News from Notch Consulting, Inc.

June 25, 2012

Jiangsu Sinorgchem poised for growth

Filed under: Rubber Chemicals — Notch @ 9:47 am

In the last two weeks, two major developments have occurred regarding Shanghai-based Jiangsu Sinorgchem Technology Co. Ltd., which is the world’s leading producer of p-phenylene diamine-based rubber antidegradants (i.e., 6PPD and IPPD). As previously reported on this blog, Sinorgchem announced on June 13 that it had settled a long-running legal dispute with Solutia regarding alleged patent infringement for the process technology for a key feedstock for 6PPD production. On the same day,
Sinochem International Corporation announced that it would acquire a combined 60.976% of the equity of Jiangsu Sinorgchem Technology Co., Ltd. held by the Carlyle Group and eight individual shareholders.

The acquisition will require approval by the shareholders conference of Sinochem International Corporation and the Board of Directors of Jiangsu Sinorgchem Technology Co., Ltd., as well as related government authorities including the National Development and Reform Commission, State-Owned Assets Supervision and Administration Commission of the State Council, and the Ministry of Commerce. Jiangsu Sinorgchem Technology’s management team supports the agreement.

Already the largest producer of 6PPD, Sinorgchem is in the process of increasing its presence in related segments, including the production of insoluble sulfur, which is used in rubber vulcanization, and TMQ, which is a rubber antioxidant. Company sales are expected to total RMB 2.3 billion (US$363 million) this year, and these two major developments open the door to further expansion, including a greater presence in the rubber chemical markets of Europe and North America.

June 21, 2012

Cabot to acquire Norit, producer of activated carbon

Filed under: Carbon Black — Notch @ 12:26 pm

Cabot today announced an agreement to purchase Norit N.V., the global leader in activated carbon, from affiliates of Doughty Hanson & Co. Managers Limited and Euroland Investments B.V. for $1.1 billion. According to Cabot’s press release, the acquisition strengthens Cabot’s specialty chemicals portfolio with a non-cyclical, high growth and high margin business.

Activated carbons are performance materials used in multiple high-end applications including environmental protection, air and water purification, food and beverages, pharmaceuticals and catalysts. Norit operates 10 manufacturing facilities throughout the Americas and Europe. It employs 760 people and provides the widest and most differentiated range of activated carbon products of any producer. Norit generated sales of $360 million and adjusted EBITDA of $92 million for the trailing twelve months ended December 31, 2011. The business has grown 12 percent annually since 2007. Norit’s current chief executive officer, Ronald Thompson, will continue to lead the business.

J.P. Morgan is Cabot’s financial advisor for the transaction. Wachtell, Lipton, Rosen & Katz is Cabot’s legal advisor for the transaction, with De Brauw Blackstone Westbroek and Slaughter & May serving as Dutch and English counsel, respectively.

Cabot held a conference call to discuss the acquisition this morning. The presentation that accompanied the call is available here.

June 20, 2012

Cabot spending $100M on Indonesian carbon black expansion

Filed under: Carbon Black — Notch @ 11:18 am

The Jakarta Post reports that PT Cabot Indonesia plans to invest US$100 million in Indonesia this year to expand production capacity at its carbon black plant in Krakatau Industrial Estate Cilegon, Banten, Indonesia. The project will increase capacity by 140,000 tons to 290,000 tons and is expected to be completed in mid 2014, based on comments from PT Cabot Indonesia director Gerry Howan on Tuesday in Jakarta. At present, Cabot operates two plants in Indonesia — one in Cilegon and another in Sumuranja, Merak, Banten. Cabot is the only carbon black producer in Indonesia.

“Our current installed capacity is only 150,000 tons, while existing demand is 230,000 tons. For this reason, we want to expand,” Mr. Howan told reporters after meeting Industry Minister MS Hidayat at the ministry.

The firm would allocate its entire output for the domestic market, which would see demand rising to 300,000 tons in the next three years due to the fast-growing automotive industry, Mr. Howan added.

In addition to the capacity expansion, the firm aimed to locally source its feedstock. “We are currently using imported decant oil. But by 2013, we will obtain it from KS [state-owned steel producer Krakatau Steel],” he explained.

Bridgestone announces new investments in Des Moines ag tire plant

Filed under: Tires — Notch @ 12:57 am

On June 7, Bridgestone Americas Tire Operations announced it was investing another $74 million for capacity expansion at its Des Moines, Iowa agricultural tire plant. This is the tire company’s main North American plant for ag tires, and the announcement follows a $77 million investment announced in March 2010. The upgrades are expected to be completed in 2013.

“Enhancements to the Des Moines facility will allow us to grow our market position, develop advanced solutions and deliver the most innovative tyre technology available to the agricultural industry,” said Ken Allen, president, Agricultural Tire, US & Canada Commercial Tire Sales division, Bridgestone Americas.

The Des Moines facility has been in operation since the mid 1940s and employs 1,673 people. In addition to manufacturing Firestone-brand agricultural tires, the plant also produces tires for the forestry and construction equipment markets.

Solutia settles 4-ADPA suit with Sinorgchem, KKPC

Filed under: Rubber Chemicals — Notch @ 12:45 am

Late last week, Solutia Inc. announced that it had settled its long patent fight with Jiangsu Sinorgchem Technology Co. Ltd. and Korea Kumho Petrochemical Co. Ltd. over 4-ADPA, a chemical intermediate used to make rubber antidegradants. Solutia said it licensed Sinorgchem and KKPC to make 4-ADPA under Solutia patents, which expire in 2019. Financial aspects of the settlements weren’t disclosed. The dispute has been ongoing since 2004 in various courts, including countersuits and appeals.

