Sustainability Along The Supply Chain

Recently, The Chemical Company’s (TCC) President, Robb Roach as well as TCC’s Vice President of Business Development, Ray Altenburger were interviewed by ICIS (Independent Chemical Information Service), a business unit of Reed Business Information.

Roach and Altenburger were chosen to discuss TCC’s core business practices, industry influence and our environmentally conscious protocol.

Click here to view the official article in PDF form or read the official article re-posted below:


Sustainability Along The Supply Chain

Growing pressure from consumers for ethical suppliers and sustainable products has chemical sellers and purchasers looking for ways to ensure they can communicate sustainable performance to the wider market.

Building in ideas and actions on sustainability across the board is helping create a green supply chain for the US chemical industry.

The concept of sustainability continues to grow in prominence in the public’s mind. Industry – especially the chem- ical industry – is having to step up its response in reply.

Buyers of consumer goods are asking ques- tions around sustainable sourcing of raw materials, labour issues, product safety and recycling. They are likely these days to base purchasing decisions on how sustainable they perceive the product to be, and indeed the company that supplies it.

The trend is a key one and has huge implica- tions for sourcing and purchasing along the chemical supply chain and the way chemical producers, distributors and users approach the way they do business and develop products. It also has huge implications for the transparent ow of information along the supply chain, and is leading to increasing use of sustainabili- ty questionnaires and even requests for audits.

“Green issues and sustainability have become mainstream today,” says Suzanne Shelton, CEO and president of Shelton Group, a specialist market consultancy in the sector. “They are no longer considered niche and are now incorporated into the very fabric of a business,” she told ICIS recently.

Shelton added that consumer surveys show that the reaction to sustainability is generally positive and that it has become an important part of corporate self-image. An increasing number of consumers are basing their purchasing decisions on perceived notions of a product and the producer’s green credentials, she affirms. A green image can thus be good for product sales growth. However, Shelton notes that companies need to ensure that they are indeed green and sustainable, and that they communicate an authentic message to this effect.

DISTRIBUTORS HAVE A KEY ROLE

It is not just chemical producers that need to be aware of sustainability arguments. The concept is just as relevant in the chemical distribution sector. Indeed, given that distributors are a key link in the supply chain between principals and many thousands of smaller customers, they have an important role to play in ensuring the sustainability message is passed on through to the consumer. They also, of course, need to ensure their own operations meet sustainability goals, for their own long-term survival.

For Robb Roach, president of US-headquartered international distributor The Chemical Company (TCC), sustainability or a long-term approach has been the basis of doing business since the company was founded.

 

“I’m not a fan of trendy buzzwords, but there is no doubt that sustainability is the blood that courses through the veins of TCC. We’ve always been a sustainable organization.”

He views it as an essential component of the way TCC builds long-term relationships with suppliers and customers, how it runs its financial affairs, and operates its logistics and technical service and back-up systems. “We look at every aspect of the way we operate – it is all founded on 100% sustainability,” he adds.

Roach believes the focus on sustainability has to be the responsibility of everyone in the business. “We are a family-owned business that is focused on long-term relationships with customers and producing partners. We do all of our business based on a history of delivering on our word without fail.”

This idea of sustainability at TCC is also found in the career sustainability it provides its employees. “These range from those just starting out their careers to seasoned industry veterans that have been with TCC for decades,” Roach says, “many after spending the majority of their careers with a large producer or deciding to forgo retirement and continue a career with us.” The company prides itself on building a diverse team to build and learn from each other. This allows it to offer better service to customers and build a positive environment in which employees can choose to further develop them- selves and dedicate their careers to TCC.

“We really like to emphasize that sustainability in the supply chain ranges from the products to the long-term work force support- ing the industry’s success,” says Roach.

The chemical industry’s drive to greater sustainability does indeed involve actions across a broad front – from adoption of alternative and renewable feedstocks and ingredients to reduced energy and water usage and hence lower carbon footprint. Smarter logistics, increased recyclability and recycling, and safer and better working conditions also play a role.

GLOBAL INITIATIVES

The good news is that the industry is respond- ing to the sustainability agenda, spurred on not just by growing consumer demands but by global initiatives such as the UN’s Sustain- able Development Goals (SDGs) for 2030, agreed late last year, and the EU’s comprehensive Circular Economy Package, which seeks to address issues surrounding waste by promoting resource efficiency and recycling.

The chemical industry views its long-term espousal of the voluntary Responsible Care initiative as a key part of its response to sustainability, focused as it is on continuous improvement of health, safety and environ- mental, and now security, performance. But there is a realization that the industry has to go further and meet the ambitions of the United Nation’s Global Compact and the Global Product Strategy under the umbrella of the United Nations Environment Program (UNEP). One recent development that is gaining traction is a consortium of chemical producers and suppliers that has come together to assess and improve sustainability performance along the supply chain.

RUNNING ON A COMMON PLATFORM

Together for Sustainability (TfS) aims to drive improvements in supply chain sustainability and currently brings together 19 players in the chemical sector. These have agreed to adopt a harmonized set of assessment and audit processes, running on a common platform “to achieve significant, measurable CSR [corporate social responsibility] performance improvements in our supply chains” and “to move towards sustainable sourcing”.

TfS was launched in 2011 by the chief procurement officers of six multinational chemical companies: Bayer, BASF, Henkel, Evonik, Lanxess and Solvay. Today, its members have an annual spend of €200bn and have so far assessed 4,500 suppliers. It notes that 70% of these suppliers have improved their sustain- ability scores after evaluation.

The strategy is to develop and implement a global supplier engagement program to assess and improve sustainability practices within the supply chain of companies from the chemical sector. The program covers the areas of management, environment, health and safety, labour and human rights, ethics and governance.

TfS uses EcoVadis to carry out sustainability audits. Since 2011, 460 have been per- formed. Re-assessments have been conducted in Europe, Asia and the US and improvement has been recognized in all regions, says TfS.

“More than 70% of the suppliers that are assessed more than once by EcoVadis improve overall, showing a positive evolution in either one or more than one of the CSR themes considered (environment, labour practices, fair business practices and sustain- able procurement). This illustrates the potential of TfS to drive supply chain sustainability in the chemical industry.”

