Chemical industry weekly news roundup, 12 December
10:30 AM MST | December 12, 2014 | By LINDSAY FROST
This Week in CW:
US chemical output is set accelerate sharply through the end of the decade, exceeding the growth of the overall US economy, according to ACC’s Year End 2014 Chemical Industry Situation and Outlook, published this week. ACC forecasts a 3.7% US chemical output gain in 2015, up from 2% in 2014, and an even stronger gain of 3.9% for 2016. The forecast puts the US chemical industry on track to break the $1 trillion sales barrier by 2019, up from $805 billion in 2014. Excluding pharmaceuticals, US chemical output is expected to advance 2.4% in 2014, followed by 4% in both 2015 and 2016. The strongest gains are expected in basic chemicals, particularly bulk petrochemicals and plastics, with growth expected to hit 3.8% in 2015, 4.5% in 2016, and exceed 6% in 2017 and 2018 as new US capacity hits the market.
DuPont has reached agreement to sell its Neoprene polychloroprene business to Denka Performance Elastomer, a new joint venture company owned 70% by Denki Kagaku Kogyo (Denka; Tokyo) and 30% by Mitsui & Co. The sale is expected to close in first-half 2015. Financial terms are not being disclosed. DuPont makers polychloroprene at its La Place, LA, site. Approximately 235 employees in United States will transfer to the jv as part of the transaction. DuPont says that Neoprene sales comprised less than 5.0% of sales in its performance polymers segment in 2013. Neoprene, the first commercially successful elastomer, was invented by DuPont in 1931. It is used in chemical- and weather-resistant products, such as wet suits and orthopedic braces. It also is used as a base resin in adhesives, electrical insulation, and coatings.
BP says that it expects to incur restructuring charges of $1 billion over the next five quarters. The company is presenting its future strategy and plans in the upstream and gas business to the end of the decade and beyond to investors in London today. This follows an announcement earlier this week that BP intends to cut hundreds of jobs, many of them in the United Kingdom and in the United States to align with its reduced size since it started a major divestment program, which followed the oil spill in the Gulf of Mexico in 2010. Chief executive of BP Upstream, Lamar McKay, and a senior members of the management team will outline the company’s strategy as the price of crude oil continues to fall.
Reichhold Industries (Durham, NC) says that the United States Bankruptcy Court for the District of Delaware has approved bidding procedures for a court-supervised auction of substantially all of its US assets. Reichhold affiliates located outside of the United States are not included in the sale. Reichhold Inc., Reichhold's US subsidiary, announced in September that it had filed for voluntary protection under Chapter 11 of the Bankruptcy Code, and that it had secured financing from its bondholders to continue operating its assets until they could be sold. In November, the company signed an asset purchase agreement with the bondholders as the “stalking horse” bidder, subject to higher and better offers and court approval.
Around the Web:
In a 1,600-page, $1.1 trillion spending bill, a provision to roll back an obscure financial regulation became a focal point of uproar as Congress struggled to keep the government funded, according to the New York Times. The “push-out” regulation — a measure to ensure that banks trade their riskiest financial instruments without the protection of the Federal Deposit Insurance Corporation or the Federal Reserve’s backup — was controversial from the start. Hundreds of billions of taxpayer dollars were shoveled into Wall Street banks after instruments like credit default swaps became worthless in the financial crisis, but even some crucial Democrats were unsure if Congress went too far when it voted to include push-out in the landmark Dodd-Frank law to regulate Wall Street in 2010.
Reuters reports that oil prices stabilized near five-year lows on Thursday as robust US consumer spending data boosted investor optimism about the world's largest economy, while traders warned that a bottom for crude remained elusive after a six-month selloff. Benchmark Brent oil remained below $65 a barrel while US crude traded not far from the $60 support level in choppy trade. US consumer spending advanced at a brisk clip in November, Commerce Department data showed, as lower gasoline prices gave the holiday shopping season a boost.
According to the Financial Times, China’s appetite for US Treasury bonds, a cornerstone of the global economy for more than a decade, is waning. Beijing is ramping up its overseas development agenda to boost financial returns and serve key geopolitical interests. The promotion of the renminbi as an international currency is gradually liberating Beijing from the dollar zone, providing it with more latitude to open up to foreign portfolio investment flows. The reorientation of China’s strategy away from Treasuries is a slow-running trend but one which intensified last month after Li Keqiang, the premier, announced a 10-point plan for financial reform.
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