Dow accelerates portfolio management actions to divest non-core businesses

MOSCOW (MRC) -- Dow Chemical has announced additional actions to accelerate the company’s ongoing commitment to aggressive portfolio management and that it is targeting an increased divestiture list of nearly USD1.5 billion over the next 18 months, reported the company on its site.

Thus, the company has identified two units that will be actively marketed for divestment: Dow’s Polypropylene Licensing and Catalysts business unit and its Plastics Additives business unit.

Andrew N. Liveris, Dow’s chairman and chief executive officer, said: "We are reviewing our entire portfolio and seeking even further opportunities to optimize value: selectively pruning assets that are no longer a strategic or financial fit - all in an effort to accelerate value creation and deliver long-term, sustainable growth for the company."

These actions are the latest in a series of steps the company has taken to further enhance Dow’s leadership position in high-margin, fast-growing end-markets, while simultaneously optimizing the value of assets. Since 2009, Dow has divested non-core businesses representing approximately USD8 billion in revenue.

In January, the company divested the stabilizers component of its Plastics Additives business, and entered into a definitive agreement to sell its 50% ownership in Nippon Unicar Company Limited (a Japanese joint venture in the Dow Electrical and Telecommunications business).

As MRC reported earlier, as part of its restructuring plan, Dow Chemical planned to spend USD900 million-1 billion
(EUR693-770mln), excluding taxes in the fourth quarter. On October 24, the company announced its plans to eliminate about 2,400 positions and closing of about 20 plants, which should save the company about USD500mln at the end of 2014.

The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene (PE), polypropylene (PP), and synthetic rubber. In 2012, Dow had annual sales of approximately USD57 billion. The Company's more than 5,000 products are manufactured at 188 sites in 36 countries across the globe.
MRC

MOSCOW (ICIS-MRC) - Weak demand in the domestic market, and uncertain perspectives in April forced Eastern European producers cut export prices of polyolefins. Ukrainian companies get price reductions by EUR20-60/tonne, according to ICIS-MRC Price Report.

The contract prices of ethylene and propylene for March in Europe were agreed by EUR50 and EUR55 above February's level. However, European makers on low demand in export markets have not been able to pass increased feedstock costs on their PE and PP prices.

Ukrainian companies reported by mid-March some Eastern European producers had been forced to reduce their prices even by EUR20-60/tonne, from the February level.
In early March, the offers for European high-density polyethylene (HDPE) to Ukraine were voiced at EUR1 ,260-1, 320/tonne, FCA. Offers for polypropylene were voiced at EUR1 ,200-1, 280/tonne, FCA, for PP-homo.

By mid-March, some Ukrainian companies managed to get price reductions from Eastern European makers. Deals for HDPE were at EUR1,200-1,260/tonne, FCA, contracts for the supply of homopolymer of propylene were at EUR1,140-1,240/tonne, FCA. The volume of purchases at such prices were limited. As per the some market participants, Eastern European makers just got rid of the excess volume of the polymers.

MRC

MOSCOW (MRC) -- An export zone tied in with a Chinese funded port in southern Sri Lanka has received an investment of over USD500 million to set up the world’s largest Polyethylene Terephthalate (PET) packaging resin plant, said Nzweek.

A statement released by the Sri Lanka Ports Authority (SLPA) noted that the agreement was signed with Hambana Petrochemicals Ltd. to build the factory in the investment zone that is adjacent to a USD360 million Chinese funded port.

"We have found the best facility to start this industry in Sri Lanka and this is the largest single location PET plant in the world. It would also be integrated subsequently with another plant, which would be set up in the second phase with a capital outlay of USD450 million. The total tonnage for the port through this industry in phase I and II is close to 4 million tons," Hambana Petrochemicals Limited Director/CEO Abhijit Sen was quoted as saying in the statement.

This business venture agreement has been signed for an initial term of 25 years and the expected total investment is USD137.39 million. Government will lease out 5 hectares in the Hambantota Port city to the Singaporean firm to build the proposed PET Plant (see MRC news).

PET resin is the raw material used in manufacturing PET bottles and containers which is a popular packaging solution for carbonated soft drinks, water, liquor and various food/non-food packaging applications.
MRC

MOSCOW (MRC) -- Indonesia’s Pertamina has chosen Thailand’s PTT Global Chemical as a partner in the development of a USD5 billion petrochemical facility in Indonesia, said Livetradingnews.

The decision was made after months of deliberations with 11 companies being considered, including South Korea’s SK Global Chemical and Japan’s Mitsubishi (see MRC news).

"PTT Global Chemical is a company with a global reputation in petrochemical sector," Karen Agustiawan, Pertamina’s president director, said in a statement.

"The partnership between both companies is expected to not only build petrochemical plants" but also to involve marketing and research and development to gain market share across Asia, Karen said.

She added that Pertamina planned to make petrochemicals a key part of its business as it strived to become a regional leader by 2025.

The partnership with PTT will center on the construction of a petrochemical plant with an annual production capacity of 250,000 tons of ethylene and 350,000 tons of polypropylene — materials key for producing plastic.

It will also produce each year 400,000 tons of polyethylene (plastic) and polyvinyl chloride, which is widely used as a construction material.

The companies will commence a feasibility study for the construction of the plant soon, with an agreement due to be signed early next month. A joint venture will be established in December, ahead of the plant’s construction next year.

The petrochemical plant is expected to go on stream in 2017, with Pertamina aiming for a 30% market share at that time.

PTT owns the largest petrochemical facilities in Thailand, with an annual capacity of 8.2 million tons, using advanced technology and high energy efficiency. Pertamina has the largest oil refinery assets in Southeast Asia.

The facility will be built near one of Pertamina’s existing oil refineries in Balongan, West Java; Plaju, South Sumatra; and Tuban, East Java. The company has not yet decided which location to use.

Hanung noted that Pertamina accounts for 10 % of the petrochemical market in Indonesia. Due to low domestic refinery capacity, it imports around USD5 billion worth of petrochemicals a year.

Pertamina’s net income climbed 26% to Rp. 25.9 trillion (USD2.7 billion) last year.
MRC

MOSCOW (MRC) -- Mangalore Refinery and Petrochemicals Ltd (MRPL) says it is no longer interested in buying out the West Bengal government's share in Haldia Petrochemicals Ltd (HPL), said Business-standard.

P P Upadhyay, managing director of MRPL, told Business Standard it made no sense to buy the shares of a loss-making company at this stage.

"There was an interest in HPL but that has died down. The key promoters are fighting a legal battle which is getting more complex every day and a solution doesn't seem to get any nearer. In such conditions, I would rather stay away from a company like this," he said.

In June last year, key officials of MRPL, citing forward integration interests, had come here to meet Partha Chaterjee, chairman of HPL.

West Bengal Industrial Development Corporation (WBIDC), through which the government holds close to 40 per cent stake in HPL, has been in a hurry to get out of the troubled joint venture, set up in 1984. The Purnendu Chaterjee-led TCG is another key promoter but TCG has been demanding management control and that has taken both the promoters to the courts.

Indian Oil Corporation has an 8.89% stake in HPL by virtue of a Rs 150-crore investment made in 2004.

HPL has faced a couple of downgrades by rating agencies over its long-term debt and the earnings per share is negative, according to officials close to the development. The West Bengal government is keen on completing transfer of its shares in Haldia Petrochemicals Ltd (HPL), which is facing funds crunch (see MRC news).

HPL's monthly cash loss is Rs 50-60 crore and operational capacity around 50%. Experts say if a petrochemical company runs below 70% of its capacity, it will have a negative impact on the plant in the long run.
MRC