Although TfS members originate from the chemical business, suppliers in scope are not limited to chemical supply chains, but cover all industries relevant to the chemical indus- try, including wholesalers and logistics service providers.

Two-thirds of the assessed suppliers are small and medium-sized companies, which often scored better than large-scale enterprises. While the supply base is covered across all categories, it is at the same time covered glob- ally – TfS aims to assess and audit suppliers in all regions.

Recognizing the growing importance of sustainability as an issue overall and the develop- ing trend towards assessments, TCC decided last year to join the National Association of Chemical Distributors (NACD) to access the benefits of accreditation through its well-regard- ed Responsible Distribution (RD) program.

Ray Altenburger, vice president for new business at TCC, comments that the third- party audit of its facilities and their policies and procedures was another step in TCC’s progression to become more professional and meet the requirement of its partners. “Today, suppliers want greater trace- ability, for instance, and [having RD accreditation] we have a high- er level of comfort when doing business.”

Robb Roach echoes this, noting that levels of reporting up and down the supply chain have increased substantially in recent years as sustainability has risen up the agenda.

“Transparency is a key aspect of the business right now and most producers and customers are aware of the importance [of sustainability] in the world and are leading the charge – we are champions in many ways.”

Internally at TCC, Roach points to many initiatives, from using fuel-efficient vehicles for sales people, encouraging effective travel planning and ensuring the trucks it uses meet all standards and regulations, right down to installing a water fountain in the head office to cut down on bottled water consumption.

“Today, suppliers want greater traceability… [to] have a higher level of comfort when doing business”

RAY ALTENBURGER
Vice president for new business, The Chemical Company

“We have also made a huge effort to be fully compliant on labelling and documentation and a large investment in EHS, and make every effort to support growing companies especially in hard-pressed economies,” adds Roach.

Altenburger also points to the fact that TCC has been handling recycled, green and biobased chemicals for many years from sev- eral of its suppliers. He believes this trend will continue to grow as customers look for sustainable options and solutions.

As Roach concludes, “The key thing is that sustainability is not a new thing for TCC – it’s just the natural thing to do.”

That’s hard to argue against of course. Virtu- ally all chemical and chemical distribution companies these days will have an eye on the sustainability argument and trends. What is shifting fundamentally now perhaps is the focus on individual company performance as in the past, to supply chain performance today.

This is going to take a lot of cooperation and communication, but in the end, those companies that get involved will secure those customers that all players in the chain need to thrive – those at the end of the value chain. And the ones, as we saw at the top of this article, that are increasingly basing purchasing decisions on their perceptions of the prod- ucts’ and producers’ green credentials.

The View: Producing Partner Profile

Quote of the Day

“The secret of success is to do the common thing uncommonly well”.
John D. Rockefeller Jr.


12741984_994067050640966_4699867798735745569_n
Prop 65 Update
: A No Significant Risk Level (NSRL) for Diisononyl phthalate (DINP) will be established effective April 1, 2016. California’s OEHHA announced last week that the NSRL for DINP will be set at 146 micrograms per day.
More Information Here 


Producing Partner Profile: Emerald Kalama Chemical

Emerald Kalama Chemical is an internationally respected corporation focused on toluene oxidation chemistry. Today, Emerald Kalama Chemical is the leading global producer of benzoic acid, benzaldehyde, benzyl alcohol, sodium and potassium benzoate and specialty derivatives such as hexyl cinnamic aldehyde, linear aldehydes and performance additives such as K-FLEX®dibenzoate plasticizers and coalescents.The phthalate-free products are the solution to formulators seeking environmentally friendly options. Additionally, these plasticizers improve the performance of the end-product.


EMP Logo
K-FLEX® plasticizers, modifiers and coalescents are used because of their excellent performance and balance of properties. They are non-phthalate, low in VOCs, and have positive attributes from a product safety and health perspective compared to other choices.

TCC Dibenzoate plasticizers distributor
Pictured left to right: Robert N. Roach Jr. – CEO of TCC, Eric Post – Business Director of K-FLEX® Americas at Emerald Kalama, Jason Butt – Sales Manager of K-FLEX® NAFTA at Emerald Kalama, Robert N. Roach III – President of TCC

The K-FLEX® product line continues to grow, to develop new technology, to expand into new applications, and meet the evolving needs of numerous industries. Many of the products also maintain certain FDA clearances for use in indirect food-contact applications.

One of the key properties of K-FLEX® products is their compatibility with a wide range of polymers, particularly polar materials. This makes K-FLEX® products highly effective in many of the most widely used non-olefin based polymers: vinyl-acetate, ethylene vinyl acetate, acrylic, styrenated acrylic, styrene-butadiene, PVC, polysulphide, nitrocellulose, nitrile, and polyurethane.

These polymers are also used in many end-use applications, including adhesives, sealants, caulks, paint, coatings, graphic arts, resilient flooring, vinyl wall covering and artificial leather.

 

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TCC is proud to be named a distributor for Emerald Kalama Chemical, and we are eager to expand our product offerings to maintain one of the most comprehensive lines of plasticizers in the industry.

Click here to learn more about the TCC and Emerald Kalama relationship


 

Upcoming Trade Shows


2016 AFPM International Petrochemical Conference
March 20th – March 22nd 2016 in Dallas, TX

The Chemical Company will have meeting space available at the Fairmont Dallas Hotel. Please email khagan@thechemco.com to schedule a meeting with a TCC representative.

UTECH North America – Polyurethanes Tradeshow
April 6th – 7 2016 in Charlotte, NC
Visit TCC at booth #318

American Coatings Show
April 12th – 14th 2016 in Indianapolis, IN
Visit TCC at booth #1947

Watch Our Latest Tradeshow Video For More information!


LoveChemistry Logo

Campaign Update

 

TCC has recently launched Spreading the Love of Chemistry Scholarship.

Valentine’s Day has come and gone, but that doesn’t mean we stop spreading the Love of Chemistry. As of March 1st, TCC has successfully launched Spreading The Love Of Chemistry endowment to benefit students attending the Community College of Rhode Island (CCRI) and studying chemistry. This endowment will continue to provide a long-term source of support for students studying chemistry at CCRI and for students awarded this scholarship that continue to study chemistry at four-year institutions.

