GCC and China to ink FTA by land 2016

MOSCOW (MRC) -- A free trade agreement between the Cooperation Council for the Arab States of the Gulf (GCC) and China could be inked by end 2016, effectively removing tariffs imposed on Middle East petrochemical products to its biggest buyer, a source close the discussions told TPS.

The GCC comprises six members: Saudi Arabia, UAE, Kuwait, Oman, Qatar, and Bahrain. Negotiations for an FTA kicked off in July 2004, and five rounds of discussions have already taken place, according to China’s Ministry of Commerce website. Negotiations were suspended in 2009, and restarted in December 2015.

Tariffs on petrochemicals, which were supposed to be lifted within five years of the China-FTA, may be lifted almost immediately after the agreement is struck.

"Both sides are now discussing to move petrochemicals from category B, where tariffs are gradually lifted within five years, to category A, where tariffs are removed immediately," the source said.

Petrochemicals such as benzene, paraxylene, styrene monomer and monoethylene glycol are top export items to China. Removal of tariffs on these products would have a profound impact on trade flows, making GCC petrochemicals much more attractive to Chinese buyers.

Case in point is paraxylene, which has a 2% import duty except for cargoes exported from Asean and Taiwan. This has led to a preference for “Asia-origin” PX which excludes products from the Middle East and India.

If the GCC is able to finalize the FTA and move petrochemicals into category A, GCC products could pose a serious threat to South Korea and Japan, which are the top exporters to China.

The GCC bloc is China's largest source of oil imports, while China is the GCC's eighth largest trading partner, according to China’s Ministry of Commerce.

We remind that, as MRC reported earlier, in 2014Oman state refiner Oman Oil Refineries and Petroleum Industries Company (Orpic) selected LyondellBasell's Spheripol polypropylene process technology for a new 300,000 tpy polypropylene (PP) plant to be built in Sohar, Sultanate of Oman. Start-up of the Liwa plastics project is planned for 2018.
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MOSCOW (MRC) -- Hengli Petrochemical Company (Hengli), based in Dalian, China, has awarded DuPont a contract to supply the alkylation and spent acid regeneration (SAR) technologies for the new, grassroots refinery in the Changxing Island Harbor Industrial Zone, according to Plastemart.

The contract includes the license and engineering design packages for the STRATCO alkylation and MECS SAR units. Installation of the new units at Hengli is currently planned for 2018 with start-up anticipated in 2019. The grassroots refinery complex, with the addition of STRATCO alkylation technology, will allow Hengli to produce a high quality alkylate product (used as a blending component in the gasoline pool) from a 100% isobutylene feed stream.

"DuPont is pleased to provide Hengli Petrochemical with our world-class sulfuric acid alkylation technology to improve the overall gasoline pool from the refinery," said Kevin Bockwinkel, global business manager for the STRATCO Alkylation Technology. "The unique feed stream (100% isobutylene) available from the Hengli Petrochemical facility marks the beginning of a new era for alkylation in the gasoline market as the butane-to-alkylate movement grows around the world."

As part of DuPont’s commitment to innovation, the alkylation unit at Hengli will utilize the patented XP2 technology in the STRATCO Contactor reactor. The XP2 technology is one of the latest Contactor reactor enhancements developed by DuPont to ensure the most effective and efficient use of the tube bundle heat transfer area, providing significant process benefits resulting in improved alkylate product quality.

As MRC wrote previously, in December 2015, Dow Chemical Co. and DuPont Co., two historic giants of U.S. industry, announced that they would join in an all-stock merger of equals that’s the first step in a plan to create three new highly-focused businesses. The deal, the largest ever in the chemicals industry, will create a USD130 billion company that combines products from both Dow and DuPont in the areas of agriculture, commodities chemicals and specialty chemicals to create the new businesses.

DuPont is an American chemical company that was founded in July, 1802. The company manufactures a wide range of chemical products, leading extensive innovative research in this field. The company is the inventor of many unique plastics and other materials, including neoprene, nylon, Teflon, Kevlar, Mylar, Tyvek, etc. DuPont was the developer and main producer of Freon used in the production of refrigeration equipment.
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MOSCOW (MRC) -- South Korea's purified terephthalic acid (PTA) makers are unlikely to restructure or merge anytime soon, as cash flow among producers have not posed an issue thus far, sources from local plants told TPS.

According to a source from South Korea's Samnam Petrochemical, all three domestic PTA producers have no cash flow problems for now.

TPS calculations indicate that PTA makers in South Korea were able to obtain conversion spreads between USD56.46/mt to USD81.14/mt from paraxylene (PX), which was at a lackluster range, but yet close enough to breakeven for basic survival.

"The government's plan to restructure the PTA business will not work in the near future," according to a source from South Korea's Taekwang Industrial.

The ownership structures of PTA makers under different "chaebol" groups continues to be a big hurdle to consolidation, polls of PTA makers suggested.

South Korea's PTA plants are neither as new nor as big as China's ones. Nonetheless, South Korea's plants are well depreciated, meaning that their lower fixed costs can make up for their higher variable costs.

Additionally, at two producers with PTA plants in Yeosu and Daesan enjoy transportation advantages, as their PX can be piped over from neighboring refineries.

