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February 1, 2006

12 Min Read
Will demand be there when Iranian plastic arrives?

NPC forges ahead

Despite fears of excess plastics capacity (December 2005 MPW), Iranian supplier National Petrochemical Company (NPC; Tehran) is forging ahead on projects destined to make Iran the number-two thermoplastics producer in the Middle East after Saudi Arabia.

By mid-2006 NPC plans to have 770,000 tonnes/yr of capacity onstream including high-density polyethylene (HDPE); linear-low and low-density PE; polypropylene, vinyl, polystyrene, ABS, melamine, and epoxy.

Projects waiting to be finished by 2008 could bring total output, if timetables are maintained, to more than 7 million tonnes of thermoplastics/yr. During a visit in December 2005, MPW witnessed a beehive of activity at NPC''s PARS Special Economic/Energy Zone in Bushehr Province, which gets its raw materials (in this case) from gas fields in the Persian Gulf.

One of the projects, a 50/50 joint venture with Sasol of South Africa, expects to be churning out 300,000 tonnes/yr high- and medium-density PE, and 300,000 tonnes/yr LDPE by later this year. The plastics related projects at this site are scheduled to start up at the end of this year through 2008. NPC is still looking for partners to help finance some of these projects.

With all this capacity coming into place, even if some is delayed, the question remains: Where will it go? NPC officials are confident that Asian markets will continue their appetite for plastics sourced in the Middle East and that because the natural resources are more plentiful and cheaper in Iran, production costs are calculated to be substantially lower than competitors'' in Asia or Europe.

Still, NPC says it doesn''t want to rock the boat. "We''re not interested in disturbing the market (by undercutting polymer prices)," says M. A. Zardbani, foreign commercial director of NPC''s marketing arm, Iran Petrochemical Commercial Co. (IPCC). NPC has decided to market the output in Asia, Africa, and Europe. The U.S. government forbids NPC imports into the U.S.

In Brief

Nordenia acquired

Flexible packaging processor Nordenia Intl. (Greven, Germany) has been acquired by financial investment company Oaktree Capital Management (Los Angeles, CA).

New lab lines

Brampton Engineering (Brampton, ON) is installing full-sized, nine- layer coextrusion and seven-layer, AquaFrost water-quenching blown-film lines at its lab facility to allow customers to run experimental multilayer film structures, says Philip Kwok, VP sales.

Kashima PP plant plans

Japan Polypropylene (Tokyo) has announced a plan to construct a 300,000 tonne/yr polypropylene plant in Kashima, plus close older plants, so that by April 2008 its PP capacity will rise from 1.08 million tonnes/yr to 1.25 million tonnes/yr.

mPPE expansion on deck in Singapore

This year Asahi Kasei Chemicals (Tokyo) and Mitsubishi Gas Chemical (MGC, Tokyo) will expand capacity for modified polyphenylene ether (mPPE) by 9000 tonnes/yr at their Singapore joint venture, taking overall capacity to 39,000 tonnes/yr.

Basell back in futures fold

Cites `encouraging'' signs, rejoins LME Polyolefins supplier Basell (Hoofddorp, Netherlands) decided in December to re-list itself as a participant producer on the London Metal Exchange (LME), marketer of plastics futures. "This initiative from Basell is consistent with our view that a shorter dated contract, a spot marker, is a vital ingredient for the LME''s plastics contract to work effectively," said Hans-Robert Schmidt, senior VP of Basell Polyolefins in Europe. "Now that the LME has indicated a willingness to finalize such a marker, we will actively renew our relationship with them once again."

The move is a 180-degree turnabout from the company''s stance last June when Basell resigned, before futures started trading, from the Plastics Committee (a group of 17 companies advising the LME) after it could not convince LME to propose a contract for plastics futures which qualified, in Basell''s view, to provide a risk-management tool that delivers an acceptable, meaningful service to the plastics industry.

Market observers at that time indicated that Basell and the other 16 members of the Plastics Committee were at odds over two issues: introduction of resin spot contracts and shelf life of polymer, both matters that Basell felt very strongly about.

These issues appear to have been settled. "Basell has been following the LME activity very closely over recent months and liquidity is growing slowly," said Schmidt. "We are optimistic that when the LME incorporates this spot price marker, a transformation of the plastics industry pricing structure will result." (More on the LME and plastics futures trading on p. 20)

Polimoon pads portfolio with another acquisition

Norwegian-based processor Polimoon (Oslo) appears prepared to consolidate much of the European plastics processing industry under its own power. Since its April 2005 listing on the Norwegian stock exchange, the processor-serving the automotive, packaging, medical and other industries via injection and blow molding, thermoforming and rotomolding operations throughout Europe-has made four acquisitions.

