 |
|
|
|
|
|
|
|
PotashCorp Dealing
with Strike
Potash Corporation (PotashCorp) was forced
to halt production at three of its
facilities in Saskatchewan province due to a
strike by members of the United Steelworkers
Union. The workers are looking for higher
wages. The strike began after mediation
between the company and the union failed. No
further meetings are scheduled. Striking
workers planned to meet with members of
other unions, such as the Communications,
Energy and Paperworkers Union (CEP), and are
considering coordinated action with other
entities as well.
The company eventually reopened its plant in
Allan, Canada, the largest of its three
operations, using its staff and management
and personnel from other production sites as
well. PotashCorp will neither confirm nor
deny media reports that suggest it is only
running at half capacity. Contingency plans
are being considered for the other two
facilities. Debottlenecking and expansions
activities are unaffected at both plants,
according to the company.
With the Potash market already tight,
fertilizer manufacturers are concerned that
the PotashCorp plant shutdowns will result
in the limited availability of Potash, which
is a key feedstock for fertilizer
production. A company spokesperson said it
has struggled to make some of its shipment
commitments, but would not comment on
whether any shipments were actually
cancelled. PotashCorp is in regular
communication with its customers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biotechs Make Trouble
for Big Pharma Bids
Both Bristol-Myers-Squibb (BMS) and Roche
Holdings will not have an easy time of
acquiring their biotech takeover targets.
ImClone Systems and BMS must first resolve a
dispute over who owns what rights to
IMC-11F8, a next-generation cancer
treatment. ImClone has also indicated that
BMS' $4.5 billion offer undervalues the
company and its product pipeline, which
includes IMC-11F8. ImClone believes it has
sole ownership, while Bristol believes it
has rights to the drug. The determination
could affect the value of ImClone and any
further actions the company might make, such
as spinning off its pipeline or looking for
other buyers. If BMS can acquire ImClone, it
can avoid a potentially long legal battle.
But in order to do so, it will likely have
to raise its offer.
Roche has its own battle ahead of it.
Genentech's specially selected panel of
directors rejected the Roche's $43.7 billion
takeover offer, stating that it
"substantially undervalues the company." The
board indicated it would consider a more
appropriate offer. For the moment, Roche is
sticking to its original proposal, but many
analysts believe a deal will be hammered
out. Genentech is concerned, however, that
its independence could be affected by the
takeover. Already, it has begun to implement
employee retention measures to retain those
employees who are worried about the loss of
the company's culture of innovation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative Source for
Biofuels - Algae?
Leading oil companies are working with
government agencies and universities to
determine the potential for using algae as a
source of biomaterial for the production of
biofuels, including gasoline, kerosene,
naphtha, heating oil and jet fuel. The "biocrude"
potentially could be produced at prices
comparable with crude-oil based fuels, and
it is attractive because algae does not
compete with food sources and is not grown
on arable land.
The National Renewable Energy Laboratory,
which previously studied the idea of
algae-based biocrude in the 1980s, but
halted the project due to its higher cost
compared to diesel, is once again working on
the project with Chevron. UOP, a division of
Honeywell, is working with the Defense
Advanced Research Projects Agency (DARPA) on
its own project, while BP has teamed up with
University of California, Berkley, to
examine this type of renewable fuel.
Total investments in algae-based biofuels
programs are estimated at $84 million in
2008, up from $29 million in 2007. More than
100 companies are believed to be involved to
some degree.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | |
Now that many of the restrictions put in
place for the Olympic Games have been
removed, the recovery of the Chinese
chemical industry has not occurred to the
extent anticipated. The economic downturn in
the United States has deepened and become a
global issue, reducing downstream demand.
The restrictions on production have also
curbed demand more than anticipated. At the
same time, high inventories at buyer firms
are further limiting purchases. The downward
pricing pressure is resulting in significant
price cuts. In addition, the transportation
bans put in place for the Olympics are in
effect until the end of September and will
continue to hamper trade until then.
High energy and raw material costs are
taking their toll on European chemical
earnings. Operating margins declined
slightly in the second quarter of 2008,
indicating that the economic slowdown is
starting to affect the industry. Plastics
producers such as BayerMaterialScience,
Borealis, Solvay and Total's chemicals
business experienced the largest decreases.
Analysts expect the overall trend to
continue, with profit margins for European
chemical producers suffering further in the
second half of 2008.
BASF still hopes to divest its styrenics
business, which includes its styrenic
copolymer plants in Germany (just recently
added to the offering) and its global
styrene copolymer marketing, sales and
logistics activities. The businesses, most
of which have been on the block for over a
year, will be formed as new subsidiaries in
January 2009 to make them more attractive to
the market. They will operate independently
ahead of the sale. Possible buyers include
LyondellBasell, SABIC and INEOS Nova. A BASF
spokesperson indicated that the company was
already "conducting negotiations" with
someone. For any company interested in
acquiring the business, key issues include
access to feedstocks, regulatory approval
and competition concerns due to the
consolidated nature of the styrenics
industry and availability of credit.
