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Extracts from Nandini Chemical Journal, Dec 2009

Natural indigo|Bioethanol feedstock|NELP|Floating LNG plants|Lithium
Highlights of Some of the Articles

TALK OF THE MONTH - CAPACITY CREATION VERSUS DEMAND CREATION IN GLOBAL CHEMICAL PROJECTS
CHEMICAL INDUSTRY IN SRI LANKA - AWAITING EXPLOITATION
NATURAL INDIGO - UNEXPLOITED AGRO CHEMICAL OPPORTUNITY
BIOETHANOL FROM FEED STOCKS - TECHNOLOGY DEVELOPMENT EFFORTS
INDIA’S NELP PROGRAMME
UPCOMING FLOATING LNG PLANTS
GLOBAL LITHIUM SCENARIO - LITHIUM BATTERIES DRIVING DEMAND
PECTIN – INVESTMENT OPPORTUNITY
FOCUS ON OMEGA-3 FATTY ACIDS
POTENTIAL FOR ORGANIC TEA CULTIVATION IN INDIA
OTHER FEATURES
OTHER ARTICLES

TALK OF THE MONTH

CAPACITY CREATION VERSUS DEMAND CREATION
IN GLOBAL CHEMICAL PROJECTS

In the recent times, there have been a number of reports about falling demand for chemical products across the world, which is attributed to the so called global melt down. While it is true that there have been some sort of global recession due to variety of reasons, it is debatable as to whether there have been real fall in the overall demand for chemical products or only decline in growth rate in demand that has upset the demand growth expectations of newly created projects.

However, globally quite a number of companies have closed down chemical plants permanently in the last one or two years. Some plants have been temporarily closed until the demand would pick up to the desired level.

A number of new projects that have been closed and new projects that have been set up during the period August to October 2009 are given below which is revealing.(Courtesy:ICIS Chemical Business )

New Projects Index: 75

North America

9.3%

Latin America

4%

Europe Including Russia & the CIS

13.3%

Asia Pacific

66.7%

Middle East & Africa

6.7%

Plant Shutdowns Index: 27

North America

22.2%

Latin America

3.7%

Europe Including Russia & the CIS

59.3%

Asia Pacific

14.8%

While viewing the above figures, it has to be kept in view that such closures have been largely taking place only in some regions in the world particularly in Europe and North America. The country like India has not seen such large closure of chemical projects due to any distinct fall in demand.

Even as some chemical plants have been closed down in some parts of the world, we find that the capacities are being created for the same products in other parts of the world, particularly in China and for petrochemical projects in Middle East countries.

It appears to be a fact that there have been some sort of over capacity creation for chemicals and petrochemicals particularly in China and for petrochemicals in Middle East countries which have upset the global demand supply balance to some extent and which have created the situation that available production capacity is considerably more than the demand level for a number of bulk chemicals.

Over enthusiastic capacity creation in China and Middle East countries appear to be leading to such situation.

Investment rush in Middle East

The case of Middle East countries is particularly peculiar as it commands advantageous crude oil/natural gas supply scenario to some extent without having regional market for derivative products. Therefore, the projects in Middle East have to necessarily focus on the market in developed countries and Asia and Africa. In their anxiety to utilize the available petroleum feedstock resources to create capacities and to utilize the “oil money”, the countries in Middle East appear to be conveniently over estimating the demand growth potential in Asia and African countries, where they  predominantly target the market.

Capacity creation in China

In the case of China, the capacity creation cannot be viewed in the same way as one would view the capacity creation in Middle East countries, since China has huge domestic demand base which is not fully realized as of now but nevertheless provide attractive potential demand in the long run .

However, in China, there seem to be some sort of over enthusiastic capacity creation in recent years, with sustained support and encouragement for investment provided by several provincial governments. This has lead to the closure of several units in China in recent time, which are technically and economically not adequately competitive in the crowded global market.

Probably, one may say that there is some level of wastage of resources in China due to such closures.

