japan recovery takes wing - خانه مهندسی شیمی...

MADOKA TASHIROTosoh

RYUICHI TOMIZAWAMitsubishi Chemical

KOJI OEDIC

CHIHIRO KANAGAWAShin-Etsu

SHIRO HIRUTAAsahi Kasai

ALSO IN THIS ISSUE:

PERSONAL CARESFO OF THE YEAR

The Worldwide News Source for Chemicals Makers and Processors • May 11, 2005 • $12.00 U.S., $15.00 elsewhere • PMA 40051509 • 3 Parts

JapanRecovery Takes Wing

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BASELL Goes to Investment Group for $5.7 Billion • TYCO Puts Plastics and Adhesives Unit on the Block • COURT Rejects HazMat Rail Ban in DC

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Newsbriefs4 Appeals court stops DC

hazmat rail ban • Private equity firm to buy Chr. Hansen food unit • Earnings grow at U.S. fertilizer firms • Jourquin to succeed Michielsen at Solvay • Brussels asks industry to investigate risks posed by 12 chemicals • Degussa buys PU release agents firm • Arkema’s first results show improvement

Top of the Week6 Chatterjee wins Basell as

U.S. blocks sale to Iran

Business & Finance NewsUNITED STATES/AMERICAS

7 Tyco puts plastics and adhesives on the block

7 Petrobras postpones raising stake in Braskem

7 Airgas buys two firms in the welding business

8 Improved volumes lift late-reporting specialty firms

8 Terra mothballs ammonia plant in Louisiana

9 Broad precedent set for ‘unfortunate’ court ruling

9 Petchem earnings improve at major U.S. oil firms

9 PPG buys maker of polarized film

9 Huntsman reports loss on one-time charges

EUROPE/MIDEAST

11 Abu Dhabi firm acquires a stake in Agrolinz

11 Germany argues for looser GM crop rules11 Rhodia shareholders seek to oust executives ASIA/PACIFIC

13 Sinopec subsidiaries post higher earnings13 Rhodia plans a big expansion in China

New Construction Projects15 Dow’s Unipol process selected for two PP

plants • Haldor Topsoe wins engineering contract for Al Jubail plant • ICI Pakistan adds soda ash capacity • Borealis extends partnership with Jacobs Engineering • Suncor gets approval for bioethanol plant • Axens selected for Saudi aromatics project • Uhde lands contract from Thai Organics & Chemical • Mosaic builds GSSP unit in Argentina

Specialty Chemicals35 Kemira takes full control of Kemiron unit 35 Engelhard launches novel diesel catalysts

Pharmaceuticals & Fine Chemicals45 Lonza to build peptides plant45 Regulators consider first GM pharma crop

Basic Chemicals & Plastics46 Ethylene prices fall for the

first time since 2003 46 Sabic to expand distribution

in Asia/Pacific 47 CW Price Report

Regulatory48 NJ seeks cleanup costs from

Honeywell and PPG 48 Oil majors fund China ben-

zene exposure study

People49 SFO of the Year: Bradley

Bell is recognized for work in taking Nalco public

CW7551 Chemical stocks rise on

a decrease in oil prices

Departments3 Letters52 Key Changes: PPG makes

management appointments

Features22 Japan Profiles50 Marketplace

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COVER STORY: JAPAN18 Recovery Takes Wing

Things are looking up for major Japanese chemical producers. The domestic market remains sluggish, but a strong pickup in demand elsewhere in Asia has underpinned a recovery in sales. Improved supply-demand balances have also lifted product pricing, especially in petrochemi-cals, providing a boost to profits.

Volume 167 • Number 16 THE WEEK: May 11, 2005 contents

www.chemweek.com Chemical Week, May 11, 2005 1

PERSONAL CARE35 Nanotech to

Play a Big RoleNanotechnology is expected to play a big role in the personal care market over the next few years, analysts say. Global demand for nanomaterials in cosmetics and toiletries is expected to reach $100 million by 2008, according to a recent report from the Freedonia Group (Cleveland).

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Logistics Outsourcing“Outsourcing: In or Out” (CW, April 20,

p. 3) raises the question of why a majority of chemical firms do not plan to outsource logis-tics processes. This is certainly not the case for other industries.

According to a study by Northeastern University and Accenture of the Fortune 500 companies, 83% use third-party logistics pro-viders (3PLs) and nearly 60% use multiple 3PLs. A study of the Global 1000 conducted by the Georgia Institute of Technology and Cap Gemini Ernst & Young found that in 2003, major U.S. companies spent 49% of their entire logistics budget on 3PLs; in Europe it was 65%.

As Jim Tompkins, president of supply chain consultants Tompkins Associates points out in the group’s book The Supply Chain Handbook: “It’s no secret that the world’s most successful companies—including Dell, Wal-Mart, and Sony—owe much of their success to outsourcing.”

Is outsourcing in or out? Well if it’s not in, every company would have its own insurance division, office supply company, car rental subsidiary, engineering firm, design and con-struction group, and so on. Outsourcing is here. It’s more a question of how much and when.

Warren H. Hoppmeyer Jr.Director/Marketing & Business Development

Odyssey LogisticsDanbury, CT

Logistics still ranked third in the Accenture study among business processes most likely to be outsourced by chemical firms, after IT and employee training. —Ed.

PFOA ReductionsYour article “Companies Commit to 90%

PFOA Reduction in Coatings” (CW, March 30, p. 53) may have suggested that 90% less PFOA would be used in making nonstick coatings. This is impossible: PFOA is required for the manufacture of the fluoropolymers in the coatings, and no effective substitute has

yet been identified. Rather, what has been reduced is the

residual level of PFOA in the liquid coating products sold to make nonstick cookware and other products. Residual levels of PFOA in liquid coatings range from 0.2% to 0.3%, and it is this small amount that is being reduced by 90% using a modified production process.

Donald K. DuncanSenior Consultant and Past President

The Society of the Plastics IndustryWashington, DC

Ferro’s Restatement “Ferro Restates Results After Auditor

Probe” (CW, Jan. 26, p. 14) inaccurately suggests that Ferro’s auditors, KPMG, con-ducted the investigation. It was conducted by independent legal counsel Jones Day, and independent auditor Ernst & Young. Ferro, and not KPMG, determined that no restatement was necessary for fiscal years 2001 and 2002.

James C. BaysV.P. and General Counsel

Ferro Corp.Cleveland

A Question of TitleIn “Strube Gets Palladium Medal” (CW,

Jan. 26, p. 9), use of the title “chairman” for Jürgen F. Strube of BASF is quite ambiguous. He is chairman of the supervisory board, and former chairman of the board of executive directors. Jürgen Hambrecht is current chair-man of the board of executive directors.

Jörg SchneiderResearch Scientist

BASFLudwigshafen, Germany

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4 Chemical Week, May 11, 2005 www.chemweek.com

■ MeBr Kills Great Lakes EmployeeA worker at Great Lakes Chemical’s El Dorado, AR plant died last week after being exposed to methyl bromide (MeBr), the company says. Several other employees were sickened, but later recovered, it says. The incident is under investigation by the Arkansas Department of Environmental Quality (Little Rock), EPA, and OSHA.

■ Westlake Posts Sharp Earnings GainWestlake Chemical reported first-quarter net income of $61.1 million (94 cts/share), compared to $10.7 million (22 cts/lb) in the year-ago quarter. Sales jumped 54%, to $618.6 million. Higher volumes and increased selling prices outpaced higher feedstock and energy costs, Westlake says. The company says that first-quarter results include a $400,000 after-tax charge related to the early retirement of debt, which reduced its earnings by about 1 ct/share.

■ Innophos Delays Earnings Innophos says it has requested a 45-day extension from its lenders to deliver its audited 2004 financial statements. The company says the audit has not been completed, due to “an ongoing review of internal control issues at Innophos’ Mexican operations.” Innophos is the for-mer Rhodia phosphates business that was acquired by Bain Capital last year.

■ DuPont Files for Debt OfferingDuPont has filed a shelf registration with the SEC for the sale of up to $3 billion in debt securities. The company said it plans to use the proceeds for general corpo-rate purposes, which may include debt repayment and refinancing, acquisitions, working capital, and capital spending.

■ RPM Acquires Services FirmRPM’s StonCor Group says it has acquired National Building Facilities Services (Philadelphia), a janitorial and facility care services company with sales of about $10 million. Terms were not disclosed.

■ Airgas, Proton Energy Sign PactAirgas says it has singed a three-year agreement under which it will market and distribute Proton Energy Systems’ (Wallingford, CT) proprietary Hogen on-site hydrogen generation systems to U.S. customers.

newsbriefs THE WEEK: May 11, 2005

Appeals Court Stops Hazmat Rail Ban in Washington, DCA federal court has stopped the District of Columbia from impos-ing a temporary ban on hazardous material shipments from going through or near the city. The decision by the U.S. Court of Appeals for the District of Columbia Circuit is a major victory for CSX, which argued that the ban would “unreasonably burden” interstate commerce, and that it would require extensive rerouting that merely shifts risks to other communities. CSX and other railroads say they are also worried that the ban would set a precedent for other U.S. cit-ies, including Baltimore, that are considering taking similar actions. The court’s decision “provides necessary and welcome clarity in the legal dispute between federal and local authorities over the move-ment of certain hazardous commodities,” CSX says. The decision overturns a district court’s ruling last month that denied CSX a pre-liminary injunction to stop the ban from being enforced (CW, April

27, p. 9). CSX responded by filing an emergency motion in the appeals court seeking to reverse the district court’s order. The appeals court says that federal regulations including the Federal Rail Safety Act likely preempt the ban, and that CSX is likely to be successful in arguing that the ban raises issues already covered under the federal Hazardous Materials Transportation Act, as well as national transport security regulations.

Private Equity Firm to Buy Chr. Hansen Food Unit for $1.4 BillionPrivate equity firm PAI Partners (Paris) has agreed buy food ingredients firm Chr. Hansen (Horsholm, Denmark) from Chr. Hansen Holding for DK8.2 billion ($1.4 billion). The acquired business produces colors, cultures, enzymes, flavors, seasonings, sweeteners, and food additives. The deal includes buildings located at Horsholm. It does not include Chr. Hansen Holding’s vaccine developer and producer ALK-Abello. The transaction is subject to regulatory and shareholder approval. Chr. Hansen expects the deal to close in a few months. PAI says it will grow the business through investments in add-on acquisitions, capacity expansions, and R&D. PAI says it has named Lars V. Frederiksen, current Chr. Hansen executive v.p./business operations, CEO of Chr. Hansen, and will maintain Chr. Hansen’s existing management team. The deal is the latest in a series of food ingredient deals in the last year, including Danisco’s pur-chase of food and feed enzymes producer Genencor last month for about $615 million. Danisco purchased Rhodia’s €211 million ($270 million)/year food ingredients business last June in a deal valued at €320 million.

Earnings Grow at U.S. Fertilizer FirmsStrong demand and tight supply of nitrogen fertilizers and potash more than doubled earnings for Agrium and Potash Corp of Saskatchewan (PotashCorp). PotashCorp’s earnings jumped 159% from the year-ago quarter, to $131.3 million, setting a new record for the company’s earnings, it says. Sales grew 26% year-on-year, to $921 million. The company says it had record potash volumes during the quarter, with prices more than 50% versus last year’s quarter. Agrium’s first-quarter earnings also more than doubled to $24 million from year-ago levels of $11 million, on sales up 23%, to $537 million. Tight market conditions, primarily for urea and potash in export and domestic markets, drove the increase in earnings in “what is normally a seasonally slow quarter,” Agrium says. Strong demand and tight supply drove up ammonia and urea prices by 55%, and potash prices by 36% from the year-ago quarter, Agrium says. Producers are adding potash capacity in anticipation of continued demand growth and tight markets. PotashCorp is restarting 1.9 million m.t./year of idled potash capacity at Lanigan, SK and Allan, SK (CW, Sept. 22, 2004, p. 11). Agrium is expanding its total potash capacity by 310,000 m.t./year to more than 2 million m.t./year (CW, April 20, p. 13).

Odfjell Fined $400,000 After Fatal Tanker ExplosionOdfjell says it has been fined $400,000 following an accident on the chemical tanker M/T NCC Mekka off the coast of Brazil on June 4, 2004, which killed two crewmembers. An empty cargo tank, which had previously held naphtha, exploded while it was being cleaned, the company says (CW, June 23, 2004, p. 11). Investigators ruled that Odfjell did not provide sufficient guid-ance to its crews on the correct use of inert gas systems, the company says.

Hazmat ruling: Ban would burden commerce.



Jourquin to Succeed Michielsen at SolvaySolvay has named Christian Jourquin as the company’s next chairman, effective May 10, 2006. Jourquin will succeed Aloïs Michielsen, who has been named chairman of Solvay’s supervisory board. Jourquin is currently executive committee member/chemicals at Solvay. Michielsen will replace Daniel Janssen, a former Solvay chairman, as the compa-ny’s supervisory chairman, and Janssen will retire. The company says Vincent De Cuyper will join the executive committee and be respon-sible for chemicals, effective May 1, 2006. De Cuyper is currently general manager at Solvay affiliate Vinythai (Bangkok). Meanwhile, Solvay CFO René Degrève will move to the post of general manager/North America, effective March 31, 2006, succeeding David Birney, who will retire. Bernard de Laguiche, managing director of Solvay Solexis (Milan) and a Solvay executive committee member, will replace Degrève as Solvay CFO.

Brussels Asks Industry to Investigate Risks Posed by 12 ChemicalsThe European Commission has ordered the chemical industry to carry out testing programs to evaluate the risks to human health and the environment posed by 12 commercially used chemicals, including chlorinated paraffins, the f lame retardant tetrabromobisphenol A, the phthalate BBP, and vinyl acetate monomer. Producers have on average 10 months to submit required data on each of the chemicals to the commission. The programs vary from prod-uct to product, and some include toxicity evaluation in aquatic organisms; biodegradation simulation testing; and environmental exposure information on emissions.

Degussa Acquires PU Release Agents Firm; Posts Lower ProfitsDegussa says it has acquired Ratec International (Wittenburg, Germany) for an undisclosed amount. Ratec produces release agents for demolding polyurethane (PU) foam and generates annual sales of “several million euros,” Degussa says. The acquisition means that Degussa’s stake in Gorapur (Wittenburg), a supplier of release technology for PU, increases to 100%. Gorapur was formerly a 51-49 joint venture between Degussa and Ratec. Degussa says it plans to integrate Gorapur with Degussa’s Goldschmidt Polyurethane Additives business. Meanwhile, Degussa posted a 20% drop in first-quarter net profits after minority interests, to €72 million ($94 million), on sales up 3%, to €2.8 billion. The company cites economic weakness, high raw material costs, and the strength of the euro. “Despite the slow start we are confident that we can offset the sharp hike in raw material costs by raising prices in the coming quarters,” says Degussa chairman Utz-Hellmuth Felcht.

Arkema’s First Results Show ImprovementArkema, the vinyls and chlorochemicals; intermediates; and performance products business of Total, posted a more than eight-fold increase in first-quarter operating profits, to €89 million ($116 million), on sales up 6%, to €1.4 billion. Total cites “improved market conditions and the effects of self-help programs that are under way.” It is the first time Arkema has reported earnings since the business was split off from Total last year. Total plans to spin off Arkema to Total’s shareholders in 2006. Arkema announced a restructuring of its chlorochemicals business earlier this year (CW, March 23, p. 20). Total’s base chemicals and polymers busi-ness reported a more than five-fold increase in first-quarter profits, to €352 million, on sales up 35%, to €2.6 billion; and the company’s specialties business reported a 3% decrease in first-quarter earnings, to €116 million, on sales up 7%, to €1.6 billion. The company cites a “rebound in petrochemical margins that began in the second half of 2004.”

ICI Posts Higher Profits, But Outlook is Less Bright ICI says its first-quarter net profits increased 23%, to £75 million ($144 million), on sales up 2%, to £1.4 billion. The improvement reflects price increases and restructuring, ICI says. Pretax profits before exceptional items were up 33%, to £84 million, ahead of analysts’ forecasts of about £81 million. “The outlook for the balance of the year, however, is less certain,” says ICI CEO John McAdam. “Further price increases will be necessary to offset continued raw mate-rial cost inflation, and sales growth slowed as the quarter progressed, suggesting weakness in a number of market sectors, particularly Europe.”

■ Sumitomo Bakelite Buys CompositesSumitomo Bakelite (Tokyo) says it has agreed to acquire Vyncolit (Ghent, Belgium) and Vyncolit North America (Manchester, CT) from Perstorp for SK856 million ($122 million) in cash. The Vyncolit busi-nesses produce moldable phenolic composites for the automotive and elec-trical industries, and generate combined sales of SK470 million/year, Perstorp says.

■ Bioethanol Unit Planned in FranceA group of four private investors has announced plans to build a €75-million ($98 million), wheat-based bioethanol plant with a capacity of 100,000 m.t./year, at Noyelles-Godault, France. The project, dubbed Ethanord, is scheduled for comple-tion in mid-2007. It would be built at the site of a metal-casting foundry that closed in 2003. The investors also say they plan a €55-million, sugar beet-based bioethanol unit with a similar capacity at the same site, for completion in 2010. The projects remain subject to French government approval.

■ Yara Forms Marketing JVFertilizer producer Yara (Oslo) says it plans to establish a 50-40-10 marketing joint venture with animal feeds producer Dansk Landbrugs Grovvareselskap (DLG; Copenhagen) and agricultural supplier Agro Denmark (Copenhagen). The jv, Ferti Supply, will purchase fertilizers from Yara and SweDane Fertilizer (Copenhagen), a producer partly owned by DLG, and distribute the product for resale to DLG, Agro Denmark, and retail outlets in the Danish market. The jv is expected to start operating in the second half of 2005 and generate sales of about DK700 million/year ($123 million). Yara posted a 7% decrease in first-quarter net profits, after minority interests, to NK917 million ($147 million), on flat sales of NK10.9 billion; operating profits increased 21%, to NK1.3 billion.

■ Reliance Bidding for Qenos?Reliance Industries is bidding to acquire Qenos (Melbourne), an olefins and poly-ethylene joint venture between Orica and ExxonMobil Chemical, according to a recent report in Indian newspaper The Economic Times. Orica and ExxonMobil put Qenos up for sale last year and recently narrowed the bidders down to a shortlist of seven (CW, March 23, p. 11). Reliance declined to comment on the report.

www.chemweek.com

Jourquin: Solvay’s next chairman.


top of the week

www.chemweek.com6 Chemical Week, May 11, 2005

May 11, 2005

Intense lobbying by the U.S. govern-ment has thwarted plans by National Petrochemical Co. (NPC; Tehran)

to acquire the BASF-Shell Chemicals polyolefins joint venture Basell. BASF and Shell have instead announced their decision to sell Basell to a consortium led by privately owned industrial holding com-pany Access Industries (New York) and The Chatterjee Group (TCG; New York) for €4.4 billion ($5.7 billion), including debt. The deal is expected to close in the second half of 2005, subject to antitrust approval.

BASF and Shell announced plans to “review options” last July for €6.7-billion/year Basell. They later invited bids to acquire Basell, and earlier this year narrowed the bidders down to a shortlist of NPC, Access Industries-TCG, and Ineos. NPC was the highest bidder at €4.4 billion compared with an original bid of €4 bil-lion from Access Industries-TCG, according to sources close to the process. Mohammad Reza Nematzadeh, president of state-owned NPC and Iran’s deputy oil minister, believed until very recently that NPC was “the win-ner” in the bidding for Basell (CW, April 27, p. 15).

However, the U.S. State Department intervened toward the end of last month, putting intense pressure on BASF and Shell to abandon the deal with NPC because of U.S. economic sanctions against Iran, sources say. The sanctions for-bid Iranian ownership of U.S. assets. Basell is the largest producer of polypropylene (PP) in the U.S., with plants at Bayport, TX and Lake Charles, LA. Basell is also the exclusive purchaser and marketer of PP produced at ConocoPhillips’ Linden, NJ plant. Basell’s assets in the U.S. account for less than 15% of its total asset value, sources say.

The State Department was also particularly concerned about the potential use by Iran for

military purposes of Basell’s process tech-nologies, sources say. The U.S. government considers Iran a state sponsor of terrorism. Basell has licensed technology to NPC for a number of polyolefin projects in Iran. Basell

and Shell pulled out of negotiations with NPC in 2003 on an olefins and derivatives jv among the three companies at Bandar Imam, Iran. Basell was also negotiating a sepa-rate low-density polyethylene jv with NPC at Bandar Imam.

NPC had said it was prepared to acquire only Basell’s assets out-side the U.S., and BASF and Shell were considering such a deal, but Washington still expressed its opposition because sanctions ban U.S. companies from doing business with Iranian-owned firms, sources say. “Although NPC won all aspects of the Basell tender, due to politically moti-vated pressures by the U.S., we are told unofficially that Iran cannot buy Basell,” Nematzadeh told semi-official Iranian news agency ISNA on May 4. BASF and Shell declined to comment on NPC’s bid. Access Industries-TCG, BASF, and Shell also declined to comment on whether Access Industries-TCG upped its bid for Basell from €4 billion, to €4.4 billion at a very late stage, to become the selected bidder.

