Archives

Archives

March 2008

CIS Launches New Structure Searchable Database

With more than 35 years of experience providing worldwide chemical sourcing information, Chemical Information Services brings you even more detailed searching capability with the addition of its new Structure: Search & Sketch database. Structure Search & Sketch combines the search power and breadth of the Directory of World Chemical Producers (DWCP) with more than 63,000 structure diagrams, which can be viewed in multiple modes including ball and stick, 2D and 3E rotation, and spacefill. Other viewing options include bond length, lone pairs, atom numbers and absolute stereochemistry.

Like the DWCP, the Structure: Search & Sketch database covers numerous sectors of the chemical industry, including bulk pharmaceuticals, fine and specialty chemicals, intermediates, laboratory chemicals and reagents, resins, and many more. Searching can be done by substructure/functional group, structure similarity, exact structure match, molecular formula, CAS registry number or chemical name.

Structure: Search & Sketch is currently in beta-testing by users of CIS' DWCP product, with an expected launch of April 1, 2008. For more information, click on the banner to the right.

			Chemicals Activity on the Rise in Singapore According to Singapore's Economic Development Board, the country hopes to increase its global competitiveness in the chemical industry through expansion of the production of value-added downstream products. The agency said that the chemicals sector has recently become the most significant contributor to manufacturing output in the country, accounting for 34 percent. In 2007, BASF SE opened a competence center for organic electronics and Wacker Chemie, a new technical center. Lanxess recently announced that is plans to construct a 100,000 tonne/year Butyl rubber facility. Some other projects under construction include a high performance lubricant additives plant by Rohmax Additives GmbH and a second facility for Mitsui Chemicals for the production of resin modifiers. Mitsui is also considering the possibility of building a Phenol/Acetone production plant in Singapore. A decision is expected in the second quarter of 2008.

			Chemical Companies Look to Africa for Opportunities The emerging economies in Africa are looking increasingly attractive to some chemical producers. Despite unstable governments, corruption and the lack of an established infrastructure, access to inexpensive feedstocks and the number of fast growing economies are proving to be worth the associated risks. Multinational companies, such as Yara and Dow, are also in talks with Libya's National Oil Corporation. Dow's Agrosciences business already has two facilities in South Africa; Bayer and BASF also have plants in the country. In Central Africa, political stability must be achieved before foreign investments can occur at any significant level. Improvements in education, security and infrastructure are also necessary. North Africa has received significant attention and investment by global petrochemical firms. It offers both access to the Mediterranean and cheap feedstock. The Algerian government announced that it plans to invest $28 billion in its petrochemical industry over the next five years. Total has agreed to build a new petrochemical complex in Arzew, and Algeria and is partnering with Sonatrach, the country's national oil company. Almet, a consortium comprised of Lurgi, Mitsui & Company, Al-Qurain Petrochemical Company and Sotraco, has also won a contract. SABIC is also interested in investing in the country.

			Growing Interest in Egypt for Chemical Production Egypt is starting to attract foreign investment in its petrochemical industry. The country's large domestic market, easy access to Europe and other areas of the world, large natural gas reserves and a skilled work force should provide incentive. In addition, state-owned Egyptian General Petroleum Corp. has launched a three- phase, $10 billion masterplan that includes the construction of 20 new complexes by 2022 that will feature 50 plants for the production of intermediates and final products. Unfortunately, there have been many delays, but some Phase One projects are now operational, and construction of others is underway. Foreign investors from India, such as Reliance Industries, Essar, Ester Industries and Indian Oil Corp., are leading the way in participating in this masterplan, but these companies are only in the initial stages of discussion, for the most part. The requirements of the heavily centralized and bureaucratic Egyptian government combined with feedstock and financial delays, have slowed down many projects. The Egyptian government recently announced that its goal for eight projects currently in progress is to achieve annual exports valued at $1.7 billion (Euro 1.1 billion). The projects, which have a price tag of $6.6 billion, are part of the first phase of the country's masterplan.

			No More Naphtha Consumption Taxes for Petchem Producers in China Approximately two years after placing a Naphtha consumption tax on petrochemical producers in China, the government has cancelled the tax. Naphtha is used as a feedstock for Ethylene and aromatics. The Ministry of Taxation removed the tax to increase the competitiveness of domestic petrochemicals against imported products. The government, however, did impose a tax on the consumption of Naphtha for other applications.