American Coatings Show Fun Run—Running For Our Love Of Chemistry

The American Coatings Show (ACS) will be hosting a Fun Run on Wednesday, April 13, 2016 from 7:15–8:30 a.m. to raise funds for student participation at future AC Conferences. Several members of the TCC team will be participating on behalf of our Love Chemistry initiative running in an effort to build student participation in chemistry-related events as well as networking with our fellow ACS attendees. We look forward to seeing you run with us.

The Chemical Company named distributor of Dibenzoate plasticizers for Emerald Performance Materials

Pictured from left to right: Nick Roach, Eric Post, Jason Butt, Robb Roach


TCC is now offeringK-FLEX® Dibenzoate plasticizers as part of their extensive line of ester products

JAMESTOWN, RI Emerald Kalama Chemical, a business unit of Emerald Performance Materials, has selected The Chemical Company (TCC) as a distribution partner for theirK-FLEX® lineofdibenzoate-based plasticizers.TCC and Emerald Kalama have created a partnership that will grow Emerald Kalama’s market reach. The addition of the K-FLEX® products will bolster an already extensive ester product line for TCC. TCC’s strong sales prominence in the Americas will expand the reach of West Coast-based Emerald Kalama. The K-FLEX® line of multi-purpose products also includes numerous applications in coatings, sealants, caulks, flexible vinyl and adhesives—adding value to TCC’s extensive product line. TCC customers now have access to the most comprehensive line of plasticizers in the marketplace.

TCC and Emerald Kalama have created a partnership that will grow Emerald Kalama’s market reach. The addition of the K-FLEX® products will bolster an already extensive ester product line for TCC. TCC’s strong sales prominence in the Americas will expand the reach of West Coast-based Emerald Kalama. The K-FLEX® line of multi-purpose products also includes numerous applications in coatings, sealants, caulks, flexible vinyl and adhesives—adding value to TCC’s extensive product line. TCC customers now have access to the most comprehensive line of plasticizers in the marketplace.Business Director Eric Post and Sales Manager Jason Butt from Emerald Kalama recently visited TCC headquarters to meet with CEO, Nick Roach and President, Robb Roach. Jason Butt led the TCC sales team through an informative technical training session of the K-FLEX® products.

Business Director Eric Post and Sales Manager Jason Butt from Emerald Kalama recently visited TCC headquarters to meet with CEO, Nick Roach and President, Robb Roach. Jason Butt led the TCC sales team through an informative technical training session of the K-FLEX® products.

The TCC line of plasticizers has expanded to include the Emerald Kalama current K-FLEX® dibenzoate product line: K-FLEX® 850S, K-FLEX® 850P, K-FLEX® 500, K-FLEX® 500P, K-FLEX® 975P, K-FLEX® PG, and K-FLEX® DP. The K-FLEX® plasticizer line is an excellent phthalate free solution for formulators looking to satisfy environmentally friendly, non-SVHC, low VOC plasticizers and coalescents.

About The Chemical Company

The Chemical Company is an international chemical distribution firm founded in 1988 by CEO Robert N Roach Jr. in Jamestown, Rhode Island. TCC was built on a foundation of ethical business practices designed to foster steady growth supported by a vested and dedicated long-term work force. TCC has consistently provided clients with high-quality chemical products and quality service in the chemical industry for close to 30 years.

About Emerald Kalama Chemical

Emerald Kalama Chemical, based in Kalama, Washington, is a wholly owned subsidiary of Emerald Performance Materials (EPM). Emerald Kalama is a manufacturer of additives and polymers that improve product durability and performance.

An Exclusive Methanol Industry Update

TCC and the Methanol Market

Written by Cory Mullins, TCC Methanol Manager

The US methanol market continues to be plagued by increasing production and slow demand. It is not uncommon during this time of year to see a slowing of methanol demand across several major derivatives connected to the housing and construction industries, such as Formaldehyde. However, we are accustomed to seeing a portion of this absent demand made up among seasonal end users within the windshield wash and oil/gas markets. So far, Mother Nature has not cooperated. Methanol suppliers anxiously await for winter conditions to set in.

Regardless of the slow coming winter, methanol market conditions leading up to this point have not been positive. Entering 2015, demand was forecasted to grow at GDP rates around the 4% range. A number of events have many now hoping the market will even sustain 2014 levels. We saw some demand curtailed early in the year due to unexpected outages in a couple of major methanol derivatives. Crude levels continue to wreak havoc on biodiesel demand and, more importantly, have stymied some new projects that are key to methanol growth across the globe. Methanol experts hold the view that conditions will not improve throughout the first half of 2016.

The Chemical Company continues to be well positioned on methanol in our respective regions of the US. We appreciate your business. Please do not hesitate to contact us if we can be of service on any front.    

 

Methanol Production Past and Present

Written by Joe Elchak, VP of Methanol

Methanol is a global commodity chemical. It is used as a building block for numerous derivatives tied to the housing, automotive, and energy industries. Historically, methanol was manufactured in the US, but as the price of natural gas increased, the US was no longer competitive. As a result, methanol plants were built in countries that had inexpensive gas such as the Middle East, Trinidad, Venezuela, etc. Recently, that trend has reversed itself and new plants are being built in the US. Offshore plants are being moved to the US, and old plants are being restarted. The significant drop in US gas pricing and the abundance of available gas accounts for this reversal. US natural gas inventories are higher than the last 5-year average. Methanol imports have dropped 50% from the same time period as last year. The US is slowly reducing its dependency on imports.

China’s requirements for methanol are a major factor in the industry’s health. They manufacture their own methanol and import significant volumes. They use huge quantities for their energy industry (blending into gasoline), other derivatives, and in the manufacture of olefins (MTO plants). However, the sharp decline in crude prices has affected the economics of the MTO plants and they are operating at reduced rates or shut down.

In the US, methanol demand for derivatives is slow but steady. Mild weather has had an impact on the use of methanol for windshield wash and down hole applications. Outage of MTBE plants has contributed to reduced demand for methanol.

Based on the above, it estimated that methanol pricing will remain static at least through the first quarter of 2016. The over- supply situation and the reduced demand has recently resulted in spot barge pricing to drop to the mid 60-cpg range. We do not foresee another new methanol plant to be built in the US until 2018.

 

In case you missed them – check out these additional updates!


