Japan urges petrochem makers to reduce capacities to cope with falling domestic demand, growing imports

MOSCOW (MRC) -- Japan has urged domestic petrochemical makers to voluntarily close or cut additional ethylene-making capacity to deal with falling local demand for plastics and synthetic fibres, and an influx of cheaper foreign supplies, as per Plastemart.

The push by the government amid existing plans to shut down ethylene plant, will lead to a further reduction in demand for naphtha.

Mitsubishi Chemical has shut one of its ethylene plants in eastern Japan earlier this year, and Sumitomo Chemical and Asahi Kasei are to shut two more of the 14 remaining in 2015 and 2016. Even with the three shutdowns, the Ministry of Economy, Trade and Industry (METI) expects excess ethylene output capacity of 1.7 mln tpa by 2020.

METI has twice ordered capacity cuts in Japan's refinery industry, which is beset with similarly bleak conditions. But the ministry doesn't intend to push for mandatory cuts at petrochemicals plants. Japan's ageing crackers, which split naphtha into ethylene and other plastics feedstocks, have also been struggling to compete with newer rivals in South Korea and Singapore with larger and more efficient plants.

New capacity is also expected to come up in the United States and China, threatening to overwhelm petrochemical margins in Asia. In the United States, 11 mln tons of new ethane crackers are planned by 2020 to take advantage of cheap, abundant supplies derived from shale gas.

As MRC reported before, in early November 2014, Japan's Idemitsu Kosan Co began restarting the 687,000-tonne-per-year naphtha cracker at its Tokuyama plant in western Japan, following an unplanned shutdown a week earlier. The shutdown came during a start-up after scheduled maintenance. We remind that Idemitsu Kosan had restarted the plant on 24 October after completing a scheduled maintenance of about 45 days.
MRC

Global LDPE sales to rise by 1.5% until 2021

MOSCOW (MRC) -- Low density polyethylene (LDPE) is one of the most commonly produced plastics and mainly used for packaging. According to a new study published by Ceresana, LDPE worth almost USD33 bln was sold worldwide in 2013. Ceresana expects global sales to rise by 1.5% p.a. until 2021, reported Plastemart.

Asia-Pacific single-handedly processed about 7.1 mln tons of LDPE in 2013. About 58% of this amount were consumed in China. Asian countries, China and India in particular, and the Middle East will remain the largest growth markets for LDPE. Due to strong competition by other types of polyethylene, future growth rates for LDPE demand are likely to fall short of overall economic development.

The LDPE markets in Western Europe and North America are largely saturated already and will grow only slightly. Several world regions are rapidly increasing their production capacities for LDPE. LDPE output in the Middle East is projected to rise at a high growth rate of 5% per year. New large-scale petrochemical complexes will commence production in upcoming years. These are often joint ventures of large international companies and regional enterprises. Various larger productions sites are to be constructed in North America and Asia-Pacific as well. Western Europe, on the other hand, will see the closure of LDPE plants.

LDPE is most commonly used for the production of films. About 63% of total demand stem from film production, especially packaging films as well as bags and sacks. Other important applications are rigid packaging and construction products, which can profit from new investments in infrastructure around the globe.

In Asia, on the other hand, it is especially films, LDPE packaging films in particular, that offer the largest growth potential, since Asian countries are increasingly adapting to Western standards for packaged food. In a global comparison, film extrusion is the most common technology for processing LDPE. Other technologies, namely extrusion coating, injection molding, and other processes like blow molding and rotomolding, account for a market share of only 37%.

The various world regions show only minor differences in regard to processing technologies. For example, extrusion coating is disproportionally often used in North America, while Eastern European countries use large amounts of LDPE not only in film extrusion, but also injection molding.

As MRC informed previously, Russian LDPE producers increased their exports by 23% over the first six months of 2014. As expected, the first months of the year accounted for the peak export sales, according to MRC ScanPlast.
Overall, Russian producers increased their LDPE sales in foreign markets (including the countries of the Customs Union) to 102,800 tonnes in the first half of 2014 versus 83,700 tonnes a year earlier.
MRC

BASF MasterFlow 9500 achieves DNV GL type approval certificate

MOSCOW (MRC) -- MasterFlow 9500 from Master Builders Solutions by BASF is the first product of its kind to receive a DNV GL (Det Norske Veritas Germanischer Lloyd) certificate for Offshore Concrete Structures, said BASF in its press release.

The Type Approval Certificate issued by the internationally acknowledged test and certification body, which specializes in oil, gas and maritime services as well as in energy and sustainability, officially confirms the quality of the offshore performance grout. "Being the first to receive this certificate feels like having received an award", says Luc Westhof, global key account manager wind turbine grouts at BASF. "The certificate assures that MasterFlow 9500 has been developed, tested and produced to the highest standards applicable in the industry, and it also guarantees maximum reliability across the entire lifetime of the offshore wind farm."

MasterFlow 9500 is an ultra-high strength high-performance offshore grout, a so-called exa-grout, with documented fatigue performance for time saving and durably secure grouting of offshore wind turbines foundations. The fast curing feature of the grout and its tolerance to very low temperatures speeds up the installation process and prolongs the timeframe for installation.

