Nicholas
Piramal Acquires Avecia Business
Nicholas Piramal agreed to purchase the pharmaceutical
custom synthesis business of Avecia for $16.3 million
(Euro 14.0 million, GBP 9.5 million). The sale
includes all operations and assets of Avecia
Pharmaceuticals in the U.K, plus Torcan Chemicals,
which is located in Canada. Avecia, which will be left
with its electronic materials and biotech businesses,
will apply the proceeds to its pension fund. This
transaction follows on the heels of the sale of
Avecia's fine chemicals business to KemFine in
September, 2005.
Famous
Quotes of the Month
- The man who does not make any mistakes does
not usually make anything. (William Connor
Magee)
- The success of most things depends upon
knowing how long it will take to succeed.
(Baron de Montesquieu)
- We seldom attribute common sense except to
those who agree with us. (Francois La
Rochefoucauld)
- Ability will never catch up with the demand
for it. (Malcolm Forbes)
- All progress requires change. But not all
change is progress. (John Wooden)
Why
Do Scabs Itch So Much?
Actually, scabs don't itch. Scabs are just
crusts of dried blood and fiber that cover a
wound. It is the wound that itches. In the
healing process, some of the nerve fibers that
mediate both pain and itch become irritated
and inflamed. This process leads to the itch
we encounter. This "itch" is
actually a small pain. If the wound were
deeper, we would then experience frank pain.
So what happens during the recovery period to
irritate nerve fibers? Well, wounds repair
themselves and shrink in size, partly because
of the elasticity of the skin but partly
because the scab pulls on the wound. Itching
can also be caused by infections or small
cracks in the scab as it dries. That is why
some dermatologists treat wounds with moist
dressings, allowing the wound to heal without
scabbing.
Arkema
to be Independent in May 2006
In May 2006, Arkema will be spun-off from
parent company Total and listed as a separate
entity. Arkema, which includes Total's
industrial and performance chemicals and
vinyls businesses, was created as a subsidiary
in 2004. Total will assume responsibility for
the pensions of current retirees and retain
ownership of all non-operational industrial
sites. Arkema's first goal will be to
establish its profitability, and the company
is considering small acquisitions to build its
position in a few niche businesses. Arkema
will also make investments around the globe,
with improvements and expansions of facilities
in the U.S., Europe, and Asia. President and
CEO Thierry Le Henaff would like to see
Europe's registration, evaluation and
authorization of chemicals (Reach) legislation
adopted globally so that European companies do
not become less competitive with those located
in other regions of the world.
Degussa
Struggles in Fine Chemicals
In response to significantly reduced earnings
by its fine chemicals business, Degussa will
take a $1 billion (Euro 830 million) write-off
and accelerate its restructuring efforts. The
acquisition of Laporte in 2001 for $1.77
billion accounts for a large part of the
write-off, which has affected the building
blocks, exclusive synthesis & catalysts,
and peroxygen chemicals businesses. The
company sites overcapacity and increased
low-cost Asian competition as contributing to
its poor financial performance. Plant
closures, job cuts, and the sale of the
Laporte business are all under consideration
as part of the restructuring plan.
DSM
Lays Out Growth Strategy
DSM will look to grow is business through
restructuring, acquisitions, development of
innovative products, and expansion in the
Chinese market. DSM's Vision 2010 strategy
involves increasing expected earning levels
for all business units. The company will be
comprised of four new business sectors -
Pharmaceuticals, Nutrition (from DSM
Nutritional Products and DSM Food Additives),
Performance Materials, and Chemicals.
Acquisitions will be focused on performance
materials, while the pharma business will
undergo further restructuring. The company
plans to increase sales of innovative products
to $1.2 billion (Euro 1 billion) by 2010
through R&D investment and acquisitions.
The goal is to achieve 50-60 percent of sales
from specialty chemicals by 2010. Areas of
R&D focus include white (industrial)
biotechnology, personalised nutrition,
biomedical materials and specialty packaging.
DSM also plans to double its annual sales in
China to $1 billion by 2010. The overall
strategy will be to grow production closer to
end markets.
PolyOne
Loses CEO
Citing the need for new leadership for the
next phase of PolyOne's evolution, president,
CEO, and director Thomas Waltermire resigned,
effective immediately. PolyOne appointed
non-executive chairman of the board William
Patient to take Waltermire's place until a
permanent replacement can be found.
