuesday that it expected to save $3.7bn through the lay-offs in its back office operations, half of which will be in Britain.

The bank said compulsory redundancies would be a last resort and that the overall impact of the job cuts would be lessened because of natural workforce turnover and a reduction in the number of temporary staff.

But union leaders reacted angrily to the news.

Rob MacGregor, from the trade union Unite, said the union was "appalled that thousands of people, who form the backbone of the RBS operations, are to be made redundant".

"These employees are totally blameless for the current position which RBS is in, yet they are paying for the mistakes at the top of the bank," he said.

Job cuts

The cuts come on top of the 2,700 job losses already announced by RBS in Britain this year.

Stephen Hester, the bank's chief executive, defended the job cuts, saying it was part of a strategy to "restore the bank to standalone strength as soon as practicable".

"From this we want the government to be able to realise value from its investment in RBS. To do so we need to cut our costs, as in all businesses, given the current recession."

Earlier, RBS confirmed that the government had raised its stake in the group to 70.3 per cent, after investors snubbed a sale of new shares, launched last month, that was backed by the government.

The bank, ravaged by the credit crunch and its 2007 takeover of Dutch group ABN Amro, said in a statement that investors bought just 0.7 per cent of new shares, which left the government to pick up the tab.

Government intervention

The state acquired a 57.9 per cent stake earlier this year after RBS took $28.7bn of government funds.

The government's stake could climb even higher after RBS agreed earlier this year to ring-fence $479bn of assets into the British government's insurance scheme for toxic assets.

The state bailout of RBS, which posted the biggest loss in British corporate history in 2008, has sparked fury in Britain, with ire particularly reserved for Fred Goodwin, the former head of RBS who has received a substantial pay-off, despite presiding over the bank's struggles.

Goodwin has refused repeated government requests to voluntarily give up part of his £700,000 ($1m) pension.

Anti-capitalism protesters who staged a demonstration in central London on the eve of last week's G20 summit in London broke into an RBS office and attempted to steal office equipment before being forced out by police.

quoted from: Al Jazeera.Net

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German Chem Outlook Remains Grim, Employers Group Says

TORONTO (ICIS news)--Germany’s chemical employers do not expect any near-term improvement in the industry’s bleak outlook for 2009, employers group BAVC said on Thursday.

“Since October last year the situation has become worse and worse,” Hans Paul Frey, general manager of Bundesarbeitgeberverband Chemie said.

“We cannot say when there will be a turnaround,” he said.

The Wiesbaden-based group represents 1,900 Germany-based chemical firms which employ some 550,000 workers.

The situation was particularly hard for producers of basic chemicals and those with exposure to the automotive industry, Frey said. 

The pharmaceuticals sector and chemical production for consumer markets, such as detergents and cosmetics, were doing better, so far, he added.

Frey said the crisis was a critical test for Germany’s “social market economy” and its partnership model between employers and unions.

BAVC and chemical union IG BCE had already agreed that jobs cuts would only be the very last resort for employers amid the crisis.

To avoid job cuts, firms were reducing weekly working hours and seeking to reduce wage costs by up to 10%, Frey said.

If those measures were not enough, there was still the option to agree company-specific wage deals that would allow firms a larger scope of measures, he said.

Frey reiterated BAVC’s warning about the widening influence of government in the crisis.

While some government aid, for example in the form of guarantees, was helpful, he warned against the government taking direct stakes in companies.

“We are not prepared to bid goodbye to the market economy,” he said.

In related news on Thursday, a group representing Germany’s polyvinyl chloride (PVC) industry said the outlook for the building sector may not be all that bad.

The government’s stimulus measures included significant incentives for renovating and remodelling older buildings, but the key was for local municipalities and counties to quickly kick-start those investments, the Arbeitsgemeinschaft PVC said.

The Bonn-based association also cited a recent survey of architects that found that the financial crisis was not likely to have had a big impact on renovation and remodelling investments.

Germany’s chemical production was forecast to decline 3.5% in 2009 and sales were expected to fall 6.0%, according to a projection by the country’s chemical producers association VCI last month.

However, when pharmaceuticals were excluded, chemical production could fall by up to 6% this year, VCI said.

quoted from: www.ICIS.com

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