October 2005 Informex to be held in Orlando in 2006 Previously scheduled to be held in New Orleans, CMP Information, the organizers of the Informex exhibition, have announced plans to hold the 2006 Informex Exhibition in Orlando. Originally scheduled for February 2006, the city of New Orleans has cancelled all exhibitions at the Morial Convention Center through March 2006 as a result of the effects of Hurricane Katrina. CMP has changed the dates of the exhibition to February 14-17, a week earlier than originally planned. The exhibition will be held at the Orange County Convention Center.   Famous Quotes of the Month - Don't manage activity; manage results. (Anonymous) - You can't measure success if you have never failed. (Steffi Graf) - Some cause happiness wherever they go; others, whenever they go. (Oscar Wilde) - Problems are only opportunities in work clothes. (Henry Kaiser) - The world can only be grasped by action, not by contemplation. (Jacob Bronowski) Why Is Rhode Island Called an Island When It Isn't an Island? Historians are confident that originally "Rhode Island" referred not to the whole territory but to what we now call Aquidneck Island, where Newport is located. Most likely, "Rhode Island" was coined by explorer Giovanni da Verrazano, who referred in his diary of his 1524 voyage to an island "about the bigness of the Island of Rhodes," a reference to its Greek counterpart. A century later, Roger Williams referred to "Aqueneck, called by us Rhode Island...." We do know that in 1644, the Court of Providence Plantation officially changed the name of Aquidneck to "The Isle of Rhodes, or Rhode Island." The entire colony, originally settled in 1636, was known as "Rhode Island and Providence Plantations." When Rhode Island attained statehood, its name was shortened to Rhode Island, befitting its diminutive size. Acetic Acid Case Settled in Favor of Celanese A Taiwanese court ruled in favor of Celanese with regard to its claim that China Petrochemical Development Corporation (CPDC) infringed upon Celanese's Acetic acid patents. The company was awarded $28 million (Euro 23 million). Celanese alleged that CPDC used its technology to increase capacity at one of its plants. The decision has been upheld by the Taiwanese Supreme Court. China Most Attractive Nation for Investment In the first half of 2005, 27 percent of global manufacturing projects were located in China, according to IBM-Plant Location International. The U.S. followed with 12 percent, and India was third with 6 percent. European countries together accounted for 23 percent, with the Czech Republic leading these nations. China is attractive because of its large market and growth potential, cost efficiencies, and access to skilled labor. To date, most companies have focused on downstream operations in China. Many, however, have moved toward locating R&D and support services in the country as well. Solvay just announced that it is building a new technical center in Shanghai that will provide R&D services for its performance polymers business. W.R. Grace has opened its Grace China headquarters in Shanghai and a technical service center in Beijing. Other regions that are receiving investment interest include Russia, Eastern Europe, and the Middle East. Import Duties Placed on Detergent Chemicals Going to Russia Effective September 18, 2005, imports of chemicals used in liquid washing detergents into Russia will have an added duty of 5-15 percent. Solutions of Alkyl amine oxide (5-15 percent) and Alkyl ethoxy sulphate (30-60 percent) will be subject to a 5 percent duty, while all other chemicals used for this purpose will be subject to a 15 percent duty. New Positive Outlook for German Chemical Industry Strong results for July and August are creating a positive mood in the German chemical industry. Trade association VCI expects production growth to remain at 2.5 percent for 2005 despite a reduction in output in the second quarter as compared to the first three months of the year. Chemicals production did not slow like it normally does in the summer, and is expected to experience an increase in demand in the latter part of the year. Higher oil prices may be a problem, but many German chemical manufacturers have been successful in passing on price increases and should be able to continue to do so. Petrochemical Industry in Iran Affected by Political Actions of the Government Iran's new president, Mahmoud Ahmadinejad, recently announced to the United Nations that Iran has an inalienable right to develop nuclear capability and will do so. This position will ultimately harm the petrochemical industry as the country will likely face a fight against the UN Security Council over this issue. Investment by foreign companies will be curtailed, and the progress of several of the major petrochemical projects currently underway will most likely be slowed or possibly halted. The ability of Iranian companies to build partnerships with major European companies, both engineering firms and oil companies, will also be negatively affected. U.S. Economy, Energy Prices Affected by Hurricanes The Manufacturers Alliance is revising its earlier forecasts for the general US economy and manufacturing performance for the rest of this year and into 2006 to take into account the impact of hurricanes Katrina and Rita. The group revised downward U.S. third quarter gross domestic product (GDP) growth from 4.2 percent to 3.3 percent. Fourth quarter GDP growth is expected to decline from 3 percent to 2.3 percent. In 2006 however, increases are predicted for some segments of the economy, and overall first quarter GDP growth is expected to be 4 percent, up from 3.4 percent as reported in the previous forecast. Second quarter GDP growth is also expected to be higher than originally forecast, up to 3.8 percent from 2.9 percent. Energy-intensive sectors will struggle, however, as reductions in refinery output remain. According to the US Energy Information Administration (EIA), as of September 28th, 2 million bbl/day of refinery capacity remained shut in as a result of hurricanes Katrina and Rita. Increased home heating demand for the winter will put additional pressure on natural gas prices. Although natural gas storage levels should be adequate to meet demand, higher prices will remain throughout the period. New Clariant in India Clariant Chemicals (India) Ltd. (CCIL), has been formed from the merger of five Clariant subsidiaries - Clariant (India) Ltd., Vanavil Dyes and Chemicals Ltd., BTP India Private Ltd., Kundalika Investments Ltd., and Colour-Chem Ltd. The merger is designed to consolidate the company's resources including its chemistry knowledge, technical expertise, customer service capabilities, and marketing and application skills. Huntsman Looks to Asia for Growth Huntsman aims to achieve $2 billion per year in sales from China by 2010, an increase of $500 million from current levels. Currently Huntsman is involved in a joint venture with BASF and Chinese partners to build a 525-million lbs/year methylene di-para-phenylene isocyanate (MDI) plant at Caojing that is expected to come on stream in June 2006. The company says its portion of the MDI output will be sold by the time the plant starts up, and Huntsman is already considering expansion of the project. The company will also invest $36 million to build a 30 million lb/year polyetheramine plant at Jurong Island, Singapore, which will expand its global capacity by 25 percent. Both plants are part of Huntsman's strategy to grow businesses in Asia that have technology or other advantages over the competition. Avecia Disposes of Scottish Fine Chemicals Business Avecia sold its Grangemouth, Scotland fine chemicals operations to KemFine for an undisclosed amount. Former Avecia Fine Chemicals vice president Tom Shields will head up the business, which has been renamed KemFine UK. KemFine was formed in 2004 through a management buyout of Kemira's fine chemicals operations. Cargill Buys Degussa's Food Ingredients Business Cargill agreed to acquire Degussa's Food Ingredients business for $670 million (Euro 540 million). The acquisition includes Degussa's texturant systems (hydrocolloids, blends, lecithin, cultures and bioactive ingredients) and flavors (flavorings plus formulation, application, analytical chemistry, and sensory analysis services) business. Most facilities are located in the U.S. and France. For Cargill, the purchase fits with the company's strategy of becoming a leading provider of specialty ingredients and ingredient systems to the food and beverage industries. Degussa put the business up for sale in August 2004. Frutarom was also interested in buying the Degussa business. Pharma Companies Importing More from Asia Pharmaceutical companies in Europe are increasingly purchasing active pharmaceutical ingredients (APIs) and intermediates from Asian suppliers as those companies become compliant with international regulatory requirements. Technological capabilities in Asia are enabling these producers to export more complex molecules as well. UK contract manufacturers see the increased Asian competition as a threat. C6 Solutions, formerly Hickson & Welch, announced earlier in 2005 that it will be closing its business due to the increased competition and the weak U.S. dollar. According to Robinson Brothers, U.K. companies are at a disadvantage because of the high cost of energy in the country. Private Equity to Acquire Fine Chemicals Business from Ranbaxy ICICI Venture Funds has agreed to acquire the animal health, diagnostics, and fine chemicals activities of Ranbaxy Laboratories for an undisclosed amount. Sale of its Allied Business portfolio will allow Ranbaxy to concentrate on drug discovery. The Dade Behring diagnostics business will be sold separately to Dade Behring Holdings. Ranbaxy's Allied Business manufactures generic drugs and active pharmaceutical ingredients. It also offers drug finishing services. Middle East Petrochemicals Face Challenges but Opportunities Still Abound Costs for petrochemical production in the Middle East will rise as facilities begin to use a different feedstock mix. Currently the cost advantage in the region is tied to its cheap access to Ethylene. The use of a more complicated feedstock mix will enable production of a wider variety of downstream chemicals, but capital costs for these more complicated and typically much larger projects are expected to be higher. Some countries such as Saudi Arabia are working to integrate their production stream by locating refineries and petrochemical plants near gas extraction operations. Allowing private investors to participate in projects within the Middle East will also be important for the future of the petrochemical industry in this region. Thailand Proceeds with Plan for Petrochemicals Development Thailand's third master plan for petrochemicals, which runs from 2004 to 2018, includes construction of 56 plants altogether, including 6 for upstream petrochemicals (3.71 million tonne/year), 17 for intermediates (3.1 million tonne/year), and 33 for derivatives (4.8 million tonne/year). A new government ministry for handling petrochemicals is being created as well. The total cost is expected to be $10.29 billion. To date, $21.89 billion has been invested in building the current capacity in Thailand. The plan is backed by the Ministry of Energy, the government, and the companies involved, who are all planning expansions as part of the plan. The Thai cabinet is expected to review the plan by the end of 2005. Polyolefin Prices Rising Rising feedstock costs and tight supply are driving up the price of both Polyethylene (PE) and Polypropylene (PP). The price of PE has increased about 40 percent since August, while PP prices have gone up a similar amount. Further hikes are expected as demand increases and supply remains tight, largely because of hurricane-related shutdowns. In the case of PP, producers had limited production earlier in the summer to reduce inventories, and current conditions are further tightening the supply. Akzo Nobel Acquires Chinese Coatings Manufacture Akzo Nobel purchased Toide Paint, the coatings operations of Guangzhou Toide Manufacturing, for an undisclosed amount. According to Akzo, Toide is one of the largest privately owned producers of emulsion paints in China. Toide also manufactures wood varnishes. With the acquisition, Akzo gains more than 200 sales outlets and distributors in southern China, Beijing, and Shanghai. The purchase fits with Akzo's strategy of becoming the largest coatings company in China Chevron Phillips Drops Styroflex Patent Case Against BASF Chevron Phillips Chemical dropped a patent infringement action against BASF that claimed BASF's Styrolux 3G55 and Styrolflex 2G66 products infringed its patents. The case was dropped, according to BASF, because the company was able to show that its Styrolux portfolio of clear Styrene-Butadiene copolymers and Styroflex Styrene/Butadiene block copolymers do not infringe on Chevron Phillips Chemical's patents. Chemical Companies in France Forming Consortia to Buy Energy The French industry trade group Union des Industries Chimiques (UIC), announced that at least four chemical companies within the association will form a consortium in order to increase their ability to obtain energy at lower costs. The four companies are Solvay, Arkema, Air Liquide and Rhodia. Criteria for joining the consortium have yet to be established. Other companies such as Innovene are considering the option. The use of consortia to increase energy buying power was approved by the administrative authorities in France in July of 2005.