The following recent report about the coal to chemical projects in China is indicative of the situation in China.

“China will stop approving coal-to-chemical projects for three years and restructure existing plants, in an effort to curb overcapacity and protect the environment, a report by the country’s official Xinhua news agency says.

The report cites a document issued by China’s State Council. China will not allow new, modern coal chemical demonstration projects and in principle, will stop approving coke and calcium carbide production capacity expansion projects and accelerate eliminating obsolete production capacity in the next three years.

Coal-to-chemicals capacity in China is “30% more than required” and plant utilization is only 40%, the report says. The report further says that the coal-mining regions of China have developed chemical capacity “blindly” in recent years “in pursuit of fast economic development, regardless of environmental damage and the strain on China’s water resources.” The Chinese government cancelled a coal-to-olefins project by Shaanxi XinXing Coal and Olefins at Yulin, China and postponed until 2016 a coal-to-olefins joint venture involving Dow Chemical, also at Yulin”.

Predicament of multinational companies

It is a different issue that most of the chemical projects in Middle East countries and China have been set up with engineering and technological support from the multinational organizations based in Europe and USA and there have been equity participation in such projects to some extent from these regions.

Obviously, petrochemical projects based in Europe and America find that they are not any more able to compete with several projects in the Middle East countries and China for global market share, due to their lack of petrochemical feedstock advantage, higher cost level of operations, inadequate regional demand base and ecological compulsions.

Therefore, multinational companies based in Europe and USA seem to think that it would be better for them to take part in the spate of investments in the Middle East countries and China and make whatever gain in the process for themselves, instead of missing the bus.

Need for capacity rationalization

Viewing the overall global chemical project scenario, some sort of rationalization of capacity is certainly called for in the case of quite a few bulk chemical projects.

There have to be a halt for capacity creation in some projects for some time.

Obviously, the chemical projects have to become more intensive rather than expansive in the next two or three years. This gives great opportunity for the creators of technology rather than the buyers of technology.

CHEMICAL INDUSTRY IN SRI LANKA AWAITING EXPLOITATION

After tumultous period of unrest and violence due to militant activities ,  Sri Lanka is now looking forward to time of peace and growth and progress.

Obviously, the Government of Sri Lanka as well as Sri Lankan and international investors should cease this opportunity to identify the appropriate areas of investment in Sri Lanka and implement projects with time bound action plans in tune with the global trends and scenario.

While Sri Lanka has many advantages in terms of natural resources such as rubber and tea plantations and mineral resources such as ilmenite deposits, careful strategic plans have to be devised to develop and exploit these resources by converting them into profitable finished products and get value additions.

So far, Sri Lanka has been exporting several of its natural products and deposits without value addition and in the process has been losing investment and economic growth opportunities for the country. Such scenario cannot any more be justified, since Sri Lanka has no reasons for not doing so after the end of the militancy and ushering in of the period of normalcy now.

Sri Lanka may lack technological expertise and resources at present for exploiting its several natural resources and for making investments in viable chemical and agro chemical projects. But, the initiation of skilful policy measures and schemes by the Sri Lankan government can attract massive investments from the technologically developed countries and multi national companies, who can bring forth the technological inputs and investments for mutual benefits.

Sri Lanka can take clue from the growth strategies and programmes of the Government of Singapore, where the availability of natural resources are less than that of Sri Lanka and the size and population of Singapore is also much less compared to Sri Lanka. Many chemical projects of high technological standards have been set up in Singapore in recent times like huge petro chemical complex and several products like poly carbonate, poly vinyl alcohol etc. which are not produced even by larger country like India.

Singapore has encouraged investments in bio technological and bio pharmaceutical field in a big way by attracting several multi national companies. While Singapore does not have any worthwhile market, the massive chemical projects are planned in Singapore with international market in view. Sri Lankan government can certainly do whatever the Singapore government has done and even may do better in view of the several natural advantages that Sri Lanka has, as compared to Singapore.