Basell has €2.2 billion of debt. As a result BASF and Shell, 50% shareholders in Basell, will each receive €1.1 billion from the sale, minus pension costs and other liabilities. Shell included a $214-million asset impair-ment charge, related to its investment in Basell, in its first-quarter 2005 accounts. Shell included a similar $286-million charge in its fourth-quarter, 2003 accounts.

Access Industries and TCG say they will pay half of the acquisition cost in cash, and finance the rest through debt. Lazard advised BASF and Credit Suisse First Boston advised Shell. Access Industries and TCG declined to provide details of their advisers. “It ends a

Chatterjee Bid Wins Basell as U.S. Blocks Sale to Iran’s NPC

period of uncertainty for our customers, who have been patient and understanding,” says Basell CEO Volker Trautz.

Access Industries has interests in the aluminum, coal, oil, and telecommunica-tions industries. “We are experienced in industrial investments in companies that compete in large, cyclical markets,” says Len Blavatnik, chairman and controlling shareholder of Access Industries. Blavatnik is a Russian-born billionaire who made his fortune in Russia’s oil industry. He is a U.S. citizen. Privately owned TCG has a control-ling 43% stake in Haldia Petrochemicals (Calcutta), which operates an olefins and polyolefins complex at Haldia, India includ-ing plants based on Basell technology.

Ownership by NPC would have given Basell much-needed access to olefins pro-duced in Iran from inexpensive gas feedstock, analysts say. The Access Industries-TCG consortium cannot offer attractively priced

raw materials, analysts add.Meanwhile, Shell and Basell will retain

a deal under which Basell will market polyolefins from the Nanhai petrochemi-cal complex that Shell and China National Offshore Oil Co. plan to start up late this year at Daya Bay, China, says Fran Keeth, executive v.p./chemicals at Shell. Marketing of polyolefins from any future projects, such as a petchem jv complex Shell is considering in Qatar, will be decided on a case-by-case basis, Keeth says.

Basell says it is the largest producer of PP with total capacity of almost 8 million m.t./year, and the biggest manufacturer of advanced polyolefin products. The com-pany says it is the seventh-biggest producer, and number one in Europe, in polyethylene (PE), with a capacity of almost 2.7 mil-lion m.t./year, and a leading supplier of polyolefin catalysts. Basell is also the lead-ing licenser of PP and PE technology.

—IAN YOUNG

Trautz: Period of uncertainty is over.

Keeth: China deal stays in place.

Blavatnik: Experience in cyclical markets.

■ CHANGING HANDS*(in thousands of m.t./year)

CAPACITY

Polypropylene 7,996¹

Polyethylene 2,670

Compounds 786

Catalloy² 385

Polybutene-1 45

Ethylene 1,540*Basell’s capacities by product. 1) Including Basell’s share of joint ventures. 2) Olefin-based engineering plastic. Source: Basell.


Tyco says it will sell its $1.7-billion/year Tyco Plastics & Adhesives (TP&A; Princeton, NJ) unit. Tyco’s plastics unit

is the largest maker of trash bags, stretch film, and sheeting in the U.S., processing about 1.5 billion lbs/year of polyethylene (PE). The unit employs 9,600, and operates 51 manu-facturing sites, primarily in the U.S.

Morgan Stanley (New York) has been retained to advise on the sale, Tyco says. It hopes to complete a deal by year-end. Tyco says it scrapped previous plans to sell its plas-tics business in early 2002 after bids failed to meet expectations (CW, Jan. 30, 2002, p. 8).

“The market demand for a property like this is there,” says Tyco CEO Edward Breen. Potential buyers “will look past the resin market,” which is what is affecting current profitability in this business, when valuing it, Breen says. “We feel now is an attractive time to sell.”

Tyco’s TP&A unit reported sales of $1.74 billion in the fiscal year ended September 30, 2004, f lat with the prior year. The unit reported operating income of $69 million, a decline of 60% from the prior year, due largely to asset impairment and restructuring charges of $91 million

associated with plant shutdowns.The assets for sale include: Tyco Plastics,

a leading producer of PE-based films; Tyco Adhesives, a maker specialty adhesives and tapes; A&E Products, a maker of plastic gar-ment hangers; and Ludlow Coated Products, a maker of specialty laminates and coated paper, film, foil, and fabric products (chart).

Tyco does not report profitability by indi-vidual business unit, but the A&E hanger unit has been a drag on profitability, says TP&A president Terry Sutter. “The A&E asset has overshadowed others,” Sutter says. “Our three

other businesses have performed quite well.” Tyco says it took a $202-million asset impair-ment charge in the A&E business during its fiscal quarter ended April 1.

Tyco’s plastics business has also been hurt by sharp rises in PE prices since second-half 2004. “The films business is still a good finan-cial performer,” Sutter says. “We’re stuck right now playing catch up with the rapid resin increases. I’m confident that we will get caught up, and we have been showing prog-ress every month and quarter.”

PE buyers have obtained some relief with a 2-ct/lb decline in April prices, and Tyco plans to be aggressive in seeking further price con-cessions, Sutter says. “We’re going to push the resin guys as hard as we can,” he says. “We are leaving no stone unturned looking for lower raw material costs.”

TP&A’s separation from Tyco will put it in a better position to pursue growth opportu-nities in higher-value specialized films, and outside the U.S., Sutter says. TP&A was a relatively small player within Tyco, which posted sales of $40 billion last year, and has slower growth rates than Tyco’s larger opera-tions in electronics, health care, and security businesses. “It is hard to compete for capital” given Tyco’s other options, Sutter says. TP&A “is a good business and sound financial per-former. New ownership and a different capital structure will allow us to execute our strategic plans.” —ROBERT WESTERVELT

Tyco Puts Plastics and Adhesives Units on the Block

■ Ashland Buys Car BriteAshland’s Valvoline division says it has agreed to purchase Car Brite, a producer of professional automotive recondi-tioning products including interior and exterior cleaners, from E&A Industries (Indianapolis). Terms were not disclosed, but the deal will be a cash transaction, Ashland says.

■ Airgas Acquires Welding Assets Airgas says it has acquired the assets and operations of Vancouver Welding Supply (Vancouver, WA), and Cumberland Welding & Supply (Cumberland, MD). The transactions closed April 30. The two businesses had a combined sales total of more than $9 million in 2004.

Brazil’s petrochemical projects, including the complex being planned by the Rio Polimeros consortium at Duque de Caxias, Copesul (Triunfo), and Petroquimica União (São Paulo), due for startup in June 2006.

Braskem also has the right to termi-nate the agreement if Petroquisa does not include, as part of the “assets designated to be contributed,” Petroquisa’s owner-ship interests in petrochemical companies located in the Triunfo petchem complex in Rio Grande do Sul.

Analysts say Petrobras’s decision will have an important impact on the Copesul complex at Triunfo, Brazil’s second-largest petrochem-ical pole. “A reorganization of the Triunfo complex becomes very likely by the end of this year, transforming it into an integrated producer,” says Jorge Bühler Vidal, head of Polyolefins Consulting (North Brunswick, NJ). —KARA SISSELL

State oil company Petrobras (Rio de Janeiro) and Brazil’s largest petrochemi-cal firm Braskem (São Paulo) have agreed

to extend until the end of the year Petrobras’s option to increase its share in Braskem. The option allows Petrobras’s chemical subsidiary Petroquisa to extend its share in voting capital from 10%, to up to 30%.

Regional petchem firms are closely moni-toring Petroquisa’s investments in Braskem, in part because Petrobras controls most of Brazil’s raw materials production, and because it would affect Petroquisa’s stake in other proj-ects, the executives say.

The original option, which would have expired April 30, required Petroquisa to divest its stakes in Brazilian petrochemical projects that compete with Braskem. It is not clear which of Petroquisa’s holdings would be affected under the amended agreement. Petroquisa has a 10%-20% stake in most of

Petrobras Postpones Raising Stake in Braskem

UNITED STATES/AMERICAS

business & finance news


*Percent of total sales. 1) Ludlow makes flexible packaging, and housewrap. 2) Maker of plastic garment hangers. Source: Tyco Plastics & Adhesives (Princeton, NJ).

ON THE BLOCK*(2004 total: $1.74 billion)

Plastics56%

Adhesives17%

Ludlow1

14%

A&E Products2

13%


Late-reporting specialty chemical mak-ers posted positive first-quarter earnings comparisons, helped by higher selling

prices and volumes, companies say. Most firms met or beat analysts’ estimates, although Nalco fell short by 1 ct/share.

Nalco reported earnings of 10 cts/share, excluding a 2 cts/share charge for one-time items. The con-sensus of analysts’ estimates was for 11 cts/share, according to First Call (Boston). Nalco swung back to a profit, following several quarters of losses. Improved volumes in the energy services division led earnings growth, the company says.

Nalco’s price increases could not keep up with rising raw material costs, however, the company says. The com-pany earned $18 million from price increases, but raw material costs rose $34 million, says chairman and CEO William Joyce. “On the positive side, we are seeing customer accep-tance of price increases in most businesses,” Joyce says.

Hercules met estimates of 19 cts/share, excluding one-time charges; earnings were 4 cts/share including charges, the company says. Improved selling prices helped boost earnings, the company says. “The challenging raw mate-

Improved Volumes Help Lift Late-Reporting Specialty Firms

UNITED STATES/AMERICAS

rial environment we saw in 2004, and especially in the fourth quarter, continued and escalated in the first quarter of this year,” says Craig Rogerson, president and CEO. Higher raw materials and freight costs reduced earnings by $27 million compared to the year-ago quarter,

Rogerson says. “Price increase initiated last year and accelerated during the first quarter yielded $19 million across all the businesses and helped offset costs,” he says. Hercules expects to incur unspecified severance charges during the second quarter, primarily in the pulp and paper busi-ness, he adds.

Arch Chemicals’ earnings more than dou-bled, led by strong demand in the personal care and industrial biocides businesses, and a significant improvement in performance ure-thanes, the company says. —KERRI WALSH


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Terra Mothballs Louisiana Ammonia Plant

Terra Industries says it has mothballed its 500,000-ton/year ammonia plant at Donaldsonville, LA indefinitely, citing

high and volatile natural gas prices. The com-pany says it will purchase ammonia from Yara (Oslo) for delivery to Donaldsonville.

Terra says the plant has been out of opera-tion since December 2004. The company will continue to use the site as a storage and distribution terminal. The plant was part of Terra’s acquisition of Mississippi Chemical (MissChem) last year (CW, Aug. 18/25, 2004, p. 8). MissChem had closed its ammonia, urea, and melamine plants at Donaldsonville last year, and had left one ammonia plant to operate as swing capacity (CW, March 31, 2004, p. 6).

Terra has signed an agreement to buy 500,000 ton/year of ammonia with Yara. The agreement is for three years, with automatic renewal every two years after.

The plant closure completes the transition of the Donaldsonville site from a produc-tion to a storage and distribution facility, Terra says.

Terra reported earnings of $3.2 million for the first quarter, down 82% from the year-ago period, on sales up 25%, to $450 million. Higher natural gas costs more than offset income contributions from MissChem, and higher nitrogen fertilizer prices. Terra’s natu-ral gas costs were up 21% in North America, and 32% in the U.K. in the quarter

—PECK HWEE SIM

■ POSITIVE FINISH*(in millions of dollars)

COMPANY SALES % CHANGE EARNINGS % CHANGE

Nalco Holding¹ $777.6 9% $11.0 NM

FMC² 552.4 9 41.0 192%

Hercules³ 505.1 6 20.5 30

Arch Chemicals 301.3 25 3.6 57

Minerals Technologies4 250.8 20 15.2 21*First-quarter sales and earnings results. 1) EPS excludes 2 cts/share one-time items. 2) Earnings were $64.5 million including gain. 3) Excludes $15.6 million in charges during first-quarter 2005. Excludes charges and a $26-million gain in first-quarter 2004. 4) Includes 2 cts/share charge.

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A recent Supreme Court ruling against Dow AgroSciences surprised some industry attorneys who say it “unfor-

tunately” will set a broad precedent for other companies facing lawsuits involv-ing the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). The court rejected Dow’s argument that the labeling requirements under FIFRA pre-empted dozens of lawsuits filed by Texas peanut farmers, who claimed that Dow’s Strongarm herbicide killed their crops (CW, May 4, p. 32). The Supreme Court ruled that most claims were not pre-empted, and that the others should be remanded to the Texas appeals court for further review.

The Supreme Court’s decision surprised some attorneys because it reverses most prec-edents set in the last 15 to 20 years in other FIFRA preemption lawsuits. “I have repre-sented pesticide manufacturers in the past, and the basic strategy is to get these FIFRA cases dismissed based on preemption,” says Madeleine Fischer, a partner with the law firm Jones Walker (New Orleans, LA). Fischer does not currently represent any pesticide compa-nies, however. “You used to have a good shot at getting cases claiming ‘negligent design’ or

‘failure to warn’ dismissed,” Fischer says.The Supreme Court’s decision may deprive

many pesticide companies of a quick and inexpensive way to have the cases thrown out, Fischer says. Dismissals based on FIFRA pre-emption are usually decided via pre-trial legal motions petitioning the judge to dismiss the

case, which means companies were saved the time and expense of going through the pre-trial, information-sharing process called discovery, she says. “Some companies with a lot of resources likely will still want to try these cases, but you won’t be able to get out of them quickly in the beginning,” she adds. “That was something nice about the FIFRA preemption, you didn’t have to go

up until the verge of trial” to obtain a dis-missal, Fischer says.

Fischer says that the Supreme Court was firm on its decision when it comes to claims by pesticide customers that are based on “breach of express warranty; violation of the Texas Deceptive Trade Practices-Consumer Protection Act; strict liability, including defective design and defective manufacture; and negligent testing.” Lawsuits based on the plaintiffs’ claims of “fraud” and “negligent failure to warn” were remanded to the Texas

Fifth Circuit Court of Appeals “to determine whether Texas laws on these points conflicted with or were equivalent to FIFRA regula-tions,” she says. In those kinds of claims, companies still have a chance to get cases dismissed based on FIFRA preemption, she adds. —KARA SISSELL

FIFRA Ruling Sets ‘Unfortunate’ Precedent

PPG Acquires Producer of Polarized Film PPG Industries says it has signed an agree-ment to acquire the business of privately held International Polarizer Holdings Trust (Marlborough, MA), a maker of polarized film for sunglass lenses. Terms were not disclosed.

International Polarizer is the world’s largest manufacturer of sunglass polar-izers, producing more than 1 million sq ft/year, PPG says. The company says it will continue to operate the business under the International Polarizer name. Richard Phillips, owner of International Polarizer, will remain as president of the business.

PPG says it is the largest global maker of optical resins. The company told inves-tors at its recent annual meeting that it was looking for small bolt-on deals to strengthen its optical business (CW, April 27, p. 6). —RW

Huntsman Reports Loss on One-Times ChargesHuntsman says it reported a first-quar-ter net loss of $99 million (45 cts/share), including the impact of preferred stock dividends, losses on the early repayment of debt, and restructuring costs. Net earn-ings excluding charges was $184.9 million (80 cts/share), compared to a net loss of $75.7 million (34 cts/share) in the year-ago quarter. Adjusted Ebitda jumped 118%, on sales up 27%, to $3.36 billion.

“First-quarter results represent our seventh consecutive quarter of improved revenues and adjusted Ebitda, and were achieved despite continued volatile and high energy and feedstock costs,” says Huntsman president and CEO Peter R. Huntsman. The company is optimis-tic about 2005 “as the fundamentals of our business continue to show general improvements,” Huntsman says. —RW

styrenics,” ConocoPhillips says.ChevronTexaco says its chemical operations,

which include its 50% interest in CPChem as well as its wholly owned Oronite subsid-iary, earned $137 million in the first quarter 2005, an increase of 85% from the year-ago quarter. “Partially offsetting the improved CPChem results was a decline in the earnings of Oronite,” ChervronTexaco says. “Margins continued to improve in markets for com-modity chemicals.”

Sunoco’s chemical earnings almost tripled, to $33 million. “Despite continued feedstock cost pressure, reflecting higher margins in polypropylene and phenol, chemicals results have improved year-on-year for eight consec-utive quarters,” Sunoco says. “Fundamentals remain positive and we expect the recovery to continue.” Chemical revenues were not dis-closed. —ROBERT WESTERVELT

U .S. oil majors with petrochemical operations reported strong year-over-year earnings gains in the first quarter.

ExxonMobil says its chemical earnings, totaled $1.28 billion in the quarter, a jump of 128%. The figures exclude a $150-million gain from the sale of ExxonMobil’s stake in Sinopec. Earnings were boosted by higher margins, and improved market conditions, ExxonMobil says. Product volumes in chemi-cals increased 2%, to 6.94 million m.t., the company says. Revenues were not reported.

ConocoPhillips says its chemical segment, which includes its 50% interest in Chevron Phillips Chemical (CPChem), reported net income from continuing operations of $133 million in the first quarter, a 240% gain over the same year-ago quarter. The increase “was related to improved margins in olefins and polyolefins, as well as aromatics and

Petchem Earnings Improve at U.S. Oil Firms


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International Petroleum Investment Co. (IPIC; Abu Dhabi) says it has agreed to acquire a 50% stake in Agrolinz Melamine

International (AMI; Linz, Austria) from OMV (Vienna). AMI, meanwhile, has confirmed Ruwais, Abu Dhabi as the location of its next melamine project.

IPIC will pay OMV €241 million ($315 mil-lion) for a 50% stake in AMI, including assumption of 50% of AMI’s net debt, OMV says. The deal is likely to close in the second half of this year, OMV says. IPIC and OMV say they will operate AMI as a 50-50 joint venture. AMI has sales of €394 million/year and is the second-biggest producer of melamine behind DSM, OMV says.

Divesting the AMI stake forms part of OMV’s strategy to focus on its energy activities, OMV says. IPIC owns 17.6% of OMV.

AMI says a final decision on the melamine

project in Abu Dhabi is expected “soon.” It says the plant will be a 60-40 jv between Abu Dhabi National Oil Co. (Adnoc) and AMI. The unit will have a capacity of 80,000 m.t./year, and is scheduled to come onstream by the end of 2008. Total investment in the project is estimated at $160 million. Adnoc and AMI will form a sepa-rate 50-50 jv to market product from the plant.

The Ruwais melamine plant will have “direct and convenient” access to natural gas feedstock, OMV says. The unit will supply rapidly growing melamine markets in the Mideast and Far East, says Joachim Grill, CEO of AMI. The com-pany has been planning a melamine plant in the Mideast for some time (CW, July 14, 2004, p. 17).

Ruwais will be AMI’s fourth melamine unit site. The company has plants at Castellanza, Italy; Linz; and Piesteritz, Germany, with com-bined capacity for 210,000 m.t./year.

AMI, meanwhile, says it has agreed to acquire €50-million/year engineering com-pany Eurotecnica (Milan) for an undisclosed amount. Eurotecnica designs and constructs chemical plants; about 80% of the plants it builds are melamine units, OMV says. It is “the only engineering company that has a proven, fully functional technology for melamine pro-duction,” OMV adds.

Building the plant in Abu Dhabi and acquir-ing Eurotecnica reflect AMI’s ambitious growth plans, Grill says. “Our goal is to become number one in melamine by 2010,” he says.

Adnoc owns 60% of the Borouge jv, which operates an ethylene and polyethylene complex at Ruwais; Borealis owns the rest. Borouge is planning to build a second complex at Ruwais that will include a 1.4-million m.t./year eth-ylene plant; two polypropylene plants with a combined capacity of 800,000 m.t./year; and a 540,000-m.t./year polyethylene unit (CW, Nov. 10, 2004, p. 23). Borouge is currently selecting a project manager and financial adviser, sources say. OMV and IPIC each own 25% of Borealis; Statoil holds the rest. —IAN YOUNG

Abu Dhabi to Buy Agrolinz Stake; Site Selected for Melamine Project

Rhodia Shareholders Aim to Oust Senior ExecutivesCertain minority shareholders in Rhodia say they will attempt to oust the com-pany’s top executives at Rhodia’s annual meeting on June 23. The move follows the recent announcement by France’s stock market regulator that it is investigat-ing Rhodia for failing to disclose certain financial information in a timely fashion (CW, April 6/13, p. 7).

Colette Neuville, president of Adam (Paris), France’s main minority sharehold-ers’ group, and rebel Rhodia shareholder Hugues de Lasteyrie, have notified the Rhodia board of resolutions planned for the meeting that call for the ousting of CEO Jean-Pierre Clamadieu and chairman Yves-René Nanot, among others. Neuville and de Lasteyrie name Rhodia board member Francis Mer as a preferred choice as CEO or chairman. Rhodia’s last CEO, Jean-Pierre Tirouflet, resigned in 2003 following a campaign by shareholders.