Packaging Update For Urea Small Bags

Click here to read more

California Determines That Vinyl Roofing Containing DINP Is Safe
Additional information available here

US EPA Moves To Web-based Enforcement System
Full Article Here


Products Immediately Available


Plasticizers

DPHP – domestically stocked Emoltene™ 100 (DPHP) starting in January 2016

TOTM – bulk loads available from domestic stock starting in January 2016

Acids

Adipic Acid – available in 25KG, 500KG and 1000KG sacks

Boric Acid – available in 25KG, 500KG and 1000KG sacks

Other Products

Phenol – bulk loads available

Phthalic Anhydride – available in 25KG, 500KG and 1000KG sacks

Upcoming Events


2016 AFPM International Petrochemical Conference
March 20th – March 22nd 2016 in Dallas, TX

UTECH North America – Polyurethanes Tradeshow
April 6th – 7 2016 in Charlotte, NC
Visit TCC at booth #318

American Coatings Show
April 12th – 14th 2016 in Indianapolis, IN
Visit TCC at booth #1947

What’s happening at TCC?


Linda Roach Memorial Dedication Ceremony

On November 21st, a special dedication event was held for the new Linda Roach Story Circle Memorial. The story circle, complete with fire pit, was donated by the Roach family as a special place to entertain children and adults alike. Family, friends, and all members of the Jamestown community were invited to gather at the memorial site for a story telling by Len Cabral and to celebrate the life of Linda Roach. Following the ceremony, all guests were invited to the TCC headquarters for an open house and reception.

Click here for a video of the event

Father of the Bride

TCC VP of Business Development, Ray Altenburger, walked his daughter, Eileen, down the aisle on August 1st, 2015. Eileen graduated from Princeton University and works in London at UBS Bank. The groom, Remy Gerbay, is a professor at the University of London as well as an International Arbitration Lawyer at ENYO. The two were married at Princeton University Chapel, and the reception held at Cherry Valley Country Club in Skillman, NJ.

Ray Altenburger's Daughter's Wedding

Photo Left to Right

Jillian Altenburger, Ray Altenburger, Eileen Gerbay, Remy Gerbay, Erin Altenburger and Allison Altenburger Paulison

The View: Product Update For Plasticizers and Polymer Additives


 Quote of the Day

“Always deliver more than expected.”

Larry Page, co-founder of Google


Product Updates: Plasticizers and Polymer Additives

Written by Tom Guadagno, Product Manager of Polymer Additives

DPHP

Perstorp, together with The Chemical Company (TCC), are cooperating in the bulk distribution of Emoltene™ 100 (DPHP) to the American market. Perstorp recently doubled their capacity of 2-propylheptanol to increase material availability and expand their supply footprint worldwide. Perstorp is committed to entering and expanding the American marketplace with Emoltene™ 100.

Click here to learn more

Based on the recent domestic retooling announcement from BASF, TCC will be the best choice to secure a dependable supply chain and avoid interruptions in supply. Lab scale and tote samples are available for approval. TCC will be offering domestically stocked Emoltene™ 100 (DPHP) starting in January 2016.

TOTM

The Chemical Company is the exclusive bulk distributor for Oxea’s TOTM, both stabilized and un-stabilized versions. Oxea is Europe’s largest producer of 2-EH alcohol and is continuously increasing ester capacity to tap into downstream markets. TOTM is a Trimellitate plasticizer based on the C8 alcohol 2-ethylhexanol. TOTM is a low migration plasticizer and is often utilized in high temperature and medical applications. Inventory is currently being built in the United States and bulk loads will be available from a domestic stock starting in January 2016.

TCC had been offering Oxea’s TOTM with door-to-door service up to this point, as baseload volumes were built up. We are excited to offer our customers, and the American market, a quality European source for TOTM. Currently, the America market is supplied through domestic sources and Oxea’s commitment will help diversify supply options for end users.

L9TM

Oxea is now producing n-nonanol (L9 alcohol), and is taking steps to register a linear C9 Trimellitate (L9TM) with the TSCA to supply the American market. Oxea’s C9 alcohol is significantly more linear than the existing material on the market. Therefore, TCC is working in combination with Oxea and TCC customers to register Oxea’s L9TM under a unique CAS number. Oxea believes their alcohol will become the standard for linear 9 alcohols used in plasticizers.

L9TM is being looked at as a replacement to 810TM which has been constrained based on alcohol supply. L9TM is an ideal plasticizer for high temperature applications such as wire and cables, as well as for synthetic leathers. The 8-10 alcohol had been made with coconut oil but recently switched to palm oil, inherently yielding less product. As yields have declined, demand on the 8-10 alcohol has increased as it is being used in higher value markets, such as cosmetics. Oxea’s L9TM is able to fill the gap between supply and demand and give customers a synthetic option which will not be constrained by palm oil harvests and yields. Oxea’s L9TM is showing superior performance based on linearity when compared side by side with the existing material on the market. Samples of L9TM are available for evaluation as TCC prepares to roll out this new product.

Products Immediately Available

Plasticizers

  • Vestinol 9 DINP
  • ChemFlexx DOTP
  • ChemFlexx 911P/ChemFlexx L9P
  • Epoxidized Soy Bean Oil

Acids

  • Adipic Acid: 25 kg, 500 kg and 1000 kg sacks
  • Bio- Succinic Acid: 25 Kg bags

Glycols

  • MEG, DEG, and TEG in Bulk

Silanes

  • Check out our full line here!

Upcoming Events

SOCMA Annual Dinner: The Society of Chemical Manufacturers & Affiliates will host their 94th annual dinner on Tuesday, December 7th at the Crowne Plaza Times Square in New York City. The evening will be full of fine dining and networking among hundreds of specialty chemical industry professionals. Ray Altenburger and Shel Gelman, Vice Presidents of Business Development, will be representing TCC at this event. To schedule a meeting, contact ray@thechemco.com or shel@thechemco.com.

What’s happening at TCC?

NACD Conference Video | TheChemCo.comNACD Certification: The Chemical Company has become an official member of the National Associations of Chemical Distributors. The mission of the NACD is to promote the significance of the chemical distribution industry. Ray Altenburger attended the NACD Annual Meeting in Florida earlier this month. His insight in the importance of responsible distribution is highlighted in the interview below.

 

TCC Takes on Colorado: Robb Roach led the TCC annual Colorado hunting trip this past October. The hunting group sought out elk and deer while capturing breathtaking moments along the way.

