IHS Chemical Week


Chemical industry weekly news roundup, 29 August

9:12 AM MDT | August 29, 2014 | By LINDSAY FROST

This Week in CW:

Albemarle’s $6.2-billion acquisition of Rockwood Holdings was the result of an off-and-on 24-month courtship, according to a joint registration statement filed on Thursday by Albemarle and Rockwood. Discussions accelerated quickly in May and June as Rockwood M&A adviser Lazard pressed for bids and former Rockwood chairman and CEO Seifi Ghasemi prepared to retire from Rockwood to take on the top job at Air Products. Four other specialty chemical makers also expressed interest in all or part of Rockwood in recent months, according to the filing.

Reliance Industries is expected to save in the region of $450 million/year by importing 1.5 million m.t./year of ethane from the United States to feed its ethylene plants in India, according to CLSA Research (Mumbai). Reliance said earlier this month that it has signed agreements to import ethane from the US from 2016 to feed its crackers. The gas will substitute its current propane imports and a portion of naphtha currently used in ethylene production. Reliance currently has capacity for 1.9 million m.t./year of ethylene, of which 40% is gas based, including ethane and propane. Domestic natural gas makes up about 35% of the current feedstock for its gas based plants with propane accounting for the rest, according to CLSA estimates. The remaining portion uses naphtha as feedstock.

LyondellBasell Industries plans to build a world-scale propylene oxide (PO)–tert-butyl alcohol (TBA) plant on the Texas Gulf Coast, with start-up planned for 2019. PO from the plant will support growing demand for polyurethanes, while TBA and derivatives will supply producers of high-octane gasoline, synthetic rubber, and lubricant additives. The plant, which will cost over $1 billion, will have capacity to produce 900 million lbs/year of PO and 2 billion lbs/year of TBA and its derivatives.

Silicones and quartz producer Momentive Performance Materials (MPM) says the US Bankruptcy Court for the Southern District of New York is likely to confirm the company’s reorganization plan once changes are made to the interest rate paid to bondholders. MPM expects to emerge from Chapter 11 bankruptcy protection “within the next few weeks,” the company says. MPM is owned by private equity firm Apollo Management (New York). MPM expects to emerge with $425 million in liquidity, and $1.2 billion in net debt, the latter figure representing a $3-billion reduction from MPM’s pre-Chapter 11 debt position. The restructuring plan also includes a $600-million rights offering, which will provide equity for the company. MPM reported $2.4 billion in sales in 2013.

Start-up company Appalachian Resins (Houston) is leasing land in Salem Township, OH for a proposed $1-billion ethylene and polyethylene (PE) production facility. Appalachian Resins had considered building a petchems complex in West Virginia, which would have utilized natural gas liquids from the Marcellus and Utica shale formations. The company has signed a land lease letter of intent with Monroe County (Ohio) Port Authority for 50 acres of land for the 600 million lb/year project. The complex in West Virginia site would only have had space for a smaller facility, the company says.

Around the Web:

The US economy rebounded more strongly than initially thought in the second quarter with a bigger chunk of the growth driven by domestic demand in a bright sign for the future, according to Reuters. Gross domestic product expanded at a 4.2% annual rate instead of the previously reported 4% pace, the Commerce Department says. Both business spending and exports were revised higher, while a buildup in business inventories was smaller than previously estimated—a mix of growth that provides a stronger underpinning for the remainder of the year.

Bloomberg writes about the approach to climate change that doesn’t involve Obama, the Senate or the UN. That idea has received some attention on the left, through the environmental writer and activist Bill McKibben, and from the center-left through a UK-based investment think tank called the Carbon Tracker Initiative. Whether to dump $5 trillion in carbon stocks from portfolios “is one of the fastest-moving debates” in 30 years, Kevin Bourne, a managing director of FTSE, said earlier this year. It’s a topic tackled this week in a Bloomberg New Energy Finance report. Though the Carbon Tracker Initiative and McKibben's climate group, called 350.org, are not in cahoots, their work has inspired offspring trying to make de-carbonated money management a real thing.

Today the Congressional Budget Office (CBO) released its latest economic and fiscal projections, and the news is pretty good, according to the Washington Post. To start things off, the CBO says the deficit this year will be $506 billion, or 2.9% of GDP. In 2013 it was $680 billion, so that’s a pretty steep drop. And in terms of GDP, not only is that slightly lower than the average deficit of the last 40 years (3.1%), it’s also a 70% decline from Obama’s first year in office, where because of the Great Recession, which brought both the need for more spending and a plunge in tax revenues, the deficit peaked at 9.8% of GDP.

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