Taiwan lifts ban on China naphtha cracker investment

MOSCOW (MRC) -- Taiwan's government has officially lifted its ban on investment by the country's petrochemical sector in naphtha cracking facilities in China, reported Want China Times.

Certain restrictions still apply to such investment projects, however, including that one company is only allowed to take part in one project, according to revised regulations issued by the country's Ministry of Economic Affairs on Tuesday.

Also, the company must hold more than a 50% stake in the project or hold control over the operations of certain product lines, and must give priority to supplying Taiwan's domestic needs, the regulations stipulate.

Vice economics minister Duh Tyzz-jiun said allowing Taiwan's petrochemical companies to invest in China will help resolve a supply gap that is expected to appear after the country's fifth naphtha cracker - operated by state-run oil refinery CPC - is shut down in 2015 when its license expires.

Kuokuang Petrochemical Technology, a subsidiary of CPC, had previously planned to build a petrochemical complex in Changhua county, but the project was scrapped in 2011 over environmental concerns, forcing it to move the project to Malaysia.

Meanwhile, a consortium led by Ho Tung Petrochemical - another shareholder in the Kuokuang project - is planning to invest in a petrochemical complex in the Gulei Development Zone in southeastern China's Fujian province.

As MRC informed previously, analysts have said that Taiwan's downstream petrochemical companies might face a shortage of feedstock. Taiwan is a net importer of ethylene; it produced 3.47 million metric tons of ethylene in 2012 and imported around 348,000 metric tons of the product. Formosa Plastics Group, among the most active Taiwanese petrochemical firms investing in China, has flagged an interest to build ethylene plants in the provinces of Zhejiang and Fujian. The company currently produces petrochemical products, such as ethylene glycol and polyvinyl chloride, in its Ningbo petrochemical complex in Zhejiang province.
MRC

MOSCOW (MRC) -- In order to enhance sustainability within the supply chain the chemical companies BASF, Bayer, Evonik Industries, Henkel, LANXESS and Solvay joined forces in the Together for Sustainability (TfS) initiative, said Solvay in its press release.

The TfS initiative has successfully concluded its first year of piloting sustainability assessments and audits in global supply chains. TfS aims at developing and implementing a global supplier engagement program that assesses and improves sustainability sourcing practices, including ecological and social aspects.

Participating suppliers will now only have to complete one form instead of multiple questionnaires with the relevant sustainability information provided to all participating buyers who would otherwise need separate sustainability assessment or audits from these suppliers. The initiative is based on good practices and builds on established principles – such as the United Nations Global Compact (UNGC) and the Responsible Care Global Charter as well as standards developed by the International Labor Organization (ILO), the International Organization for Standardization (ISO), Social Accountability International (SAI) and others.

During the initiative’s pilot phase, TfS members have initiated about 2,000 assessments and audits. In the next phase of implementation, which draws on the learnings from the successful pilot phase, TfS will increase its activities to further procurement markets and will look to continue growing by onboarding new members.

As MRC wrote before, Solvay SA agreed to buy U.S.-based Chemlogics for USD1.35 billion in cash to expand its offering of chemicals for the oil and gas industry. The Belgian chemical maker is paying 10.7 times earnings before interest, taxes, depreciation and amortization for the business, which generated about USD500 million in annual sales, it said today in a statement. The Brussels-based company will issue about EUR1 billion (USD1.35 billion) in hybrid bonds to support finances.

Solvay S.A. is a Belgian chemical company founded in 1863, with its head office in Neder-Over-Heembeek, Brussels, Belgium. The company has diversified into two major sectors of activity: chemicals and plastics. Solvay supplies over 1500 products across 35 brands of high-performance polymers – fluoropolymers, fluoroelastomers, fluorinated fluids, semi-aromatic polyamides, sulfone polymers, aromatic ultra polymers, high-barrier polymers and cross-linked high-performance compounds.
MRC

MOSCOW (MRC) -- Tosoh Corp. said it will examine and prepare the company for a merger with its wholly-owned subsidiary Nippon Polyurethane Industry Co. (NPU), subsequently dissolving the NPU subsidiary upon completion of the merger, according to Apic-online.

Tosoh's Nanyo complex currently supplies utilities and isocyanate raw materials to NPU, and NPU in turn supplies hydrogen chloride to Tosoh as a raw material for vinyl chloride monomer.

"Recovering and utilizing resources has raised operational competitiveness at NPU and Tosoh, and the merger will increase it further," Tosoh noted.

Subject to shareholder's approval, the merger took effect on 1 October, 2014, and consolidate the two companies' synergies under a single management base for "better, more flexible responses to a changing isocyanate operating environment," Tosoh explained.

As MRC informed previously, Tosoh Corporation has recently announced it will construct a plant to produce Rzeta, the company’s new emission-free reactive amine catalyst for polyurethane foams. The plant will be built on the grounds of the ethyleneamine production facilities at the Nanyo complex for an estimated investment of JPY 2 billion (about EUR 15.3 million). Construction of the Rzeta plant began in September 2013 and is expected to be completed by November 2014. Rzeta-produced PU foams are used in proximity to other resins, such as polyvinyl chloride (PVC) and polycarbonates.

Tosoh is one of the largest chlor-alkali manufacturers in Asia. The company supplies the plastic resins and an array of the basic chemicals that support modern life. Tosoh's petrochemical operations supply ethylene, polymers, and polyethylene.
MRC

MOSCOW (MRC) -- Oltchim Ramnicu Valcea’s privatisation will take place this autumn, not early next year as PCC had stated, lawyer Gheorghe Piperea, one of the plant’s trustees in bankruptcy, said Nineoclock.