Sales Team Trip | TheChemCo.com

 

 

Employee Success (Raph) | TheChemCo.comCelebrations for Coach Cerrato: Raph Cerrato, husband of TCC Office Manager, Kerri McNamara, has been named the head coach of the University of Rhode Island baseball program. Cerrato served as interim head coach for the past year where he led a successful season, including a victory over 11th ranked North Carolina. Kerri and Raph also celebrated their one year anniversary on October 25th. Congratulations Kerri and Raph!

 

The New View From Jamestown: Oil & Petrochemical Pricing


 Quote of the Day
“Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”
 Benjamin Franklin

Industry Update

Written by Tom Ultsch, Vice President of TCC Midwest Market

After bouncing from lows in August below $40, crude oil pricing has declined by 50% since the fourth quarter of 2014. The current price is “hovering” around $46/BBL. Average crude pricing was around $96/BBL during 2014 and should average around $49/BBL in 2015. The main factors causing this change include increased production in North America, worldwide currency shifts and a lackluster economic outlook for China.

The fall in commodity speculation on everything from gold to oil has also had a large impact on pricing. The lower price of crude oil and lower gasoline pricing has stimulated US demand. United States gasoline demand has increased by over 500,000 BBL/day since the same time last year. The slowing Chinese economy has been offset by their increase in strategic oil reserves. These factors are helping offset excess production and have recently caused oil markets to go sideways and stay in the $45-$50/BBL range.

The lower cost of oil has significantly affected petrochemical prices. Olefin values have dropped by 30-40% since early this year, resulting in customers and suppliers closely watching their inventories. Currency changes and relatively stronger North American demand allowed US petrochemical prices to remain higher than in other areas of the world. Over the last month, this disparity has begun correcting itself and any arbitrage opportunities that existed are closing. All of these factors have masked true US demand during the third quarter of this year.

Another factor that has been driving pricing in the petrochemical industry is the dominant role that natural gas and Natural Gas Liquids (NGLs) are playing in North America. The shale gas revolution has transformed the face of the petrochemical industry over the last few years. Stable political and monetary policy has also attracted projects back to North America. This new production is starting to come online and has created more opportunity for downstream production of products. The current dip in crude oil pricing is offsetting some of this economic enthusiasm. The differential in crude oil/naptha values versus the new NGLs has decreased substantially and is causing producers to reexamine remaining with heavier feeds versus converting to lighter NGL feeds for basic olefin production. These discussions are highly dependent on propylene and butylene downstream requirements and their relative values.

 

Products Immediately Available

ChemFlexx DPHP: Bulk loads available for direct shipment

Methanol: Bulk Trucks and Railcars available in North America

Phenol: Available in Bulk and Drums

 

Upcoming Events

APLA: November 7th to the 10th in Cancun, Mexico

2015 NACD Annual Meeting: November 9th to the 12th in Bonita Springs, FL

2015 Chem Show: November 17th to the 19th in New York, NY

 

What’s happening at TCC?


Road Trip To The West:
CEO Nick Roach and his wife, Fran, spent a week travelling west to explore the sights of four different states. Highlights of their trip include visiting Mount Rushmore, Yellowstone National Park, and the Grand Tetons National Park.

Midwest Landscape | The Chemical Company

EPCA: TCC was well represented at the European Petrochemical Association (EPCA) earlier this month in Berlin, Germany. President Robb Roach was among the TCC representatives attending the five-day conference to meet with petrochemical industry professionals.

New to the TCC Team: Alex Azeredo is the Logistics Coordinator for TCC. Alex earned his bachelor’s degree at King University in Bristol, Tennessee. He now oversees freight. His responsibilities include researching reliable carriers to transport our products from warehouse to consumers.

TCC Newlyweds: Javier Fernandez and Angela Diaz were married August 29th in the Dominican Republic. Angela has been with TCC for 6 years and Javier for 5 years. Congratulations to the happy couple!

Wedding | The Chemical Company

Industry News: Oil Exports Encouraged, EPA Ozone Regulations, Cuba Opens for Business and more!


Quote of the Day
“The best way to destroy an enemy is to make him a friend.”
 Abraham Lincoln

Overview

Petrochemical Index Drops • Oil Exports Encouraged As Bill Passes House • 0% Interest Not Forever • Keystone Pipeline Still Alive • EPA Ozone Regulations are Problematic • Cuba Opens for Business

The summer proved to be more dramatic than usual with a nearly disastrous stock market crash, devaluation of Chinese currency, the lowest oil prices in at least three years, and an American economy that is working its way up, one small step at a time. Nonetheless, with a failing global economy, and a strong US dollar hurting exports, will the decision to not raise the interest rates haunt us in the future by possibly setting the stage for inflation? Oil and gas drillers are going through a period of mergers and acquisitions to survive the continued slump in prices. The EPA continues to impose regulations that burden manufacturers in a fragile economy that is doing all it can to recover, and states are writing their own environmental laws to keep their residents safe. The DOD insists that the failed $500 million dollar foreign military training program is a necessity and must continue. A new set of rules governs Americans wishing to do business in and with Cuba as the crippling embargos are lifted and commerce with the island is getting ready to commence for the first time in more than half a century. The good news is that despite an unpredictable future and a fluctuating economic environment, the chemical industry appears to be robust, and all indices predict prosperity for some time to come.


Chemical Industry News

August ICIS Global Petrochemical Index (IPEX) drops 8.7% as Asia Prices Fall

According to recent ICIS data, primary olefins and aromatics prices fell sharply as the major polyolefins in northeast Asia drove the ICIS global petrochemical index down by 8.7% in the month of August. This was the sharpest drop in the index since the beginning of the year. The global IPEX for the month is down 31% on the year.

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After a quiet week following the US Labor Day holiday, styrene spot prices held steady although trade was thin. ICIS spot price has fallen for eight consecutive weeks since the middle of July, mirroring the fall on benzene.

Producers settled August styrene contracts at an average of 3 cents/lb below July prices, with decreases mostly ranging from 2-5 cents/lb. Larger buyers achieved prices in the upper end of that range. According to data released this week by the US International Trade Commission (ITC), the US exported 10% more styrene year to date through July than in the same period a year earlier.