Economic
Impact of Hurricanes Less Than Predicted
While hurricanes Katrina and Rita have
decreased oil and gas supplies, their negative
impact on the U.S. economy appears to be less
than initially expected. The American Gas
Association reported that as much as 1-2
billion cubic feet per day of gas production
in the Gulf Coast area may remain shut down
through the winter, resulting in further price
increases. A full recovery is expected,
though, by the end of March 2006, according to
U.S. energy officials. Many chemical plants
shut down in preparation for Hurricane Rita
are now back online, but production is limited
due to feedstock and energy shortages. Several
companies have declared force majeuere at
their Gulf Coast facilities and announced
expected lower earnings as a result of the
hurricanes. On the positive side, the health
of the U.S. economy before the hurricanes has
enabled it to absorb much of the financial
impact. The global manufacturing sector
remains strong and will assist with economic
recovery in the U.S. In addition, while the
short term effects of the storms have been
negative, the chemical industry is expected to
benefit from increasing sales generated by
reconstruction efforts in the long term.
German
Chemical Companies Face New Pension Rules
Changes in accounting principles are leading
German chemical companies to restructure their
pensions with the goal of optimizing their
balance sheets. Many are transferring money
into standalone contractual trust arrangements
(CTAs) in order to externally fund their
pension obligations. The move is designed to
improve certain financial ratios and reduce
some of the risk associated with pensions.
BASF, German fertilizer, pesticides and salt
producer K+S, and energy group E.On are all
establishing CSAs for this purpose. Other
companies such as Degussa and Bayer are also
considering such a restructuring.
Spanish
Chemical Industry Faced with Striking Truckers
More than 130,000 trucks were off the road in
Spain as the Confederacion Espanola de
Transporte de Mercancias (CETM), the country's
biggest national truck federation, went on
strike. Some plants were forced to shut down
operations and stop delivery of products,
while others used armed guards to ensure the
safety of their goods as they were routed to
their destinations. According to the Spanish
Chemicals Federation (FEIQUE), many chemical
producers in Spain do not have their own truck
fleets, and therefore must wait until the
strike is over. The CETM is demanding removal
of a Euro 2 per liter healthcare tax on fuel.
The Spanish government has met with the
federation, but no date has yet been set for
the end of the strike.
Altana
Pharmaceuticals May be for Sale
Despite announcements earlier in 2005 that
Altana would spin off its chemicals business
and expand its pharma operations, the company
recently hired Goldman Sachs to explore
options with regard to its pharmaceuticals
business. The options include the sale of the
pharma operations for a potential $7 billion.
Neither Altana nor Goldman Sachs provided any
comments.
BASF
Unloads Its Ceramic Decoration Color Business
BASF sold its glassware, ceramics and
porcelain decoration color business to WC
Heraeus for an undisclosed amount. The
acquisition does not include facilities or
employees. Heraeus sees the purchase as
complementary to its existing product line.
The company will manufacture the BASF products
in Vienna.
PolyCarbon
Acquires Borregaard Synthesis
PolyCarbon Industries (PCI) has acquired the
Newburyport, MA facility of Borregaard
Synthesis Inc. and will change its name to PCI
Synthesis Inc. by the end of 2005. The move
follows PCI's loss of its main manufacturing
facility to fire. PCI will merge the custom
synthesis businesses of the two companies and
create two units - PCI Pharma Products and PCI
Custom Synthesis. Prior to the incident that
damaged PCI's manufacturing facility in
Leominster, MA, the company was considering
alternative expansion scenarios in order to
produce a new line of active ingredients and
also meet the demand for its existing line of
laboratory products and custom synthesis
services. The Borregaard facility in
Newburyport, MA, has many more and much larger
volume reactors and a much greater total
capacity (18,000 gallons vs. 1,200). The
R&D efforts of the two companies will be
combined at PCI's Devens, MA facility. The
immediate focus of PCI is to get the new
facility inspected by the FDA and approved for
GMP production of APIs.
Price
Hikes for Paper Chemicals
Flat or slightly declining demand and rising
raw material and energy prices are leading
paper chemical manufacturers to raise prices
of their products. Fine and coated paper is
experiencing the strongest growth, and
chemicals targeted at this application are
experiencing the greatest price increases.
Typically prices hikes range from 5-20
percent. Some companies are also adding energy
surcharges, while others are dropping price
breaks for certain customers due to rising
freight costs.
