BASF declares FM on n-butanol, shuts down plant for repairs at Ludwigshafen, Germany

MOSCOW (MRC) -- BASF, the world's petrochemical major, has declared force majeure (FM) on the supply of n-butanol after hitting unspecified technical problems at its production plant in Ludwigshafen, Germany, according to Chemweek.

The FM was declared “with immediate effect” on 8 December by BASF in a letter to all its n-butanol customers. “Our production plant for n-butanol has encountered unforeseeable technical problems. To remedy the situation, we were forced to shut the plant down and start the necessary repair work immediately,” it said. The incident was described in the letter as being “beyond BASF’s reasonable control,” impacting its ability to supply customers with n-butanol according to its contractual obligations, it said. The FM will remain in place “until further notice.”

BASF will allocate the supply of n-butanol for the time being, and said it would continue to use all reasonable efforts to mitigate the effects of the shortage.

The tightening market for n-butanol in Europe and globally has gone “from feast to famine” at a time when demand for derivatives such as butyl acrylate, butyl acetate, and glycol ethers has been higher than usual for this time of year, according to Denis Poussin, global director/acrylic acid and acrylates at IHS Markit. Lower n-butanol supply may lead to further tightness and rising prices in those derivative markets, he says.

As MRC informed previously, BASF restarted its No. 1 steam cracker following a maintenance turnaround on September 30, 2019. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.

North America chemical rail enters December with surge

MOSCOW (MRC) -- North American chemical rail traffic continues to recover from the effects of COVID-19. During the week ended 5 December, volume totaled 49,537 carloads, up 8.6% year-over-year (YOY), according to data released on 9 December by the Association of American Railroads (AAR). On a four-week basis, volume was up 6.4% from 2019, versus 4.6% during the period ending 28 November, reported Chemweek.

For the year to date, chemical railcar traffic in North America was down 3.0% from 2019 and 5.1% from 2018, versus shortfalls of 3.3% and 5.4%, respectively, for the year through 28 November.

Chemical railcar traffic in the US contributed 36,294 carloads to the weekly total, up 12.5% YOY and up 26.8% from the previous week. For the year to date, US chemical railcar traffic is down 3.8%.

Canadian chemical rail traffic totaled 12,249 carloads, down 2.4% YOY and down 1.5% from the previous week. For the year to date, Canadian chemical railcar traffic is down 1.0%.

Chemical railcar traffic in Mexico totaled 994 carloads, a YOY increase of 23.3% and a sequential increase of 6.4%. For the year to date, Mexican chemical railcar traffic is down 2.3%.

We remind that Russia"s output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% year on year, according to Rosstat"s data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.

We also remind that Russia"s output of products from polymers grew in October 2020 by 6.3% year on year.
However, this figure increased by 1.5% year on year in the first ten months of 2020. According to the Russian Federal State Statistics Service, October production of unreinforced and non-combined films rose to 124,000 tonnes from 117,600 tonnes a month earlier. Output of films products grew in January-October 2020 by 8.5% year on year to 1 104,900 tonnes.

China issues final batch of refined fuel export quotas for 2020

MOSCOW (MRC) -- China has issued a new and final batch of refined fuel export quotas for 2020 totaling 3 million tons, including its first sizeable quota to a giant private refiner, two industry officials with knowledge of the matter said, said Chemweek.

The new issue brings the total fuel export quota this year to nearly 59 million tons, up from last year's 56 million tons. Valid until the end of the year, the new quota includes 1.95 million tons allotted to CNPC, 1 million tons to privately controlled Zhejiang Petrochemical Corp (ZPC) and 50,000 tons to North Industries Group Corp (Norinco), the sources said.

The Ministry of Commerce did not immediately respond to a request for comment. Rongsheng Petrochemical Co, the largest stake holder in ZPC, confirmed in a statement that it had received the 1 million ton export quota.

ZPC, which operates China's single-largest crude oil refinery based in eastern port city Zhoushan, in July became the first private refiner allowed to export refined fuel, but the size of its quota had not been determined. Beijing is seeking to let more private companies access the global fuel market as it looks to ease oversupply pressure on China's domestic market.

"The export quotas will offer more flexible choices for the company in the fuel market ... and will allow the company to pursue bigger benefits," Rongsheng said in the statement. Previously, only a handful of large state-owned Chinese refiners, including Sinopec, CNPC, CNOOC, Sinochem Group and China National Aviation Fuel Co, have been allowed to export refined products.

The allotment to Norinco will go to the group's subsidiary refinery, Huajin Petrochemical, based in northeast China's Liaoning province, which aims to use the quota for diesel exports, one of the officials said. Despite swelling domestic fuel inventories as a result of record refinery processing, Chinese refiners have capped overseas shipments so far this year as the coronavirus pandemic slashed global demand.

China normally issues refined fuel quotas - covering mostly diesel, gasoline and jet fuel - in several batches over a year. Low-sulfur fuel oil exports come under a separate quota. The latest batch falls under the "general trade" category, where companies receive a tax refund after transactions are completed.