 

According to the American Chemistry Council’s Specialty Chemicals Market Volume Index, nineteen specialty chemical segments realized year-over-year growth in August, despite drops in oilfield and mining chemicals. On a three-month moving average basis, plastic additives and electronic chemicals grew the most. Year over year, “gains are fairly widespread among most market and functional specialty chemical segments, and, in some cases, they are improving,” the ACC said.


Thailand-based conglomerate Siam Cement Group (SCG) is predicted struggle with softening chemical margins and inventory losses in the near future, but analysts say that it still should post record profit this year. Profit in 2015 will get support from its petrochemicals business due to strong demand in southeast Asia.


According to ICIS data, US ethylene margins fell 9.5% for the week ended 11 September. Margins for ethane-based spot ethylene dropped to 15.42 cents/lb ($340/tonne) from 17.04 cents/lb from the previous week. This is the lowest those margins have been since November 2011.


Eight non-government organizations (NGOs) have urged US Senate leaders Mitch McConnell (R-Kentucky) and Minority Leader Harry Reid (D-Nevada) to bring the bill updating the country’s chemical management law to the floor for consideration as soon as possible. The public health, environment, animal welfare and workers’ groups said that the Toxic Substances Control Act is “badly broken” and the Udall-Vitter bill (S 697) should be an urgent priority.


As part of a United Nations global climate agreement, the European Union will push for the world to reach carbon neutrality by the end of the century. That would entail curbing emissions by 50% from 1990 levels by midcentury according to Bloomberg data. EU member states originally agreed to push for making the world carbon-neutral by the end of the century.

In line with recommendations from the Intergovernmental Panel on Climate Change, or IPCC, a UN-organized body of thousands of scientists and environment ministers from the EU’s 28 nations want the agreement to include a 2050 target of reducing global emissions by 50 percent from 1990 levels.


The Federal Trade Commission has hit five providers of environmental seals, and dozens of businesses displaying the seals, with warning letters because of concerns that the eco-labels do not comply with the FTC’s Green Guides. The seals were allegedly in disagreement with the guidelines that bar marketers from making environmental claims without using “clear and prominent language” substantiating the claims being made.


API President Gerard Pushes US Oil Export Advantages

Oil & Gas

API President Gerard Pushes US Oil Export Advantages

American Institute President and CEO Jack Gerard said that allowing crude oil exports can help the US seize its long-term opportunity to compete in the global marketplace and become a swing producer. Several analysts said that oil exports would create jobs, resolve the irony in lifting sanctions on Iran, drive oil and gasoline prices lower and bring billions of dollars in savings for consumers. In spite of an economic downturn, US producers will still be major participants, depending on how the US plans to prevail over political differences and “bring that epicenter of energy power right here at home,” Gerard said.

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According to an American Petroleum Institute poll, the Keystone XL pipeline continues to receive support from a majority of American voters. Seventy-eight percent of registered voters surveyed believed the project would bolster US economic security and 68% were in favor of building the pipeline. Results of the survey revealed that most voters “are more likely to support a candidate who supports approving Keystone XL,” said Cindy Schild, senior manager for oil sands and refining and executive director for Oil Sands Fact Check at API.


A Deloitte report said that the pace of mergers and acquisitions activity in the natural gas and oil industries will probably improve from the end of this year through next year amid sustained low oil prices. The industry generated $153 billion from 169 deals in the first seven months of the year. Sixty-on percent were from exploration and production and approximately 14% was from the midstream sector, according to the report.


New England states would benefit from lower electricity costs through three proposed natural gas pipeline projects in the region according to a New Hampshire Public Utilities Commission report, but the greatest benefit would come from the Northeast Energy Direct proposed by Kinder Morgan unit Tennessee Gas Pipeline. According to the commission’s estimates, the project would have a benefit to cost ratio of 5.25 to 7.


The House Energy and Commerce Committee voted 31-19 to pass legislation to lift the ban on crude oil exports. “Numerous studies, including those from the Congressional Budget Office, Government Accountability Office and Energy Information Administration, all conclude that (allowing) oil exports would be a net jobs creator,” said Committee Chairman Fred Upton, R-Mich.


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Economy, Business & Politics

Does Zero % Interest Mean Forever? Not According to the Fed

In late 2008, when the Federal Reserve drove its target interest rate to near zero, it initiated an economic debate focused on the risks of having nowhere lower to go, and specifically, the financial bubbles it might fuel.

Although six years have passed with few bubbles in sight, a new risk has made its presence known; the proverbial temporary zero has elevated in status to be an effective anchor on interest rates that is much more difficult to abandon than the Fed ever expected. Nonetheless, Fed officials emphatically say that the US can and will eventually break ranks with the rest of the pack, but their latest decision to hold was fraught with caution concerning the new butterfly-effect economy, where a market ripple in China could tighten US financial conditions and cause the Fed to change its course.

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Congress Refuses to Abandon Failed $500 Million Program to Fight ISIS in Syria

Senate Armed Services Committee Chair John McCain (R-AZ) said: “Just because they failed doesn’t mean you shouldn’t do it.” That was right before he labeled the Syria effort “an abject failure.”

House Armed Services Committee chair Mac Thornberry (R-TX) iterated similar sentiments. “If you look around the world, we’re going to have to do lots of training and equipping and assisting. Some things have worked pretty well, some things have not and we need to understand that because we’re going to do a lot more of it,” he said.

The DOD has not put the brakes on the thus far completely ineffectual effort. Undersecretary of Defense for Policy Christine Wormuth told lawmakers that close to 100 more rebels are in training today.

The Pentagon is conducting a thorough assessment of the program, a major component of President Obama’s anti-ISIS strategy. Although a timeline has not been set for when the internal review might end, lawmakers believe that the department is “painfully aware of their skepticism”.

“It’s certainly time to reevaluate what we’re doing,” said Sen. Jack Reed (RI), the Armed Services panel’s top Democrat. “One of the realities that everyone mentions is that there has to be some indigenous force on the ground . . . I think we have to exhaust that option before anything else.”

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Considering its abundance of oil and natural gas supplies, a report from Columbia University’s Center on Global Energy Policy said that the US should open itself up to engagement with other countries in order to sustain energy security and encourage competition. The exportation of domestic oil while importing heavy crude would also “move trapped surpluses to global markets, strengthen the US stance against resource nationalism in other countries, and contribute to a global market environment that promotes economic growth in the United States,” the report said.