Several chemical investment opportunities in Sri Lanka can readily be cited. For example, with the availability of ilmenite mineral deposits of fairly good quality standards, a large titanium complex can be set up in Sri Lanka that would involve the production of synthetic rutile, titanium dioxide pigment, titanium metal etc. which are ilemenite based products. The global demand for titanium dioxide is around 4 million tonnes per annum and it is increasing steadily at 4% per annum in the world. Titanium dioxide is a very valuable pigment that is extensively used in the production of paint, ink , plastics and several other products. Many companies produce titanium dioxide in the world even though there is no ilmenite deposits in the country, by importing the requirement of ilmenite. Singapore is an immediate example. Titanium metal, which is a strategic metal used extensively in aircrafts, defence, chemical projects etc. is another important product that can be made from ilmentie deposits.

Another great investment opportunity for Sri Lanka is the chemicals that can be produced from tea. Green tea poly phenol is a very significant product made from green tea that has important nutraceutical applications and whose demand is growing up at impressive rate in the global market.

Caffeine is another important chemical from tea waste. Such products can be produced in Sri Lanka with great advantages and would significantly contribute to the improvement in the economy of tea plantations.

There is an activated carbon project from coconut shell which is already operating in Sri Lanka. But, opportunities exist for more capacity creation for activated carbon and several other value added nutraceutical products from coconut can be produced in elegant manner.

Sri Lanka should also actively consider setting up a petro chemical complex with big investment from multi national companies that would pave way for production of several down stream petro chemical products and polymers and additives, which would open up huge employment avenues and demand for skilled jobs.

While the above opportunities have been stated as examples , many other growth avenues exist in the field of chemical industries particularly in food processing, bio technology and bio pharmaceutical sector.

Sri Lankan government should consider creating separate zones for research and development activities, where several multi national companies would show interests in investments due to the comparatively lower operating costs in Sri Lanka . Such research and development centres would strengthen the much needed technological base in Sri Lanka considerably in the long run.

Sri Lanka has to take urgent steps to create at least one technological educational institution of international standards.

NATURAL INDIGO UNEXPLOITED AGRO CHEMICAL OPPORTUNITY

Natural indigo plantation, a drought resistant crop, which provides indigo blue dye for textile application was known in India for over 400 years.

Natural indigo was extensively cultivated in India in the 19th century and early part of 20th century. The natural indigo was cultivated in thousands of acres in the country and huge quantity was exported by the East India company and later on by British traders to Europe for use in cotton dyeing.

The indigo crop provided livelihood to thousands of farmers as a profitable crop in Bihar, Uttar Pradesh, Gujarat, Madhya Pradesh, Andhra Pradesh and Tamil Nadu.

This article further discusses the Indian and global scenario for Natural indigo.

BIOETHANOL FROM FEED STOCKS - TECHNOLOGY DEVELOPMENT EFFORTS

TMO Renewables (Guildford, UK), has developed a process to convert at least 25 different biofeed stocks into ethanol.

The company has successfully tested feedstocks including corn stover, municipal waste, used newsprint, and wheat straw at the company’s Guildford demonstration facility.

The firm’s process is based on a thermophilc geobacillus bacterium with the capability to digest a wide range of materials. The bacterium is commonly found in compost environments.

This article discusses the following

  • Process outline
  • Advantages of the process developed
INDIA’S NELP PROGRAMME

The New Exploration Licensing Policy (NELP), approved in 1997 and launched two years later, helped kick off a major exploration programme in India.

The current licensing round, NELP VIII, puts 70 blocks up for exploration and production: 24 in water depths greater than 400m, 28 in shallow water and 18 onshore.

By the end of 1st quarter of 2009, the NELP programme had attracted exploration investment commitments of about $10 billion and increased India’s acreage under licence fourfold.