Wojciech Zaremba, the representative of PCC SE, Oltchim’s significant minority shareholder, stated that the authorities postponed for the winter the selection of a private investor and for the spring the plant’s actual privatisation, against the backdrop in which a quick sale was expected this autumn. Zaremba emphasized that Oltchim needs a new business model in the current context of the world petrochemical market, and in order to survive it has to be privatised as soon as possible.

Lawyer Gheorghe Piperea pointed out: "We are waiting for the evaluation report on Oltchim’s assets, in order to be able to create that special purpose vehicle (SPV) that we have called Oltchim 2 and that will be cleaned of debts. These days we are expecting the evaluation report in order to put it up for the creditors’ committee’s approval. After we obtain the creditors’ approval we will know what Oltchim 2 will include and we will start negotiations with the interested investors."

In other developments, the tender for the sale of Ramplast, the PVC profiles producer owned by Oltchim, is taking place today. The starting price has been set at approximately EUR 6 M, yesterday being the last day in which offers were accepted, Gheorghe Piperea informed.

According to the same source, the Galati Dynamic Selling Group and Russia’s Oil Gas Trade (OGT) LLC, a company that also entered the race for Oltchim’s privatisation, are interested in Ramplast. Russia’s OGT promised investments of EUR300 mln at Oltchim. The sale of Ramplast is seen as an extremely important step for the future of Oltchim, which, according to the trustees in bankruptcy and the authorities, needs a minimum of EUR15 mln in order to hike the production. Piraeus Bank and Transilvania Bank are willing to finance Oltchim by up to EUR 10 M, the two banks’ condition being the creditors’ committee’s green-light for the sale of Ramplast, sources from within the plant inform.

As MRC wrote before, until recently, the government has claimed that the company is viable and there are prospective buyers for it. PM Victor Ponta, however, there is no buyer and that EC has warned the government not to bail out the plant.

At stake there are not only Oltchim's 3,200 employees - but also part of the 20,000 people working for Oltchim's suppliers. Oltchim's industrial site includes vast and technically viable production facilities that might be interesting for strategic investors. But the company owes some EUR 800mn in debt - out of which EUR 250mn to the government and EUR 150mn to state-controlled electricity supplier Electrica.

Based at Ramnicu Valcea in southern Romania, Oltchim produces caustic soda, petrochemicals, agrochemicals, inorganic products and building materials, including insulating PVC for panels, doors and window frames.
As per MRC, Oltchim at the present does not supply PVC to the Russian market. Insignificant amounts of PVC-S had been delivered from 2005 to 2009 and on average made 1,900 tonnes per year.
MRC

MOSCOW (MRC) -- Russian gas monopoly, Gazprom, in order to fill the underground gas storage facilities has reduced the price for natural gas from about USD 390-400 to USD 260 per thousand cubic meters for the Ostchem Holding, which belongs to the Group DF of businessman Dmitry Firtash, said Ukrainian News agency.

The source has noted that the Naftogaz of Ukraine national joint-stock company, which also imports gas to Ukraine had not obtained gas discounts from Gazprom. Earlier, Minister of Energy and Coal Industry Eduard Stavytskyi had said that under preliminary data, the price for gas acquired by national joint-stock company from Gazprom will make up about USD 410 per thousand cubic meters in October-December 2013.

On October 8, Russian President Vladimir Putin told a press conference that Gazprom had lowered gas price for Ukraine to USD 260 per thousand cubic meters in order to pump it into underground gas storage facilities.
"Having informed the Russian authorities, Gazprom helped Ukraine to pump in the required amount of gas into underground gas storage facilities at the discount of USD 260 per thousand cubic meters. Approximately, and I may be mistaken in some, several dollars, when recently the price for Ukraine had been USD 400, and now it is about USD 380-390 per thousand cubic meters," he said.

At the same time, Putin did not specify the name of the importer, who obtained the said discount. In September, Firtash said that Ostchem planned to accumulate 6-6.5 billion cubic meters of natural gas in the Ukrainian underground gas storage facilities by November (then there were about 1.3 billion cubic meters of Ostchem's gas).
Besides, he added that in view of the increase in gas pumping into underground gas storage facilities, Gazprom would increase the transit of the fuel through the territory of Ukraine.

In August, the average customs cost of the natural gas imported by Ukraine (taking in account supplies from Europe) decreased by 3.2% to USD 393.5 per thousand cubic meters as against July. In July 2013, Ukraine imported natural gas from Europe at the price of USD 394.92 per thousand cubic meters and from Russia at USD 401.52 per thousand cubic meters.

As Ukrainian News earlier reported, in May the Cabinet of Ministers approved the expected balance of importation and distribution of natural gas for 2013 with the amount of imports of 27.3 billion cubic meters of gas.
Of the total amount of importation, Gazprom will deliver 18 billion cubic meters, RWE Supply & Trading (Germany) - 1.3 billion cubic meters, Ostchem (from Russia) - 8 billion cubic meters.

As MRC wrote before, Mr. Dmitry Firtash, Head of the Board of Directors Group DF, projected that the volume of domestic mineral fertilizers market will double by 2017. According to the outlooks published by OSTCHEM (a company operating Group DF"s nitrogen chemical productions), by 2017 the nitrogen fertilizers consumption volumes will rise from the current 950 thousand tons up to 2 million tons, phosphates - from 225 up to 460 thousand tons, potassium fertilizers - from 125 up to 270-280 thousand tons.

OSTCHEM is an asset management company consolidating efforts of Group DF"s nitrogen chemical industries: STIROL Concern (Gorlovka), Severodonetsk Azot, Cherkassy Azot, Rivneazot.
MRC