Neuville, meanwhile, has called for an independent review of Rhodia’s environ-mental liabilities to evaluate how much compensation it should demand from Sanofi-Aventis in recently launched legal proceedings (CW, April 20, p. 5). —IY

compromise between the two.Separately, the European Council of Ministers

will decide soon whether to authorize the sale of Monsanto’s MON863 GM corn across the EU for use in animal feed. The authorization does not cover MON863 for consumption as human food, or for cultivation. MON863 has been genetically engineered to resist corn rootworm. The European Food Safety Authority (EFSA; Brussels) has found MON863 to be safe for use in animal feed. A total of 26 GM products have so far been approved for EU market use. EU national governments have until now resisted approving cultivation of GM crops, however (CW, March 30, p. 17). —ALEX SCOTT

The Bundesrat, Germany’s upper house of parliament, has voted against draft legislation concerning approval of the

commercialization of genetically modified (GM) crops in Germany, and has instead pro-posed more liberal laws that would make it easier to approve and plant GM crops there.

The draft legislation would implement a 2001 European Commission directive for the commercialization of GM crops throughout the European Union (EU), and would affect how all types of GM crops are controlled in Germany. The legislation was proposed by German agriculture minister Renate Künast, a member of the Green Party, and has been approved by the Bundestag, Germany’s lower house of parliament.

The Bundesrat is proposing a more straight-forward approval process for GM crops; an easing of rules associated with growing GM crops close to conventional crops; and restric-tions on the public’s right to know where GM crops have been planted. A mediation com-mittee will review the draft legislation and the Bundesrat’s proposals in an attempt to find a

Germany Proposes More Liberal GM Crops Law

EUROPE/MIDEAST



Backing GM: Bundesrat wants easier laws.


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S inopec says its chemicals business gen-erated vastly improved earnings in the first quarter on the back of stronger

demand and prices for petrochemicals, which offset higher raw material costs. Sinopec did

not publish group chemical earnings. The company’s ethylene production increased almost 8%, to 7.7 million m.t., in the first quarter, and plastics output grew almost 9%, to 1.7 million m.t., Sinopec says.

Several of Sinopec’s listed petchem subsid-iaries reported big increases in first-quarter profits (table). Shanghai Petrochemical (SPC) reported a 46% increase in net profits, to Rmb1.1 billion ($130 million), on sales up 27%, to Rmb10.6 billion. “Domestic demand

for petrochemical products remained strong, causing the selling prices of the company’s major products to increase to various degrees,” says SPC chairman Lu Yiping. Prices for fibers, intermediates, and plastics increased 17%,

55%, and 27%, respectively, dur-ing the quarter, SPC says. The company recently commissioned its Secco ethylene and derivatives joint venture with BP.

The exception was polyester producer Yizheng Chemical Fibre (YCF), which reported a 97% drop in first-quarter net earnings, to Rmb3 million, on sales up

39%, to Rmb3.8 billion. YCF says it failed to pass on high raw material costs to its customers due to oversupply in China’s polyester market.

Beijing Yanhua Petrochemical, another Sinopec subsidiary, has not yet reported first-quarter figures, but it recently announced a more than four-fold increase in full-year 2004 net earnings, to Rmb2.9 billion, on sales up 56%, to Rmb17.9 billion. The earnings fig-ure exceeded analysts’ estimates of about Rmb2.2 billion. —IAN YOUNG

Sinopec Subsidiaries Post Higher Earnings

ASIA/PACIFIC



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■ EARNINGS SOAR IN CHINA*(in millions of Rmb)

SALES %CHANGE EARNINGS %CHANGE

Beijing Yanhua¹ Rmb17,940 56% Rmb2,896 NM

Shanghai Petrochemical 10,651 27 1,075 46%

Yangzi Petrochemical 9,687 36 1,312 54

Yizheng Chemical Fiber 3,800 39 3 -97*First-quarter 2005 figures, unless specified otherwise. 1) Full-year 2004 figures. NM=Not meaningful. Source: Company reports.

DIGEST

Weak Demand Causes LG Chem’s Profits to DropLG Chem reported a 23% decrease in first-quarter net profits, to won118.3 bil-lion ($118 million), on sales up 16%, to won1.87 trillion. The earnings figure was short of analysts’ estimates of about won138.1 billion. It reflects weakening domestic and overseas demand, and high raw material prices, LG says. Operating profits nevertheless increased 16%, to won141.4 bil-lion. “Factors such as the lagging domestic economy, high oil prices, and appreciation of the Korean currency played against us,” says Ki Ho No, president and CEO at LG Chem. LG’s information and electronic materials business posted a won1.4-billion operating loss, compared with a won19-billion profit a year earlier, on sales up 11%, to won282 billion. The company cites a “slump” in the information technology industry.

Rhodia Plans Big Expansion of China BusinessRhodia says it intends to increase China’s share of the company’s sales from 5%, to 10%, by 2008. The company’s sales in China increased by almost 30% in 2004, to €248 million ($324 million), and are likely to grow to about €300 million this year, Rhodia says. China will account for about one-third of Rhodia’s investments in the coming years, the company says. Rhodia says it has invested €300 million in China, and has 15 production sites there. Rhodia recently announced plans to build a $30 million-$35 million diphenols unit at Wuxi, China for completion in 2007 (CW, April 6/13, p. 17). The company is also participating in an estimated Rmb3-billion ($362 million) silicones joint venture with China National Bluestar Corp. (Beijing) at Tianjin, China, also for completion in 2007 (CW, Oct. 27, 2004, p. 19).


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GCI Magazine and Chemical Week present

restige Products for the Personal Care IndustryJune 22-23, 2005 Peninsula Hotel – Chicago, IL

As the number and net worth of core prestige consumers rise, particularly in Eastern Europe and Asia, they are driving growth in the prestige cosmetics and fragrance markets, which jumped 4.7% in 2003 to reach an overall market size of US$47 billion (GCI, October 2004). In response to this upswing, GCI Magazine in conjunction with Chemical Week is hosting Prestige Products for the Personal Care Industry, an event targeted to the suppliers and manufacturers of the luxury personal care market.

2005 Featured Topic Sions• New Customer Segments: Identifing & Working With The Changing Shape

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PP

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Chemical Week, May 11, 2005 15www.chemweek.com

new construction projects

Saudi Formaldehyde Selects Haldor Topsoe for Al Jubail PlantSaudi Formaldehyde Chemical says it has awarded Haldor Topsoe a contract for licens-ing, engineering, catalysts, equipment, and a fully programmed control system for a 200-m.t./day formaldehyde facility at Al Jubail, Saudi Arabia. The plant will produce formaldehyde at concentrations of up to 55%. It will feature a single reactor and be designed so that an additional reactor can be installed to increase the plant’s initial capac-ity by 100%-300%. The unit will form part of SFC’s complex at Al Jubail that includes three formaldehyde production lines based on Haldor Topsoe technology.

ICI Pakistan Adds Soda Ash CapacityICI Pakistan (Karachi) says it will invest PRs915 million ($15 million) to expand soda ash capacity at Khewra, Pakistan by 50,000 m.t./year, to 225,000 m.t./year. The expansion will also lead to higher pro-ductivity and better operating efficiency, the company says. The additional capacity will supply the local market, ICI Pakistan says. The completion date of the project was not disclosed. ICI Pakistan modernized the Khewra plant in 2002, debottlenecking various production units and adding a 5.2-MW cogeneration plant (CW, April 10, 2002, p. 33). The soda ash plant meets about 75% of Pakistan’s requirements for the product, ICI Pakistan says.

cles. The plant will be partly financed by a C$22-million ($17.6 million) grant from the Canadian federal government’s previously announced Ethanol Expansion Program, Suncor says.

Axens Selected for Saudi Aromatics ProjectSafra (Jeddah, Saudi Arabia) has selected Axens’s (Paris) continuous catalytic regen-erative reforming technology for a planned 100,000-m.t./year aromatics complex at Yanbu, Saudi Arabia, Axens says. The facility will produce a mix of benzene, toluene, and mixed xylenes that will be further processed in unspecified downstream units.

Uhde Lands Contracts from Thai Organics & ChemicalThai Organics & Chemical Co. (TOCC) has selected Uhde to provide engineering services for an expansion of TOCC’s chlor-alkali plant at Rayong, Thailand, by 70 m.t./day of caustic soda, to an undisclosed level, Uhde says. Completion of the project is scheduled in 11 months. The scope of the contract includes basic engineering, detailed engineering, supply of membrane elements, and commissioning of the plant. Uhde says it won the contract despite “stiff interna-tional competition.”

Mosaic Builds Granular Phosphate Unit in ArgentinaMosaic Co. says it will build a granular single super phosphate (GSSP) plant next to its dis-tribution facility at Quebracho, Argentina. The new plant will have capacity of 240,000 m.t./year, and will require investment of approximately $14 million, Mosaic says. The facility will use imported phosphate rock and sulfur from nearby plants in Argentina, the company says. GSSP is the most com-petitive product price per unit of sulfur, and is well-regarded by soybean farmers because fertilizing with sulfur products improves crop yields, it says. Mosaic was recently formed from the merger of IMC Global and Cargill’s fertilizer business.

Novartis Starts Work on Singapore Pharma UnitNovartis says it has broken ground on a $180-million project to build a bulk pharma-ceuticals manufacturing plant at Singapore’s Tuas Medical Park. The facility will produce new and existing Novartis products, it says.

Borealis Extends Partnership with Jacobs EngineeringBorealis has extended an engineering con-tract with Jacobs Engineering to include new, unspecified projects at Borealis’s Porvoo, Finland site, Jacobs says. Jacobs will provide construction, consulting, engineer-ing, and procurement services for projects at Porvoo with a total installed cost of up to $1.9 million, under the terms of the revised agreement, the company says. Financial terms of the deal were not disclosed. “The expansion of our partnership with Borealis into Finland reflects Borealis’s strategy of improving capital effectiveness, and our model of growth through expanding long-term client relations,” says Andy Kremer, v.p./Jacobs Group.

Suncor Gains Approval for Canada Bioethanol PlantEnergy firm Suncor (Calgary, AB) says it has received final environmental approval from federal and provincial Canadian gov-ernments to build a 200-million liter/year bioethanol plant that will use corn as its raw material, at St. Clair Township, ON. Construction of the $120-million facil-ity will begin immediately, and should be completed by mid-2006, the company says. The plant will employ up to 40, and will consume about 20 million bushels/year of corn, Suncor says. Ethanol produced from the facility will be blended with gasoline to provide cleaner-burning fuel for vehi-

Dow’s Unipol Process Selected for Two World-Scale PP PlantsDow Chemical says its Unipol polypropylene (PP) process technol-ogy has been selected by an undisclosed petrochemical company to build a 500,000-m.t/year PP facility, and a second PP plant with a capacity of 400,000 m.t./year. Further details of the projects, including the company’s identity, plant locations, and timing, were not disclosed. The larger plant will produce homopolymers and ran-dom copolymers, Dow says.

The larger plant will be the world’s largest single-train PP unit, says John Yimoyines, v.p./Dow Technology Licensing. The Unipol process features one or two gas-phase, fluidized-bed reactors. A single reactor is used to produce homopolymers and random copolymers. A second-stage reactor adds the key elastomeric component to the PP polymer chains, the company says. The back-mixing activity of the reactors leads to exceptional product consistency, the company says.

Dow’s other recently awarded Unipol PP contracts include a project to increase produc-tion at Polipropileno’s (Bogota) PP plant at Cartagena, Colombia by 80,000 m.t./year, to 200,000 m.t./year. Output from that plant will be sold in Colombia, and other Latin American and Caribbean countries (CW, Nov. 3, 2004, p. 16). —ALEX SCOTT

Yimoyines: Largest single-train PP unit.


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Japan

May 11,2005

Country Focus

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T hings are looking up for major Japanese chemical producers after a long period of depressed earnings. The domestic market remains sluggish, but a strong pickup in demand elsewhere in

Asia, particularly China, has underpinned a recovery in sales. Improved supply-demand balances have lifted product pricing, espe-cially in petrochemical markets, providing a boost to profitability. Most firms are undergo-ing or have recently completed rationalization, cost-cutting, and debt-reduction efforts that have also helped the bottom line, and enabled them to focus on growth efforts.

Structural problems remain, however. There has been no large-scale M&A among the major companies, which remain smaller and much more diversified compared to their Western peers, with interests in petchems, specialty chemicals, health care, and electronic materials, as well as nonchemical busi-nesses ranging from housing to analytical equipment. Most Japanese firms have also been slow to globalize, and most are highly dependent on the domestic market. That is a particular problem for those in the petchem sector, which have the added problem of high feedstock prices, analysts say.

Nevertheless, most of the major firms reported healthy increases in net earnings for the first nine months of their fiscal year, ended December 31, 2004 (table). Companies cited strong domestic demand; rising export sales, particularly to China; and higher prod-uct prices, especially for petrochemicals. Several warned that there was some deterio-

ration during the last three months of 2004, however, due to the strong value of the yen, and softer demand for finished goods, such as electronics. But analysts say demand improved again in the January-March quarter, and most are expecting strong earnings reports for the fiscal year ended March 31, which are due out during the next two weeks.

Mitsubishi Chemical recently raised its operating profits projection by 14% for the year ended March 31, to ¥146 billion ($1.38 million), and its sales target by 2.3%, to ¥2.19 trillion. It reported operating profits of ¥98.2 billion on sales of ¥1.93 trillion the pre-vious fiscal year. The company cites the effect of higher petchem pricing, an increase in sales in its performance product segment, and strong export demand, particularly from China. The

results mean that Mitsubishi will comfortably meet its goals of a ¥100-billion operating profit and return on assets of more than 4% under a restructuring effort put in place two years ago under president and CEO Ryuichi Tomizawa.

When Tomizawa was promoted from the company’s pharma affiliate to his current post in 2002, Mitsubishi was suffering sharp losses as previous restructuring efforts had failed to offset the effects of the chemical down-turn, particularly in chemicals and electronic materials, and the company’s high debt load. “The performance of the company was mis-erable,” Tomizawa says. “My main issue was how to stabilize the company.” The restruc-turing involved the sale or creation of joint ventures of several operations with a view to shifting the company toward higher-margin businesses. Costs were cut by an annualized ¥39 billion, and debt reduced by ¥280 bil-lion, to ¥770 billion.PETCHEM RESTRUCTURING. The company car-ried out a major restructuring of its petchems business, participating in the consolidation of the Japanese polyolefins business via the formation of a jv in polyethylene (PE) and polypropylene (PP), creating entities that have the largest respective capacities in Asia. Mitsubishi is also a participant in PS Japan, the country’s largest polystyrene (PS) maker, and several other large petchem jv’s. The company closed an ethylene plant at Yokkaichi, and has concentrated production at Kashima and Mizushima, where it has carried out extensive cost-cutting measures, with the goal of making them among the “lowest-cost ethylene produc-ing sites in Asia,” Tomizawa says.

The company remains highly dependent on the domestic market, with only 23% of its sales generated outside Japan, but plans to increase that figure with overseas investments in products where it has a good technology position, Tomizawa says. Projects include a major purified terephthalic acid (PTA) jv with Itochu in China, and an acrylates venture with

Sasol in South Africa. The one excep-tion to that regional expansion policy is the company’s 59%-owned Mitsubishi Pharma affiliate, which Tomizawa says he would like to globalize in an effort to better compete with major drug firms. Mitsubishi Chemical and Mitsubishi Pharma recently announced plans to form a joint holding company to acceler-ate that process (CW, May 4, p. 17).

Other measures included beefing up Mitsubishi Chemical’s R&D effort to enhance new product and process development. New product develop-

ment will be the key to meeting goals under Mitsubishi’s latest three-year restructuring phase, Tomizawa says. Under that plan, the company aims to generate sustainable operat-ing income of ¥140 billion, raise its return on

Japan


■ PROFITS SURGE*(in billions of yen)

SALES %CHANGE EARNINGS %CHANGE

Mitsubishi Chemical ¥1,606.2 13% ¥48.6 66%

Asahi Kasei 1,011.8 12 46.7 NMSumitomo Chemical 948.0 12 44.2 88

Mitsui Chemicals 903.0 13 5.5 -50

Dainippon Ink 747.2 2 7.2 21

Shin-Etsu Chemical 717.3 16 69.7 NA

Tosoh 424.8 24 22.8 NM

Ube Industries 417.1 12 6.5 65*Nine months ended December 31, 2004. NA=Not available. NM=Not meaningful. Source: Company reports.

Recovery Takes Wing

COVER STORY



processing” PE based on its own proprietary technology, 350,000 m.t./year of linear low-density PE, 300,000 m.t./year of high-density PE, 700,000 m.t./year of PP, 600,000 m.t./year of ethylene glycol (EG), and 200,000 m.t./year of propylene oxide.

Sumitomo says it has also boosted its R&D effort. “I believe that the driving force behind earnings growth of the chemical industry is,

above all, R&D and technologi-cal capability,” Yonekura says. The company cites process successes including novel caprolactam and propylene oxide technologies, and new products from its “hybrid chemistry” approach, including optically functional films and color filters for liquid crystal displays that were developed by combining functional polymer design and fine polymer processing technology, he says. Sumitomo aims to generate 20% of its sales from new products by the end of the three-year plan, he adds.

Asahi, Mitsubishi, and Sumitomo have all eschewed the trend among European and U.S. firms to separate their drugs businesses, however the small size of individual businesses is the main concern for Mitsubishi, Tomizawa says. “We can be suc-cessful doing business across a wide area, but the power of our individual businesses is not strong enough to be sustainable alone,” he says. Pressure on the pharma sector is growing as a result of pricing changes as the Japanese government tries to reduce prescription drug prices. Sumitomo recently announced plans to merge its drugs business with Dainippon Pharmaceutical.

There has been no major M&A in the Japanese chemicals sec-tor since the mid-1990s, when Mitsubishi Chemical was created from the merger of Mitsubishi Yuka and Mitsubishi Kasei; and Mitsui Chemicals was formed from

the combination of Mitsui Sekka and Mitsui Toatsu. Mitsui Chemicals and Sumitomo Chemical had planned to merge, but that plan collapsed in 2003 over a valuation dis-agreement. Further large-scale M&A is not expected, due to inherent conservatism among the Japanese “keiretsu” or corporate family sys-tem, analysts say, and most restructuring has taken place along individual business lines.

licles, dry-film resists, and other products for the electronics industry, and medical products such as polysulfone fibers and hemo-dialyzers, he says. A further ¥400 million will be spent on capital projects through 2010. The company is also trying to strengthen new product development. “We have many prom-ising products in the medical and electronics fields. Each one is relatively small, but we have a large number of them,” he adds.

Sumitomo Chemical is one year into a three-year development plan that aims to boost its net income to ¥65 million, on sales of ¥1.33 tril-lion. The company expects to post net income of ¥50 billion, on sales of ¥1.28 billion for the year ended March 31. The company plans to focus the bulk of its investment in life sciences, particularly pharma-ceuticals, as well as information technology-related chemicals, says president Hiromasa Yonekura. The company will also enhance its posi-tion in “downstream value-added bulk products such as polyolefins, and agchems,” and boost its operations overseas, particularly in high-growth Asian markets, Yonekura says.

Based on the projects already under way, Sumitomo estimates that its overseas revenues will rise from 31% of the group total in 2003, to 40% in 2006, Yonekura says. The company is expanding its electronic materials business in China, South Korea, and Taiwan, and its petrochemical business in Singapore. Sumitomo’s overseas sales figure is likely to increase much higher toward the end of the decade, however, via its participation in a $4.3-billion refining and petchems project with Saudi Aramco at Rabigh, Saudi Arabia. Sumitomo is the only Japanese chemical firm participating in the current round of Mideast expansions.

“We aim to conclude a feasibility study in the third quarter, start construc-tion by the end of 2005, and are aiming for commercial operations by the end of 2008,” Yonekura says. The project will include a 1.3-million m.t./year ethylene plant, and a total of 900,000 m.t./year of propylene produc-tion, including that sourced from the refinery. The downstream configuration will include plants to produce 250,000 m.t./year of “easy

assets to more than 5.5%, and further reduce debt. The goal is to raise the share of operat-ing profit from performance and functional products, and pharmaceutical units mainly through the introduction of new, higher-value products, and reduce the contribution from petrochemicals.

Asahi Kasei, which also lost money in 2002, is two years into a three-year restruc-turing program that is also intended to shift the company toward higher-value businesses, and reduce debt. The company says it expects to achieve its financial targets a year ahead of schedule, with projected operating income of ¥115 billion for the year ended March 31, adjusted for certain pension costs, on sales of ¥1.38 trillion. Its target was for operating profits of ¥110 million on sales of ¥1.30 tril-lion to be achieved at the end of the next fiscal year. Asahi will achieve a return on equity of 11.1%, versus its target of 10%, and its debt-equity ratio has been cut to 0.51, comfortably beating its 0.7 target.

