Asian GCC demand forecast to grow by at least 5% per annum

F O C U S ICIS made no such deduction in respect of the 2006 figures. The approach by ‘CW’ shows greater consistency in respect of Bayer, but it takes into account sales for the Crop Protection and Materials segments only. ‘CW’ ranks Bayer in 10th place for 2006, with sales of $23.0 bn and in 11th place for 2007, with sales of $23.7 bn. Bayer hived off its pigments business, as well as most of its inorganic chemical activities, creating Lanxess in July 2004. Lanxess is now one of the world’s top 40 chemical companies, with sales revenues of $9.7 bn for 2007. After BASF, Mitsubishi Chemical is the next largest chemical company with some involvement in the pigments industry, as the owner of three carbon black plants in Japan. Next comes DuPont, the world’s largest TiO2 pigment producer. In fact, TiO2 pigments represented about 7% of DuPont’s total chemical sales revenue for 2007. Evonik (formerly Degussa) – the world’ s 14th largest chemical company – is second only to Cabot as the world’s largest carbon black producer, as well as being a leading supplier of precipitated silica. DIC (formerly known as Dainippon Inks & Chemicals), one of the four major global organic pigment suppliers and by far the world’s largest manufacturer of printing inks, has climbed to a place among the top 30 chemical companies. Huntsman’s deliberate downsizing has meant that it experienced a steeper descent in the rankings than any other company – from 21st in 2006 to 40th in 2007. The company sold virtually all its petrochemical and polyolefin assets, including those acquired from ICI in 1999, though it has retained ownership of the global polyurethane and TiO2 pigment businesses. Offsetting these disposals, Huntsman acquired the Textile Effects business of Ciba in June 2006, including dyes and colorants as well as specific chemical products designed to enhance the performance characteristics of textiles. Other companies that appear in this list of the top 100 chemical companies and are involved in pigments manufacture include: Merck (effect pigments); Clariant (organic pigments); Kemira (TiO2); and Cabot (carbon black). Some major pigment consumers, making paint or plastics masterbatch, also appear in the list.

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Indeed, paint sales make a substantial contribution to the revenues of: BASF, DuPont, AkzoNobel, PPG, SherwinWilliams, Orica, RPM and Valspar. Plastics masterbatch sales make a substantial contribution to the revenues of: BASF, Clariant, PolyOne and Cabot. As a result of the BASF acquisition, Ciba’s name will not appear in the 2008 list of the top 100 chemical companies. Nor will the name of Rohm & Haas, which is about to be acquired by Dow Chemical. After considerable delays and acrimonious discussions, it now seems that Apollo (the private equity fund) will complete the long-heralded acquisition of Huntsman early next year. (See also ‘Focus on Pigments’, May 2008, 5). Huntsman will then be merged with Apollo’s existing subsidiary, Hexion, so the name of Huntsman will also disappear from the list. Various pundits have suggested various companies on the 2007 list that might be takeover candidates, Clariant being a name that crops up frequently in this context. In an interview for the ‘Financial Times’ (Ref 1), Mr Jürg Wittmer (Chairman of Clariant) addressed this possibility. He said: “It is very clear that this (chemical) industry is going to consolidate further. There’s no question about it. And we are going to be part of it. The question is, do we do this as a possible victim or as a credible player that can actively participate?” With a view to improving its credibility as an independent survivor, Clariant recently replaced its Chief Executive – Mr Hariolf Kottmann, taking over from Mr Jan Secher. According to Mr Wittmer, “This guy is exceptional. He has one of the broadest speciality chemical backgrounds I know. You don’t act just to please the market. You do what you think is right for the long term. It is not necessarily popular, but we’re not here to win popularity. You have to prepare yourself in the best way for a difficult future. The focus now is to fix this house once and for all. In order to do that, you have to have the right team. I really believe the fundamental strengths of Clariant have always been undersold. For us, the story is about creating perspectives now.” Reg Adams 1) Financial Times, 5 Nov 2008, (Website: http://www.ft.com)

