French refiners lose EUR500 M in 2013 on Total strike

MOSCOW (MRC) -- French refinery losses may reach 500 million euros (USD689 million) this year as demand falls and profit margins are eroded by US imports, according to the country oil lobby, sid Hydrocarbonprocessing.

"The situation is very difficult," said Jean-Louis Schilansky, head of the Paris-based Union Francaise des Industries Petrolieres, which represents companies including ExxonMobil and Total, the country’s biggest refiner.

Workers at all five of Total’s French refineries have participated in a strike in recent days, demanding the explorer use profit from other parts of the business to pay bigger salary increases. The company has shut plants and plans further reductions in its European refining operations.

Refiners are mothballing plants across Europe where overcapacity remains as high as 10%, according to UFIP. Over the past four years LyondellBasell, Petroplus and Total have stopped refining at their plants at Berre, Petit-Couronne, Reichstett and Dunkirk.

France now has eight working plants compared with 24 in 1977, with Exxon operating two, Ineos Group one and Total the rest.

European margins dipped to 13 euros a metric ton this month after rising as high as 32 euros a ton in February to give an average of 18 euros a ton for the year, according to data on UFIP’s website. This compares with averages of 34 euros a ton last year and 14 in 2011.

French refiners lost about 1 billion euros a year in the three years between 2009 and 2011 amid an economic slump, UFIP reported. They broke even last year when margins were above the 30 euros-a-ton level the organization considers is needed by refiners to break even.

The region’s refiners are struggling to compete with plants in the US, run using relatively cheap natural gas, Schilansky said. A shale gas boom in the US has pushed gas prices lower.

Total has set a target to reduce its European refining and petrochemicals business by 20% from last year to 2017. As the biggest refiner in western Europe, where it operates eight plants, the company has borne the brunt of lower margins and a drop in the consumption of fuel products.

Total reported third-quarter profit, excluding changes in inventories, fell to 2.72 billion euros from 3.36 billion euros a year earlier, the Courbevoie, France-based company said in October.
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MOSCOW (MRC) -- EU proposals to limit the amount of free emission permits in its cap-and-trade program boost industry costs, and are one reason Dow limited capacity expansion in the region for the past 12 years, said Hydrocarbonprocessing.

That compares with Dow's USD4 billion of US investment planned for the next four years. Europe’s "backfiring" climate and energy policies are adding to high natural gas costs and holding back Dow Chemical's investment in the region, said the company’s director of global climate change policy. European Union proposals to limit the amount of free emission permits in its cap-and-trade program boost industry costs, and are one reason Dow and other chemical makers limited refining capacity expansion in the region for the past 12 years, Russel Mills said by phone from Zurich on Dec. 12.

That compares with the Midland, Michigan-based company’s USD4 billion of US investment planned for the next four years, he said.

Dow, the biggest US chemical maker, joined companies including ExxonMobil in a Dutch court challenge to the European Commission’s decision to reduce the pollution rights it hands out to factories, Mills said. Manufacturers may seek compensation of about 4 billion euros (USD5.5 billion) in total for the lost free permits, according to Utility Support Group, an adviser to some Dutch chemical factories on the matter.

Commission spokesman Isaac Valero-Ladron in Brussels declined to comment when reached by e-mail. The EU is seeking to curb a surplus of permits in its carbon market that pushed prices to a record low and eroded the incentive for companies to invest in emission-reducing technologies. The commission decided in September to lower the handout of free allowances to factories by 12% in the eight years through 2020.

European gas prices are already relatively high, with the cost of the fuel in the UK more than twice the level in the US. BASF in Germany, India’s Tata Chemicals and Lotte Chemical of South Korea shut plants in Britain this year.

EU carbon permits for December 2014 dropped 0.8% on Monday to 4.88 euros a metric ton on ICE Futures Europe in London. The benchmark contract was as high as 31 euros a ton in 2006.

As MRC wrote before, Dow Elastomers, a business unit of The Dow Chemical Company unveils a breakthrough compatibilization technology that offers a tuneable range of new-to-the-world, highly effective solutions for combining both non-polar and polar polymers with polypropylene.

The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene (PE), polypropylene (PP), and synthetic rubber. In 2012, Dow had annual sales of approximately USD57 billion. The сompany's more than 5,000 products are manufactured at 188 sites in 36 countries across the globe.
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MOSCOW (MRC) -- The State Oil Company of Azerbaijan (SOCAR) has appointed Fugro to conduct topographic surveys of areas designated for construction of new oil-gas and petrochemical complex SOCAR OGPC, as per Plastemart.