European
Demand for Biopolymers Increasing
Biopolymers are moving from a niche market to
the mainstream. Consumption in Europe has
increased 2.5 times between 2001 and 2004 and
is expected to grow from 20,000 tonne to 1
million tonne by 2015. Long-term potential for
biopolymers in Europe is predicted to be as
much as 15 million tonne per year. Bio-based
1,3-Propanediol, developed by DuPont and Tate
& Lyle, will be used by DuPont to produce
the polyester Poly(trimethylene terephthalate)
(tradename Sorona). Proctor & Gamble,
along with Kaneka, is working to commercially
produce
Poly-3-hydroxybutyrate-co-3-hydroxyhexanoate
(PHBH) for the packaging industry. Challenges
to the industry in Europe include high costs,
competition with traditional polymers, and
lack of consumer education.
BP
Finds Buyer for Innovene
BP agreed to sell its olefins, derivatives and
refining subsidiary Innovene to Ineos for $9
billion (Euro 7.46 billion). Ineos, an
employee owned organization, borrowed $10
billion (Euro 8.3 billion) from three banks to
make the purchase. The acquisition will make
Ineos a $30 billion company and the fourth
largest independent petrochemicals firm,
according to a spokesperson. It fits with the
company's growth strategy and increases
upstream integration as well. For BP, the
decision to sell Innovene rather than launch
an IPO eliminated any market uncertainty.
Ineos will likely create at least four
companies based on product lines once Innovene
has been integrated into the company.
To avoid regulatory issues, Innovene's
Ethylene oxide assets and business in Europe
are not included in the deal. The U.S. Federal
Trade Commission declined to comment on
whether or not it will investigate the
proposed acquisition. The transaction is
likely to be reviewed by the Department of
Justice. The French chemicals trade union
federation CGT is concerned that the $10
billion loan will lead to reduced profits and
thus reduced pay for employees. The group's
trade unions are considering what action to
take will possibly coordinate their activities
with trade unions in the U.K.
Because the price Ineos has agreed to pay for
Innovene is so hefty, some analysts predict
that other spin-offs or outright sales of
chemical divisions by European oil companies
may occur. Some possibilities include Repsol's
chemicals business and energy group Eni's
Enichem operations. The spin-off of Arkema
from Total is already in the works.
Chinese
Polyester Makers Struggle
Rising energy and feedstock costs combined
with declining prices have led to
significantly reduced margins and ultimately
resulted in the closure of 10 Polyester
production lines in eastern China. Producers
in Jiangsu and Zhejiang provinces together
have shut down approximately 2.4 million
tonne/year of Polyester capacity. The
breakdown in talks between the U.S. and China
about textile trade issues and a decline in
both domestic and export demand have all
contributed to the recent price reductions.
Many producers are conducting maintenance
operations while the facilities remain closed.
Paraffin
Wax Prices Rising in Response to Short Supply
Tight supplies of paraffin wax have driven
prices to record levels in the Americas. Three
ExxonMobil facilities are operating on a
limited basis as a result of damage caused by
hurricanes Katrina and Rita. Citgo Petroleum
has experienced reduced production
capabilities since early September due to a
separate incident. The price for fully refined
paraffin waxes has climbed nearly 10 cents/lb.
Candle makers are turning to alternatives such
as vegetable waxes in response to the high
prices.
Positive
Outlook for Commodity Chemicals
Prices for commodity chemicals will continue
to climb in the fourth quarter, and margins
will rise along with them. Tightness of supply
is not expected to be alleviated in the near
future, as many plants remain shut down
following hurricanes Katrina and Rita.
Analysts are predicting that pricing power
lost in the first half of the year will be
recovered and enable producers to also recover
their margins, even though energy and
feedstock costs are higher. Looking into 2006,
tightness is expected to be the norm even
though most facilities will be back on stream,
because many plant turnarounds are scheduled
to take place in the early part of the year.
Price
for PVC Spikes
Manufacturers of Polyvinyl chloride have
introduced price hikes that are more than
twice the amount initially announced for
October transactions. The dramatic surge in
prices is attributed to higher Ethylene and
natural gas costs. In addition, inventories of
PVC are low and demand is increasing, so
operating rates are consequently at high
levels. The shut down of Formosa's 1.6-billion
lbs/year PVC plant at Point Comfort, TX is
also expected to have a major effect on the
industry.