President Barack Obama recently acknowledged that the Environmental Protection Agency’s (EPA) pending ozone standard decision causes “legitimate economic issues that have to be considered.” Nonetheless, the agency doesn’t have a lot of room to navigate, as “this is an existing statute . . . and we are charged with implementing it based on the science that’s presented to us,” he said. The EPA is proposing a stricter ozone standard, going from 75 parts per billion to between 65 and 70 ppb by 2025. The ruling is due by the end of September.


The Pipeline and Hazardous Materials Safety Administration (PHMSA) will more than likely issue a draft safety rule to govern the transport of oil and other hazardous liquids through pipelines, Administrator Marie Therese Dominguez said. Dominguez expects the rule, which cleared the White House, to “spark a robust dialogue moving forward about pipeline safety in the United States,” according to a report by the Associated Press.


A Bloomberg report said that a reduction in the blending volumes of cellulosic ethanol required by the Environmental Protection Agency (EPA) under the Renewable Fuel Standard could lead to adverse financial consequences for the producers of cellulosic ethanol, according to a letter to President Barack Obama signed by Novozymes, Abengoa, and Enerkem. “If you add all that up, you’re close to $14 billion in investments,” Novozymes President of Americas Adam Monroe said in a conference call. “Certainly the business model wasn’t to build one plant and you’re done.”


A Fiscal Times Article said that Boehner may have found a way out of the budget standoff. “There are a lot of steps in this process,” Boehner said Thursday at a press conference after the GOP conference. “You will see a lot of steps in the coming weeks, and certainly reconciliation is a distinct possibility as well.”

Without doubt, reconciliation is a compelling option for GOP leaders who are torn between worrying about the party being blamed for shutting down the government, and pacifying the hardliners who are stirred up over a series of secretly recorded videos that allegedly show Planned Parenthood officials talking about selling body parts from aborted fetuses.

Only a simple majority is required for reconciliation to pass the Senate. This means that Democrats can’t filibuster a measure used under the tactic. In the Senate, it can only be used for one budget reconciliation each year. In 2010, the Democrats used budget reconciliation to pass Obamacare.

The GOP-controlled House recently voted to allow leaders to invoke “martial law” in another bid to show how serious they are about avoiding a shutdown. The tactic allows leaders to bring a spending bill designed to avoid a shutdown to the floor on the same day that it clears the House Rules Committee, skipping the usual one-day wait that it usually requires to do so.


President Obama has issued a new set of rules for American companies hoping to do business with Cuba, effectively dismantling a significant portion of the economic embargo that has crippled the island for more than half a century. American companies are now allowed to establish businesses in Cuba where they can hire local employees, and transferring money to and from the island will be much easier than it has been in the past. “A stronger, more open US-Cuba relationship has the potential to create economic opportunities for both Americans and Cubans alike,” US Treasury Secretary Jack Lew said.


Despite pending federal legislation, several US states are making their own chemical laws, many with an emphasis on green chemistry. According to the National Law Review, California’s Department of Toxic Substances Control has authorized a number of chemical laws. Maine, Vermont, Oregon, Minnesota, and Washington State have also enacted statewide green chemistry laws. The laws require notifications, and in some cases, alternative analyses and set restrictions are mandatory.


American Petroleum Institute Senior Director of Regulatory and Scientific Affairs Howard Feldman said that almost half of over 3,000 counties in the US will be placed in noncompliance status if the Environmental Protection Agency imposes ozone standards of 68 parts per billion, the limit previously speculated by some publications. According to a report by the Washington, D.C. Examiner, Feldman went on to say that the EPA should instead prioritize allowing counties to comply with the current standards before imposing new ones.


A USA Today article reported that the Agriculture Department along with the Environmental Protection Agency said that the current administration has set a goal of cutting US food waste in half over the next 15 years through consumer education programs and partnerships with food companies. “By reducing wasted food in landfills, we cut harmful methane emissions that fuel climate change, conserve our natural resources and protect our planet for future generations,” said EPA Administrator Gina McCarthy

Industry News: Algae to Plastic, Crude Output Rise & Dow Stock


Quote of the Day
“This is no time for ease and comfort. It is time to dare and endure.”
Winston Churchill

Chemical Industry News

Using algae to turn CO2 into plastic? Maybe not such a crazy idea

According to an E&E News report by Niina Heikkinen, chemical feedstock ethylene can be found nearly everywhere on the planet. It’s in polyester shirts, PVC pipes, plastic milk jugs and high-grade industrial ethanol.

However, using ethylene as a plastics and chemical building block does have an environmental cost. The production of the cheap hydrocarbon emits more carbon dioxide than any other chemical process. Because of concerns about CO2 levels contaminating the atmosphere, scientists are experimenting with ways to make the production of ethylene more environmentally friendly. Researchers at the Department of Energy’s National Renewable Energy Laboratory have experienced unexpected success with a blue-green algae called cyanobacteria.

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Technologies designed to directly remove carbon dioxide from the air are nearly ready to make their debut. However, the question remains—will they be cost-effective and commercially viable, asks Noah Deich, founder of the Center for Carbon Removal. He said: “It’s not a question of if we can take carbon out of the atmosphere, but I think the question is if all of the technologies that can take carbon out of the atmosphere do it in a cost-effective, sustainable and scalable way.”


China’s decision to allow the yuan to crash against the US dollar was designed to boost its tanking economy, which has been in a five-year slowdown. Unfortunately, the devaluation has adversely affected regional petrochemical markets. The International Monetary Fund (IMF) anticipates a 6.8% growth this year, down from a 7.4% growth registered in 2014 according to ICIS.


The demand for European recycled polyethylene terephthalate (R-PET) is on the rise in the second half of 2015, as substitute virgin PET prices continue to rise and many companies make environmental commitments to use R-PET. Nonetheless, sustainability is an issue as long as collection issues and supply shortages persist.


To build on anticipated record earnings for the current fiscal year, Japanese chemicals giant Asahi Kasei has developed a growth strategy through diversity. New applications for existing products could increase sales, and new process technology should enable feedstock diversification and reduce cost of production.


