■ Dow Lifts Caustic Force Majeure Dow Chemical has lifted the force majeure on caustic soda from its Freeport, TX facility, a company spokesperson says. Dow had declared the force majeure in June, citing an unspecified “critical production issue” at the facility that compounded operational and equipment disruptions (CW, June 16, p. 8).
■ Shengda Tech Delays Fertilizer Buy Shengda Tech Inc. ( Tai’an City, China) says it needs additional time to close the acquisition of JinanFertilizer Co., Ltd. (Shandong, China), and that its Bangsheng Chemical facility was closed as scheduled on October 31. The company did not provide further details on the closure. ShengdaTech says it plans to acquire Jinan Fertilizer and consolidate its current Tai’an City coal-based chemical business into the Jinan operation year-end. “The government has encountered unexpected delays in completing all procedural steps required to finalize negotiation and approval for this transaction,” says Xiangzhi Chen, president and CEO of ShengdaTech.
■ Sabic, APCC Start Saudi PP Projects Sabic says it has started operations at the world’s single-largest polypropylene (PP) train at Al-Jubail, Saudi Arabia. The facility has a PP nameplate capacity of 500,000 m.t./year and uses Dow Chemical’s gas-phase Unipol PP technology. Separately, Advanced Polypropylene Co. (APCC; Jubail, Saudi Arabia) has started operations at a 455,000 m.t./year PP unit at Al-Jubail. The plant uses Lummus’ Novolen advanced gas-phase PP technology.
Global demand for mono-ethylene gly- a worldwide slowdown, but it is difficult to col (MEG) in China, the largest MEG gauge the full potential impact of these devel-consumer, is expected to fall amid the opments,” Chhoa says. Total global MEG tanking global economy. China’saverage MEG demand is currently forecast to grow by less demand growth had been f orecast than 1 million m.t./year. “It looks at 6.5%/year from 2007-15, before certain that the MEG sector is facing the global financial crisis. a period of intensifying pressure,” he “Until recently, industry observ- says. ers remained bullish about the Industry watchers say that the prospectsforglobal MEGgrowth, forecast for China is much more propelled primarily by soaring pessimistic than in previous years, demand in China. However, in because China is exporting less poly-light of the current uncertainty ester products, which use MEG as a over the global economy, most Chhoa: MEG sector feedstock. “As China clears out all its are now revising their growth facing pressure. inventory of high-cost petrochemicals forecasts downwards,” says Thomas Chhoa, and finished goods, demand is collapsing,” general manager, ethylene oxide/glycols for sourcessay.
Shell Chemicals, at CW ’s China Chemicals Meanwhile, the global MEG industry Industry Conference in Shanghai late last is likely to face some turbulence as a result month. of the large volume of new capacity that is “China accounts for over a third of global steadily coming onstream, Chhoa says. “When MEG demand, and some analysts have sug- announced capacity increases are added to gested that China could consume more than existing global capacity and measured against half of the world’s production by 2015,” Chhoa current and projected demand, an imbalance is says. China’s demand growth for MEG in looming,” hesays. recent years has been driven by “a combina- Industry observers say that the glycol market tion of increases in both domestic and export has begun to cycle down and, with 2. 8 million demand for downstream products, primarily tons of capacity coming online in the Mideast in polyester fiber and polyethylene terephthalate 2009, there will be a surplus that will last for sev- (PET) resin,” he says. eral years. “We’re going to see a surge of supply
“Given current upheavals in the global coming when demand is about to come down,” economy, it looks as though we are facing amarketplayersays. —lindsey bewley
PETROCHEMICALS
■ Solvay Drops Sulfur Surcharge Solvay says it will suspend the sulfur surcharge it implemented in August on sulfite products. “The cost of sulfur has returned to the level needed to suspend the surcharge,” says Michael D. Wood, business manager/sulfite products at Solvay.
■ Caustic Soda Prices Increase Dow Chemical, Olin, and Formosa each say they will increase caustic soda prices in North America by $100/m.t. for diaphragm grade material and by $120/m.t. for membrane grade. The move comes after PPG Industries increased its global caustic soda price by $100/m.t. and OxyChem increased its prices $115/m.t.
New petrochemical capacity from Mideast producers is expected to weaken producer margins amid an industry downturn and to harm the credit risk profile of petrochemical makers, says Standard & Poor’s (S&P; New York). Petrochemicals are experiencing a downward trend in production and capacity growth, S&P says.
“The downcycle has arrived,” says Tobias Mock, director of chemical sector ratings, S&P. New Mideast petchem plants are coming online “quarter by quarter,” though there have been some delays due to engineering and
construction costs, Mock says. Demand is weakening, however, he says. That has left the industry the question of “how will the petrochemical cycle will play out,” he adds.
Integrated petchem producers are hurt if their operating rates decline, Mock says. “Only if they run close to full capacity [can] they make a lot of profit,” he says. “This sensitivity and dependency on demand will be an important point in the next [few] years, and we’re concerned with the decline of demand, because this time the petrochemical downturn could be severe.” —lb
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