"This enabled certain PTA producers to obtain a bigger discount on their PX term contracts," the Samnam source explained.

South Korea's government has recommended a restructuring of the petrochemical industry, with PTA producers specifically urged to reduce production by 30%, or around 1.5 million mt/year of capacity, via voluntary reductions or scrapping of existing facilities.

PTA makers face a difficult 2016 ahead due to market saturation worldwide, according to TPS analyses. South Korea, once one of the world's biggest producers and key exporters of PTA, has been unable to match costs and compete, due to a series of mega-PTA plants that started up in China in recent years despite an economic downturn.

As MRC wrote previously, South Korea’s PTA producers were urged to reduce production by 30% amid worsening market conditions, according to the government’s industrial restructuring plan. The country’s petrochemical industry is one of the five industries that was recommended by the government to undergo restructuring, along with shipping, shipbuilding, steel and construction sectors. Since October 2015, the South Korean government has been pushing ahead with its plan for restructuring industries that have suffered from macroeconomic uncertainty including the slowdown of the Chinese economy and the US Federal Reserve’s interest rates hike.
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MOSCOW (MRC) -- Specialty chemicals company Lanxess is expanding its range of highly reinforced polyamides and polyesters for the design of extremely strong structural components, said the producer on its site.

The polyamide 6 grades Durethan BKV 60 EF and XF are being joined by a polyamide 66 with a glass fiber content of 60 percent, which is to be marketed under the name Durethan AKV 60 XF. The new high-performance thermoplastic combines the benefits of a highly reinforced, easy-flowing compound with the advantages of a polyamide 66 resin.

"The material exhibits excellent strength and stiffness. It unlocks a whole new dimension of design freedom for all-plastic parts, plastic/metal hybrid technology and continuous-fiber-reinforced semi-finished thermoplastic composites. What’s more, it can be used as a metal substitute in a whole range of applications," says Ralf Heinen, a plastics expert at Lanxess.

As is to be expected, compared to its polyamide 6 "cousins" with the same glass fiber content, the new highly filled polyamide 66 structural material offers better resistance to chemicals. Another advantage of the new material is its excellent processing characteristics. Despite the high glass fiber content, it exhibits the same flowability as polyamide 66 with a 35 percent glass fiber content. It can also be injection molded at the same temperatures.

The new polyamide 66 can also be used as a substitute for metals in components under the hood. Potential applications include valve covers, transmission and engine oil pans, brackets and intake pipes. Engine mountings and coupling rods in the chassis area are also viable applications for the material.

As MRC informed previously, in January 2016, Lanxess started up a second production line for high-performance plastics compounding at its facility in Gastonia, North Carolina. The new line represents an investment of about USD15 mln and doubles the site’s annual production capacity from 20,000 to 40,000 metric tons.

Lanxess is a leading specialty chemicals company with sales of EUR 8.0 billion in 2014 and about 16,600 employees in 29 countries. The company is currently represented at 52 production sites worldwide. The core business of Lanxess is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals.
MRC

MOSCOW (MRC) -- Accella Performance Materials has purchased the spray foam division of Quadrant Urethane Technologies, as per Rubbernews.

Founded in Dallas, the acquired operation is a manufacturer of spray foams used for insulation. The purchase gives Accella a strong product portfolio of spray foam products and services, according to Andy Harris, president and CEO of Accella.

Adding the division to the fold allows Accella, a member of the Arsenal Capital Partners group of companies, "to further expand our footprint is spray foam insulation and deliver even more value to our customers," he said in a statement.

With the acquisition, "Accella’s position as the leading independent polyurethanes systems house is even stronger by leveraging the combined technology, manufacturing and customer support across the group," according to John Televantos, an Arsenal partner who co-heads Arsenal’s Specialty Industrials business.

"Quadrant Spray Foam brings a strong reputation for high quality products and customer service that combines synergistically with Accella’s offering and culture to better meet the needs of customers," Roy Seroussi, a principal at Arsenal, said at a statement.

Robert Jamieson, Quadrant’s owner said he is pleased with the transaction. "Quadrant will continue to serve its customer base with innovative products and leverage Accella manufacturing and technology capabilities to build on its brand success," he said in a statement. "Accella is a great home for Quadrant’s spray foam team and technology."

"The combination of Accella with Quadrant Spray Foam and the prior inclusion of Premium Spray Products, Burtin Polymer Labs and Coating & Foam Solutions provides innovation, scale and speed that makes Accella the industry leader in spray foam for insulation and roofing," said Chris Brink, vice president of Accella Polyurethane Systems.

As MRC informed earlier, in 2014, PolyOne Corp. acquired the specialty polymer coatings assets of Accella Performance Materials Inc. for about USD49 million.

Accella is a leading manufacturer of custom formulated polyurethane systems, and recycled rubber products formed from the strategic combination of Dash Multi-Corp, MarChem, Arnco, Pathway Polymers, Ultimate Systems, RB Rubber, IPS Polymer Systems, Zeus, Premium Spray Products, Coating & Foam Solutions and Burtin Polymer Labs. The polyurethane business is focused on foams, coatings, adhesives, tire fill, sealants and elastomers.
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