The latest, announced Jan. 10, is the rigid packaging business of Rosti (Farum, Denmark). The purchase includes five processing facilities in Neumünster, Witzenhausen, Görzke, Winsen (all Germany) and Glostrup, Denmark, and includes 290 employees. The price was not disclosed.

The five factories generate an annual turnover of approximately €40 million. Not included are two PET blowmolding facilities, one each in Germany and Sweden, belonging to Rosti. Following the acquisition, Polimoon Group will have combined sales of €380 million and employ 2740.

In mid-December 2005 Polimoon acquired injection molder Rim Tech, a 200-employee supplier to the automotive industry, for €5.8 million. Rim-Tech is located in Zlin, Czech Republic and had about €9 million in sales last year. On Nov. 28, 2005 Polimoon announced its acquisition of a 70% share in Polish rigid packaging processor Lima-Pol and will acquire the remaining 30% by 2008. Last June Polimoon bought consumer packaging processor Grabor Plastics (Suffolk, England).

Rosti''s rigid packaging operations process blowmolded and injection molded bottles, tubes and containers, especially for the household goods and personal care packaging segment, plus industrial packaging for chemical companies. According to Polimoon, profitability at the German operations is "satisfactory" while the Danish facility is unprofitable. Polimoon says it anticipates some costs will be incurred to restructure the Danish business. Polimoon already has two facilities in Denmark.

Following the divestment, the Rosti Group has 15 entities spread throughout Europe, North America, and China; 13 belong to the Technical Plastics Div., which Rosti says is its core division. Rosti expects its new facility in Suzhou, near Shanghai, to be operational by the end of 2006.

Davis-Standard divvies up businesses

Davis-Standard LLC (Pawcatuck, CT) will organize itself into separate converting and extrusion units. Its April 2005 merger with Black Clawson Converting Machinery, and August acquisition of Merritt Extruder Corp., boosted offerings in both markets.

The Converting Systems Group consists of cast-film, blown-film, palletizing, liquid-coating, blowmolding, extrusion-coating, and winding applications.

The Extrusion Systems group will encompass fiber; sheet; elastomer; wire and cable; lab and specialty; pipe; profile and tubing; recycle and reclaim; and compounding.

[ On the record ]

"We believe you about the money, but we are not interested in the savings. Frankly, we are embarrassed at how much money we make on these [private-label] products." Unidentified processor, from a Stress Engineering Services client report on rigid packaging for private-label brands.

"You can only throw so many new parts on an old car." Matthew Chaponi of Wittmann, on some processors'' hesitation to invest in new equipment.

"By 2010 my goal in Europe is €100 million sales, 1200 machines sold annually, and 10% market share." Yoshiharu Inaba, president and CEO of Fanuc, on targets for Fanuc''s new European JV.

"The worldwide trend by retailers to promote house brands and private labels is ensuring that the branded companies are looking to increase the value proposition to consumers in ways other than lower prices. This can be through new tastes, portion sizes, or packaging features." Ian Wilson, strategic development director at Amcor, in the firm''s annual report.

W&H granted GS safety mark for winder system

Windmöller & Hölscher (W&H, Lengerich, Germany) has been awarded a special safety certificate for the company''s Filmatic S film winder system from the Employers'' Liability Insurance Association (the German name is Berufsgenossenschaft Chemie) in Hamburg, Germany. According to W&H, this is the first film winder to receive this approval.

Since its introduction in 1977, the GS (Geprüfte Sicherheit or tested safety) has developed into an internationally recognized safety brand based on both the German equipment and product safety act as well as the EU Machinery Directive 98/37/EG. Validity of the GS certificate is for five years before the unit or its successor has to undergo safety testing again.

Herbert Fischer, head of W&H''s product development/extrusion equipment, believes the GS certificate offers more than the statutory CE marking from the EU, which is applied to products by the manufacturers themselves. He says the GS symbol is only applied after exacting, unbiased product safety evaluation.

Processor Gira wins technology applause

Market analyst firm Frost & Sullivan (London) has presented its Excellence in Technology of the Year Award to German processor Gira Giersiepen GmbH (Radevormwald). Gira was named one of MPW''s most notable 25 processors last year (March 2005 MPW). For more on Gira, see As I See It on p. 18.

Demag takes reigns in China; Helmar Franz at Haitian

In January injection molding machine maker Demag Plastics Group (Schwaig, Germany) made official its takeover of the 40% share owned by Ningbo Haitian in the two firm''s former Ningbo, China-based joint venture Demag Haitian Plastics Machinery Ltd. Demag now will run the company as Demag Plastics Machinery (Ningbo) Co. Ltd. Financial terms were not disclosed. The JV was formed in 1998.

Haitian''s increased emphasis on exports was a key reason for the change. Demag Plastics Machinery (Ningbo) Co. Ltd.''s product range comprises the Dragon machine series with clamping forces of between 500 and 2000 kN.