The restructuring includes a requirement that any business reporting negative eco-nomic value added (EVA) for two consecutive years is earmarked for closure, divestment, or alliance, says president Shiro Hiruta. Closures have included the company’s viscose rayon and acrylic fiber businesses, as well as its Indonesian operations. Divestments have included the company’s salt, liquors, and industrial nitrocellulose businesses; a 90% stake in its polyvinyl chloride (PVC) opera-tions; and its stake in the trading company Chori. Asahi has formed jv’s in businesses including aramid film and bioriented PS sheets, and it is a participant in PS Japan.FINANCIAL IMPROVEMENT. “We have achieved an improvement in our financial structure a year ahead of schedule, and this gives us the ability to invest in the areas we need to,” Hiruta says. Asahi has already been expand-ing its production outside Japan, including an adipic acid project and acrylonitrile expansion in Korea, a polyacetal venture in China, and setting up spandex fiber production in China, Taiwan, and Thailand. Asahi has raised its share of sales outside Japan from just 14% in 1998, to a current level of 23%, Hiruta says. Chemical investments in Japan are being concentrated in areas where the company has a strong competitive position, including acrylonitrile and styrene, he says.

Asahi will invest ¥260 billion under the current plan, of which ¥100 million will be on high-growth businesses such as electronics and health care, Hiruta says. Recent examples include lithium ion battery separators, pel-

Kanagawa: Lean from the start.

Tomizawa: Globalize pharma unit.

Tashiro: Good results in 2004.

Yonekura: A focus on life sciences.


COVER STORY

www.chemweek.com20 Chemical Week, May 11, 2005

reduced headcount, achieving annualized cost reductions of ¥55 billion, Takahashi says. The company transferred its PE business to Japan Polyethylene, in which it retains a minority share, and consolidated its ethylene production facility at Oita, Japan from two trains to one, he says. Its hard disk (HD) media business has been improved by shifting the customer base from companies that also have in-house pro-duction of HD media to companies that rely on OEM manufacturers, and by expanding capacities through acquisition. “As a result, the HD media business is now classified as one of the strategic growth businesses,” he says.SHIFTING DIRECTION. Even companies with a larger exposure to specialties have not been immune to profitability problems. Dainippon Ink and Chemicals (DIC) had suffered several years of poor profits and was failing to meet its financial targets under a three-year restructur-ing started in 1992, when Koji Oe took over as president in June 2004. “We underestimated the impact of changes in our operating envi-ronment,” Oe says. “Specifically, we did not expect product prices to decline or raw mate-rials costs to rise as steeply and swiftly as they did,” he says. “We thus realized that a shift in direction was needed if we were to achieve the goals we had set for ourselves.”

The three-year plan was scrapped and replaced with a two-year program, targeting “drastic” cost cutting, particularly in DIC’s inks business; debt reduction; and expansion of production in high-growth markets, par-ticularly China, Southeast Asia, and Eastern Europe, Oe says. The company has not given financial specifics for the plan, however. DIC is also strengthening its R&D effort to boost development of information technology-related and environment-friendly products, and display-related materials, he says. DIC’s divestment plan is almost complete follow-ing the sale of its agchems business to Nippon Soda last year, although a plan to merge its PS business with PS Japan was thwarted by antitrust concerns.

There is not much sign of improvement in the highly competitive inks business, DIC’s largest market, Oe says. However, the com-pany’s U.S. inks operation, Sun Chemical, has improved by focusing on providing addi-tional services via its Vivitek business model, he says. One key focus of DIC’s restructur-ing is to maximize synergies with its Sun and Reichhold subsidiaries. Reichhold was only at break-even last year, but its results have improved following a restructuring, and suc-cess in passing on higher raw material prices, he adds. The company is also utilizing resin

electronics and health care sectors. Recent successes include an optical filter for plasma display panels, he says. The company says it has also developed a new extrusion technol-ogy that will broaden applications for its ultra-high molecular weight PE film, and a polylactic acid-based biodegradable polymer.

Showa Denko is in the second phase of a six-year business plan due for completion at the end of this year. The first phase focused on

restructuring and improvement in financial strength, while under the second phase, dubbed Project Sprout, “we aim to nurture and expand individualized, competitive, high-value businesses in areas with high growth potential,” says Kyohei Takahashi, president and CEO. The company set a series of profitabil-ity and debt-reduction targets, but “since we no longer pursue a bigger scale, our goals do not include net sales,” Takahashi says.

The company has already achieved several of its major finan-cial targets, including an operating income of ¥50 billion and a return on assets of 5.1%. It reported operating income of ¥52.1 billion in 2004 on sales of ¥740 billion, representing a return on assets of 5.5%; it is the only major Japanese firm to report earnings on a calen-dar-year basis. It has also achieved its target of reducing interest-bearing debt to below ¥520 billion, representing a debt-equity ratio of 2.8. It is also close to achieving its goal of a 7.5% operating margin; the figure last year was 7.0%.

Showa Denko has classified its operations into three categories: strategic growth businesses, base businesses, and businesses that need restructuring. “We are pref-erentially allocating resources to strategic growth businesses, in which we expect high growth based on our proprietary tech-nologies,” Takahashi says. “We want to expand them to the extent

that their aggregated operating income will account for 50% of the company’s total oper-ating income,” up from 40% in 2004. The company’s capital budget will be focused on projects for electronic materials and fabricated aluminum products.

In the past five years, Showa Denko has withdrawn from unprofitable operations and

Mitsui Chemicals began a strategic plan last year that also aims to shift the company further from commodities specialties, says chairman and president Hiroyuki Nakanishi. The company plans to raise sales to ¥1.3 trillion and ordinary profit to ¥100 billion by the end of the fiscal year ending March 31, 2007, with performance materials accounting for more than 50% of the total. Mitsui expects to report ordinary profit of about ¥70 million, on sales of ¥1.26 trillion, for the year ended March 31. The company recently revised its nonconsolidated financial targets for the year, but it did not change the consolidated figures.

Mitsui has undergone consider-able rationalization of its petchem business, including the recent establishment of a polyolefins jv with Idemitsu Kosan, called Prime Polymer. The rationalization will lead to annualized savings of about ¥10 billion, Mitsui says. Other moves have included exiting the acrylonitrile business, and efforts to strengthen its propylene-PP business. The company added a metathesis unit at its Osaka cracker last year to raise propylene output for PP production, and is planning a metathesis unit at its Chiba facility. It is also pursuing a scrap-and-build program to improve the efficiency of its PP business.

Mitsui plans to invest ¥330 bil-lion during the next four years, with the intention of raising the contribution of overseas sales from just over 30% of the total, to 40%, Nakanashi says. “We intend to fur-ther accelerate business expansion based on sites from Southeast Asia to China,” he says. Major projects include an expansion of PTA capac-ity in Thailand, and an investment of ¥140 billion on three projects in China, including PTA, a PP com-pounds unit, and a bisphenol A jv with Sinopec, and possibly a poly-ethylene terephthalate plant. Mitsui says it is considering a phenol plant that could also be a jv with Sinopec (CW, Feb. 23, p. 15).

Mitsui has also boosted its new product development efforts in a bid to raise the share of sales from new products from a current level of about ¥19 billion, to ¥90 billion by 2007, Nakanashi says. The company says it is focusing in particular on materials for the

Oe: U.S. subsidiaries are improving.

Hiruta: Improved financial structure.

Takahashi: Targeting growth businesses.

Nakanishi: Accelerate expansion overseas.



technology transferred from DIC, Oe says.The most consistently successful Japanese

firms have been those with a narrow focus on a few business lines. Tosoh abandoned a diversification strategy 15 years ago to focus on selected petrochemicals, particularly the vinyl-isocyanate chain, and inorganic materi-als including zirconia and quartz products, says president Madoka Tashiro, chairman and CEO. Tosoh had an “extraordinarily good year” in fiscal 2004, and is expecting a similarly good performance for the year ended March 31, Tashiro says. “You can’t cover everything as a medium-sized company, so we decided to select a few areas where we have a specific advantage and focus on them,” he says.

Tosoh wants to expand its businesses over-seas, including construction of a PVC plant in China that is due to start up next year, Tashiro says. The company is also looking to expand into related areas, either by acqui-sition or new product development, he says. Examples have included sputtering targets, an electronic materials business it entered via acquisitions. Like DIC, Tosoh does not issue financial targets, however. “One of the reasons we failed in the past is by overexpand-ing to meet a particular target,” Tashiro says. “It can be dangerous to publish such targets, as these often need to be adjusted to reflect a change in business conditions.”STAYING LEAN. The most successful of the larger Japanese companies is Shin-Etsu, which has had 11 years of continuous profit increases. The company also focuses on rela-tively few business areas, including vinyls, silicon wafers, silicones, and electronic mate-rials, and prides itself on a very lean operation, says Chihiro Kanagawa, president and CEO. “We started out a lean, focused company, and have always been that way, so we have never needed to restructure,” Kanagawa says. The company expects to post another set of record figures for the year ended March 31. “We think that is a rather exceptional perfor-mance,” he says. The company has no debt, and more than $4 billion in cash on hand.

Shin-Etsu’s key to maintain a balanced structure, with less cyclical specialty busi-nesses such as silicones to offset cyclical commodity areas including PVC and silicon wafers, Kanagawa says. The company recently expanded its position in methyl cellulose, a less cyclical business, by acquiring Clariant’s business—a deal that gave Shin-Etsu a lead-ing position in Europe. The company has also developed several new business areas with in-house R&D efforts, particularly in electronic materials, including a photoresist compat-

ible with the latest generation excimer lasers. Other successful introductions have included a pheromone-based insecticide, and the first liquid fluoroelastomer, the company says.

Unlike the vast majority of Shin-Etsu’s rivals, both Japanese and Western, the com-pany refuses to invest in centrally planned economies, notably China, or in regions where there is political risk, including the Mideast, Kanagawa says. Kanagawa cites his personal

experience with a Shin-Tech investment in Nicaragua that was seized after the revolution in the 1970s. He prefers to serve the China market via export from Japan. Right now, his investment location of choice is the U.S., where the company is planning a major vinyls com-plex, and possibly an ethylene plant. “We have to avoid investments with any kind of country risk,” he says. “Right now, the U.S. is the best place for that.” —ANDREW WOOD in Tokyo


http://www.aromaticchemicals.com

http://www.asahi-kasei.co.jp

ASAHI KASEI

CHEMICAL WEEK, MAY 11, 2005 23www.chemweek.com

Company Profile

Our Core Operating CompaniesAsahi Kasei Chemicals Beginning with Japan’s first commercial ammonia synthesis in 1923, process and product innovation have driven the expansion and growth of operations. The company is a world leader in prod-uct quality and performance in a number of important fields.Asahi Kasei Homes Centered on high-performance, earthquake-resistant Hebel Haus™ homes for the urban setting, operations are expanding in the fields of remodeling, real estate, and urban redevelopment. Asahi Kasei Pharma The product range includes pharmaceuticals, medical devices, pharmaceutical intermediates, diagnostic reagents, nutritional products, and animal health products.Asahi Kasei Fibers A wide and expanding range of innovate materials for apparel and industrial applications are produced with the know-how gained through eight decades of industry leadership.Asahi Kasei EMD The company serves the global electronics industry with a range of essential products that meet emerging performance demands.Asahi Kasei Construction Materials Hebel™ ALC panels, Neoma™ foam insulation panels, and an innovative range of piles meet market demands for value, per-formance, and environmental compatibility in the residential, commercial building, and civil engineering markets.Asahi Kasei Life & Living Led by Saran Wrap™ and Ziploc™ for the Japanese market, a growing range of innovative products bring comfort, conve-nience, and ecology to the home. With over 50 years of leadership in Japan, the business’s operations are expanding overseas.

About Asahi Kasei Asahi Kasei provides innovative solutions based on chemistry and materials science to a diverse range of markets including fibers, chemicals, consumer products, housing, construction materials, electronics, and health care, with consolidated annual sales of some $10 billion; 25,000 employees; and 100 consolidated sub-sidiaries. Our operating configuration comprises seven core companies that operate as autonomous units specialized in separate business fields. Asahi Kasei Corporation, as parent company, functions as a holding company for group operations.

Asahi Kasei Corporation, as the holding company, focuses on formulation of group strategy, monitoring the conduct of group operations, optimal allocation of group resources, and group-level corporate research and development. The seven constituent corporations have financial responsibility for their own opera-tions, and strive to heighten asset efficiency and productivity.

R&DIn fields ranging from chemicals to housing and construction materials; fibers; pharmaceuticals and medical devices; and elec-tronics, Asahi Kasei has a strategic focus on creating value for the customer. Each of the core operating companies performs R&D for early commercialization in their own fields of business, while the holding company performs basic group-level R&D and develops businesses in new fields. Work is guided by the concept of “green and sustainable technology,” ensuring due consideration for environmental effects.

ESHIn 1995, Asahi Kasei adopted Responsible Care to enhance envi-ronmental preservation—at group sites, in the communities we belong to, and for the general public—and product safety, opera-tional safety, and workplace hygiene and health. Implementation of Responsible Care is not limited to chemical operations, but is inclusive of all operations throughout the Asahi Kasei group. Responsible Care reports are published each year to gain greater understanding of the efforts and results achieved by the Asahi Kasei group in these endeavors.

Looking aheadWe will maximize use of management resources to obtain height-ened corporate value for the Asahi Kasei group. We will continue to serve our principals through constant innovation and advances based in science and the human intellect; and will contribute to human life and human livelihood, through the active conduct of our business.

Breakthrough̶TogetherOur petrochemicals complex at Mizushima.

A CHEMICAL WEEK Custom Publication


http://www.sumitomo-chem.co.jp

SUMITOMO CHEMICAL


About Sumitomo ChemicalSumitomo Chemical is one of Japan’s leading chemical compa-nies, offering a diverse range of products in the fields of basic chemicals, petrochemicals, fine chemicals, IT-related chemicals, agricultural chemicals, and pharmaceuticals. While expand-ing business worldwide and aggressively pursuing cutting-edge R&D, we continually strive to contribute to the sustainable development of society through our Responsible Care activities.

Our Business SectorsBasic ChemicalsFocusing on caprolactam and polymethyl methacrylate, this sec-tor delivers basic materials to various industries—from consumer goods to high-tech industries. Our product line also includes industrial chemicals, high-purity aluminum, and a licensable hydrochloric acid oxidation process.Petrochemicals and PlasticsSumitomo Chemical supplies many kinds of petrochemical products including organic chemicals, plastics such as low-den-sity polyethylene and polypropylene, and synthetic rubber. The company is steadily expanding its petrochemical operations over-seas. In addition to its operations in Singapore, the company is engaging in a feasibility study with Saudi Aramco to construct an integrated refining and petrochemical complex in Saudi Arabia.Fine ChemicalsOur specialty and customized products, based on unique organic synthesis technologies, meet the diverse needs of industries and consumers. Products include pharmaceutical chemicals, adhe-sive intermediates, polymer additives, and dyestuffs.IT-related ChemicalsOur newest business sector develops comprehensive solutions—including LCD materials such as polarizing films and color filters, super engineering plastics, photoresists, and compound semiconductor materials—to meet the diversifying requirements of IT-related electronics industries.Agricultural ChemicalsSumitomo Chemical’s most globally active sector—in terms of product development and sales alike—markets a wide variety of plant protection chemicals, fertilizers, plant growth regulators, household insecticides, and feed additives. Our comprehensive approach enhances agricultural production and living environ-ments in more than 110 countries worldwide.Pharmaceuticals Sumitomo Chemical conducts intensive, high-level research, mainly through its subsidiary Sumitomo Pharmaceuticals, focus-ing on new drug treatments for neurological, immunological, and cardiovascular disorders, as well as for diabetes. Our genomic drug discovery has been strengthened by alliances with biotech ventures in Japan and overseas.

Research & Development

The basic thrust of Sumitomo Chemical’s R&D strategy lies in the pursuit of “Creative Hybrid Chemistry,” combining diverse technologies developed in a wide range of fields to create and expand a variety of businesses. Based on this strategy, the com-pany has consistently met the challenge of creating “innovative processes” by utilizing its core catalytic technologies, and met the challenge of developing “innovative products” through a combination of its core polymer design and processing technolo-gies. The company is also making strong efforts to promote basic research in the field of life sciences, including genomic research that will bolster the future business of Sumitomo Chemical.

The Pursuit of Sustainable ChemistrySumitomo Chemical is using its unique technological competen-cies to promote “Sustainable Chemistry” as a component of its CSR initiatives. Sustainable Chemistry refers to the continuous pursuit and development of technological innovations in chem-istry to provide society economically with useful products and services while minimizing their environmental impact. Based on advanced technologies accumulated over the years, Sumitomo Chemical is dedicated to incorporating Sustainable Chemistry into its operations, to contribute further to society.

Road Map for Future GrowthGrowing globally and acting responsibly, Sumitomo Chemical will continue to provide high-quality, innovative products and create more value for customers worldwide.

Company Profile

In Pursuit of Stable High Growth through Creative Hybrid Chemistry



JAPAN CHEMICAL INDUSTRY ASSOCIATION

26 CHEMICAL WEEK, MAY 11, 2005 www.chemweek.com

cooperate closely with its counterparts elsewhere in the world to respond appropriately to such important issues as the European Union’s Registration, Evaluation, and Authorisation of Chemicals (Reach) policy; global warming; and Responsible Care.

JCIA will also work hard to improve the image of the chemi-cal industry in Japan and strengthen its presence in Asia--the world’s growth center in the 21st century--by exercising leader-ship in addressing environmental protection and other important subjects.

It is very important for JCIA to strengthen its relationship with China, the world’s factory for commodities. JCIA will also work closely with its Western counterparts, stepping up exchanges of information, pursuing joint activities, and sending out joint messages. By doing so, we aim to gain the international community’s full trust in the global chemical industry.

J apan’s chemical industry enjoyed prosperity in 2004 due to various contributing factors. First, many chemical companies improved their earning power mainly as a result of strenuous cost -reduction efforts during the past several years. Second, exports of chemicals remained at high levels, reflecting strong demand from China and

other Asian countries. Third, Japanese chemical companies’ elec-tronics-related businesses had higher profitability and performed relatively well. Despite soaring crude oil prices, the petrochemi-cals business also achieved good results as higher feedstock costs were gradually absorbed by increases in selling prices for petro-chemical products. Ethylene production in Japan last year totaled 7.56 million m.t.--the third highest in history.

Looking at prospects for this year, no optimism is warranted given continued high crude oil prices, the Chinese government’s tight monetary policy, uncertainty in the Mideast, and the appre-ciation of the yen. Nevertheless, Japan’s chemical industry is expected to remain in good shape because inventory adjustments by the electronics industry will be completed by the middle of the year, and the Japanese economy is recovering.

The chemical industry is playing an increasingly important role as a provider of materials for daily life and for a wide variety of industrial products, and as a supplier of advanced materi-als that support the IT and biotechnology industries. Japan’s chemical industry successfully meets the most stringent quality requirements, putting it in a strong position to lead technical developments around the world.

Meanwhile, environmental and safety issues are becoming more and more important for the chemical industry. JCIA will

Comment

Japan’s Chemical Industry: Current State and Outlook

By Mr Mitsuo Ohashi, Chairman of JCIA



JAPAN PETROCHEMICAL INDUSTRY ASSOCIATION


Comment

T he petrochemical industry in Japan had outstand-ing earnings in 2004 despite the high cost of inputs. Strong operating performance resulted from demand growth and high operating rates in combination with the effects of cost cutting and portfolio realignment measures of the past several years.

Domestic demand rose with an improvement in the Japanese economy, and the Asian supply-demand balance for petrochemi-cal products remained tight due to strong demand in China and Southeast Asia. Strong demand also allowed Japan’s petro-chemical industry to maintain high operating rates, and ethylene production was the highest for four years and the third highest ever, at 7.57 million m.t.

Japanese chemical companies have been driving down pro-duction costs for some time, particularly through advanced technology for energy conservation. Rising prices for petroleum and derivatives have relatively little impact on operating perfor-mance as a result. The chemical industry in Japan has also shifted its product portfolio away from bulk chemicals by expanding operations in performance chemicals for the automotive and elec-tronics industries.

Moving forward, I see three challenges for Japan’s petrochem-ical industry. The first is the adoption of a new product-pricing mechanism that reflects fluctuations in crude oil prices. With WTI, Brent, and Dubai benchmark prices pushing historic highs, it is urgent that we institute pricing mechanisms that reflect oil prices throughout the value chain. The industrial structure of a Japanese economy marked by deflation will need to undergo fur-ther adjustment to reflect the high cost of oil.