Along with BP and Total, Furgo will conduct research with use of technology LIDAR and aerial photography.
Under Cabinet’s decision, the complex was allotted 4,200 hectares on the border of Garadagh district of Baku and Absheron district near the Sangachal terminal.

As MRC wrote before, SOCAR in 2012 signed a contract to build a plant for the production of polypropylene and polyethylene of high density with an annual capacity of 200,000 and 100,000 tons respectively. Construction of these facilities is planned in the Sumgait Chemical Technology Park.

The State Oil Company of Azerbaijan Republic (SOCAR) is the state-owned oil and natural gas corporation of Azerbaijan. It produces oil and natural gas, operates the country's two oil refineries and the running of oil and gas pipelines throughout the country.

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MOSCOW (MRC) -- German plastics machinery maker KraussMaffei (KM, Munich) will start producing and supplying injection moulding machines from its plants in Haiyan, China, in the spring of 2014, said Plasteurope.

Production at the plant has recently doubled. One of the first machines to be supplied completely from Haiyan will be an MX 1300-8100 for Yanfeng USA Automotive Trim System (Harrison Township, Missouri). Yanfeng USA is a wholly-owned subsidiary of Yanfeng Visteon Automotive Trim System, headquartered in Shanghai / China. The machine will be equipped with the new "MuCell" system, a process for the physical foaming of plastic parts which makes them up to 35% lighter than comparable components.

KraussMaffei and Yanfeng have also agreed to cooperate further globally in the area of thermoplastic and duroplastic processing. Discussions are currently progressing on other machines. "We are delighted to provide our know-how to support Yanfeng as a strong supplier on the global automotive market and we see great potential for further cooperation,” said Frank Peters, vice president of sales at KraussMaffei. In addition to the expansion of its Chinese plants, Yanfeng said other production sites in North America and Europe are planned for 2014. The company currently operates plants in China, the US and India.

As MRC wrote before, two leading pipe manufacturers from Russia have recently chosen KraussMaffei Berstorff as a systems supplier for premium-quality technology and invested in PO pipe extrusion systems. Isoljazionny Trubny Zawod (ITZ) is seeking to enter into a long-term partnership with KraussMaffei Berstorff. Polyplastic Group is already a satisfied KraussMaffei Berstorff customer and, consequently, has placed a follow-up order.
MRC

MOSCOW (MRC) -- BASF, the world’s leading chemical company, will build a compounding plant for engineering plastics Ultramid (polyamide) and Ultradur (polybutylene terephthalate, PBT) compounds in Yesan, Chung Nam Province, Korea, according to the company's press release.

The new plant is expected to begin construction by first half of 2014 and operations from the end of 2015, and will create more than 30 new jobs.

With an initial annual capacity of 36,000 metric tons, the new plant will more than double the total compounding capacity of BASF’s engineering plastics in Korea.

With this project and the capacity expansion of BASF's compounding plant in Pudong/Shanghai (China), which has already been announced, BASF’s overall compounding capacities in Asia will increase from the current 130,000 to a total of 225,000 metric tons.

"As the leading producer and preferred business partner of engineering plastics, we continuously strengthen our position in the key markets. Our investment in Yesan is a milestone in Korea," said Mr. Raimar Jahn, President, Performance Materials, BASF.

"This is our first plant at the Yesan site in Korea and it is an important contribution to achieve our strategic targets. With its excellent infrastructure, Yesan offers a favorable environment for the further expansion of the plant in the future to meet the growing demand of our engineering plastic solutions for the automotive and electrical & electronic industry in Korea," said Mr. WooSung Shin, Managing Director, BASF Korea.

Similar to the compounding plant in Ansan, Korea and other Asian locations, the new plant in Yesan will produce Ultramid and Ultradur compounds. Ultramid and Ultradur are used, for example, in automotive parts as well as the electrical and electronics industry. Some innovative applications include seat structures, oil sump modules, sensors, engine mounts, connectors and highly integrated laser-structured electronic devices.

As MRC informed previously, BASF is building a new Ultramid polymerization plant with a capacity of 100,000 metric tons per year in Shanghai, China. The new plant is planned to start up in 2015.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF 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 EUR72.1 billion in 2012.
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