Asian PET prices for CIS countries fell by USD30-40/tonne this week

MOSCOW (MRC) -- Prices of polyethylene terephthalate (PET) in Asia continued their downward trend this week under the pressure of paraxylene (PX) prices. PET prices for buyers in the CIS countries dropped by USD30-40/tonne from last week, according to ICIS-MRC Price report.

Buying activity remained sluggish in the Asian PET market. PET prices responded to lower prices of the whole feedstock components range (PX, MEG and PTA).

Chinese PET prices in the Russian ports were at USD1,240-1,260/tonne CFR Vostochny port, excluding VAT. Ukrainian traders said Chinese PET prices in the port were heard at the beginning of the week at USD1,275-1,290/tonne CIF Odessa, excluding VAT.

According to ICIS, Asian PX producers' margin is USD290-310/tonne at present. But PET producers are operating on the verge of profitability, and some plants have already been unprofitable for a long time. Thus, only PET producers with complete production cycle (from PX to PET) have an effective business in the PET market.
MRC

Solvay announces a price increase of 9% per tonne in Latin America for most of its silica ranges of products

MOSCOW (MRC) -- Belgian chemical and pharmaceutical company Solvay has announced a price increase of 9% per ton in Latin America zone for most of its silica ranges of products, Zeosil, Tixosil and Tixolex as of 3rd March or as contracts allow, as per the company's statement.

Labor inflation in Brazil, escalation of energy and transportation costs has created significant and continued cost pressures throughout the zone value chain. This price adjustment is necessary to continue to offset the continuing rise in production and distribution costs.

As MRC wrote previously, Solvay SA reported sharply lower net income of EUR25 million (USD34.4 million) for the fourth quarter of 2013, down from EUR198 million a year earlier, with net sales down 5% at EUR2.42 billion. For the full year, net income totalled EUR378 million, down from EUR690 million. The company said that was mainly due to one-off portfolio items. The group's net sales for the year reached EUR9.84 billion in 2013, down 5% on the year.

As an international chemical group, Solvay assists industries in finding and implementing ever more responsible and value-creating solutions. Solvay generates 90% of its net sales in activities where it is among the world's top three players. It serves many markets, varying from energy and the environment to automotive and aerospace or electricity and electronics. The group is headquartered in Brussels, employs about 29,400 people in 56 countries and generated 9.9 billion euros in net sales in 2013.
MRC

Moody raises outlook for Indonesiaan Chandra Asri to stable

MOSCOW (MRC) -- Moody's Investors Service, has changed the outlook of Chandra Asri Petrochemical Tbk (CAP), the country’s largest petrochemical producer, to stable from negative. Concurrently, Moody's affirmed CAP's B2 corporate family rating (CFR), reported Moody's on its site.

The change in rating outlook to stable reflects our expectations of an improved operating environment in 2014 relative to the cyclical trough which meaningfully depressed CAP's margins and cash flows in 2012. CAP's operating performance, which improved substantially in 2013, is expected to generate mid to high single digit EBITDA margins in 2014 bolstered by earnings from its new butadiene plant, which became operational in Q4 2013.

"We have stabilized CAP's outlook as improving operating performance alleviates ratings pressure driven by cyclical decline and tight liquidity," says Brian Grieser, a Moody's Vice President Senior Analyst and lead analyst for CAP.

However, aggressive capital spending plans for 2014-2015, which have been pre-funded with bank debt and equity, will temper ratings momentum as they introduce significant execution and financial risk. Moreover, CAP's performance in 2015 is expected to soften mildly due to the tie-in works required to integrate its ongoing naptha cracker expansion and scheduled turn around maintenance.

During 2013, CAP announced two major projects that will help the company to expand production capabilities downstream in the petrochemical value-chain. The first project is a roughly 43% production capacity expansion of its naptha cracker and the second is a joint venture with Compagnie Financiere Michelin (Michelin, Baa1 stable) to build a synthetic rubber plant, both of which are located in Indonesia. CAP's financing requirements for these projects will largely be funded with proceeds from a USD128 million rights offering and a 7-year USD265 million term loan both of which have been completed in the fourth quarter of 2013.

CAP's B2 rating reflects its leading position in the Indonesian petrochemicals market, a position based on its vertically integrated operations. However, the rating is constrained by its modest leverage, small global presence, and asset concentration. The rating also takes into consideration the cyclical nature of the petrochemical industry, which is a cause of significant volatility in its earnings and cash flow.

CAP operates the only naphtha cracker in Indonesia.