MARKETS US to maintain anti-dumping duties on Indian & Chinese carbazole violet Imports of carbazole violet, known as Pigment Violet 23, from certain named Indian and Chinese suppliers have been subject to anti-dumping duties imposed by the US Department of Commerce (USDC) for several years. They were originally imposed following an investigation into carbazole violet pricing that stemmed from complaints filed in November 2003 by Nation Ford Chemical and Sun Chemical. (See ‘Focus on Pigments’, May 2007, 3 & Jan 2008, 3 & May 2008, 5). On 31 December 2007, Nation Ford and Sun Chemical requested that the USDC carry out another administrative review of the carbazole violet market. The review was duly carried out, covering the period from 1 December 2006 through to 30 November 2007. The USDC has now published its preliminary findings and is inviting comments from interested parties, with a promise to issue its final report by early March 2009. Alpanil Industries and Pidilite Industries (both of India) were found to have made sales of carbazole violet “below normal value.” There were 14 Chinese companies named for the investigation, including: Aesthetic Colortech (Shanghai) Co Ltd, Anhui Worldbest IE Co Ltd, Cidic Co Ltd, Nantong Haidi Chemical Co Ltd, Tianjin Hanchem International Trading Co Ltd and Trust Chem Co Ltd. However, the USDC declared: “Eleven of these companies failed to cooperate by not acting to the best of their ability to comply with the requests for information and should therefore be assigned an antidumping duty rate based on adverse facts available.” Federal Register, 8 Sep 2008, 73 (174), 52007-52015 (Website: http://www.gpoaccess.gov/fr/advanced.html)

Asian GCC demand forecast to grow by at least 5% per annum In an 8-page review of the ground calcium carbonate (GCC) industry in Asia, Mr Ian Wilson notes that this year for the first time Asia will become the world’s largest region for GCC

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FOCUS production and consumption, overtaking North America and Western Europe. For 2007, GCC production in Asia was 21.3 M tonnes – roughly the same as in Western Europe and about 3% lower than in North America. Total world GCC production was 73.4 M tonnes for 2007. Asia’s GCC production consisted of: 12 M tonnes in China; 2.3 M tonnes in Japan; 1.9 M tonnes in South Korea; 1.3 M tonnes each in Taiwan and Thailand; 0.8 M tonnes in Indonesia; 0.6 M tonnes each in India and Malaysia; and 0.2 M tonnes in Vietnam. Asia’s GCC consumption more or less balanced production, at 21 M tonnes for 2007. By end-use sector, this total breaks down as: 39% for paper, 35% for plastics, 10% for paint, 6% for rubber, 6% for sealants, and 4% for sundry other applications. Asia: GCC Demand, by End-use (2007) Paper Plastics Total (tonnes) Total (percent) China India Indonesia Japan Korea, South Malaysia Taiwan Thailand Vietnam

8.20 M 100%

7.35 M 100%

50% 4% 7% 15% 12% 2% 3% 6% 1%

58% 2% 3% 7% 9% 2% 11% 7% 1%

As in the US and Western Europe, Omya and Imerys are the leading producers of GCC in Asia, but they do not exert the same degree of market dominance. Omya has a 69% market share in Western Europe and a 22% market share in the US, but its share of the Asian market is only 14%. Imerys has a 22% market share in the US and a 9% market share in Western Europe, but its share of the Asian market is only 8%. In the league of major Asian GCC suppliers behind Omya (with regional capacity of 3 M tonnes/y from operations in eight different Asian countries) and Imerys (with regional capacity of 1.7 M tonnes/y, also derived from operations in eight different Asian countries) come: Asia Pulp & Paper (APP, headquartered in Singapore), Fimatec (of Japan), Chenming Paper (of China) and Formosa Plastics (of Taiwan). APP already has GCC