During the certification process, experts from BASF and DNV GL were working on testing and documenting material properties, assessing quality control of relevant aspects during the manufacturing process, product application and related installation guidelines as well as quality assurance documentation.

The evaluation of MasterFlow 9500 was conducted in accordance with DNV-OS-C502 (Section 9E). DNV GL implemented the certification scheme for structural grouts in this standard for Offshore Concrete Structures in September 2012 to provide a uniform approach for documenting material properties and performance for relevant applications.

In addition, MasterFlow 9500 also reduces the overall costs of offshore installations. The material develops a high strength very early on and can be applied at lower temperatures compared to conventional products. Considering the total cost of implementation, the time MasterFlow 9500 can save is a big factor in lowering the costs.
Also, provided the product is applied correctly, MasterFlow 9500 ensures a maintenance free connection between the tubular steel members for offshore wind turbine foundations.

As MRC informed before, in October 2014, BASF, the German chemicals giant, and Archroma agreed on the sale of BASF’s global textile chemicals business to Archroma, a supplier of specialty chemicals to the textile, paper and emulsions industries.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF had sales of about EUR74 billion in 2013 and over 112,000 employees as of the end of the year.
MRC

Dow realigns external reporting segments

MOSCOW (MRC) -- The Dow Chemical Company has announced that it is realigning its external reporting segments to better reflect Dow’s strategy to be low-cost and fully integrated across key value chains, while adding value through shared technology and end-market orientation, as per the company's statement.

The company also announced it is changing the allocation with certain expenses previously reported in its Corporate segment, to drive further visibility into operating performance at the segment level.

"Our new reporting segments are designed to align businesses within their key, integrated chemical envelopes, more effectively allocate resources by targeted end-markets, and provide increased visibility regarding their value drivers," said Howard Ungerleider, Dow’s executive vice president and chief financial officer. "As a result, we expect this new structure will improve modeling and peer comparison capabilities."

The new operating segment structure maximizes Dow’s integration benefits - either through molecular and value chain alignment, such as the company’s acrylic, chlorine, ethylene and propylene envelopes, or through the benefits derived from an enhanced, innovation-driven market focus.

The operating segments will include the following:

Agricultural Sciences – Will continue to operate under the same structure comprised of Crop Protection and Seeds;
Consumer Solutions – Previously part of Electronic and Functional materials, and includes Consumer Care, Dow Automotive Systems, and Dow Electronic Materials;
Infrastructure Solutions – Formerly named Coatings and Infrastructure Solutions, and is comprised of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions and Performance Monomers;
Performance Materials & Chemicals – Includes Chlor-Alkali and Vinyl, Chlorinated Organics, Epoxy, and Industrial Solutions and Polyurethanes;
Performance Plastics – Comprised of the Company’s previous Performance Plastics business groups, however now also includes key raw material inputs via the energy and hydrocarbons business groups that were formerly included in the Feedstocks and Energy segment.

In addition to segment and business changes, Dow is also changing the allocation of certain expenses previously reported within its Corporate segment, which will better reflect operating performance and profitability at the segment level. All leveraged functional costs, such as information systems, finance, human resources, legal and supply chain, will now be fully allocated to the segments. In addition, long term performance based compensation expense will now be allocated to the segments based primarily on employee alignment.

"These changes to Dow’s Corporate segment will improve clarity and accountability at the business level, and reinforces our overall focus on increasing transparency of our operations," Ungerleider added.

As MRC reported earlier, Dow Chemical has recently announced an increased divestiture target aligned to further enhance the value of its portfolio and support the company’s market-driven, integrated strategy. On track to complete its goal of realizing USD4.5 billion to USD6 billion in proceeds by year-end 2015, and with additional portfolio management actions underway, Dow is now increasing its divestiture target to USD7 billion to USD8.5 billion to be complete by mid-2016. Since 2013, the company has generated USD2.5 billion in proceeds, reallocating this capital to remunerate shareholders, fund growth and reduce debt.

The Dow Chemical Company is an American multinational chemical corporation. As of 2007, it is the second-largest chemical manufacturer in the world by revenue (after BASF) and as of February 2009, the third-largest chemical company in the world by market capitalization (after BASF and DuPont). Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

PP exports from Russia surged by 68% from January to October 2014

MOSCOW (MRC) -- Exports of polypropylene (PP) from Russia increased by 68% over the first ten months of 2014 and totalled about 138,000 tonnes. China is the key importer of Russian PP, according to MRC ScanPlast.


October PP exports from Russia rose to 11,500 tonnes from 7,100 tonnes in September. Overall, Russian plants exported about 138,000 tonnes of propylene polymers to foreign markets from January to October 2014 versus 82,000 tonnes over the same period of 2013. China accounted for the largest export quantities. The five largest importers of Russian PP also include Belarus, Ukraine, Turkey and Kazakhstan.

Such a significant increase in export sales of Russian producers was achieved by a launch of production at new plants in Omsk (Poliom) and Tobolsk (Tobolsk-Polymer) in 2013. To date, Russia's total PP production capacities are about 1.4 million tonnes per year.

Tobolsk-Polymer with the share of around 46% in the total exports became the key exporter over the stated period, while Tomskneftekhim and Poliom follow the leader.

MRC