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Chemical industry weekly news roundup, 28 March
March 28, 2014 | By LINDSAY FROST
This Week in CW:
IHS Chemical’s 2014 World Petrochemical Conference kicked off this week—with the central theme being the shifting landscape of petrochemicals, both at home and abroad, due to the shale boom. The shale revolution will dramatically affect the global distribution of chemical industry profits, says Dave Witte,senior v.p. of IHS and general manager of IHS Chemical. Earnings in North America leaped ahead of the global average beginning in 2009, and Witte expects the trend to continue beyond 2018. The cyclicality and volatility of earnings in basic chemicals remains one of the greatest challenges facing the market, says Mark Eramo, v.p./chemical industry insight at IHS Chemical. Industry’s ability to balance significant new supplies against the demand pull on petrochemicals from economic growth will continue to determine profitability. Also, US exports of polyethylene (PE), polypropylene, and para-xylene, three of the largest primary petrochemical products, could double by 2025 thanks to shale gas, ExxonMobil Chemical president Stephen Pryor told attendees. While US producers have entered growth and investment mode thanks to the surge in unconventional energy production, producers in all regions must adapt in response to challenges in development of human resources, innovation, and R&D, and cost and feedstock competitiveness, according to speakers on an executive panel at the conference.
The oil spill that has closed Galveston Bay and stopped traffic in and out of the ports of Houston, Texas City, and Galveston is unlikely to have a serious impact on chemical production or shipping, say analysts at IHS. They expect the channel to reopen, at least partially, today. In the event of an extended closure, however, aromatics and methanol derivatives could be affected. The spill occurred at about noon on 22 March, when a barge carrying 900,000 galof bunker fuel oil from Texas City to Bolivar, TX, collided with a cargo ship. A single compartment of the barge was breached, releasing 168,000 gal of oil into the harbor.
Although winter weather has continued to hurt the economy, ACC says equity prices in the chemical industry drove the monthly chemical activity barometer (CAB) up. The CAB gained 0.3% over March on a three-month moving average basis. ACC says this gain points to modest but continued growth through the fourth quarter. Year-on-year, the CAB is up 2.5%, and the February number was revised upwards slightly, to 94.4, ACC says.
Sinopec said on Monday that it has made significant breakthroughs in the exploration and development of shale gas in China and is planning to develop the Fuling shale gas field in Chongqing into China’s first shale gas field, with an annual production capacity of 10 billion cubic meters by 2017. Sinopec says that this achievement marks an important breakthrough in China’s shale gas development and signifies the country’s earlier-than-expected entry into the large-scale commercial development phase. The Fuling shale gas field has reserves of 2.1 trillion cu meters. Sinopec expects the annual capacity of the field to reach 1.8 billion cu meters by the end of 2014 and 5 billion cu meters by 2015, a 10-fold increase compared with previous estimates.
Around the Web:
The US Supreme Court ruled on Tuesday that taxes are due for Social Security and Medicare on severance packages paid to workers who are laid off involuntarily, overturning a lower court ruling that could have led to a wave of payroll tax refund requests from US businesses, according to Reuters. In a win for the Obama Administration and the US Internal Revenue Service (IRS), the court voted 8-0 that Quality Stores Inc., a defunct retailer; and its employees are not entitled to tax refunds totaling about $1 million. The tax refund at issue was small, but IRS says the stakes in the case were huge because, if Quality Stores had won, thousands more refund claims could have resulted, possibly totaling as much as $1 billion.
Researchers at University College London have developed a new antibacterial material which has potential for cutting hospital acquired infections, according to the college’s news source. The combination of two simple dyes with nanoscopic particles of gold is deadly to bacteria when activated by light—even under modest indoor lighting. And, in a first for this type of substance, it also shows impressive antibacterial properties in total darkness.
Siemens, the German power and industrial giant, said on Tuesday that it would build facilities for offshore wind turbines on the east coast of England, as Britain rapidly expands into wind power, according to The New York Times. Siemens plans to invest about £160 million ($264 million) in the production and installation facilities. Its partner, the port operator Associated British Ports, which is owned by a group of investors including Goldman Sachs, will contribute about $249 million. The investment decision recognizes Britain’s position as the leading market for offshore wind, a sector that is now sufficiently large to attract major companies.