As MRC informed earlier, China is in the process of building a mega petrochemical and refining complex in east China’s Shandong province. The country started the project in late October, 2020, four months after the USD20 billion project received state approval. The Yulong project to be built in Yantai, Shandong, China’s hub for independent oil refineries, consists of a 400,000-bpd oil refinery and a 3-MM-ton-per-year ethylene plant, Reuters reported in June.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

Celanese and Mitsubishi Gas Chemical to restructure Korea Engineering Plastics JV

MOSCOW (MRC) -- Celanese Corporation, a global chemical and specialty materials company, and Mitsubishi Gas Chemical Company, Inc. announced the signing of a memorandum of understanding (MOU) confirming their intent to restructure Korea Engineering Plastics Co. (KEP), a joint venture owned 50% by Celanese, 40% by MGC and 10% by Mitsubishi Corporation, said Chemweek.

Under the terms of the MOU, KEP would focus on manufacturing, developing, producing, and supplying high quality products to its shareholders, who would then independently market them globally and without restrictions. The MOU envisions a modernization of the scope of the KEP joint venture, which was formed in 1987 to manufacture and market polyoxymethylene (POM) in Asia, with a particular focus on serving domestic demand in Korea.

Celanese and MGC believe that focusing KEP’s efforts on manufacturing and supplying its shareholders with a leading portfolio of innovative products is a necessary response to the globalization of the POM industry, the fragmentation of the marketing supply chain, and other changes in market conditions since KEP was first formed.

POM is one of the world’s most widely used engineered materials, known for its high dimensional stability, hardness and creep resistance. These unique qualities allow POM to be used as a broad replacement for metal parts. Along with its copolymer resins, POM is widely used as an engineering plastic across almost every industry.

The parties have also committed to increasing KEP’s production capacity to improve the long-term security of supply to its customers and further support their growth. The increased volumes are expected to come on-stream in a series of steps in the coming years.

The parties expect the joint venture restructuring to be completed before the end of 2021, subject to customary closing conditions and any necessary regulatory approvals. KEP will continue to serve its customers, without change, until the restructuring is closed and will provide more information pertaining to the transition as details are finalized.

The partners of KEP are focused on ensuring KEP’s customers will continue to be able to depend on a reliable supply of products and KEP will work closely with them on a plan to address any concerns in the coming months.

As MRC informed earlier, Mitsubishi Chemical has acquired a greenfield property at a large integrated site in Geismar, Louisiana, and plans to advance its feasibility study for the design and construction of a 350,000-metric tons/year methyl methacrylate (MMA) plant. The plant will be the third and largest to employ the Alpha production technology developed by subsidiary Lucite. The company earlier in March this year announced its intent to build the plant.

The main application, consuming approximately 75% MMA, is in the production of polymethyl methacrylate acrylic plastics (PMMA). Methyl methacrylate is also used to produce methyl methacrylate-butadiene-styrene copolymer (MBS), used as a modifier for polyvinyl chloride (PVC).

According to MRC's ScanPlast report, October total production of unmixed PVC grew to 86,600 tonnes from 86,000 tonnes a month earlier, SayanskKhimPlast and Bashkir Soda Company increased their capacity utilisation. Overall output of polymer was 805,100 tonnes in the first ten months of 2020, which virtually corresponds to the last year"s figure. Two producers increased their production, whereas two other manufacturers reduced their output.


Wacker gives final approval to sale of Siltronic stake

MOSCOW (MRC) -- The supervisory board of Wacker Chemie has approved the conclusion of an irrevocable undertaking with GlobalWafers Co. (Hsinchu, Taiwan), under which Wacker will transfer its entire 30.8% stake in silicon wafer company Siltronic to GlobalWafers as part of a voluntary takeover bid that GlobalWafers will submit to all Siltronic shareholders, reported Chemweek.

The offer price will be EUR125/share, as previously announced, and the minimum acceptance threshold of the takeover bid is 65%. The deal will be subject to competition law clearances and further regulatory approvals, Wacker says. The offer price values the whole of Siltronic at EUR3.75 billion (USD4.54 billion).

“Since we became a minority shareholder in Siltronic in 2017, we have repeatedly expressed our intention to sell our remaining stake in the medium-to-long term,” says Rudolf Staudigl, Wacker’s outgoing president and CEO. “Siltronic has performed extremely well over the last few years. It enjoys a strong position in the global semiconductor-wafer market, has an excellent technology base and is highly profitable. As a result, now is the right time for us to take the next step and pull out of Siltronic completely.”

The entity resulting from the merger of Siltronic and GlobalWafers, also a manufacturer of silicon wafers, would be “an industry leader that offers an extensive portfolio and can supply all semiconductor customers with cutting-edge products,” Staudigl says.

The agreement between GlobalWafers and Siltronic includes “comprehensive guarantees for the sites operated by [Siltronic],” says Staudigl. “Siltronic will essentially be able to maintain its existing business strategy and remain a reliable partner to the European semiconductor industry going forward,” he says. Site closures and forced layoffs have been ruled out in Germany until the end of 2024, he adds.

As MRC reported earlier, Wacker Chemie operates a 90 ktpa EVA compounding plant at the Ulsan site, consisting of two lines. The second line with a capacity of 40 thousand tons of products per year was launched in 2013.

According to MRC's DataScope, September EVA imports to Russia fell by 30,32% year on year to 2,38 tonnes from 3,420 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-September 2020 by 9,85% year on year to 26,340 tonnes (29,220 tonnes a year earlier).

Wacker Chemie manufactures and markets EVA dispersions under the VINNAPAS brand name. VINNAPAS polymer dispersions are used in a wide range of industries: for the production of complex thermal insulation systems, building and tile adhesives, plaster, building mixtures and mortars, cement sealing slurries and nonwovens.