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Chemical industry weekly news roundup, 24 January
12:21 PM MST | January 24, 2014 | By LINDSAY FROST
This Week in CW:
Hedge fund Third Point (New York), on 21 January, revealed a “significant” investment in Dow Chemical and promptly urged management to consider spinning off its petrochemical operations. In a letter to investors, Third Point, run by investor Daniel Loeb, called on Dow to hire advisors to conduct an assessment of whether its petrochemical strategy maximizes profits and aligns with Dow’s goal of transforming into a specialty chemicals company. “The review should explicitly explore whether separating Dow’s petrochemical businesses via a spin-off would drive greater stakeholder value,” says Third Point. On 21 January, Dow shares jumped 6%, closing at $45.92, on the news. Sources put the size of Third Point’s investment at $1.3 billion, a 2.3% stake based on Dow’s current market capitalization. Third Point has $14 billion in assets under management.
Northwest Innovation Works (NWIW; Vancouver, WA) has proposed to build two large-scale methanol plants in the US Pacific Northwest. The proposed facilities would each cost $1 billion and have a design capacity of 5,000 m.t./day. Output from the plants will be shipped to Dalian, China for conversion to olefins. NWIW plans to build the plants at the Port of Kalama, WA, and at Port Westward, on the Oregon side of the Columbia River. NWIW was formed this year. Its backers include PPE, a joint venture between Shanghai Bi Ke Clean Energy Technology Co. (CECC), and Dalian Xizhoug Island Petrochemical Park (Dalian, China), together with the Silicon-Valley-based private equity firm H&Q Asia Pacific.
Freedom Industries has filed for bankruptcy a week after a leak at one of its tanks containing 4-methylcyclohexane methanol (MCHM) forced a water ban in nine West Vriginia counties surrounding Charleston, WV—the state’s largest city. The Chapter 11 petition filed on 17 January in the US Bankruptcy Court of the Southern District of West Virginia lists assets and debts of $10 million each. The filing seeks protection from the company’s creditors and may halt over two dozen lawsuits that residents and business owners have filed over the incident, reports say. The same day that the Chapter 11 was filed, Freedom filed a debtor-in-possession financing, which would allow it to secure up to a $5-million loan to continue to function in some capacity. A judge approved the loan on 22 January.
Informex 2014 kicked off this week at Miami, FL. Reform of the Toxic Substances Control Act (TSCA) along with trade-related issues top the regulatory concerns for Socma this year, the organization tells CW at the trade show. Socma’s priority for 2014 is the passage of TSCA reform, says president and CEO Lawrence Sloan. Sloan gives it a “50-50 chance” that TSCA reform is passed by Congress by late August. Attendees and exhibitors were mostly optimistic about the direction of the fine chemicals and contract manufacturing industries, as the economic situation improves and some sector-specific drivers have turned in the industry's favor. The pharmaceutical sector faces some challenges – particularly a number of drugs coming off patents – that can have a mixed impact on the fine chemicals sector. Pharma companies are increasingly turning to biologic drugs to fill their pipelines, and many generic drugs will operate more like commodities, attendees say. However, the drugs still need to be produced, and many contract active pharmaceutical ingredient (API) makers do business in generics.
Around the Web:
Stock markets fell around the world on Friday as investors worried about an economic slowdown in emerging markets, according to the NY Times. The concerns led to the first sustained decline in United States stock indexes in 2014. The Standard & Poor’s 500-stock index was down about 1.3 percent at midday on Friday, bringing it down 2.3 percent for the year so far. The Dow Jones industrial average was down 1.3 percent and 3.5 percent for the year. The downturn was much worse elsewhere, with the Euro Stoxx 50 index falling 2.8 percent, bringing it into the red for 2014. The declines this week have been fed by disappointing economic news out of China and the rest of the developing world. An index of Chinese manufacturing growth released on Thursday showed that the sector was contracting for the first time in six months.
According to CNet news, researchers at Virginia Tech are developing what amounts to fuel cells, but with a sugar solution rather than hydrogen. Other attempts at sugar batteries have been made, but this one has an energy density that blows other versions out of the water. That means it can run for a much longer time before refueling is necessary. At its most basic level, the battery combines maltodextrin with air, which results in electricity and water byproducts. The innovation here centers around the researchers’ use of enzymes. The sugar battery could be a staple in electronic devices within just a few years, if development goes according to schedule. It has the potential to keep a considerable amount of battery waste out of landfills.
Chinese affiliates of the four largest accounting firms were barred for six months from leading audits of U.S.-listed companies after failing to comply with Securities and Exchange Commission orders for documents at the heart of a series of accounting fraud probes, according to Bloomberg. The decision by U.S. Administrative Law Judge Cameron Elliot, if finalized, would force more than 200 Chinese companies traded in the U.S. to find new auditors, while multinationals with significant operations in China, like General Motors Co., would also have to bring in new firms to check those units. The firms receiving the bans—Deloitte Touche Tohmatsu CPA Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Ltd—said that they will appeal the decision.