As MRC reported earlier, German petrochemical company Ferrostaal Industrial Projects GmbH and Jakarta-listed PT Chandra Asri Petrochemical, have agreed to work on studies for the development of a petrochemical plant. Under an agreement, Ferrostaal and Chandra Asri will develop a methanol-based olefin production complex in Teluk Bintuni in West Papua, with a total investment amounting to USD1.89 billion. The complex is expected to produce up to 400,000 tonnes of polypropylene and 175,000 tonnes of ethylene annually
MRC

BASF Business Services to focus on information services, supply chain operations and business process management for BASF Group

MOSCOW (MRC) -- BASF Business Services Holding GmbH will in future focus on providing information services, supply chain operations and business process management solutions exclusively for BASF Group, reported the company on its site.

These include consulting, development and operation of IT systems as well as the design of business processes along the value chain. Following this strategic decision, the company will not continue its business with third party customers, which has sales in the low double-digit million euro range.

BASF Business Services Holding GmbH has thus signed an agreement to sell its third party business including the 100%-owned subsidiary BASF Business Services Consult GmbH, based in Hamburg, to Tech Mahindra GmbH, Dusseldorf, a German subsidiary of Tech Mahindra Limited, India, a provider of IT solutions and services.

Legal closing of the transaction is expected in the second quarter of 2014.

As MRC informed earlier, last year, the largest diversified chemical company in the world, successfully completed the second phase of registration for REACH under EU chemical law. REACH stands for the Registration, Evaluation, Authorization and Restriction of Chemicals and represents a fundamental reorganization of chemical law in Europe. The second phase of registration for chemicals with a production volume between 100 and 1,000 tonnes per year ends on May 31. In this phase, BASF submitted around 550 substance dossiers to the European Chemicals Agency (ECHA) - more than any other company.

BASF Business Services Holding GmbH (until 31.12.2013 BASF IT Services Holding GmbH) is an indirect wholly-owned group company of BASF SE. The group of companies employs approximately 2,200 employees and had annual sales of EUR523.5 million in 2013.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals.
MRC

BASF to establish world-scale specialty amines plant in Nanjing, China

MOSCOW (MRC) -- BASF will build a new world scale production plant to manufacture specialty amines at its existing wholly-owned site in the Nanjing Chemical Industry Park in China, as per the company's press release.

The plant, which is scheduled to come on stream in late 2015, will have dimethylaminopropylamine (DMAPA) and polyetheramines (PEA) as the main products.

With this new facility BASF will further strengthen its global production network. The new plant complements existing facilities in Germany and the US for DMAPA and PEA.

"BASF is a leading supplier of DMAPA and PEA globally, and this investment reflects our continued commitment to meeting the growing market demand in Asia Pacific," said Sanjeev Gandhi, President of BASF’s Intermediates division.

"The investment is driven by the increasing consumption of personal care products by the growing middle class in China and in Asia," said Dr. Guido Voit, Senior Vice President, BASF Intermediates, Asia Pacific. "Additionally, the development in the construction, wind energy and coatings industries in China and other emerging countries in Asia will continue to drive demand for PEA."

DMAPA is mainly consumed in the production of betaines, which are used as co-surfactants in personal care products like shampoo and body wash. DMAPA is also used in various other applications including dye-stuff intermediates, lubricant additives, electroplating, coupling agents for rubber and others.

PEA is an intermediate chemical for epoxy curing agents used in the production of plastics, polyurea coatings, adhesives, reaction injection moulding and wind blade composites. BASF offers polyetheramines under its Baxxodur brand.

BASF has manufacturing capacities for both products at its sites in Ludwigshafen, Germany, and in Geismar, Louisiana.

As MRC informed earlier, in late January 2014, BASF and China Petroleum & Chemical Corporation (Sinopec) broke ground on the construction of its world-scale isononanol (INA) plant in Maoming Hi-tech Industrial Development Zone, Maoming, China. At start-up in 2015, the plant, which is the first of its kind in China, will serve the increasing market demand for next-generation plasticizers. A newly-formed 50-50 joint venture company has been created, BASF MPCC Company Limited.

INA is used as the feedstock for the production of next generation plasticizers, including diisononyl phthalate (DINP) and non-phthalate plasticizer Hexamoll DINCH. DINP is widely used as a plasticizer in industrial applications such as automotive, wires, building and construction, while Hexamoll DINCH is BASF’s non-phthalate plasticizer for sensitive applications, including toys as well as food contact and medical applications.

The BASF Group’s Intermediates division develops, produces and markets a comprehensive portfolio of more than 700 intermediates around the world. Its most important product groups include amines, diols, polyalcohols, acids and specialties. Among other applications, intermediates are used as starting materials for coatings, plastics, pharmaceuticals, textiles, detergents and crop protectants. Around the globe the division generated sales to third parties of about EUR2.8 billion in 2013.
MRC