			Specialty Chems Earnings Report Specialty chemical producers in the United States and Europe reported a range of results for the fourth quarter of 2007. All players face rising raw material and energy costs, but only some sectors were successful in passing through price hikes. European companies were also plagued with unfavorable exchange rates. DSM managed to achieve a 26 percent increase in net income on a 7 percent increase in sales. Syngenta had a successful quarter, with sales up 28 percent, although earnings were not reported. On the other hand, Ciba Specialty Chemicals saw net income decline by 26 percent even though sales were up by 2 percent. Clariant also experienced a loss, even though sales grew by 5 percent. Kemira saw both net income and sales decline. In the United States, despite the slowing economy, most companies reported gains in the fourth quarter of 2007. Most attributed volume growth and favorable exchange rates as key factors. Ecolab reported a sales increase of 13 percent and a net income growth of 30 percent. A rise of 16 percent in sales accompanied a net income of nearly 100 percent for Lubrizol compared with the fourth quarter of 2006. Arch Chemicals reported positive net income compared to a loss in the previous year, with sales up 12 percent as well. Valspar saw earnings rise 2 percent and sales climb 10 percent. Due to special charges, Nalco's earnings fell 18 percent even though sales grew 9 percent.

			Tax Cuts Possible for Indian Fertilizer Producers To support its domestic chemical and fertilizer manufacturers, the Indian government announces that it is considering indirect tax breaks. The proposals include reduction of customs duties on crude and unrefined Sulfur from 5 to 2 percent and the tax on imports of Phosphoric acid from 7.5 to 5 percent. Subsidized prices of fertilizers for farmers would remain unchanged. Naphtha imported for fertilizer production would continue to be exempt from import duties, but material used for polymer production would be subject to a 5 percent duty.

			Bankruptcy Period Ends for Solutia Solutia emerged from bankruptcy as a well-positioned producer of specialty chemicals and performance materials, according to CEO Jeffry Quinn. The company's stock is again listed on the New York Stock Exchange, but under the new ticker symbol "SOA." The emergence from bankruptcy was delayed due to the tightness in the credit markets. An agreement on financing was only reached after Solutia sued it creditors. The company initially filed for bankruptcy in December 2003 because of its inability to pay off certain liabilities that it inherited when it was divested from Pharmacia in 1997.

			BASF Takes Steps To Demonstrate Climate Change Management BASF has taken two key steps to demonstrate its commitment to managing its operations in light of their impact on climate change. First, the company created a Climate Protection Office (CPO) position and appointed Ulrich von Deessen, currently chief of staff of BASF Chairman Jurgen Hambrecht, who will assume this role on May 1, 2008. As CPO, von Deessen will be a member of BASF's Sustainability Council and will be responsible for implementation of programs relating to climate protection and greenhouse gas emissions. Secondly, BASF began reporting a comprehensive "carbon balance" for its operations. The company says its products can save three times more greenhouse gas emissions than those created by the company during the manufacture and waste disposal activities associated with their production. The determination takes into account emissions from raw materials and precursors, production operations and disposal of its products. BASF also identified 90 products that reduce CO2 emissions when used in end products. The report was independently review by Oko-Institut inFreiburg, Germany. In addition, BASF has established the goal of reducing greenhouse gas emissions by 25 percent per metric ton of product sold in 2020 as compared to 2002.

			Job Cuts Announced by Ciba Specialty Chemicals Brendan Cummins, the new CEO at Ciba Specialty Chemicals, is making a number of changes, including the reduction of the company's workforce by 2500 jobs (approximately 22 percent). Most of the cuts will take place in Europe, with 700 to 900 positions eliminated in 2008. Ciba will also close more than half of its R&D centers. The focus of the remaining six labs will be on protection and stabilization, color, solid-liquid separation, paper strength and coating, interphase and rheology, and polymerization and curing agents.

			FDA Issues: Budget, Biogenerics and Oversight President Bush requested a 5.7 percent increase in the 2009 budget for the FDA. The agency has received extensive criticism recently for its inability to properly inspect imported food and drugs, as well as other issues, such as inadequate staffing and outdated technology, much of which has resulted from underfunding. Many think the requested increase is far lower than necessary. FDA Commissioner Andrew von Eschenbach recently stated that the agency "requires substantially more dollars" and a "systemic overhaul." Unfortunately, Congress is disinclined to provide additional funds without first seeing substantive change. That creates a difficult situation, because measurable change cannot occur without proper monetary resources. The FDA is asking that generics producers begin to pay a fee like the manufacturers of branded drugs already do. The proposal also includes provisions for a new authority to approve biogenerics. Congress has been working on an attendant biologics law but has yet to reach an agreement on an acceptable procedure. Because biopharmaceuticals are much more complex and difficult to copy (as compared to small molecule drugs), there is concern about how to ensure that generic versions will act in an identical manner to the branded product. The FDA would like to have the flexibility to determine what level of testing is necessary for any biosimilar drug, while others want to see specific testing requirements established. According to many industry players, it is unlikely that any progress on legislation regarding approval of biogenerics by the FDA will be achieved in 2008. On the issue of oversight of marketed drugs, FDA announced that its new strategy, called "Safety First," will include a database listing potential side effects with a schedule for reviewing them, changes to its decision-making procedures regarding emerging safety issues, and expansion of its Office of Surveillance and Epidemiology, which oversees the safety of drugs on the market.