In related news, former Demag Plastics Group CEO Helmar Franz last month officially joined the board at Ningbo Haitian (Ningbo, China) and serves as executive VP, responsible for strategic business development. Franz left DPG last March and now lives in Ningbo.

Franz already is well familiar with Haitian; he was managing director of DPG''s manufacturing plant for small machines in Wiehe, Germany in 1998 when DPG and Haitian formed their joint venture to manufacture horizontal injection molding machines in China.

Quadrant lands new award

A glass-mat thermoplastic-composite pedestrian beam was named best part in the new Safety category during the Society of Plastics Engineers award ceremony. Accepting the award were representatives from Volkswagen, Tier One supplier and processor AKsys GmbH (Worms, Germany), and Quadrant, the material supplier.

Volkswagen has already adopted the part, including 100,000 annual build for its Bora vehicle; 46,000/yr for the Golf GTI; and 220,000/yr for the Golf Plus. The compression molded GMT carrier adds stiffness by mounting an extra carrier below the existing bumper beam and reducing weight and costs relative to existing metal solutions.

Marvelly returns to lead Battenfeld Gloucester

Brian Marvelly is now president and CEO at Battenfeld Gloucester Engineering Co. Inc., the Gloucester, MA-based manufacturer of plastics extrusion equipment and web converting machinery. Marvelly returns to the position he held until last April, when he accepted a consulting position within the SMS Group. SMS (Düsseldorf, Germany) is the parent firm of the SMS Plastics Technology group of companies that includes Battenfeld Gloucester.

Kurt Schneider, who replaced Marvelly last April, has left the firm.

Tyco sells plastics business

Tyco International (Pembruke, Bermuda) announced the sale of its plastics, adhesives, and coated products to private investment firm Apollo Management for $975 million. The conglomerate''s A&E Products Group, which includes garment hangers, wasn''t included in the sale.

The sold unit is composed of 43 manufacturing sites in five countries and has 7100 employees making trash bags, stretch film, plastic sheeting, and duct tape. Tyco estimates its 2005 revenue at $1.7 billion. Tyco Communications VP Gwen Fisher told MPW that the unit has 21 processing facilities in the U.S., primarily handling film extrusion.

Titan expands PE presence

Polyolefins supplier Titan Chemicals (Kuala Lumpur, Malaysia) will acquire leading Indonesian polyethylene producer PT Petrokimia Nusantara Interindo (PT PENI; Jakarta) for $23 million. The Indonesian firm has 450,000 tonnes/yr of capacity for HDPE and LLDPE in Cilegon, Banten Province. The deal is expected to improve the competitiveness of PT PENI, which currently relies on imported ethylene feedstock. Titan will be able to provide it with competitive feedstock from its complex in Pasir Gudang on the Southern tip of the Malaysian peninsula.

Said Titan Chemicals'' Managing Director Donald Condon Jr., "Our current production capacity is sold out. This acquisition will increase the polyolefins capacity of Titan Chemicals by close to 50% and make it the largest polyolefins producer in Southeast Asia."

Titan Chemicals was already a major polyolefins player in the Southeast Asian region, with 370,000 tonnes/yr of capacity for PP and 530,000 tonnes/yr of capacity for PE.

Fanuc sets lofty goals in Europe

Like the Japanese and North American markets before it, the European injection molding market is shifting from hydraulically to electrically powered machines, according to officials at Japanese molding machine maker Fanuc (Yamanashi Prefecture). Fanuc in December revitalized its European marketing effort by forming a 50/50 joint venture, Fanuc Robotshot Europe GmbH (Neuhausen, Germany), with its longtime European sales agent, Mitsui Machine Tool. Fanuc had handled services; now both sales and services fall under the JV''s responsibility.

Yoshiharu Inaba, president and CEO of Fanuc, identified packaging, automotive and medical as markets he intends to penetrate. Fanuc in 2005 sold 208 machines, about 2% of the market, but Inaba has a goal of 10% market share by 2010. Cumulative Fanuc Roboshot sales into Europe are 1218 machines since 1994.

Degussa in Taiwanese acrylic JV

Degussa (Düsseldorf) and Forhouse (Taichung, Taiwan) will establish a joint venture for manufacturing polymethyl methacrylate (PMMA) molding compounds. Degussa will hold a 51% stake, and Forhouse 49% in the JV, which will build a 40,000-tonne/yr plant in Taichung for manufacturing optical-grade PMMA molding compounds for applications in display technology.

Forhouse, a leading manufacturer of lighting modules for flat-screen monitors, has pursued a strategy of backward integration, first through a facility for making extruded optical-grade sheet material and now through its plan to produce molding compounds.

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