Terephthalic Acid Output
Mitsubishi Chemical Corp will withdraw from terephthalic acid production in Japan in December 2010, due to difficulty turning around the loss-making business due to the continued decline in domestic demand. The company will also halt output of paraxylene, the raw material for terephthalic acid, used in making polyester clothing and plastic bottles, at its Mizushima plant in May 2010.
Fine for Cartel
The Japan Fair Trade Commission ordered Sekisui Chemical Co. and Mitsubishi Plastics Inc. to pay a total of 11.7 billion yen in fines for forming a cartel over the sale of vinyl chloride pipes between 2004 to 2006. The two companies have not yet decided whether to comply with the order.
According to industry experts, China's upcoming stimulus package for the petrochemical sector will likely focus on oil refining and chemical industries, while oil and gas exploration will not be touched upon. The package will most likely be dedicated to the overall development of the sector in the next three years, with emphasis on industrial restructuring and optimization of product mix. For the chemical industry, it is predicted that the stimulus package will stress the adjustment and upgrading of industrial structure, support development of high-end chemical products, and encourage manufacturers to make high-tech and high-value-added products which could replace imports.
50 Percent Interest
The Abu Dhabi National Energy Company PJSC (Taqa) has purchased a 50 percent equity stake in the Caribbean portfolio of Marubeni Corporation, Japan's largest trading company, for an undisclosed sum. Taqa's role will be operational, with its 50 percent interest represented at the board level at each facility and holding key management positions. The transaction is expected to close by the end of the first quarter 2009, subject to regulatory approvals.
International Petroleum Investment Co. (IPIC) is taking over Nova Chemicals Corp. in a friendly deal worth $2.3 billion. IPIC will assume Nova's debt. Nova had been exploring alternatives for a number of months and the IPIC agreement was assessed to be the best alternative. IPIC has been familiar with Nova's business for a long time, and sees the acquisition as a good fit for its portfolio, which includes operations in Europe, the Middle East and Asia. Under the deal, IPIC has agreed to provide a $250-million credit backstop facility to give Nova sufficient liquidity going forward. Nova will remain an independent chemicals and plastics company with its current senior management team staying in place.
Saudi Basic Industries Corporation will freeze all increments, promotions and bonuses for more than half of its 31,000 employees this year to maximize its cash flow in light of the economy. The company’s goal is to maximize its cash flow. Workers at SABIC Innovative Plastics and SABIC Europe will not be affected because they have already been subject to a similar move.