Akzo
Invests in Egypt
Akzo Nobel acquired a 60 percent share of
Egyptian powder coatings producers Coatech For
Chemical Industries for an undisclosed amount.
The joint venture will give Akzo a point of
entry into the rapidly growing Egyptian market
as well as surrounding markets in the Middle
East. The company will be renamed Akzo Nobel
Powder Coatings and will be headed by Coatech
co-founder Hanni Radwan.
The
Cost of Paint is on the Rise
Rising raw material, energy, and fuel costs
have forced paint manufacturers to raise
prices, especially for those destined for the
automotive and industrial markets. Many are
also adding surcharges to cover the additional
costs. The two U.S. Gulf Coast hurricanes only
compounded the cost issue Announcements by
various paint producers indicate that prices
will increase on the order of 5-25 percent,
depending on the company and the specific
application.
OMV
Expands in Petrochemicals
With the closure of its deal with Abu Dhabi's
International Petroleum Investment Co (IPIC)
to acquire the remaining 50 percent share of
plastics producer Borealis, OMV has taken an
initial step to strengthen its position in
petrochemicals. OMV and IPIC paid Statoil
$1.11 billion (Euro 920 million) for the
business, which has led to OMV holding a 35
percent stake in Borealis and IPIC owning the
remaining 65 percent. Borealis is a large
customer of OMV, and the share increase places
OMV in a stronger competitive position. OMV
also plans to double its refining capacity,
mostly through acquisitions within Europe. Its
Borouge polyolefins joint venture in Abu Dubai
is undergoing a $2.5 billion (Euro 2.1
billion) expansion as well. The overall goal
is to become Central Europe's major integrated
oil and gas production and refining company.
EU
Parliament Rejects Changes to REACH
The environment committee of the European
Parliament voted to reject amendments to the
registration, evaluation and authorization of
chemicals (Reach) legislation that would
introduce a risk-based approach for
prioritization and reduce requirements for
intermediate volume chemicals (10-100
tonne/year). In addition, the group voted for
limiting registration of dangerous substances
to a five year period and allowing the use of
these compounds only if safer alternatives do
not exist. Reduced requirements will be
considered for low volume products (1010
tonne/year), and the 'one substance, one
registration' proposal was supported. Previous
parliamentary committees have approved some of
these changes, and thus a fight is expected
when the full parliamentary plenary vote is
held in mid-November. Final approval of the
Reach legislation may take place in the first
quarter of 2006.
Nobel
Prize Awarded for Development of Metathesis
Reactions
The 2005 Nobel Prize in Chemistry has been
awarded to Yves Chauvin, Robert Grubbs and
Richard Schrock for their work on developing
metathesis chemistry for organic synthesis.
Metathesis has become one of the most
important reactions in the chemical industry.
The first commercial example was the Shell
higher olefins process (SHOP), used to produce
high molecular weight polyolefins. Companies
are currently exploring the use of metathesis
chemistry for production of Propylene from
Ethylene and Butylene. Chauvin explained the
mechanism of metathesis reactions and
determined what types of metals might be
effective catalysts in 1971. Schrock developed
Tungsten and Molybdenum catalysts in 1990 that
efficiently affected metathesis reactions.
Grubbs developed an air-stable Ruthenium
metathesis catalyst that is more commercially
viable.
Refinery
Production at Low Due to Hurricanes
Following hurricane Rita, U.S. oil production
has dropped to its lowest level since the
spring of 1987, down to 70 percent of total
capacity. Operating rates were already reduced
to 88 percent following hurricane Katrina. In
addition to 4 plants still closed following
the first storm, 18 refineries in the Gulf
Coast region remain closed after the second
hurricane. There are 43 refineries in the area
which produce more than 40 percent of U.S.
refining capacity. Producers are working as
quickly as possible to make repairs and
re-start shut down operations.
DSM will look to grow is business through
restructuring, acquisitions, development of
innovative products, and expansion in the
Chinese market. DSM's Vision 2010 strategy
involves increasing expected earning levels
for all business units. The company will be
comprised of four new business sectors -
Pharmaceuticals, Nutrition (from DSM
Nutritional Products and DSM Food Additives),
Performance Materials, and Chemicals.
Acquisitions will be focused on performance
materials, while the pharma business will
undergo further restructuring. The company
plans to increase sales of innovative products
to $1.2 billion (Euro 1 billion) by 2010
through R&D investment and acquisitions.