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satellite plants based at paper mills in China and Indonesia, providing 1 M tonnes/y of capacity. Next year, its capacity will be raised to 1.5 M tonnes/y thanks to the commissioning of a new facility on Hainan Island (southern China). The future for the GCC industry in Asia is bright. Mr Wilson points out that printed and writing paper production in this region is forecast to increase at 4-5% per annum over the next five years. In fact, 70% of the increment in world printing and writing paper demand will be accounted for by Asia. He notes: “This is good news for GCC, because pigment loadings are increasing in coated woodfree papers. GCC is now the major papercoating pigment, with the threat from PCC not being fully realised to date. In fact, the emphasis is on carbonate blends in certain types of paper. The search for new marble deposits (for raw material to make GCC) is continuing and in the next decade it is anticipated that high-quality marble will be supplied from North Korea, where there are large deposits near to sea-ports. Japan already imports significant volumes of marble for its requirements, replacing local marble at a competitive price. The development of the paper industry in India will depend on the discovery of new local deposits and on the economics of importing lumps and chippings from Malaysia and Vietnam. China will continue to show strong growth in the GCC sector, based on large resources of high-quality marble and the installation of more satellite GCC plants at paper mills.” Industrial Minerals, Sep 2008, (492), 54-65

Cheap SiCl4 feedstock could boost China’s fumed silica output Fumed silica (aka “gaseous-process silica white”) is increasingly popular as a functional filler in China for applications in rubber, plastic, paint, ink, paper, cosmetics, food and pharmaceuticals. Small-scale local production began in China during the 1960s, but the industry has been strengthened in recent years by foreign direct investment. Cabot’s 90:10 joint venture with China National Bluestar established a 4800 tonnes/y fumed silica plant at Jiujang (Jiangxi province) in 2006. The

partners are now building a 7000 tonnes/y plant at Tianjin, which is due to come on-stream in mid-2010. (See ‘Focus on Pigments’, Sep 2006, 3 & Oct 2008, 5). Tokuyama (of Japan) began production at a 5000 tonnes/y fumed silica plant at Jiashan (Zhejiang province) in early 2007. (See ‘Focus on Pigments’, May 2005, 4). China’s total fumed silica capacity currently stands at 14,500 tonnes/y, with Chinese-owned companies contributing just over 5000 tonnes/y. Three of these companies are planning expansions. Shenyang Chemical intends to raise its capacity to 5000 tonnes/y by 2010. Shanghai Chloralkali intends to raise its capacity to 2000 tonnes/y. Guangzhou GBS HiTech & Industry Co (an existing small-scale producer) has commenced construction of a new 5000 tonnes/y fumed silica plant in Zhejiang province, which is being jointly funded by Zhejiang Xinan Chemical. Imports of fumed silica into China increased from 11,400 tonnes in 2006 to 12,300 tonnes in 2007. Data on actual production is not available, but it was almost certainly more than 10,000 tonnes, so that the country’s fumed silica consumption comfortably exceeded 20,000 tonnes. The main end-use for fumed silica is as a functional filler for silicone rubber. In this application, it is generally regarded as preferable to precipitated silica on technical merit, but the relative price of fumed silica remains high. About 85% of China’s silicone rubber demand is currently accounted for by just three provinces – Guangdong, Jiangsu and Zhejiang. About a dozen large silicone monomer plants are currently being built in China and their completion will presage a steep reduction in the prices of siloxane and silicone rubbers. This will facilitate a rapid rise in demand for silicone rubber, substituting for other synthetic rubbers and for natural rubber. If fumed silica is going to realise the huge market potential opening up in the silicone rubber sector, it will be essential to bring the price down. One factor that may help here is the potential for reducing the cost of silicon tetrachloride, which is the key feedstock for fumed silica manufacture. SiCl4 is an important by-product generated during the manufacture of polycrystalline silicon by the popular

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