Previous postings on the suits can be found here, here, here, here, here, here, here, here, here, here, here, and here.

The case centered on the process by which 4-amino-diphenylamine is manufactured, with Flexsys alleging that Sinorgchem was infringing on its patented manufacturing process.

“The settlement of these long-standing disputes is a milestone for Solutia and its Santoflex antidegradant business,” said Rich Altice, president and general manager of Solutia’s Technical Specialties division. “We remain committed to using our innovative chemistry to provide value to our customers and shareholders, as well as to protecting our intellectual property rights.”

Sinorgchem CEO Stephen Choi said his company is glad to put the dispute behind it. Sung-Kyu Lim, senior executive vice president of Korea Kumho’s sales division, expressed appreciation for its customers’ patience and support during the legal proceedings.

New CEO: Bridgestone to focus more on specialty tires

Filed under: Carbon Black, General, Silica, Tires — Notch @ 12:28 am reports that Bridgestone’s recently appointed CEO Maasaki Tsuya indicated in an interview with the Wall Street Journal that the tiremaker will be focussing more on high end specialty tires in order to combat increasing competition from Asian manufacturers and global economic challenges. “We will lose if we make similar products using similar production methods (to our competitors),” he said in the interview.

Like other tiremakers, Bridgestone faces weaker demand for commercial vehicle tires from crisis-plagued Europe, and Tsuya believes the region’s problems could drag on for years. On the other hand, Bridgestone’s Asian rivals are getting a boost from continuing strong economic growth in the region, including competitors in China, Taiwan, and Korea.

Given this situation, Tsuya believes that Bridgestone’s survival is dependent upon the development of superior new products and production technologies. Tsuya believes Bridgestone should concentrate on large OTR tires for construction and mining vehicles and fuel efficient passenger car tires as its core products, since these are products that competitors cannot easily match.

June 18, 2012

NNPC carbon black unit has been operating off-and-on for the last year

Filed under: Carbon Black — Notch @ 2:24 pm

Last week, this blog reported the news that Nigeria’s House of Representatives had advised the Nigerian National Petroleum Corporation (NNPC) to shut down its refinery in Warri due to emissions from its carbon black unit. Prior to this news, Notch believed that the carbon black unit had been shut down since about 2005. Based on information from an industry source, Notch has heard that the carbon black unit has been producing for about one year, but that production has been quite sporadic due to persistent mechanical problems with the unit.

June 12, 2012

Nigerian representatives urge refinery shutdown due to carbon black emissions

Filed under: Carbon Black — Notch @ 1:51 pm

Nigeria’s House of Representatives Committee on Petroleum, Downstream, has advised the Nigerian National Petroleum Corporation (NNPC) to shut down the Warri Refining and Petrochemical Company, WRPC, due to the persistent emissions of carbon black on the environment. Notch Consulting data put capacity at the carbon black unit at 18,000 tonnes/year, but industry sources had indicated that the carbon black unit was operating only sporadically for at least the last several years. (It is possible, in other words, that the emissions are not originating in the carbon black unit.)

The Chairman, House Committee on Petroleum, Downstream, Hon. Dakuku Peterside, made the call to shut the refinery in a statement after a meeting with stakeholders over the lingering crisis between the refinery and the Ekpan community. The call followed a petition written to the committee, entitled, “A Save Our Soul Appeal” written by Ajomata/Awhakpor Landlords Association of Ekpan, dated May 24. In the petition to the committee were urged to sanction NNPC over the life-threatening carbon black soot being emitted into their environment.

According to the landlords, “This appeal was necessitated by the reckless emissions of dangerous carbon black soot/chemicals into our environment on a daily basis without due care and keeping to international best practices. Our continuous appeals in writing and physical visitation to the management of the said company and their supervising Ministry of Petroleum over the years have been ignored, as they have never replied any of our letters nor stopped the life-threatening nuisance that their emissions have become.”

After a comprehensive meeting with all the relevant stakeholders which included the people of Ajomata/Awhakpor community; NNPC; the Department of Petroleum Resources, DPR; Ministry of the Environment; National Environmental Standards and Regulatory Enforcement Agency, NESREA; the Environmental Rights Action, ERA, and the committee leaders, the lawmakers called for the suspension of operations at the plant.

TC Debica cutting tire production in Poland

Filed under: Tires — Notch @ 1:33 am

From Rubber & Plastics News comes word that TC Debica S.A. has announced a plan to cut production of consumer and agricultural tires at its plant in Debica, Poland, the second time this year it has reduced output. The company, which is majority owned by Goodyear, will reduce production by another 4% for passenger tires and about 6% for farm tires in reaction to reduced orders from Goodyear. Debica’s management board said Goodyear, the key exporter of its tires, cited weak demand in the European markets.

In March, Debica announced it would cut production of truck tires by about 10% and agricultural tires by 4.5% compared with a schedule prepared earlier in the year.

China’s tire production up 2.8% in May

Filed under: General, Tires — Notch @ 1:25 am

From European Rubber Journal comes word that China’s tire production rose 2.8% in May, based on data published by China’s National Bureau of Statistics. In the first five months of 2012, China’s production rose to 336 million units, up by 4 percent on the year-before figure.

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