The goal is to achieve 50-60 percent of sales
from specialty chemicals by 2010. Areas of
R&D focus include white (industrial)
biotechnology, personalised nutrition,
biomedical materials and specialty packaging.
DSM also plans to double its annual sales in
China to $1 billion by 2010. The overall
strategy will be to grow production closer to
end markets.
Changes in accounting principles are leading
German chemical companies to restructure their
pensions with the goal of optimizing their
balance sheets. Many are transferring money
into standalone contractual trust arrangements
(CTAs) in order to externally fund their
pension obligations. The move is designed to
improve certain financial ratios and reduce
some of the risk associated with pensions.
BASF, German fertilizer, pesticides and salt
producer K+S, and energy group E.On are all
establishing CSAs for this purpose. Other
companies such as Degussa and Bayer are also
considering such a restructuring.
Biopolymers are moving from a niche market to
the mainstream. Consumption in Europe has
increased 2.5 times between 2001 and 2004 and
is expected to grow from 20,000 tonne to 1
million tonne by 2015. Long-term potential for
biopolymers in Europe is predicted to be as
much as 15 million tonne per year. Bio-based
1,3-Propanediol, developed by DuPont and Tate
& Lyle, will be used by DuPont to produce
the polyester Poly(trimethylene terephthalate)
(tradename Sorona). Proctor & Gamble,
along with Kaneka, is working to commercially
produce
Poly-3-hydroxybutyrate-co-3-hydroxyhexanoate
(PHBH) for the packaging industry. Challenges
to the industry in Europe include high costs,
competition with traditional polymers, and
lack of consumer education.
Rising energy and feedstock costs combined
with declining prices have led to
significantly reduced margins and ultimately
resulted in the closure of 10 Polyester
production lines in eastern China. Producers
in Jiangsu and Zhejiang provinces together
have shut down approximately 2.4 million
tonne/year of Polyester capacity. The
breakdown in talks between the U.S. and China
about textile trade issues and a decline in
both domestic and export demand have all
contributed to the recent price reductions.
Many producers are conducting maintenance
operations while the facilities remain closed.
With the closure of its deal with Abu Dhabi's
International Petroleum Investment Co (IPIC)
to acquire the remaining 50 percent share of
plastics producer Borealis, OMV has taken an
initial step to strengthen its position in
petrochemicals. OMV and IPIC paid Statoil
$1.11 billion (Euro 920 million) for the
business, which has led to OMV holding a 35
percent stake in Borealis and IPIC owning the
remaining 65 percent. Borealis is a large
customer of OMV, and the share increase places
OMV in a stronger competitive position. OMV
also plans to double its refining capacity,
mostly through acquisitions within Europe. Its
Borouge polyolefins joint venture in Abu Dubai
is undergoing a $2.5 billion (Euro 2.1
billion) expansion as well. The overall goal
is to become Central Europe's major integrated
oil and gas production and refining company.
The environment committee of the European
Parliament voted to reject amendments to the
registration, evaluation and authorization of
chemicals (Reach) legislation that would
introduce a risk-based approach for
prioritization and reduce requirements for
intermediate volume chemicals (10-100
tonne/year). In addition, the group voted for
limiting registration of dangerous substances
to a five year period and allowing the use of
these compounds only if safer alternatives do
not exist. Reduced requirements will be
considered for low volume products (1010
tonne/year), and the 'one substance, one
registration' proposal was supported. Previous
parliamentary committees have approved some of
these changes, and thus a fight is expected
when the full parliamentary plenary vote is
held in mid-November. Final approval of the
Reach legislation may take place in the first
quarter of 2006.
The 2005 Nobel Prize in Chemistry has been
awarded to Yves Chauvin, Robert Grubbs and
Richard Schrock for their work on developing
metathesis chemistry for organic synthesis.
Metathesis has become one of the most
important reactions in the chemical industry.
The first commercial example was the Shell
higher olefins process (SHOP), used to produce
high molecular weight polyolefins. Companies
are currently exploring the use of metathesis
chemistry for production of Propylene from
Ethylene and Butylene. Chauvin explained the
mechanism of metathesis reactions and
determined what types of metals might be
effective catalysts in 1971. Schrock developed
Tungsten and Molybdenum catalysts in 1990 that
efficiently affected metathesis reactions.
Grubbs developed an air-stable Ruthenium
metathesis catalyst that is more commercially
viable.