This article further discusses the following

  • India’s offshore production
  • Programme NELP VIII
  • Participating companies and operators
UPCOMING FLOATING LNG PLANTS

Following hard on the heels of the floating LNG (FLNG)) deal struck by Petronas, MISC and Mustang Engineering, a number of other oil & gas industry players have been busy raising their profile in what is seen as a potentially huge floating LNG market with particular significance for the Asia-Pacific region.

GLOBAL LITHIUM SCENARIO LITHIUM BATTERIES DRIVING DEMAND

Lithium stores a large amount of energy for its volume, which makes it suitable for application in electronic industry.

In a mobile phone or PDA, there is about one-tenth of an ounce (0.284g) of lithium in the battery. But hybrid electric vehicles batteries are projected to contain about 20lbs (9kg) of lithium.

Lithium sells for roughly $1 per kg.

This article discusses the following

  • Global lithium reserves
  • Lithium producing countries
  • Project plan in Bolivia
  • Major producers
  • Thrust area for demand
  • Other application areas
  • Demand growth
  • Global demand
  • Lithium demand pattern by end user market 2009
  • Global lithium market share
  • Supply scenario
  • Global production
  • Production process
  • Production from continental brines
  • Development project in China
PECTIN – INVESTMENT OPPORTUNITY

extraction.

Pectin consists primarily of a chain of galacturonic acid units linked by bonds. The galacturonic acid chain is partially esterified as methyl esters.

This article discusses the following

  • Product characteristics
  • Grades
  • Applications
  • Application sectors
  • Import
  • Export
  • Indian manufacturers
  • Indian demand
  • Constraints facing the Indian pectin industry
  • Raw material
  • Process
  • Process steps
  • process flow
  • Global pattern of raw materials used for pectin production
  • Global scenario
  • Production
  • Growth
  • Global market for pectin
  • Major global producers
  • Market share of major global players
  • Prognosis
FOCUS ON OMEGA-3 FATTY ACIDS

Scientific studies report that omega-3 fatty acids are beneficial to heart, joint and brain health and for cognitive functioning and developments, especially for infants and children.

Recent studies tentatively support the use of omega-3 fatty acids in treating depression, therapeutic management of autism, preventing age-related blindness and decreasing the risk of prostate cancer.

Next to probiotics, omega-3 is sought after functional ingredient right now and it is successful in both dietary supplements and fortified/functional products.

This article further discusses the following

  • Omega-3 as antidepressants
  • Types
  • Market size
  • Regulatory issues
  • Producers
  • Issues
  • Starting material
  • Fish oils
  • Algal oils
  • Plant oils
  • Demand driver
  • Efforts to improve omega-3 content in plants
  • Development efforts for omega-3 from pig
  • Formulation producers
  • Patent dispute
POTENTIAL FOR ORGANIC TEA CULTIVATION IN INDIA

Organic tea farming, which had been identified as a major growth sector during the Tenth Five Year Plan, continues to be in focus and is viewed as a segment with high potential that is expected to boost agricultural growth during the current Plan period as well.

The high return of almost twice the price of conventional tea is the price incentive to the farmer and the planter to convert their holdings into organic teas.

However, a sharp fall in production and productivity is often pointed out as the major constraint before small and large holders who want to convert their holding into organic tea plantations. Yields have been reported to fall by 10 per cent in the first year of conversion and by 20,30 and 40 percent in the succeeding years.

But in the following years, yields have reportedly gained by 20 per cent, a study by UPASI Regional Centre and Tea research Centre.

This article further discusses the various issues facing the organic tea industry.