The second challenge is greater consolidation of operations. Japan’s petrochemical industry has a fragmented logistics and supply structure; small plant scale; and a large number of players. In commodity segments, product-specific consolidation through M&A and alliances has further to go. The favorable operat-ing climate will make such moves seem less urgent, but they are necessary nonetheless. I believe, in fact, that the time is ripe for further consolidation as the availability of more resources brings

greater freedom and flexibility of action.The third challenge is to continue the advance of technological

development. While the development of specialized materials for electronics and other leading-edge fields has driven the realign-ment of the Japanese petrochemical industry’s product portfolio toward higher-value segments, the life cycle of these products is short. Significant resources must be dedicated continuously to technological development if the pace of creating new products and cultivating new markets is to be maintained.

The mature Japanese petrochemical industry in many ways contrasts with the growing petrochemical industry in other parts of Asia. But Challenges Ahead: New Horizons in Asia, the theme of APIC 2005 which we will host, is no less apt, as the petrochemical industry in each part of the region works to over-come its own challenges and open the path to new horizons in a common future shared by the industry.

Japan’s Petrochemical Industry: Current State and Outlook

By Mr Shiro Hiruta, Chairman of JPCA



http://www.dic.co.jp

DAINIPPON INK AND CHEMICALS, INCORPORATED


About DIC

Dainippon Ink and Chemicals (DIC) is a diversified manu-facturer of specialty chemicals with a leading position in key markets. DIC is also a multinational group with a global network comprising more than 260 subsidiaries and affiliates in over 60 countries, including U.S.-based Sun Chemical and Reichhold.Originally a manufacturer of printing inks, we have built on our expertise in color engineering to develop technologies that have broadened our portfolio. Today, we offer an extensive line-up of products in four segments: graphic arts materials, industrial materials, high-performance and applied products, and electron-ics and information materials.

Business SegmentsGraphic Arts MaterialsThis segment encompasses our core printing inks and organic pigments businesses, as well as presensitized plates, graphic arts films, prepress equipment and other printing supplies. We are a leading player in the markets for mainstay segment products, with global market shares of 33% for printing inks and 25% for organic pigments.Industrial MaterialsWe manufacture a wide range of industrial materials, including synthetic resins, resin-related products, functional polymers, and polymer additives. Customers include manufacturers of coatings, building materials, automobiles, electrical and electronic compo-nents, and textiles.High-Performance and Applied ProductsProducts in this segment include special compounds and colo-rants, pressure-sensitive adhesive materials, chemical coatings, plastic molded products, building materials, and petrochemicals, most of which are made from internally sourced raw materials. These products are sold to manufacturing companies in such sec-tors as housing construction, civil engineering, food and beverage packaging, and automobile manufacturing.Electronics and Information MaterialsThis segment comprises an extensive range of next-generation imaging and reprographic products, liquid crystal materials, engineering plastics, and membranes. We supply these products to numerous high-growth industries, including electrical, elec-tronic, and IT-related equipment.

Global R&D NetworkWe place a strong emphasis on developing environment-friendly technologies and products. The DIC Central Research Laboratories in Sakura, Japan, focus on next-generation core

technologies and coordinate interdepartmental R&D projects. Divisional technical departments carry out advanced, specialized research supported by three R&D centers in Japan. Our R&D laboratory in Berlin, Germany, collaborates with Sakura on basic research, while our R&D laboratory in Qingdao, China, con-ducts applied research. Sun Chemical and Reichhold operate a combined six R&D centers in the U.S. and Europe, which focus on graphic arts materials and synthetic resins.

Strategic FocusWe are reinforcing our leading position in the printing inks and organic pigments markets by basing production at locations that ensure efficient and reliable supplies. We are also stepping up efforts to maximize synergies between these businesses and among the DIC companies responsible for them, and to acceler-ate the development and launch of innovative, highly profitable products that respond to changing market needs.Going forward, we will continue to seek growth by allocating management resources to the development of next-generation IT-related and environment-friendly products. Geographical expansion will focus on high-growth Asian markets, notably China, and emerging markets, including Central and Eastern Europe.

A Diversified, Global Manufacturer of Specialty Chemicals

Company Profile

The DIC Central Research Laboratories at Sakura, Japan.



http://www.kuraray.co.jp

KURARAY


Company Profile

Research & DevelopmentKuraray is engaged in strategic research and development aimed at creating and fostering new businesses based on the company's proprietary technologies, as well as strengthening and expanding its core businesses. Our G-21 medium-term business plan iden-tifies four primary areas of focus for Kuraray's corporate R&D program, which cuts across divisional boundaries to involve the entire group. The program covers electronics and IT, medical and healthcare, environment and energy, and high-performance materials.

Environmental and Industrial Safety ManagementKuraray pursues business and supplies products in a way that achieves a balance with our environmental responsibilities. We have launched initiatives aimed at global environmental con-servation and disaster prevention, as well as occupational and product safety, from mid- and long-term perspectives.

Road Map for Future Growth One of Kuraray’s strategies is to create original products and carve out a market from scratch. We also aim to seize opportuni-ties in growing markets and expand our market share by adding functionalities that cannot be replaced with other materials.Kuraray will increase its operational speed and entrepreneurial capabilities, while striving for long-term, sustainable growth.

About KurarayOne of Japan’s leading manufacturers of specialty materials, Kuraray is active in polymer chemistry and synthetic chemistry. The company has developed a host of technological applications based on those areas of expertise. Our range of highly original products, developed from this solid technological base, has met with strong demand in various fields, including chemicals, resins, high-performance materials, fibers, and medical products.

Corporate MissionWe in the Kuraray Group are committed to opening new fields of business using pioneering technology, and contributing to an improved natural environment and quality of life.

Our Business SectorsChemicals & ResinsPOVAL (polyvinyl alcohol or PVA), a synthetic resin, is used in products ranging from fiber sizing agents to polarized films for liquid crystal displays. EVAL (ethylene vinyl alcohol copolymer or EVOH), a high-performance resin, boasts superior gas-barrier properties. It is used for food packaging and automobile fuel tanks because it shuts out oxygen and volatilized gasoline. EVAL’s use is spreading throughout the world. Methacrylic resin, used for optical components and construction materials, is another key product. Kuraray also uses isoprene to produce SEPTON ther-moplastic elastomers, industrial cleaning agents, aromachemicals, and pharmaceutical intermediates.High-Performance MaterialsGENESTAR, a heat-resistant polyamide resin, exhibits excel-lent resistance to abrasion, as well as superior chemical resistance properties. It is used in electronic and automotive components. Kuraray's liquid crystalline polymer film, featuring low dielectric dissipation, is used to manufacture printed circuit boards. Opto-screens, made by applying precision molding to methacrylic resin, are used for the screens of rear-projection televisions. FibersKURALON PVA fibers have a high level of strength, low elon-gation, hydrophilic properties, and excellent weatherability. They are used in various industrial applications. CLARINO man-made leather has the biggest share of the world market for that product, and is in high demand for shoes, bags, sporting goods, clothing, and upholstery. Medical ProductsKuraray manufactures and sells dental repair materials; artificial kidneys that are used in dialysis equipment to remove toxic sub-stances from the blood; and various other types of medical device including contact lenses.

Kuraray Specialities Europe GmbHCompetitive Growth Through Specialty Materials



The Responsible Care (RC) program, started in Canada in 1985, has now been adopted in 52 countries around the world. It is a voluntary activ-ity for chemical-related

companies to take responsible actions to secure the environment, public safety, and health; and to announce the results of the activity as part of a dialog and communica-tion with the public.

In Japan, the Japan Chemical Industry Association (JCIA) has expanded its RC activities since 1990 and has steadily increased the number of companies that adopt the RC program. Five years later in April 1995, the Japan Responsible Care Council (JRCC) was established at JCIA with 76 leading chemical companies as key players. This year we welcome its 10th anniversary. In commemoration of the 10th anniversary, we will host the interna-tional Responsible Care Leadership Group (RCLG) conference in Japan in November, as well as sponsor a commemorative lecture.

Currently, the number of member companies of the JRCC totals 108, and significant results have been achieved through widespread voluntary activities of the member companies as well as their affiliated companies. For example, we reduced the amount of emissions to the environment of such major chemi-cals (354 substances) as toluene, dichloromethane, and carbon disulfide by 47% in 2003 from that of 2000. In particular, as a result of our efforts in the reduction of emissions of such harm-ful air pollutants (12 substances) as dichloromethane, benzene, and vinyl chloride monomer, their emission amount decreased by 80% in 2003 from that in 1995. Meanwhile, our efforts to reduce the emission of industrial wastes reduced those emissions by 15% in 2003 from that in 1995. In addition, by promoting recycling and reuse of these industrial wastes, we have reduced the final disposal amount of industrial wastes by 77% in 2003 from that in 1995.

At JRCC, we have tackled not only preservation of the envi-ronment but also developed measures for prevention of global warming, security and prevention of disasters, workers’ safety and health, safety of chemicals and chemical products, and safety of chemical distribution, thereby endeavoring to improve public safety and health. At the same time, we build understanding and trust of the chemical industry by promoting a dialog with soci-

ety. Also, this year we plan not only to have a dialog with the general public, consumer organizations, environmental NGOs, and regional administrative organizations in the regions of major chemical industry districts nationwide, but also to continue to promote understanding within the regions by expanding our communications in the communities by holding factory tours and chemistry programs for children.

Also, to contribute to the “sustainable development” of the chemical industry in ASEAN member countries, JRCC has sup-ported RC activities in these countries since 2001.

Japan’s Responsible Care Activity

Community dialog in Yokkaichi region, Mie Prefecture

32 CHEMICAL WEEK, MAY 11, 2005 www.chemweek.com

RESPONSIBLE CAREComment A CHEMICAL WEEK Custom Publication


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Nanotechnology is expected to play a big role in the personal care market over the next few years, analysts say. Global

demand for nanomaterials in cosmetic and toiletries is expected to jump to $100 million by 2008, according to a recent report from the Freedonia Group (Cleveland).

The most common use of nanomaterials in cosmetics and toiletries is to create nanoscale particles of inorganic ultraviolet light (UV) absorbers such as zinc oxide (ZnO) and titanium dioxide (TiO₂) in sunscreens. Nanotechnology used to create micro-capsules containing free radical scavenging ingredients are also gaining popularity.

The use of nanoscale oxides in sunscreens was one of the first com-mercial applications of nanoparticles. Several other areas of research in personal care nano-technology are just getting under way, such as dendrimers, as well as nanoscale skin delivery systems borrowed from pharmaceu-ticals, industry experts say.

The personal care market has not seen “the explosive proliferation of nanomaterial-enhanced products just yet,” says Mike Richardson, analyst at Freedonia Group (Cleveland). However, successfully commer-cialized nanomaterials in personal care will be replicated because the industry depends on product development and enhancement, and a marketing emphasis on all things “new.”DIFFERENT PROPERTIES. Nanoscale refers to materials that are 100 nanometers (nm) or less, says Bob Davenport, analyst at SRI Consulting (SRIC; Menlo Park, CA). One nm is one-billionth of a meter. Nanoparticles can have size, shape, and surface character-istics that are different from larger particles, Davenport says. For example, nanoscale oxides used in sunscreens are transparent at the nanoscale level, whereas larger oxide parti-cles are not, resulting in the white appearance of traditional sunscreens.

Nanomaterials can also have medici-nal properties. Nanoscale ZnO can be used as an antifungal, and nanoscale sil-

ver is an antimicrobial. Moisturizing and antidandruff ingredients, as well as vita-mins and oils have also been miniaturized, experts say. Researchers are also working on nanoscale systems to encapsulate nanoscale cosmetic and nutraceutical ingredients. “Microencapsulation is definitely one of the bigger deals in terms of nanomaterials in per-sonal care products,” Richardson says.

Nanomaterial development has been con-centrated at companies that already produced products such as fumed oxides with a small par-ticle size, such as Degussa. In other cases the

development work has been carried out by small start-up companies that have

links with larger companies. Nanophase Technologies (Romeoville, IL), a devel-oper of nanoscale oxides, supplies product for use in sunscreen materials

to BASF. It is also work-ing with Rohm and Haas’s

(R&H) Rodel unit to make and sell nanoparticle-based

chemical mechanical planarization slurries.

Nanophase says it has developed a process called discrete particle encapsulation to coat the surface of nanoparticles such as ZnO or TiO₂ with a thin polymeric shell. The cap-sule makes the particles compatible with a wide variety of fluids, resins, and polymers, the com-pany says. The company recently introduced a range of ZnO nanocrystals for personal care applications at a controllable particle size of less than 35 nm.

Some firms are also working with academic institutions. Ciba Specialty Chemicals, Dow Corning, R&H, and Degussa say they have collaboration projects under way with universi-ties as well as customers.

BASF announced plans in February to increase its focus on nanotechnology as part of its plan to maintain profitability through 2015. The company says it is building on its Z-Cote line of microfine ZnO with Z-Cote Max, a UV absorber that is compatible with acrylate thickeners and a wide variety of per-sonal care products.

BASF and Shiseido (Tokyo) recently began a joint development program to create UV

Nanotechnology Finds Some Growing Applications

■ Kemira Takes Full Control of KemironKemira says it has acquired the 40% stake in water treatment firm Kemiron that it does not already own, from Kemiron founder and managing direc-tor Lawrence Hjersted. Terms were not disclosed. Hjersted will continue to head Kemira’s water treatment business in North America. The deal makes Kemira the global leader in coagulants for water treatments, the company says. Kemira’s water treatment business consists of Kemiron and Eaglebrook International Group (Matteson, IL), which generate combined sales of about $165 million, Kemira says.

■ Engelhard Launches Auto CatalystsEngelhard says it is launching a catalyst technology that meets new European Union emission regulations and reduces precious metal costs for auto makers. The technology will go into serial production this month on new model platforms from two unspecified European auto makers, and each of the vehicles will be equipped with a three-catalyst system to achieve regulatory compliance, Engelhard says. The technology enables palladium to be substituted for one-third of the platinum on one of those catalysts, the company says. “That results in significant precious metal cost savings while meeting the high-temperature durability required in diesel emission-control applications,” it says.

■ Specialties Price WatchHuntsman’s Performance Products divi-sion says it increased prices of certain surfactants, effective May 1. The company raised its list and off-list prices for Surfonic N series surfactants by 3 cts/lb; the off-list price of Surfonic L series and DA series alcohol ethoxylates by 3 cts/lb; the off-list price of Surfonic TDA series alcohol eth-oxylates by 5 cts/lb; and dinonylphenol prices by 10 cts/lb. The company cites rising energy and raw material costs, as well as continued tightness in the mar-ket • Clariant says it increased glycolic acid prices by 5%, effective May 1. The increase applies to glycolic acid 70% cosmetic grade, 57% technical grade, and the newly introduced 70% technical grade • Degussa’s Goldschmidt Chemical says it will increase cosmetic care product prices in North America by 15%, effective May 15 or as contracts allow.

specialties personal care


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protection materials, and a licensing agree-ment to sell them. The transparent products will have both high sun protection factor (SPF) and high UVA protection using differ-ent UV filters, BASF says.

Oxford University spin-off firm Oxonica (Kidlington, U.K.) recently launched a line of photostable UV absorbers with enhanced

UVA protection called Optisol. The prod-uct comprises small crystals with ultrafine TiO₂ and less than 1% of manganese in the crystal. BASF has a stake in Oxonica.

Showa Denko also offers nanoparticles of metal oxides to shield UV rays in personal care products. Personal care/environmental goods is one of three growth markets being targeted

by the company under its latest growth plan. Ciba Specialty Chemicals says nanotech-

nology is one of its main R&D focuses. Ciba’s nanotech products include its Tinoderm cos-metic delivery system, Tinosorb M micron-ized UV absorbers for personal care, and R&D activities in effect pigments for cosmet-ics. Tinoderm contains nanoparticles of vita-mins and antioxidants that can be used in anti-aging products. Tinosorb M contains fine particles of the organic sunscreen bisoctrizole, which absorb, deflect, and scatter UV radiation, and offer higher efficacy and lighter-feeling formula-tions than their inorganic counterparts, says Ciba’s personal care R&D director Dietmar Hueglin. The particles are also insoluble in water and oil. Ciba is currently applying for registration of Tinosorb M in the U.S.

“This is a breakthrough innovation after 15 years of little or no innovation in sun-screens,” Hueglin says. The company says it has increased global capacity for Tinosorb M to meet demand. Ciba would not disclose capacity figures or locations.NANOSCALE CAPSULES. Cognis says it uses the natural biopolymer chitosan to cre-ate nanoscale capsules with liquid crystal liposomes that can deliver and increase the penetration of anti-aging vitamins and botanical extracts to the skin, says marketing manager Maria de Moragas. Chitosan has a cationic charge, which interacts well with negatively-charged hair and skin, Cognis says. The company opened a new plant at Castellbisbal, Spain in late 2003 to manufac-ture these capsules. Cognis did not disclose capacity figures.

Dow Corning says it offers surfactants with nanoscale silicone-poly(oxoethylene) copolymer capsules, or vesicles. Active ingredients such as vitamins or hair glos-sifiers can be placed in the vesicles, the company says. “Through these vesicles we can deliver ingredients to specific parts of the body either on the skin or hair, or orally,” says Gregg Zank, executive direc-tor/science and chief technology officer. The structures are in the several hundred nm range, Dow Corning says.

Engelhard has added to its personal care portfolio with the acquisition of The

personal care


Personal Care Products Face Increased Regulatory ScrutinyProposed legislation in California, campaigns by consumer groups, and a move by federal authorities to more carefully monitor ingredients in personal care products have turned the spotlight in recent months on personal care product safety.

FDA does not require premarket safety testing for cosmetics ingredi-ents, as it does for pharmaceuticals. However, the agency recently put the personal care industry on notice when it announced it would issue enforcement guidelines for a regulation that requires a product label to carry a warning if one of the product’s ingredients has not been proven safe. The regulation has been on the books for years, but a petition from the Environmental Working Group (EWG; Washington) prompted authorities to “remind” industry that it must comply with the labeling law.

The FDA product safety labeling law requires that, if the safety of a product ingredient can-not be substantiated, manufacturers must place a warning on the principal display panel of the product stating “Warning: the safety of this product has not been determined.”

At the heart of the debate over personal care product safety are phthalates, a class of chemical additives that can make plastic more flexible, nail polish more chip resistant, or shampoos more fragrant. Scientific studies indicate some phthalates could harm the repro-ductive system of laboratory animals. Industry says those findings do not apply to the amount of phthalates people are exposed to through toys and personal care items. Studies indicate that high doses of dibutyl phthalate (DBP) may cause health problems in laboratory animals, but diethyl phthalate (DEP) has not been shown to cause reproductive problem even at high doses, says Marian Stanley, manager of ACC’s phthalates esters panel.

In response to EWG’s petition, FDA tested 48 personal care products, and found that most contain at least one phthalate. However, FDA officials say there is no “compelling evidence” that phthalates in consumer products pose a health risk. The FDA has not provided further details about its phthalates investigation. However, Stanley says it is unlikely that the FDA would remain silent if serious health risks had been discovered.

The Cosmetics, Toiletries, and Fragrances Association (CFTA; Washington) has previ-ously said it supports the FDA’s “plan to adopt guidelines for strict and swift enforcement of regulations requiring substantiation of cosmetics ingredient safety. The cosmetic ingredient safety substantiation system works well, and is based on impeccable science. Even an indus-try with an exemplary safety record as ours functions best with a tough cop on the beat, and we welcome FDA’s action.” CFTA did not provide comment by CW press time.

Several California lawmakers have introduced separate bills affecting phthalates; one that would ban DBP in cosmetics; and another that would ban di (2-ethyl-hexyl) phthal-ate (DEHP) in children’s toys. The cosmetics ban, introduced by assembly member Judy Chu (D., Monterey), did not pass the assembly’s health committee; the toys ban, introduced by assembly member Wilma Chan (D., Oakland), passed that committee late last month.

Legislation introduced by California State Senator Carole Migden (D., San Francisco) would establish the Safe Cosmetics Act of 2005, requiring cosmetics companies to provide a list of products sold in the state to the Department of Health Services (DHS; Sacramento). That list would identify by product any ingredient that contains a chemical identified as causing cancer or reproductive toxicity. The bill would allow the DHS to then determine whether the cosmetics’ ingredients have met safety substantiation requirements.

—KARA SISSELL

Hueglin: A new sunscreen for the U.S.

Stanley: No risk to human health.


www.chemweek.com

boost SPF by 50% to 70%, and reduce the quantity of greasy-feeling UV absorbers to achieve the same coverage, Jones says.

R&H markets the particles as SunSpheres. The “uncertain regulatory climate” could affect the future of the SunSpheres line in the U.S., however, Jones says. The FDA extended the comment period for proposed regula-tions limiting SPF factors of sunscreens and UV absorber varieties. SunSpheres can cost-effectively make higher SPFs with lower UV absorber quantities, he says.