			Future Looks Good for Companies Providing Services to the U.S. Pharma Industry According to Health Industry Insights, overseas firms providing R&D, clinical trial, manufacturing, and other services to the U.S. pharma and biotech industries should experience strong demand in 2008. Singapore and India were listed as two countries that will receive much of this business. The perceptions regarding intellectual property protection in China are also becoming more positive, and more outsourcing can be expected there as well. The desire to increase efficiencies and lower costs is driving the trend toward outsourcing for both the pharma and biotech industries.

			Pharma Formulators Face Excipient Issues Excipients are inactive ingredients in final pharmaceutical formulations that have not received as much attention from regulatory agencies as active ingredients in the past. That is changing, though, as global sourcing of these materials increases the opportunity for fraud. Adulterated excipients have caused the deaths of numerous people in Panama, Haiti, Nigeria, Bangladesh and India. To prevent fraud, formulators must establish strong relationships with suppliers rather than look for the lowest bidder, according to one industry consultant. Some pharma companies have started making strategic investments in excipient suppliers to ensure reliable supply. The U.S. FDA has also increased its inspections and submission requirements as they specifically relate to excipients, and it is anticipated to increase its regulation of excipient suppliers.

			Phosphate Taxes in China Could Have Negative Impact The Chinese' government's increase of the tax on Phosphate fertilizer exports from 20 to 35 percent could affect the level of material shipped from the country. Diammonium phosphate (DAP), Monammonium phosphate (MAP) and complex Phosphate blends (Nitrogen/Phosphate/Potash, Nitrogen/Phosphate and Phosphate/Potash) were all affected beginning February 1 through September 30, 2008. The price of Phosphate fertilizers has climbed recently, and even with the increased taxes they may still be able to make a profit. The tax was imposed by the Chinese government to reduce or halt exports of fertilizers in order to avoid a shortage within the domestic market.

			U.S. Court Ruling on Medical Devices Could be Good News for Ag Sector A recent ruling by the U.S. Supreme Court regarding medical devices could help pesticide producers deal with product liability cases. The Court ruled that defective product claims filed in state courts were preempted by federal regulations addressing the safety of medical devices. The ruling means that, in most instances, plaintiffs cannot seek compensation in state courts for alleged defects in devices approved by the FDA. The regulatory language covering medical devices is nearly identical to that appearing in the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), which states that federal pesticide labeling laws overrule state laws that are more restrictive. Pesticide manufacturers are hopeful that the case will establish a precedent.

			Biotech Blossoming Around the World According to the non-profit group International Service for the Acquisition of Agri-biotech Application, 114 million hectares (282 acres) of land were planted in 2007 with genetically modified (GM) crops. That number is a 70-fold increase from 10 years ago, and will likely double by 2015. Many farmers around the world are impoverished, and GM crops provide a means for increasing income and alleviating poverty, says the group. Biotechnology has been used to improve crop yields through protection against insect damage and plant diseases. Today, 23 countries use GM seeds (largely soybean, cotton, canola and corn) and an additional 29 allow imports for food and animal feed. Europe, however, is resisting the trend. Only one crop has been approved for cultivation in the EU, and individual countries are banning it. In Germany, new rules regulating minimum distances between neighboring GM and conventional crop plantings will prevent the use of GM maize, according to the German chemical industry group VCI. The association believes that the legislation will prevent the creation of large biotech crop plantings for research on new technologies, therefore preventing Germany from playing a role in this important global marketplace.

			New Bacteria for Biomass to Ethanol Conversion Identified Researchers at startup company Zeachem have developed a process for converting biomass to Ethanol using bacteria (Moorella thermoacetica) found in termite guts and the ruminant of cows that is up to 50 percent more effective than conventional processes. The bacteria converts the sugars in biomass into Acetic acid rather than Ethanol, and releases no Carbon dioxide. The Acetic acid is then converted to Ethyl acetate and reacted with Hydrogen produced from the gasification of Lignin byproduct generated when the biomass was converted to sugars. Other gases from the gasification step are used to provide the energy needed for the gasification itself. Laboratory scale tests have achieved a 40 percent better yield. Zeachem hopes to have a larger scale plant operational some time in 2008.