OTHER FEATURES

SAFETY AND ACCIDENT PAGE

Following safety and accident details are discussed:

  • China Mining Disaster Raises Questions
  • HCFC leaks in USA
  • Fire in oil depot in Jaipur in India
  • Radiation leak at Kaiga nuclear power unit in India

PLANT CLOSURES

The article discusses the plans for closure of selected units by the following players

  • Clariant shuts master batch plants
  • Ineos Nova idles Texas city styrene monomer plant
  • BASF to close maleic anhydride facility in Belgium
  • LyondellBasell abandons Chocolate Bayou Olefins unit

ANTI DUMPING PAGE

The antidumping measures introduced in  the various countries in the last few weeks on the following products are discussed:

  • Caustic soda
  • PVC Paste resin
  • Soda ash
  • Silk
  • GPCA slams antidumping procedures against Mideast Petchem Exports
  • Saccharin
  • Adipic acid
  • Coated papers import
  • LAB
  • PET Film
  • Sodium nitrate

TECHNOLOGY OPPORTUNITIES IN COAL FIRED POWER PLANTS

This article contains the following :

  • Use of super critical technology
  • Coal combustion
  • Oxy firing

NEWS ROUND UP

The recent developments on the following products/events are discussed:

INTERNATIONAL

  • PVDF
  • Waste to bioethanol
  • Nonbiodegradable bag ban in Buenos Aires
  • Bioethanol study in UK from household waste
  • PVC Complex in Iran
  • Total in French biodiesel programme

INDIA

  • Plastic industries oppose ban on multi layered pouches
  • Molasses export ban in UP
  • Government of India plans polymer bank notes
  • Fertilizer subsidy policy

CHINA NEWS

The recent developments on the following products/events are updated :

  • COAL BED METHANE PROJECTS IN CHINA
  • New environmentally friendly polymer dispersion
  • Degradable plastic
  • Fumed silica
  • Dupont licenses VAM
  • Methanol
  • Collaboration in phenol and EPDM
  • Lime sulphur project
  • Gas phase silicon dioxide
  • Carbon black
  • Production and use of DME China
  • Praxair metals technology makes debut in China
  • Aliphatic isocyanates production
  • Thin film photovoltaic production facility in China

TECHNOLOGY DEVELOPMENTS

The recent developments on the following technology efforts are highlighted

INTERNATIONAL

  • Phosgene-free route to polycarbonate
  • Carbon capture project
  • Eco-friendly technology for chlorine production
  • Algae based resin
  • Bio-engineered poly lactic acid (PLA)
  • GEM mineralogy for exploration of crude oil formations
  • New blue pigment
  • Plants to produce plastics
  • PFOA substitute

AGROCHEMICAL PAGE

The recent developments on the following products/events are discussed:

  • Development of agri-bio inputs for brinjal
  • Carbofuran

PHARMA PAGE

The recent developments on the following products/events are discussed:

  • Fake Chinese Drugs In India
  • Biosimilars
  • Trials on botanical drug to combat HIV
  • Developing body tissue

ENERGY PAGE

The recent developments on the following products/events are discussed:

  • Geothermal Energy Project In Canadian University
  • Biomass projects in Haryana
  • Rooftop solar photovoltaic (SPV) systems

ENVIRONMENTAL PAGE

The recent developments on the following products/events are discussed:

  • ACC, India uses municipal waste to fire its kilns
  • Bisphenol A

PRICE DETAILS - INTERNATIONAL

Global price trends on the following products are provided :

  • Polyethylene
  • Monoethylene glycol
  • Per chloro ethylene
  • Benzene
  • Toluene diisocyanate (TDI)
  • Paraxylene
  • Polyethylene Terephthalate (PET)
  • Paraffin wax
  • Spot bulk chemical prices
OTHER ARTICLES
  • Indian Paper Industry Facing Difficult Time
  • Paper Industry Looks To Copier Segment For Growth
  • Ayurvedic Drugs To Come Under Quality Net
  • Probiotic Food Likely To Come Under Clinical Trial Ambit
  • Proposed New Guidelines For Pro-Biotic Food Products
  • Issues Relating To Trans Fat Content In Vanaspati
  • Total In French Biodiesel Programme
  • Tender
  • New Projects-International
  • Chemicals imported at the Chennai port during the month Of October 2009
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