Some researchers have argued that materi-als that are not usually toxic to humans could be toxic at the nanoscale and have called for them to be regulated. EPA gave a dozen $4-million grants to universities last year to study the potential health and environmental risks of nanomaterials, including the absorp-tion and toxicity of nanoparticles on skin. The European Union has launched projects dubbed “Nanosafe” 1 and 2 to identify, moni-tor, measure, and minimize risks presented by nanotechnology. —VERONICA MACDONALD

nanomaterials in personal care scents. Flavor and fragrance manufacturer Firmenich (New York, NY) says one of its research priorities is develop-ing natural and synthetic polymer capsules ranging from nanometers to millimeters in size.

Other companies offer particles that are slightly larger than 100 nm. Rohm and Haas (R&H) pro-duces hollow particles comprising styrene acrylate copolymers that are about 300 nm in size to boost SPF in sunscreens. The particles are prepared through controlled emulsion polymerization and work

with UV absorbers to refract the light away from skin, says Chuck Jones, a scientist with R&H’s consumer and industrial specialties business. “Hollow particles have the ability to effectively scatter the UV light in such a way to increase the absorbents of sunscreen, which are directly related to SPF,” Jones says. Adding these particles to a formulation can

Collaborative Group (Stony Brook, NY) last August, for an undisclosed amount. Collaborative manufactures liposome delivery systems that encapsulate pharmaceutical and nutraceutical ingredients, as well as skin care materials for moisturizers, sun protectors, and anti-wrinkle creams.

Suppliers are also studying the use of

personal care


Small scale, big market: Use of nanotechnology is on the rise.

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A N T I P E R S P I R A N T S

CLINICAL RESEARCH LABORATORIES, INC371 Hoes LanePiscataway, NJ 08854 USATel: 732-981-1616Fax: 732-981-0520E-mail: [email protected]: www.crl-inc.comClinical Research Laboratories, Inc. (CRL) pro-vides a wide range of clinical safety and efficacytesting for the cosmetic and pharmaceutical indus-tries. Clinical Research Laboratories, Inc. isconveniently located in central New Jersey. CRLis dedicated to conducting human clinical test pro-cedures to determine the safety and efficacy ofcosmetic, personal care and OTC drug products.Areas of expertise include Dermatology, Photobiology, Ophthalmology,Bioinstrumentation, Microbiology, Cosmetology,Consumer Research Evaluation and ClinicalTrials. CRL offers specialized expertise in the test-ing of antimicrobial products, disinfectants, mouthrinses, toothpastes, antibiotics and sanitizers.

C L I N I C A L S A F E T Y , E F F I C A C Y A N DC L A I M S U B S T A N T I A T I O N

CLINICAL RESEARCH LABORATORIES, INC371 Hoes LanePiscataway, NJ 08854 USATel: 732-981-1616Fax: 732-981-0520E-mail: [email protected]: www.crl-inc.comClinical Research Laboratories, Inc. (CRL)provides a wide range of clinical safety and effi-cacy testing for the cosmetic and pharmaceuticalindustries. Clinical Research Laboratories, Inc.is conveniently located in central New Jersey.CRL is dedicated to conducting human clinicaltest procedures to determine the safety and effi-cacy of cosmetic, personal care and OTC drugproducts. Areas of expertise include Dermatology, Photobiology, Ophthalmology,Bioinstrumentation, Microbiology, Cosmetology,Consumer Research Evaluation and ClinicalTrials. CRL offers specialized expertise in thetesting of antimicrobial products, disinfectants,

mouth rinses, toothpastes, antibiotics and san-itizers.

C O N T R A C T P A C K A G I N G P R I V A T EL A B E L S E R V I C E S

HARRISON SPECIALTY CO. INC.15 University RoadCantan, MA 02021-0190Tel: 781-828-8180Fax: 781-828-4057E-mail: [email protected]: www.harrisonspecialty.com

C O S M E T I C I N G R E D I E N T S

BIO-BOTANICA® INC.75 Commerce DriveHauppauge, NY 11788-3943 USATel: 631-231-5522Fax: 631-231-7332E-mail: [email protected]: www.bio-botanica.com

DSM NUTRITIONAL PRODUCTS, INC.45 Waterview BoulevardParsippany, NJ 07035-1298 USATel: 800-526-0189Fax: 973-257-8580E-mail: [email protected]: www.dsm.com

KOBO PRODUCTS INC.3474 South Clinton AvenueSouth Plainfield, NJ 07080 USATel: 908-757-0033Fax: 908-757-0905E-mail: [email protected]: www.koboproducts.com

2 0 0 5 S U P P L I E R ’ S D A Y

www.chemweek.com Chemica l Week, May 11, 2005 39

2005 Suppliers’ Day

Companies in the profiles are arranged alphabetically within the following categories:

Antiperspirants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Clinical Safety, Efficacy and Claim Substantiation . . . . . . . . . . . . . . . . . . . . . . . . . . 39Contract Packaging Private Label Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Cosmetic Ingredients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Cosmetic Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Creams/Lotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Disinfectants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Hair Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Humectants/Moistures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Laboratories Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Personal Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42Preservatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Raw Material Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Skin Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Sun Screen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Surfactants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Trade Show Organizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Vitamins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Specialty Esters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Testing Lab (Invitro) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Requests for information on listing in future issues and company profiles, please contact:John Markovic Tel: 212.621.4914; Fax: 212.621.4949; e-mail: [email protected]

sjo+2005 Suppliers Day 5/6/05 3:16 PM Page 39



http://www.harrisonspecialty.com







http://www.bio-botanica.com


http://www.dsm.com


http://www.koboproductsinc.com

40 Chemica l Week, May 11, 2005 www.chemweek.com

LONZA, INC.90 Boroline RoadAllendale, NJ 07401 USATel: 201-316-9200Fax: 201-785-9013E-mail: [email protected]: www.lonza.com

WACKER CHEMICAL CORPORATION3301 Sutton RoadAdrian, MI 49221 USATel: 800-248-0063Fax: 517-264-8246E-mail: [email protected]: www.wacker.com

WACKER (www.wacker.com) is a globallyoperating chemical company headquartered inMunich, Germany. We are a leading manufac-turer of a broad range of high quality materialsfor the cosmetics, human care and personalcare industries.For bath, cleansing and sunscreen products fortreating skin and hair through deodorants and mostforms of color cosmetics like make-up, lipstick andmascara, WACKER materials and solutions addvalue to your products through technology andinnovation.Customized and comprehensive solutions for vir-tually all aspects of cosmetic applications arederived from our Wacker-Belsil® silicone basedadditives and CAVAMAX® cyclodextrin products. For film forming, conditioning and thixotropiccontrol, Wacker-Belsil® excels where innovativeformulations are needed. CAVAMAX® cyclodex-trins are the perfect solution for masking tasteor odor, adding stability and delivering or solu-bilizing active ingredients.Discover more about WACKER by visting ourwebsite www.wacker.com. Contact Dr. ArndtSchlosser or Dr. Mark Harrison at 800-248-0063 for more information.

C O S M E T I C R A W M A T E R I A L S

CONCENTRATED ALOE CORPORATION (CAC)123 N. Orchard StreetBldg. 4AOrmond Beach, FL 32174 USATel: 386-673-4247Toll Free: 800-638-0082Fax: 386-676-0055E-mail: [email protected]: www.conaloe.com

CRODA INC300-A Columbus CircleEdison, NJ 08837-3907 USATel: 732-417-0800Fax: 732-417-0804E-mail: [email protected]: www.crodausa.comCroda Inc is a major supplier to the personal careindustry and offers one of the widest ranges ofspecialty chemicals and surfactants available.Known for high quality ingredients with leading-edge functionality, Croda enjoys a long historyof innovation in the industry — as the leadingauthority in quat and ester technologies, as animportant source of natural ingredients, and asa forerunner in Super Refining technology,acknowledged by Frost & Sullivan. Patentedphosphate ester chemistry for the delivery ofactives, UVB hair protection, and multi-func-tional products for hair and skin care haveearned Croda the distinction of bringing inno-vative product concepts to its customers.

DESERT WHALE JOJOBA COMPANY, INC.P.O. Box 41594Tucson, AZ 85717-1594 USATel: 520-882-4195Fax: 520-882-7821E-mail: [email protected]: www.desertwhale.com


LIPO CHEMICALS INC.207 Nineteenth AvenuePaterson, NJ 07504 USATel: 973-345-8600Fax: 973-345-5975E-mail:

[email protected]: www.lipochemicals..com

Lipo Chemicals, Inc. is a reliable worldwidesupplier of chemical ingredients to the personalcare, food, industrial and pharmaceutical indus-tries. With a unique marketing approach and afocus on new technologies, Lipo offers a widearray of specialty, basic and naturally derivedingredients. As an ISO 9001:2000 Standard reg-istered company, Lipo offers complete technicalsupport, formulation expertise and innovativeproduct solutions. Expanded worldwide labo-ratory facilities and custom product developmentaffirms Lipoís commitment to the Personal caremarket.

Visit us at Booths # 131 & 230

2005 Suppliers’ Day2 0 0 5 S U P P L I E R S ’ D A Y



http://www.lonza.com


http://www.wacker.com


http://www.conaloe.com


http://www.desertwhale.com


http://www.dsm.com




http://www.lipochemicals.com



PRESPERSE INC.635 Pierce StreetSomerset, NJ 08873 USATel: 732-356-5200Fax: 732-356-3533E-mail: [email protected]: www.presperse.com


WACKER (www.wacker.com) is a globallyoperating chemical company headquartered inMunich, Germany. We are a leading manufac-turer of a broad range of high quality materialsfor the cosmetics, human care and personalcare industries.For bath, cleansing and sunscreen products fortreating skin and hair through deodorants andmost forms of color cosmetics like make-up,lipstick and mascara, WACKER materials andsolutions add value to your products through tech-nology and innovation.Customized and comprehensive solutions forvirtually all aspects of cosmetic applications arederived from our Wacker-Belsil® silicone basedadditives and CAVAMAX® cyclodextrin prod-ucts.For film forming, conditioning and thixotropiccontrol, Wacker-Belsil® excels where innovativeformulations are needed. CAVAMAX® cyclodex-trins are the perfect solution for masking tasteor odor, adding stability and delivering or solu-bilizing active ingredients.Discover more about WACKER by visting ourwebsite www.wacker.com. Contact Dr. ArndtSchlosser or Dr. Mark Harrison at 800-248-0063 for more information.

C R E A M S / L O T I O N S

HARRISON SPECIALTY CO. INC.15 University RoadCantan, MA 02021-0190 USATel: 781-828-8180Fax: 781-828-4057E-mail: [email protected]: www.harrisonspecialty.com

D I S I N F E C T A N T S

CLINICAL RESEARCH LABORATORIES, INC371 Hoes LanePiscataway, NJ 08854 USATel: 732-981-1616Fax: 732-981-0520E-mail: [email protected]: www.crl-inc.comClinical Research Laboratories, Inc. (CRL)provides a wide range of clinical safety and effi-cacy testing for the cosmetic and pharmaceuticalindustries. Clinical Research Laboratories, Inc.is conveniently located in central New Jersey.CRL is dedicated to conducting human clinicaltest procedures to determine the safety and effi-cacy of cosmetic, personal care and OTC drugproducts. Areas of expertise include Dermatology, Photobiology, Ophthalmology,Bioinstrumentation, Microbiology, Cosmetology,Consumer Research Evaluation and ClinicalTrials. CRL offers specialized expertise in thetesting of antimicrobial products, disinfectants,mouth rinses, toothpastes, antibiotics and san-itizers.

H A I R C A R E

HARRISON SPECIALTY CO. INC.15 University RoadCantan, MA 02021-0190 USATel: 781-828-8180Fax: 781-828-4057E-mail: [email protected]: www.harrisonspecialty.com

INTERNATIONAL SPECIALTY PRODUCTS (ISP)1361 Alps RoadWayne, NJ 07470 USATel: 800-622-4423Fax: 973-628-4001E-mail: [email protected]: www.ispcorp.com

H U M E C T A N T S / M O I S T U R E S


2 0 0 5 S U P P L I E R S ’ D A Y





http://www.presperse.com






http://www.ispcorp.com







http://www.dsm.com

42 Chemica l Week, May 11, 2005 www.chemweek.comwww.chemweek.com

L A B O R A T O R I E S T E S T I N G

CHEMIR ANALYTICAL SERVICES2672 Metro Blvd.Maryland Heights, MO 63043 USATel: 800-659-7659Fax: 314-291-6630E-mail: [email protected]: www.chemir.com

P A C K A G I N G

KAUFMAN CONTAINER COMPANY4700 Spring RoadCleveland, OH 44131 USATel: 800-824-4119Fax: 216-398-8128E-mail: [email protected]: www.kaufmancontainer.com

O. BERK COMPANY3 Milltown CourtUnion, NJ 07083 USATel: 908-851-9500Fax: 908-851-9367E-mail: [email protected]: www.oberk.com

P R E S E R V A T I V E S



SCHULKE & MAYR GMBH22851 NorderstedtGermanyTel: 49-40-521-00-0Fax: 49-40-521-00-244WWW: www.schuelke-mayr.com

Schulke & Mayr introduces a true innovation incosmetics preservation.Euxyl® PE 9010 takes a preservative standard,phenoxyethanol,and enhances the activity to protect againstbacteria, yeast and mold, without the useof traditional anti-fungals. The addition of eth-ylhexylglycerin affects the interfacial tensionat the cell membrane of microorganisms, improv-ing the preservative activity of phenoxyethanol.

Sensiva® SC 50 improves the activity of yourcurrent preservative system.

Euxyl® K 500 - paraben-free, broad-spectrumpreservative blend.

Schulke & Mayr’s specialist expertise help makeprservation simpler. With Euxyl™ PE9010, we make it better too. For more infor-mation visit us at booth # 126.

2 0 0 5 S U P P L I E R S ’ D A Y


Ajinomoto Specialty Chemical is a division ofAjinomoto U.S.A., Inc., a wholly owned subsidiary ofTokyo-based Ajinomoto Co., Inc. Globally, AjinomotoSpecialty Chemical group is a world leader in the man-ufacturing and marketing of a diverse line of aminoacids and specialty chemicals, including amino acid-based humectants, surfactants, emollients andfunctional powder developed for the cosmetic and toi-letries industry. Ajinomoto Specialty Chemical grouphas headquarters in New Jersey and has serviced itsclients in the United States for over 80 years.

BOOTH # 439, 538

Ajinomoto U.S.A., Inc.Country Club PlazaWest 115 Century Road, Paramus, NJ 07652, U.S.A.Tel: 201 225-7175 • Fax: 201 261 7267Web: www.ajichem.com

P E R S O N A L C A R E






http://www.chemir.com


http://www.oberk.com


http://www.kaufmancontainer.com



http://www.schuelke-mayr.com

http://www.ajichem.com


R A W M A T E R I A L S U P P L I E R S

CONCENTRATED ALOE CORPORATION (CAC)123 N. Orchard StreetBldg. 4AOrmond Beach, FL 32174 USATel: 386-673-4247; Toll Free: 800-638-0082Fax: 386-676-0055E-mail: [email protected]: www.conaloe.com

CRODA INC300-A Columbus CircleEdison, NJ 08837-3907 USATel: 732-417-0800Fax: 732-417-0804E-mail: [email protected]: www.crodausa.comCroda Inc is a major supplier to the personal careindustry and offers one of the widest ranges ofspecialty chemicals and surfactants available.Known for high quality ingredients with leading-edge functionality, Croda enjoys a long historyof innovation in the industry — as the leadingauthority in quat and ester technologies, as animportant source of natural ingredients, and asa forerunner in Super Refining technology,acknowledged by Frost & Sullivan. Patentedphosphate ester chemistry for the delivery ofactives, UVB hair protection, and multi-func-tional products for hair and skin care haveearned Croda the distinction of bringing inno-vative product concepts to its customers.


HAMPFORD RESEARCH, INC.54 Veterans BoulevardStratford, CT 06615 USATel: 203-375-1137Fax: 203-386-9754E-mail: [email protected]: www.hampfordresearch.com

RUGER CHEMICAL CO. INC.1515 W. BLANCKE STREETLINDEN, NJ 07036 USATel: 973-926-0331Fax: 973-926-4921E-mail: [email protected]: www.rugerchemicals.com

BOOTH # 146Ruger Chemical is a full service regional dis-tributor and national re-packager of over 3,000chemical actives, excipients and ingredients tonutrition, supplement and pharmaceutical and per-sonal care manufacturers. Our user-friendlyjust-right packaging and re-packaging sizes are acost effective convenience for many manufac-turers. Our FDA registered facility and ourquality systems and methods of product handlingallows us to offer products that are USP, NF, BP,EP, JP, ACS, FCC and other quality grades inboth the standard manufacturing package and inour repackaged sizes. We are authorized dis-tributors for premier suppliers such as, Uniqema(ICI and Mona product lines), Crompton-Witco, Mallinckrodt-Baker, Noveon, & P&G. Ask usabout Noveon’s NF grade Carbopol line forcontrolled release nutritionals.

Call Ruger...and relax®


WACKER (www.wacker.com) is a globallyoperating chemical company headquartered inMunich, Germany. We are a leading manufac-turer of a broad range of high quality materialsfor the cosmetics, human care and personalcare industries.For bath, cleansing and sunscreen products fortreating skin and hair through deodorants and mostforms of color cosmetics like make-up, lipstick andmascara, WACKER materials and solutions addvalue to your products through technology andinnovation.Customized and comprehensive solutions for vir-tually all aspects of cosmetic applications arederived from our Wacker-Belsil® silicone basedadditives and CAVAMAX® cyclodextrin products. For film forming, conditioning and thixotropiccontrol, Wacker-Belsil® excels where innovativeformulations are needed. CAVAMAX® cyclodex-trins are the perfect solution for masking tasteor odor, adding stability and delivering or solu-bilizing active ingredients.Discover more about WACKER by visting ourwebsite www.wacker.com. Contact Dr. ArndtSchlosser or Dr. Mark Harrison at 800-248-0063 for more information.

S K I N C A R E


S U N S C R E E N

CLINICAL RESEARCH LABORATORIES, INC371 Hoes LanePiscataway, NJ 08854 USA

2 0 0 5 S U P P L I E R S ’ D A Y







http://www.conaloe.com


http://www.rugerchemicals.com





http://www.dsm.com



44 Chemica l Week, May 11, 2005

Tel: 732-981-1616Fax: 732-981-0520E-mail: [email protected]: www.crl-inc.comClinical Research Laboratories, Inc. (CRL)provides a wide range of clinical safety and effi-cacy testing for the cosmetic and pharmaceuticalindustries. Clinical Research Laboratories, Inc.is conveniently located in central New Jersey.CRL is dedicated to conducting human clinicaltest procedures to determine the safety and effi-cacy of cosmetic, personal care and OTC drugproducts. Areas of expertise include Dermatology, Photobiology, Ophthalmology,Bioinstrumentation, Microbiology, Cosmetology,Consumer Research Evaluation and ClinicalTrials. CRL offers specialized expertise in thetesting of antimicrobial products, disinfectants,mouth rinses, toothpastes, antibiotics and san-itizers.



S U R F A C T A N T S


T R A D E S H O W O R G A N I Z E R

HBA HEALTH AND BEAUTY AMERICA125 Village Blvd., Suite 220Princeton, NJ 08540-5703 USATel: 609-452-2800Fax: 609-452-2880E-mail: [email protected]: www.hbaexpo.com

V I T A M I N S


S P E C I A L T Y E S T E R S

HATCO CORPORATIONA UNIT OF KAUFMAN HOLDINGS1020 King Georges Post RoadFords, NJ 08863 USATel: 732-738-1000Fax: 732-738-7037E-mail: [email protected]: www.hatcocorporation.com

T E S T I N G L A B ( I N V I T R O )

BIOINNOVATION LABORATORIES, INC.321 N. Central Expressway Ste.256Mckinney, TX 75070 USATel: 972-542-5015Fax: 972-562-3290E-mail: [email protected]: www.bioinnovationlab.com

2 0 0 5 S U P P L I E R ’ S D A Y


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http://www.soapandcosmetics.com

Lonza says it will invest about SF24 mil-lion ($20 million) to expand peptide production at Visp, Switzerland. The

move is in response to “increased demand for peptide active pharma ingredients (API) worldwide, and the increasing number of new entities entering clinical phase trials,” the company says.

The new facility will accommodate large-scale cGMP manufacture of peptides, as well as oligonucleotides for drugs. The company says it will also build a smaller plant to pro-duce clinical-trial quantities of peptides and oligonucleotides. Lonza says it will install high-performance liquid chromatography (HPLC)-purification equipment and lyophi-lization equipment, in addition to enhancing infrastructure at the site. The latest invest-ment plan “underscores” Lonza’s goal to become the preferred supplier in peptides, the company says.

Lonza says it is the only custom manufac-turer offering liquid, solid, and recombinant peptide technology. Lonza’s peptide manufac-turing technology includes use of recombinant microbes. The company’s peptide facilities at Visp include large solid-phase reactors

for producing cGMP batches above 10 kilo-grams; HPLC purification; and a clean room for final isolation, it says.