Lanxess has combined its Canadian and
U.S.-based businesses into a new North
American service organization located in
Pittsburgh, Pa. The business will be headed
by Lanxess Corp. president Randy Dearth, who
will also become managing director. Although
both businesses will continue to operate at
separate legal entities, the move is
designed to increase efficiency.
During the first half of 2008, imports of
refined Glycerine into the United States
climbed 53 percent over the same period in
2007. Malaysia was the largest exporter,
followed by Germany. The supply of refined
Glycerine available for export has grown due
to a slowing of demand in Asia and an
increase in biodiesel production in Europe,
a process that results in the formation of
Glycerine as a byproduct. The greater
availability has resulted in declining
prices for refined Glycerine, which have
dropped as much as 5 percent.
The European Commission (EC) is
investigating the impact that the
acquisition of DSM Special Products by
Arsenal Capital Partners may have on the
Benzoic acid and Sodium benzoate markets.
Arsenal owns Velsicol Chemical, which
produces both products as well as Benzoate
plasticizers. If these businesses are
combined, the new entity would control a
very large percentage of the European
markets for these products, potentially
reducing competition. The EC must make a
final decision by Dec. 11, 2008.
The FDA appears to be on track to approve a
similar number of drugs in 2008 as it did in
2007. In the first six months of the year,
the agency approved 9 new molecular entities
(NMEs), suggesting that it will approve 18
for the full year, the same amount as in
2007. However, the actual number will depend
on how many new drug applications are
received and the length of time it takes for
reviewing each one. Pharma companies claim
that the FDA's tougher approach to safety
has made the approval process more difficult
and much longer. The agency points to the
industry's lack of effective research
programs as the reason few new drugs are
approved. In 2006, 22 NMEs received a
positive review.
By 2014, Roche Holding will become the
largest drug company in the world,
displacing current leader Pfizer, who will
fall all the way to sixth place, according
to forecasting firm EvaluatePharma. Roche's
strong position in biotech and its limited
number of drugs nearing patent expiry will
make the difference for the company. Other
European firms -- Sanofi-Aventis,
GlaxoSmithKline and Novartis -- will fill in
the next slots. Pfizer is not the only one
to fall far. Eli Lilly and Co. is predicted
to drop from tenth to fifteenth place.
Legislation in October 2008 in Vietnam is
expected to be approved; it will allow the
production and planting of biotech soybeans,
corn and cotton beginning in 2011. The hope
is to create new plant varieties, animal
breeds and other biotech products. The
action is prompted by the desire of the
country to reduce its reliance on imports,
the rate of which is rising every year.
Stating that the European Commission (EC)
will not accept commitments proposed by OMV
regarding its $23 billion (Euro 15 billion)
takeover bid for MOL, the Austrian company
has withdrawn its offer. The EC would
require OMV to dispose of a refinery and
make other significant changes to its
operating model to gain approval, actions
not deemed reasonable by the firm. MOL and
the Hungarian government have been opposed
to the merger since its initial proposal.
According to OMV, the combination of the two
companies would have enhanced the security
of energy supply throughout the region.
European buyers of Palm oil could see higher
prices following the hijacking of a tanker
in the Gulf of Aden. The market was already
tight in Northwestern Europe, and the
estimated 15,000 tonnes of crude Palm oil
was headed for Rotterdam. Any price
increases should be short lived, though,
according to many players in the market. The
Palm oil is used to produce Palm methyl
ester (PME), a form of biodiesel used in
warmer climates. It is not in large demand
in Europe during the colder months, as it
solidifies and often clogs filters. The
tanker, which was hijacked by Somali
pirates, is being tracked by NATO warships.
Spot prices for European Monoethylene glycol
(MEG) are on average $370/tonne higher than
prices for MEG on the Asian market. This
amount is the highest premium observed since
1991, and is occurring while Asian MEG
prices are dropping.They are at their lowest
level in the last five years. In Europe,
buyers are finding it difficult to locate
material, despite the very high prices.
Delayed shipments are leaving the market in
that region very tight, with little or no
change expected at least through September.
With the severe downturn in the U.S. economy
significantly affecting the housing and auto
markets, coatings producers in North America
have only done well in 2008 if they have
enjoyed significant exposure to export
markets. The weak dollar has made it
possible for these companies to somewhat
offset the decline in demand at home. PPG
Industries and DuPont are two companies that
have shown positive growth in sales and
earnings in the second quarter of 2008,
while Sherwin-Williams has seen earnings
decline.