			Ammonia Spot Prices High in Middle East Tight supply of Ammonia in the Middle East has resulted in rising spot prices for this commodity chemical. A recent sale by SABIC to Yara set a new record price for spot material in the region. Prices have risen as much as 65 percent since the beginning of 2008.

			Benzene Prices Rise Dramatically in Europe A combination of climbing crude oil prices and a perceived tightness in the market have helped cause an increase in the price of European Benzene. Prices, in fact, were recently near record levels that occurred in April 2007. Traders indicated that supply tightness would increase for March and April due to production issues, so Benzene prices could rise further.

			Chlor-Alkali Market to Remain Robust in U.S. Tightness of supply with only minimal planned capacity additions and high levels of exports of derivate products, combined with high transport costs in the United States, will result in continued high Chlor-alkali prices in the country during 2008. Both OxyChem and Dow Chemical are reducing Chlorine capacity, which will largely offset production increases by Olin, Canexus and ERCO and the new capacity at Shintech's facility that is expected to come onstream in the second quarter of 2008. High shipping rates for Chlorine will add to the upward pricing pressure. Capacity changes are also not expected through 2009 for Caustic soda, while increasing export demand is offsetting any declines in the domestic market resulting from the slowdown in housing.

			Sulfuric Acid Market Will Stay Strong in 2008 A leading player in the global Sulfuric acid market predicts strong demand and higher prices throughout 2008, with only a slight decline in 2009. Demand is originating in the fertilizer metal leaching and biofuel sectors. Rising Sulfur raw material costs are also leading to higher acid prices. Moderation in 2009 is likely to happen in response to greater supplies of Sulfuric acid.

			Titanium Dioxide Market - Hitting Bottom? A key producer of Titanium Dioxide (TiO2) suggested that the market for this chemical is possibly near the low point of its cycle and that global growth could be as high as 3 percent per year when the turnaround occurs. The decline in the market began in mid-2006 when hikes in raw material costs came at a time of lower demand. Efforts to push through price increases by TiO2 producers only partially succeeded. Further reductions in operating costs, capacity reductions and successful price increases will be needed to recover margins and reach reinvestment levels.

			Rationalization in the Biocides Sector Increasing regulation and the shift to production in Asia are placing pressures on biocide manufacturers and leading to consolidation of the sector. Regulations in Europe - the Biocidal Products Directive (BPD) in particular, as well as Reach legislation - will cost manufacturers tens of millions of dollars each, according to one industry player. Many companies plan to address these cost concerns and the globalization of their customer base through acquisitions. Dow Chemical, Arch Chemicals and Lanxess are also adding capacity or research facilities in Asia.

			Asian Adipic Acid Market Faces Abundant Supply A combination of new capacity in China and growing quantities of Chinese imports is resulting in a surplus, which in turn is placing downward pressure on Adipic acid prices in Asia. The Chinese government's implementation of tighter credit controls has reduced demand for Adipic acid. Most regional producers are hoping that the situation will improve in the spring when Polyurethane production peaks and buyers find that they need to replenish stocks. Final orders related to the August Olympic games are also expected in the second quarter and could foster growth in the Adipic acid market.

			Declining Spot MEG Prices in Europe While China Market Improves European spot prices for Monoethylene glycol (MEG) will continue to fall in the near future. Market players are having trouble predicting how low prices may drop. For the first time in several weeks, the price of MEG in Europe has dropped below Asian levels. Buyers are holding out for lower prices as supply has switched from being short in the past to being readily available today. Many European producers are no longer selling spot material due to reduced margins or in preparation for maintenance shutdowns. In China, MEG spot prices have begun to rise after three months of declines. Tight supplies have both buyers and sellers expecting firmer prices for the next several weeks. The declines resulted from resistance in the downstream Polyester market, which cut back production in January due to diminishing margins. The weakened demand, combined with lower feedstock costs, resulted in lower MEG prices.

			Prices Rising for U.S. MMA Methyl methacrylate (MMA) contract prices for the first quarter of 2008 rose dramatically in the United States in response to much higher feedstock costs. Contract prices are based on feedstock costs from the previous quarter, and in the fourth quarter of 2007, prices for Propylene, Acetone and Methanol rose sharply. As a result, prices for MMA rose about 6 to 9 percent.