Manufacture of peptides in quantities greater than 100 kg is costly, especially for long-chain peptides, the company says. Lonza minimizes costs of a given process by maxi-mizing throughput and minimizing assets, raw materials, and solvent use, it says.

The therapeutic peptides market is worth about $1 billion/year, and is projected to grow 10.5%/year through 2010, accord-ing to a recent report by Frost & Sullivan (F&S; London) (CW, Feb. 2, p. 21). Europe’s peptides market will likely double, to $605 million/year by 2010, the report says.

A key peptide market driver is the devel-opment of large synthetic and biological peptide libraries that, in combination with high-throughput screening processes, is enhancing prospects for obtaining new peptide drug candidates, says Himanshu Parmar, a research analyst at F&S and author of the report.

Other key players in the peptides market include Bachem (Bubendorf, Switzerland), which estimates it has a market share of about 30% in peptides, and Akzo Nobel’s Diosynth subsidiary. —ALEX SCOTT

Lonza to Build Peptides Plant at Visp

■ Cambrex’s Financial Performance DipsCambrex has reported a 62% decline in first-quarter net income, to $4.1 million, on sales down 3%, to $110 million. However, CEO John R. Leone says he is “encouraged by the con-tinued strong growth in Cambrex’s Bioproducts division and the positive impact of cost reductions in selected areas.” Contract active pharma ingre-dients and biopharma sales fell slightly, Leone says.

■ Avecia Lands Pfizer ContractAvecia says it has been awarded a long-term contract by Pfizer to produce clinical and commercial quantities of Pfizer’s ProMune oligonucleotide anti-cancer drug. Financial terms were not disclosed. “This is a significant contract for our business over the next few years, and it further underlines Avecia’s posi-tion at the forefront of oligonucleotide process development and manufacture,” says Michael Mclean, president of Avecia Biotechnology. ProMune is currently undergoing phase II clinical trials.

■ GSK Acquires Vaccines FirmGlaxoSmithKline (GSK) says it plans to acquire vaccines producer Corixa (Seattle) for €233 million ($302 million). Corixa develops vaccine products for diseases including HIV, malaria, and TB. The deal includes Corixa’s manufacturing facil-ity for monophosphoryl lipid A (MPL) at Hamilton, MT. MPL is contained in several vaccines produced by GSK.

Environmental groups, including Friends of the Earth (FoE), have objected to a fast-track evaluation take place. FoE says it is concerned that the GM rice could become accidentally mixed with standard rice grown in the region, and that a full-length evaluation by the authorities is imperative.

Ventria says it has been given permission to cultivate its GM rice crops in a 5-acre site in North Carolina. Meanwhile, the company is mulling other potential commercial sites in southwestern and northwestern Missouri. It agreed with the authorities last month to select a site for planting its pharma rice at least 120 miles from the nearest conventional rice crops growing in Missouri. Brewery firm Anheuser-Busch (St. Louis) had threatened to purchase rice for its business from outside the state if Ventria did not agree on the 120-mile buffer zone. —AS

B iopharmaceutical company Ventria Bioscience (Sacramento, CA) says it hopes to gain permission from regula-

tory authorities in Missouri in coming weeks to plant 200 acres of the first commercial genetically modified (GM) crop containing a therapeutic protein to be cultivated in the U.S. The crop is a GM rice variety engineered to express the antibacterial, protein-based drugs lactoferrin and lysozyme. The two pro-teins, which occur naturally in breast milk and saliva, could be used to treat diarrhea, the company says.

The Missouri Agriculture Department says it is considering the application and that it may take up to a month or more to decide. The rice-planting season ends on May 20, Ventria says. The company says it is urging the Missouri authorities to accelerate the evaluation process to meet that deadline.

Regulators Consider First GM Pharma Crop

BIOTECHNOLOGY

MANUFACTURING

Lonza: Building peptides production at Visp.

pharmaceuticals & fine chemicals

Chemical Week, May 11, 2005 45www.chemweek.com


OLEFINS

Ethylene Prices Fall for the First Time in 19 Months

lb, down nearly a penny from March levels, Carson says.

First-quarter ethylene chain margins were the highest since the 1995 peak, but will likely fall in the second quarter because of falling prices and rising feedstock costs, Carson says. Cracker operating rates have declined from 92% in December, to 90% because of ready supply, he says.

Market players say operating rates could fall further with the imminent restart of Chevron Philips Chemical’s 600-million lbs/year cracker at Sweeny, TX (CW, March 9, p. 25). The cracker has been idle since 2001. Lyondell says it will keep its Lake Charles, LA cracker idle.

Ethylene contract prices have settled at a 1.5-cts/lb decline, to 40 cts/lb del for April, market players say. This is the

first decrease in ethylene contract numbers since August 2003 (chart). Market players say high polyethylene (PE) inventories, fall-ing derivatives prices, and increased supply pulled down contract numbers. Ethylene margins likely declined less than a penny, because of falling feedstock costs, says Don Carson, analyst at Merrill Lynch (New York). Feedstock costs in April averaged 23.5 cts/

■ Dow to Build Solvents UnitDow Chemical says it plans to build a phenolic glycol ether unit at Freeport, TX to meet customers’ demands for gly-col ethers with lower phenol content and higher purity. The plant will replace an existing unit at Midland, MI when it comes onstream in the third quarter of 2006, Dow says. The company did not disclose capacity or investment details. The new unit will produce ethylene- and propylene-based glycol phenol ether to meet demand growth projections for these solvents, it says. Dow says Freeport provides easy access to phenol, ethylene oxide (EO), and propylene oxide (PO) feedstocks. The com-pany says it will continue to pursue options in meeting demand for EO- and PO-based glycol ethers worldwide.

■ Basell PE Unit Out of ActionBasell says its 250,000-m.t./year high-density polyethylene (PE) plant at Wesseling, Germany will be down for about 10 days, due to processing prob-lems. The company says it expects to be “in short supply” for some of its medium-density PE grades, but that it would try to avoid significant disruption in supply.

■ Celanese Hikes Solvents Prices Celanese has announced price increases of 4 cts/lb for n-butanol, and 5 cts/lb for n-butyl acetate and isobutyl acetate in North America. The company is seeking increases of $100/m.t. in Latin America for n-butyl acetate and isobutyl acetate. The increases are 6%-7%, and are effec-tive June 1, or as contracts allow.

Sabic to Expand Distribution in Asia

Sabic says it plans to establish six new dis-tribution facilities in Asia this year to complement the three it already has, in

anticipation of a boom in its exports to the region. The company is also expanding its operations in the Mideast to meet rising Asian demand, says Abdulrahman Al-Ubaid, v.p./polyolefins.

Sabic says it will set up the distribution centers by early next year: two in China, two in Australia, and one each in Vietnam and New Zealand. The company says it will lease existing bonded warehouses. It is in the process of expanding its largest distribution center, in Singapore, to 35,000 m.t. Sabic says it is doubling capacity of a 5,000-m.t. facility in Shanghai. The company also has a

5,000-m.t. center in Hong Kong.Economic growth in China is expected to

remain the strongest of any major region, and China will be Asia’s largest consumer and re-exporter of finished plastic products, Al-Ubaid says. The U.S. imports more than 120 million m.t./year of finished PE goods, 40% of which come from China and 32% from other Asian countries, he adds.

Sabic is conducting feasibility studies to explore options for building production facilities in Asia over the longer term, Al-Ubaid says. “Asia is a very important market for Sabic, and we intend to localize our pro-duction facilities in Asia to be nearer to our customers,” he says. —GREGORY DL MORRIS

POLYMERS

45

40

35

30

25A

2003S O N D O N DJ

’04F M A J

’05F M AM J J A S

*U.S. ethylene contract prices, delivered. Source: CW research.

ETHYLENE SLIPS*(in cents/lb)

Spot ethylene parcels traded recently at 30 cts/lb del, a decline of about 4 cts/lb dur-ing the past month, market sources say. Shell Chemical has resumed operations at its 1.3-billion lbs/year cracker at Deer Park, TX, and removed its 85% sales allocation on ethylene and propylene on May 1.

Ethylene prices could dip further before inventories are worked off, which will likely occur by June, says David Begleiter, analyst at Deutsche Bank (New York).

Export demand and prices for derivatives have yet to improve, as a result of new cracker startups in China, sources say. Shanghai Secco (Shanghai), a joint venture of Innovene, Sinopec, and Shanghai Petrochemical Co., brought onstream a 900,000-m.t./year ethylene plant at Caojing, China in March. BASF-YPC, the 50-50 jv between BASF and Sinopec sub-sidiary Yangzi Petrochemical (Nanjing, China), will soon start up a 600,000-m.t./year ethylene plant at Nanjing (CW, April 20, p. 24).

The only positive news for prices is the further delay of National Petrochemical Co. (Tehran) subsidiary Amir Kabir Petrochemical’s (Bandar Imam, Iran) 520,000-m.t./year ethylene unit at Bandar Imam, Begleiter says. Startup of the plant was postponed from late last year to sec-ond-quarter 2005, and will likely be delayed to at least July because of operational glitches, he says. —PECK HWEE SIM

basic chemicals & plastics



U.S. EUROPESPOT CONTRACT SPOT CONTRACT

ETHANE 50-51 cts/gal fob ▼

NAPHTHA 13-139 cts/gal fob ▼ $460-470/m.t. cif

GASOIL 120-124 cts/gal fob $470-480/m.t. cif

PROPANE 80-81 cts/gal fob ▼

BUTANE 100-101 cts/gal fob ▼

ETHYLENE 30-30.75 cts/lb del ▼ 40 cts/lb del Apr. ▼ $900-920/m.t. cif ▼ €750/m.t. del Q2

PROPYLENE

chemical-grade 41-42 cts/lb del 41.5 cts/lb del Apr. ▼ €700-720/m.t cif ▼ €705/m.t. del Q2

polymer-grade 42-43 cts/lb del 43 cts/lb del Apr. ▼ €720-730/m.t cif ▼

BUTADIENE 45-50 cts/lb fob 44 cts/lb del Apr. $960-980/m.t. fob ▼ €702/m.t. del Q2

BENZENE 260-265 cts/gal fob ▼ 300 cts/gal fob May ▼ $830-840/m.t. fob ▼ €695/m.t. fob May ▼

TOLUENE1 180-183 cts/gal fob ▼ $570-580/m.t. cif ▼

MIXED XYLENES 178-180 cts/gal fob ▼ 185 cts/gal fob May ▼ $500-520/m.t. cif ▼

STYRENE 44-48 cts/lb fob ▼ 71-78 cts/lb fob Apr. ▲ $950-960/m.t. fob ▼ €962/m.t. del May ▼

METHANOL 90-91 cts/gal fob 95 cts/gal fob Mar. €210-220/m.t. fob €230/m.t. fob Q2

MTBE 174-175 cts/gal fob ▼ $570-580/m.t. fob

0

2.0

3.5

3.0

4.0

2.5

$4.5

1.5

1.0

0.5

0

10

20

30

50

60

40

70 cts

0

2010

504030

60708090

100 cts

ETHYLENE (U.S. contracts; cts/lb)

STYRENE (U.S. spot; cts/lb) METHANOL (U.S. spot cts/gal)

BENZENE (U.S. spot; dollars/gal)

0

5

10

15

25

20

35

40

30

45 cts

M’04

J J SA O N D F AM J’05

M’04

M MD FO NSJ J AA

J’05

M’04

M MD FO NSJ J AAJ’05

M’04

M MD FO NSJ J AA

J’05

SPOT CONTRACT SPOT CONTRACT

PARA-XYLENE $700-750/m.t. fob ▼ 44.5 cts/lb del Apr. $870-880/m.t. fob ▼ €674/m.t. del May ▼

ORTHO-XYLENE 38-39 cts/lb fob 38.5 cts/lb fob Mar. ▲ $780-800/m.t. fob €650/m.t. del Q2

ETHYLENE GLYCOL

antifreeze 48-49 cts/lb fob

fiber-grade 49-50 cts/lb del Mar. €800-820/m.t. cif ▼ €942/m.t. del May ▼

ACRYLONITRILE $1,310-1,320/m.t. fob 60-63 cts/lb del $1,400-1,530/m.t. cif €1,385-€1,400/m.t. del Q1

EDC 23-24 cts/lb fob $440-450/m.t. fob

INORGANICS

CHLORINE $320-360/ton fob $345-375/ton fob Q2 ▲ €150-180/m.t. del

CAUSTIC SODA $300-320/ton fob $365-375/ton fob Apr. ▲ $360-380/m.t. fob ▼ €280/m.t. del May ▼

SODA ASH $96-105/ton fob €200-210/m.t. del.

1) Nitration-grade. The CW Price Report is compiled the Wednesday prior to publication through consultation with producers, consumers, and traders. Prices are quoted fob (free-on-board), cif (cost, insurance & freight), c&f (cost & freight), or frteq (freight equalized). References are NWE (Northwest Europe) port for Europe and USG (U.S. Gulf ) port for the U.S., and reflect recent large-volume transactions.


Petrochemical prices fell across the board last week, pressured by lower feedstock costs and a lack of pickup in demand. U.S. olefins con-tracts settled lower for April, due to rising inventories downstream and increased sup-ply, analysts say. Ethylene contracts dropped 1.5 cts/lb, to 40 cts/lb del. Spot ethylene par-cels traded about 10 cts/lb below contract levels. Propylene contracts slipped 1.5 cts/lb in April, to 41.5 cts-43 cts/lb del.

European olefins prices also softened, although producers say demand is still healthy. Ethylene spot numbers declined $60-$70/m.t. last week, and propylene was down by about €40/m.t. in response to ready supply of lower-grade refinery material, mar-ket sources say. Even tight supply could not maintain butadiene prices, which slipped about $20/m.t. last week.

Aromatics prices tumbled in May in line with softening energy prices and weak demand from Asia, sources say. U.S. ben-zene prices fell below $3/gal, trading at $2.60-$2.65/gal last week. European ben-zene lost $170-$180/m.t. last week as supply exceeded demand, sources say. May ben-zene contracts in the U.S. settled at $3/gal fob, down 87 cts/gal from April. European benzene contracts plummeted €186/m.t., to €695/m.t. fob for May. Toluene and mixed xylenes numbers declined in tandem with benzene and energy prices, dipping about 25 cts/gal and about 20 cts/gal, respectively, in the U.S. May xylenes contracts in the U.S. were 25 cts/gal lower than in April, at $1.85/gal fob. European toluene and xylenes prices dropped $20-$30/m.t. last week.

The absence of buying interest from Asia, as well as the drop in benzene prices, pulled down styrene spot prices by 6 cts-9 cts/lb in the U.S., and $100-$110/m.t. in Europe. April styrene contracts in the U.S. firmed a penny, mostly catching up with the rise in April benzene contracts. European styrene market players say they have agreed on May contracts at €962/m.t. del, down €183/m.t.

U.S. para-xylene spot prices have taken a dive of more than $200/m.t. in the past two weeks. European p-xylene prices have declined about $100/m.t. in the same period, sources say. Initial settlements were at €674/m.t. del for May p-xylene contracts, down €76/m.t.

Ethylene glycol prices also softened, by $10-$20/m.t., in line with lower Asian numbers. May contracts settled at €942/m.t. del, down €8/m.t., as part of a two-month agreement.

www.chemweek.com

cw price reportCOMMENTARY


REMEDIATION

New Jersey Seeks Millions from Honeywell and PPG

The New Jersey Department of Environmental Protection (DEP; Trenton) says it will seek reimbursement

from Honeywell, PPG, and Occidental for the cleanup of 106 northern New Jersey sites contaminated with hexavalent chromium. DEP’s estimated total cost of the cleanup is $18 million. The companies’ predecessors used the chromium to clean machine parts. The companies say they have agreed to clean up some of the sites, but that they are not convinced they are responsible for the other remaining properties. “In the case of the orphan sites, it is not clear whose material is

example, we have remediated all 37 of the residential sites for which we accepted respon-sibility under our 1990 administrative consent order with the New Jersey Department of Environmental Protection,” PPG says.

Honeywell says it supports the state’s initiative to remediate addi-tional chromium sites, but that there is “no connection between many of the sites mentioned in the lawsuit and [Honeywell’s predeces-sor] Mutual Chemical.” The DEP has filed a separate lawsuit against Honeywell that seeks to recoup lost tax revenue caused by Jersey City’s inability to attract business to sites

contaminated by Honeywell’s predecessor. “Jersey City’s claim for property taxes is based on a novel legal theory that has not been rec-ognized by New Jersey courts,” Honeywell says. —KARA SISSELL

impacting which sites,” PPG says.“Jersey City has waited too long for the

cleanup of these sites. We will use every tool in this land to keep Jersey City from waiting any longer,” says DEP commissioner Bradley Campbell. The DEP says that, unless the companies respond by May 16, it will charge the com-panies three times the cost of the cleanup, as provided for under the state’s Spill Compensation and Control Act.

The state will begin to clean up three of Jersey City’s most contam-inated chromium sites this month: Morris Canal, near City Hall; Tempesta and Sons on Aetna St.; and Liberty State Park, near the Freedom Way walkway.

“We have acted responsibly when it has been determined that our chromium ore pro-cessing residue has impacted specific sites. For

Negotiators Discuss Stockholm ConventionMembers of the United Nations met last week in Punta del Este, Uruguay to decide how to implement the Stockholm Convention, which was ratified in February. The convention is an agreement to ban or strictly control 12 persistent organic pollutants (POPs), known as the “dirty dozen,” including the pesticide DDT, polychlorinated biphenyls (PCB), and the by-products dioxins and furans.

The negotiators are attempting to agree on who will oversee the bans, and what rules and enforcement measures are needed to carry out the terms of the con-vention. For example, DDT is still used in some countries to kill mosquitoes carry-ing malaria.

One of the primary challenges is the need to consider the risks of the chemi-cals against any public health benefits or cost-benefit concerns, experts say. The International Council of Chemical Associations says there is a need to “weigh public health, environmental safety, and socioeconomic considerations when determining whether to ban or restrict chemicals.”

The World Wildlife Fund (Washington) issued a list of chemicals it says should be added to the POPs treaty. Those include perfluorinated compounds, five brominated flame retardants, and seven pesticides including hexa-chlorocyclohexane, chordecone, and pentachlorophenol. —KS

Oil Majors Fund China Benzene Exposure Study

Major oil and petrochemical firms including BP, ChevronTexaco, ExxonMobil, and Shell have com-

missioned a study, currently under way in China, on how benzene exposure affects workers’ health. The industry funded study is an effort to refute other studies that have alleged a link between benzene exposure and a worker’s likelihood of developing cancer, according to a recent report in the Houston Chronicle. The National Cancer Institute (Bethesda, MD) published a study late last year that found Chinese shoe workers who were exposed to benzene were at risk of devel-oping cancer even though their exposure was below the OSHA worker exposure limit of 1 part per million (CW, Dec. 15, 2004, p. 10).

The American Petroleum Institute (API; Washington) says the benzene study is sched-uled for completion by 2007. But the article in the Houston Chronicle, which obtained documents from lawyers involved in unrelated lawsuits, says that the companies funding the study already expect the results to downplay benzene’s health risks. The article quotes an industry toxicologist saying, in a legal depo-

sition in an unrelated case, that there are a “whole lot of reasons” for getting a “good scientific answer” to the question of whether benzene poses health risks.

API says that, although the study has been funded by some of its members, the research is being conducted completely independent from the companies or API. “There are no foregone conclusions,” says API. “This is a serious effort to get some answers.” The Fudan University medical center (Shanghai), the University of Colorado Health Sciences Center (Aurora), and the private firm Applied Health Sciences (San Francisco) are conducting the study. API is not managing the study, it says.

The Houston Chronicle reports that the study is expected to provide scientific support for assertions including: benzene exposure does not increase the risk of leukemia in the general population; that current occupational exposure limits for benzene do not put work-ers at risk; and that non-Hodgkins’ lymphoma could not be caused by benzene exposure.

Dow Chemical opted not to help fund the study, the article says. —KS

HEALTH EFFECTS


regulatory

www.chemweek.com

Campbell: City has waited too long.


SFO of the Year: Bradley BellHelping Take Nalco Public Again

Senior financial officers (SFO) play a leading role when their companies are taken public and answer to a new set

of bosses: Wall Street and public sharehold-ers. Bradley Bell became CFO of Nalco in November 2003, and had just one year to get the company ready for an initial public offering (IPO). Bell has been recognized by analysts for his skill in that undertaking, and been named CW ’s 2005 SFO of the Year.

Bell became executive v.p. and CFO at Nalco in November 2003, after Nalco was acquired from Suez by a consortium of New York-based private equity firms Apollo Management, The Blackstone Group, and Goldman Sachs Capital Partners for $4.35 billion. He was formerly senior v.p. CFO at Rohm and Haas (R&H).

Investors in public and private companies have the same fundamental goal: “To achieve a high return on their investment,” Bell says. There are differences working in senior man-agement for a public company and a privately held firm, however, he says. “Being owned by three private equity firms resulted in a level of interaction not found when you have a large number of public shareholders.”

Owners and management worked together to focus efforts around three goals: “Revitalizing growth, improving operations to reduce costs, and developing alternate channels to market,” Bell says. Working with and keeping a close relationship with shareholders is just as desirable for a publicly traded company, but is harder because of the large number of shareholders and dis-closure laws, he says.

Public and privately held firms also operate on different time-tables, Bell says. Public investors hold public companies to quar-terly updates and goals, such as earnings growth and cost reductions, he says. That pres-sure can hamper companies’ long-term goals. Private firms, however, can take a longer-term outlook, he adds. Private equity firms are also far more tolerant of debt: “Wall Street wants us to have debt levels similar to other chemical

companies,” Bell says. Nalco’s debt at year-end was $3.4 billion, a net debt-Ebitda ratio of 5.8 times, he says. This compares to 1.8 times at Praxiar, 1.4 times at Air Products, and just 0.8 times at Ecolab.

The short period of time to prepare for the IPO proved to be one of the biggest challenges, Bell says. “An IPO places heavy demands on a CEO and CFO, and ours was done much earlier than we envisioned,” he says. “We were knee-deep in estab-lishing our new company, and our initiatives could not be put on hold.”

Nalco was a publicly traded company as recently as 1999 when it was acquired by Suez. However, Suez had acquired other compa-nies since buying Nalco and added those firms to Nalco’s portfolio, Bell says. As a result, “We did not have the required three years of audited financial data to file the IPO,” Bell says. Nalco had to re-audit its financials for that period, which required a “tremendous amount of teamwork” from

inside the company as well as its auditor Ernst & Young, he says.

Nalco operated as if it were a publicly traded company after the consortium bought it in preparation of the IPO, Bell says. “The public world was turned radically on its heels because of Sarbanes-Oxley,”

(SOX) the federal act that requires clearer reporting standards, he says. Nalco adopted SOX rules from the start to prepare to go public, he says.

The Nalco IPO was the second that Bell was involved in; he serves on the board of Compass Minerals, which Apollo took public in 2003 (CW, Dec.24/31, 2003, p. 10). Bell, a finance graduate with an Harvard MBA, and has spent his entire professional career in the financial world, mostly for pub-licly traded companies, he says. He spent six years at R&H, and for 10 years before that he was v.p. and treasurer of Whirlpool Corp. Bell was v.p. and treasurer of automotive components firm

Bundy before joining Whirlpool. Bell’s skills as a CFO were lauded by his

former boss, R&H CEO Raj Gupta. “In the six years Brad was with Rohm and Haas, it is hard for me to imagine anyone who toiled harder or had a greater impact on our success. Brad was a lot more than a CFO. He was a valued member of our executive council, and

held key roles in the successful execution and integration of Morton International and other acquisitions. He was an impor-tant contributor to our strategy to implement an enterprise-wide SAP migration, and has led key aspects of the revisions to our governance practices to meet the spirit and the letter of the Sarbanes-Oxley Act and NYSE requirements.”

Bell is also a member of the board, and chairs the audit committees at IDEX Corporation (Northbrook, IL), a manufacturer and mar-

keter of engineered industrial products, such as pumping and dispensing products. Bell is also a board member of Opportunity International (Oak Brook, IL), a not-for-profit organization, which attacks poverty among the world’s poorest communities.

—KERRI WALSH


people

Bell: Important strategic contributions.

■ BIOGRAPHY

BRADLEY BELL, EXECUTIVE V.P AND CFO, NALCO HOLDING

Born: Chicago

Education: BS in finance, University of Illinois; MBA, Harvard University Graduate School of Business.

Home: Wheaton, IL

Car: BMW

Most Recent Vacation: To the outskirts of Guadalajara, Mexico with his family to see the progress of the nonprofit organization Opportunity International (Oak Brook, IL).

Last Book Read: The Purpose-Driven Life, by Rick Warren

Family: Wife Lorrie and four sons.


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cw75 stock performance

■ LEADERSCOMPANY NAME TICKER 1-WEEK CHANGE (%)

Eastman EMN 23.2%

Wellman WLM 22.4

Huntsman HUN 13.3

Dow Chemical DOW 9.1

Lyondell Chemical LYO 8.0

FMC FMC 7.6

Air Products APD 7.5

NL Industries NL 7.5

Hercules HPC 7.4

Nova Chemicals NCX 7.1

■ LAGGARDSCOMPANY NAME TICKER 1-WEEK CHANGE (%)

Olin OLN -10.1%

MEMC WFR -3.9

Church & Dwight CHD -3.5

Cabot Corporation CBT -2.7

Nalco Holding NLC -2.5

PolyOne POL -2.4

Cabot Microelectronics CCMP -1.1

Albany Molecular AMRI -0.6

ATMI ATMI -0.6

Rhodia RHA -0.5

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lume

3M MMM D 59,529 77.35 1.0% -2.9% -5.3% -4.1% 19.9x 2.17% 89.03 72.62 2.0%DuPont DD D 48,343 48.62 4.6 0.8 -0.2 1.0 27.5x 3.04 54.90 39.29 1.7Dow Chemical DOW D 46,960 48.85 9.1 5.3 -0.7 0.5 12.8x 2.74 56.38 35.30 3.1BASF BF D 36,342 67.25 2.9 -0.9 -3.4 -2.3 14.5x 3.38 74.69 46.50 0.2Bayer BAY D 24,297 33.27 4.9 1.0 0.2 1.3 29.7x 2.19 34.80 23.78 0.1Monsanto MON D 15,953 59.48 1.5 -2.3 7.7 8.9 29.9x 1.14 65.42 30.93 3.1Praxair PX S 15,291 47.43 3.8 -0.1 7.9 9.0 22.6x 1.52 49.42 34.28 2.4Sasol SSL B 14,848 24.19 7.0 3.2 13.3 14.5 13.0x 3.06 26.55 13.18 0.2Air Products APD S 13,820 60.27 7.5 3.6 4.5 5.7 20.7x 2.12 65.47 46.50 3.0Akzo Nobel AKZOY D 11,975 41.90 3.3 -0.6 1.3 2.4 11.5x 1.79 45.60 29.76 0.1Syngenta (ADR) SYT D 11,971 21.27 2.1 -1.7 -0.4 0.8 24.4x NA 23.26 14.98 0.2PPG Industries PPG D 11,846 68.99 4.1 0.3 1.9 3.0 18.2x 2.73 74.73 54.97 2.8Rohm and Haas ROH S 10,219 45.54 5.7 1.9 3.5 4.6 19.0x 2.20 50.00 35.28 2.1PotashCorp POT B 9,820 88.23 5.3 1.5 6.6 7.8 32.7x 0.68 91.84 39.12 1.9Clorox CLX D 9,769 63.68 0.6 -3.2 9.1 10.2 11.2x 1.76 65.75 48.22 3.5Solvay SVYSY D 9,729 115.00 1.8 -2.1 6.2 7.4 NA NA 121.00 78.09 0.0BOC Group BOX S 9,349 37.85 2.0 -1.9 0.6 1.8 15.8x 3.12 39.95 29.92 0.0Ecolab ECL S 8,428 32.73 1.0 -2.8 -6.6 -5.4 26.8x 1.07 35.40 27.73 1.5DSM (ADR) DSMKY D 6,646 17.35 0.3 -3.6 8.1 9.3 NA NA 18.85 11.05 0.0Lyondell Chemical LYO B 6,611 26.93 8.0 4.2 -6.2 -5.1 NM 3.34 35.65 14.43 6.1Sherwin-Williams SHW S 6,189 44.05 -0.3 -4.1 -0.8 0.3 14.9x 1.86 46.50 34.94 3.7ICI ICI S 5,991 20.11 2.3 -1.5 10.6 11.8 14.8x 2.73 21.65 13.19 0.1Avery Dennison AVY S 5,890 53.30 2.6 -1.3 -10.6 -9.4 18.8x 2.85 65.75 49.60 3.1Mosaic MOS B 5,028 13.30 0.8 -3.1 -18.5 -17.3 NM 0.00 18.58 11.20 0.9Huntsman HUN D 4,705 23.02 13.3 9.4 NA NA NA 0.00 30.00 19.60 2.2Eastman Chemical EMN D 4,699 59.23 23.2 19.3 3.3 4.5 27.2x 2.97 61.57 41.09 15.1Ciba (ADR) CSB S 4,526 31.94 0.5 -3.4 -15.4 -14.3 15.5x 5.82 37.92 29.55 0.0Sigma-Aldrich SIAL S 4,148 60.24 3.5 -0.3 -0.1 1.1 18.0x 1.26 64.80 52.94 4.6Engelhard EC D 3,800 31.10 7.1 3.2 1.8 3.0 16.5x 1.54 32.34 26.28 3.8IFF IFF S 3,582 37.90 4.4 0.5 -11.1 -10.0 18.5x 1.85 43.01 33.76 3.1Nova Chemicals NCX B 2,890 34.30 7.1 3.3 -27.2 -26.0 9.3x 0.93 52.05 24.15 4.2Shanghai Petrochemical SHI B 2,736 38.00 1.9 -2.0 1.9 3.0 5.7x NA 45.20 24.30 0.1Lubrizol LZ S 2,674 39.71 2.1 -1.7 8.4 9.6 23.9x 2.62 43.57 30.01 2.6Nalco Holding NLC S 2,466 17.40 -2.5 -6.3 -10.9 -9.7 NA 0.00 20.94 15.15 0.7MEMC WFR S 2,444 11.70 -3.9 -7.7 -11.7 -10.5 11.5x 0.00 14.95 7.33 5.7Scotts SMG D 2,418 72.70 6.8 2.9 -1.1 0.0 19.8x 0.00 74.00 55.76 6.0Agrium AGU B 2,416 18.30 5.1 1.2 8.6 9.8 9.6x 0.49 19.22 11.61 2.5Church & Dwight CHD D 2,211 34.89 -3.5 -7.3 4.0 5.1 25.7x 0.69 37.19 26.75 2.2Valspar VAL S 2,199 42.72 2.6 -1.2 -14.2 -13.1 16.6x 1.87 50.61 40.81 3.8Methanex MEOH B 2,094 17.45 0.3 -3.6 -4.0 -2.9 9.1x 1.83 20.21 10.59 2.5RPM International RPM S 2,009 17.10 0.7 -3.2 -11.5 -10.4 17.6x 3.51 19.62 12.83 2.6FMC FMC D 1,923 51.94 7.6 3.8 7.5 8.7 12.1x 0.00 56.42 38.44 5.5Cytec Industries CYT S 1,909 47.84 2.9 -0.9 -6.8 -5.6 16.8x 0.84 54.64 35.92 3.8Cabot Corporation CBT D 1,877 29.85 -2.7 -6.6 -22.5 -21.3 55.3x 2.14 40.44 29.59 4.6Westlake Chemical WLK B 1,826 28.10 4.1 0.2 -15.8 -14.7 12.9x 0.14 37.70 14.51 2.1Albemarle ALB S 1,765 37.90 6.2 2.3 -1.7 -0.5 25.4x 1.58 40.33 26.51 3.2Airgas ARG S 1,719 22.81 5.7 1.8 -13.8 -12.7 19.5x 0.79 27.09 20.66 3.2Crompton CK S 1,698 14.49 4.2 0.3 23.8 24.9 NA 1.38 16.18 4.91 4.8Great Lakes Chemical GLK S 1,666 31.97 3.5 -0.4 12.6 13.7 20.4x 1.25 35.49 22.25 4.7Hercules HPC S 1,610 14.25 7.4 3.5 -4.0 -2.9 57.0x 0.00 15.55 9.93 2.4Minerals Technologies MTX S 1,382 67.35 3.7 -0.1 1.1 2.2 23.9x 0.30 68.70 53.41 6.2Olin OLN D 1,312 18.50 -10.1 -13.9 -15.3 -14.1 23.1x 4.32 25.35 14.76 13.5Georgia Gulf GGC B 1,292 37.89 0.4 -3.5 -23.8 -22.6 10.1x 0.84 58.57 29.25 9.4Genencor International GCOR D 1,159 19.27 0.0 -3.9 17.5 18.7 NM 0.00 19.30 13.48 0.0Rhodia RHA D 1,148 1.83 -0.5 -4.4 -32.2 -31.1 NM 0.00 3.20 1.13 0.7Sensient Technologies SXT S 965 20.49 0.6 -3.3 -14.0 -12.9 13.4x 2.93 24.09 18.62 2.1MacDermid MRD S 962 31.75 4.5 0.7 -11.9 -10.7 18.5x 0.76 37.09 26.32 1.1H.B. Fuller FUL S 922 32.00 6.3 2.5 13.2 14.4 24.6x 1.53 32.16 24.91 6.3NL Industries NL B 859 17.70 7.5 3.6 -19.0 -17.9 4.1x 5.65 24.72 9.20 0.7Symyx Technologies SMMX S 830 25.53 1.8 -2.0 -15.0 -13.9 NM 0.00 32.20 16.51 2.4Ferro FOE S 804 19.18 6.0 2.1 -16.7 -15.5 34.9x 3.02 26.52 16.77 4.0Compass Minerals CMP B 777 24.80 2.2 -1.6 3.5 4.7 15.8x 4.44 26.83 15.59 3.0ATMI ATMI S 762 23.61 -0.6 -4.4 4.8 5.9 22.9x 0.00 28.24 17.18 6.9Cabot Microelectronics CCMP S 714 28.89 -1.1 -5.0 -27.9 -26.7 16.0x 0.00 41.98 25.50 25.3PolyOne POL D 696 7.58 -2.4 -6.3 -16.3 -15.2 19.9x 0.00 10.25 6.22 3.5OM Group OMG S 631 22.14 0.0 -3.9 -31.7 -30.6 7.5x 0.00 37.76 21.30 7.9Arch Chemicals ARJ S 603 25.66 1.2 -2.6 -10.2 -9.0 29.8x 3.12 30.64 24.17 2.8Rogers ROG S 575 35.10 0.8 -3.1 -18.6 -17.4 18.3x 0.00 71.36 33.87 4.5A. Schulman SHLM S 527 17.18 3.2 -0.7 -18.4 -17.3 17.0x 3.38 22.19 15.92 3.3Cambrex CBM S 497 18.82 1.1 -2.7 -30.3 -29.2 NM 0.64 27.09 18.37 4.1Wellman WLM B 380 11.86 22.4 18.5 11.4 12.5 NA 1.69 15.42 6.28 13.7American Vanguard AVD S 330 18.14 0.7 -3.1 -1.1 0.1 23.9x 0.61 22.88 13.54 0.6Albany Molecular AMRI S 310 9.70 -0.6 -4.5 -12.9 -11.8 NA 0.00 15.34 8.01 2.5Stepan SCL S 200 22.20 3.4 -0.5 -8.1 -6.9 21.1x 3.51 25.75 21.25 0.9Aceto ACET S 179 7.37 7.0 3.1 -41.8 -40.7 14.5x 1.36 13.33 6.53 2.1*D = Diversified. S = Specialty. B = Basic. Source: CW research.

CW75 Index*

MAY 4 146.62

WEEK AGO 141.17

QUARTER AGO 148.41

YEAR AGO 122.61*Jan. 1, 2002 = 100.

The CW75 Index rose 3.9% for the week ending May 4, outpacing broader market indexes including the Morgan Stanley

global composite and Standard & Poor’s 500, which rose 1.5% and 1.7%, respectively. Basic chemical shares jumped 5.3%; followed by diversified stocks, up 3.9%; and specialty chemical stocks, up 3.1%.

Chemical stocks rose on news that crude oil prices had decreased following a buildup in inventory of more than twice the expected amount, says Frank Mitsch, analyst at Fulcrum Global Partners (New York). Many first-quarter earnings reports were also above consensus estimates, helped by higher selling prices and margins, lifting stock prices, analysts say.

Eastman Chemical topped the leaders list following strong first-quarter earnings. Credit Suisse First Boston (New York) upgraded Eastman’s stock from neutral to outperform.

160

140

120

100

150

100

300

250

200

1) Morgan Stanley composite index. Source: CW research.

1) Morgan Stanley composite index. Source: CW research.

SECTOR COMPARISON (index; Jan. 1, 2002 = 100)

75(index; Jan. 1, 2002 = 100)CW

A’04

J’05

F AM JJ O DN M MSA

75 stock indexWorld index1

CW

Basic DiversifiedSpecialtyWorld index1

A’04

J’05

F AM JJ O DN M MSA




key changes

SUN CHEMICAL PERFORMANCE PIGMENTS has named Ian Knowles as business development manager/paper and board for Europe and North America. Knowles previously held various sales, marketing, and technical roles in pigments, dyes, and paper chemicals for Ciba Specialty Chemicals.

INDIUM has promoted Ross Berntson to director/solder products. Berntson was previously director/fabricated products.

KINDER MORGAN has named Park Shaper as president, and Steve Kean as executive v.p./operations and a member of the office of the chair-man.

MERCK has named Richard T. Clark as president and CEO, and a member of the Merck board. Clark is currently president of Merck’s manufacturing division.

BORCULO DOMO INGREDIENTS, in con-junction with Univar USA, has named Jeff Langa as business development manager for the pharmaceutical industry at Univar. Langa will be responsible for Borculo Domo

and Dale Sause as vice chairman. Valerius is president of Kirby Inland Marine, and Sause is president of Sause Bros. They will each serve a one-year term.

BRUSH ENGINEERED MATERIALS has named Richard J. Hipple as president and COO. Hipple was previously presi-dent/alloy products, the largest operating group of Brush Wellman, a wholly owned subsidiary of Brush Engineered Materials. The company has also promoted Donald G. Klimkowicz to president/alloy products, and Walter G. Maxwell to v.p./operations for alloy products.

Romeo Kreinberg has been elected to the board of directors of DOW CORNING. Kreinberg is currently senior v.p./plastics for Dow Chemical.

PARK ELECTROCHEMICAL has appointed Anthony W. DiGaudio as v.p./sales. DiGaudio replaces Emily J. Groehl, who is retiring.

GRACE has elected Richard C. Brown as a v.p. and president/Grace Performance Chemicals. Brown was previously presi-dent/core products at GE Silicones.

SARTOMER has hired Hawon Kea as sales manager for Sartomer Korea. Kea was previ-ously president of Hyupsuyng Trading Co.

RESIN TECHNOLOGY has appointed John Denzer as managing partner. Denzer was most recently director/poly-propylene sales at Formosa Plastics.

TERRA INDUSTRIES has named Daniel D. Greenwell as v.p. and controller. Greenwell was previously corporate controller for Belden CDT.

BASF has elected Robin C. Rotenberg as president/BASF Canada. Rotenberg was formerly general counsel and corporate sec-retary for BASF Canada.

OLIN has appointed Todd A. Slater v.p. and controller. Slater was most recently v.p. and financial officer for Olin’s metals group.

EASTMAN CHEMICAL has named Ted Germroth as senior technology fellow.

Ingredients and Univar’s pharmaceutical lactose growth efforts, the companies say.

Rudi Demeuse has been appointed man-aging director of EUROPEAN PIPELINE DEVELOPMENT CO. Demeuse will be responsible for marketing, finance, and

human resources. He was previously v.p./marketing petrochemicals at BP.

UNIVAR has appointed Patrick Lammers as managing director of its Dureal divi-sion, based at Rotterdam. Lammers was previously regional commercial manager for Africa, Europe, and the Mideast at Shell Car Care International.

THE AMERICAN WATERWAYS OPERATORS has elected Steven P. Valerius as chariman

PPG Announces Management Assignments, Executive CommitteePPG Industries has made several managerial appointments: J. Rich Alexander has been elected senior v.p./coatings, responsible for the industrial, aerospace, and archi-tectural business units as well as coatings in the Asia/Pacific region; Victoria Holt has been elected senior v.p./glass and fiber glass, responsible for the fiber glass, flat glass, and automotive OEM glass business units; Kevin F. Sullivan has been elected senior v.p./chemicals; William A. Wulfsohn has been elected senior v.p./ coatings, and managing director/PPG Europe, and will be responsible for automotive OEM and packaging business units as well as PPG’s coatings operations in Europe; and Maurice V. Peconi has been elected v.p./corporate development and services. Alexander was previously v.p./industrial coatings. Holt was previously v.p./fiber glass. Sullivan was previously v.p./chemicals, and will continue to be responsible for PPG’s chlor-alkali, fine chemicals, silicas, and optical products businesses. Wulfsohn was previously v.p./coatings for Europe. Peconi was formerly v.p./corporate development.

PPG also named its executive committee: Charles E. Bunch, president and CEO, who will become chairman July 1; James C. Diggs, senior v.p., general counsel, and secretary; and William H. Hernandez, senior v.p./finance. —EDMUND BERRIGAN

Ian Knowles Ross Berntson Park Shaper

William H. HernandezCharles E. Bunch

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