Polyethylene terephthalate (PET)—mainly used for synthetic fibers and bottle resins, is a resistant thermoplastic with two forms—amorphous and semi-crystalline. Despite Asian demand being set to grow this year, capacity increases will add to adequate regional supply levels, with prices tracking those of feedstocks.


Low virgin prices in Europe had a negative impact on R-PET in late 2014 and early 2015, as consumers can easily switch between virgin and recycled polyethylene terephthalate (PET). Supply factors lie bottle shortages and collection problems may begin to influence European R-PET as the pressure diminishes.


 

Oil & Gas

Crude Oil

U.S. crude output rises to highest production level since 1920

The month of July saw 9.52 million barrels per day, according to a recent American Petroleum Institute report. However, the report said that the output represented a 2.5% drop from June and an 8.8% increase from the previous year. API Chief Economist John Felmy said: “There’s a lot of momentum in the system. If you’ve already drilled a well, you’re not going to stop pumping because of the drop in prices.”

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According to Sen. Heitkamp, ND oil and gas producers’ jobs are at risk because of the new methane rules. The rules, drafted by the Environmental Protection Agency (EPA) could hurt operators in North Dakota’s Bakkken Shale, Sen. Heidi Heitkamp, D-ND said. She went on to say that imposing additional costly rules amid tanking global oil prices “could have a dire impact on the jobs” that are industry dependent. The senator added that collaboration is necessary in order to reach middle ground between “energy independence and reduced greenhouse gas emissions” if we want to improve emissions reduction efforts.


Increasing natural gas production in the Marcellus Shale has resulted in a declining demand for Colorado and Wyoming gas. This has been worsened by the partial reversal of the 1,698-mile Rockies Express pipeline. As Marcellus output approaches record production levels, gas production from the Niobrara Shale dropped 12% from a record high in 2012. Paul Grigel, senior equity research analyst at Macquarie Group said that: “More competition is certainly not helpful for Rockies producers. The Marcellus is truly a world-class asset, and even with transportation costs factored in, it can unseat Rockies gas.”


The buyers of Gulf Coast oil fields will likely be the natural gas producers in the emerging flood of deals anticipated in the coming months, attendees said at a recent conference. These companies are “in a better position to buy, and the reason is they’ve been fighting low gas prices for three or four years,” Jerry Eumont, managing director for consulting at HIS said. He also said that the big independent Marcellus Shale gas operators could consider diversification of portfolios, since they are “already lean and they’ve stabilized.”


The Environmental Protection Agency (EPA) presented a draft of new rules for the oil and natural gas industry governing methane emissions reduction with targets of up to 45% from 2012 levels by 2025. The industry does not need such “duplicative and costly” rules, as it has been leading efforts in cutting methane emissions. “API supports a common sense regulatory approach that builds on cost-effective controls already required by EPA for new equipment,” American Petroleum Institute President and CEO Jack Gerard said in a Bloomberg article covering the announcement.


The American Chemistry Council said that US chemical production is expected to increase by 3.2% this year and 3% next year, resulting from shale natural gas production. Chemical manufacturers are planning 238 shale-related projects over the next few years in the US. This will allow US chemical production to gain momentum through next year and give it the impetus needed to surpass the growth of the overall US economy.


As oil prices fall below $41 per barrel, forcing them to suspend or cancel new projects, according to a report released by TD Securities, Canadian oil sands companies are realizing production losses. Prices for more than half of ongoing projects cost more than $44 just to break even according to the report. In order to maintain capital requirements and realize favorable cash flows from the projects in the long term, steam-assisted gravity drainage oil-sands project operators Cenovus and MEG Energy also need $50 per barrel, the report said.


The lease sale of acreage in the western Gulf of Mexico by the Bureau of Ocean Energy Management drew the lowest bids in the region since 1983—only $22.7 million in high bids. BHP Billington was the most active participant in the smallest sale in the Gulf, came in with 26 bids. BOEM Director Abigail Ross Hopper said, “The continuing drop in oil prices and low natural gas prices obviously affect industry’s short-term investment decisions.”


Skip York, vice president for integrated energy at Wood Mackenzie said that the authorization of US oil swaps with Mexico by the Commerce Department is not necessarily an indication that crude export restrictions will be lifted or even relaxed. “The next step, absent legislative action, could be extending export policy relief to other partner countries with free trade agreements,” he said in a UPI article.


“EPA’s new proposal to regulate methane emissions is not only unnecessary, but another example of the administration’s punitive expansion of their war on fossil fuels,” said Senate Environment and Public Works Committee Chairman Jim Inhofe, R-Oklahoma in a Bloomberg report.

The Economy, Business, & Politics

Stock Market Sell-Off Turns Ugly: Dow Stock Drops 531 Points

 

Dow Stock Market Sell-Off Reminiscent of the Black Monday of 1987 when the Dow fell 508 points, the market sell-off on Friday, Aug. 24, 2015 will go down in history as one of the darkest days in market history.

Stocks fell for the fourth day in a row with the Dow falling more than 500 points into correction territory. Oil set a 6 ½-year low as it dropped below $40 per barrel.
Growing concerns about the slowing Chinese economy and falling oil prices have global markets under pressure. Recent Chinese data showed even weaker manufacturing, which added to the worries.

A day after the blue-chip index fell 358 points in its biggest tumble since Nov. 9, 2011, the Dow Jones industrial average slid 531 points, or 3.1%, to 16,640. The losses sent the blue-chip index down 10.1% from its record closing high of 18,312.39 on May 19. This means the blue-chip gauge is officially in correction territory.

The broad-based losses covered all 10 sectors of the S&P 500, with the technology and energy sectors sending the markets spiraling downward. The current slide began when the Dow plunged 358 points.

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The GOP elite is troubled by Donald Trump’s popularity and unshakable endurance in the polls, coupled by wall-to-wall media coverage of his campaign. The Republican Party hierarchy would much rather anoint an established, proven, conservative candidate. Although many believe that Trump’s campaign will inevitably implode, any signs of slowing down have yet to show themselves. Trump’s team is staffing up and strategizing a path to victory in the primaries and beyond. “The only thing that takes him out is either Father Trump or Father Time,” says Matthew Dowd, the former chief strategist for President George W. Bush. “So far, he is immune,” he added.


Sen. Marco Rubio, R–FL, is going to Detroit to present a tax plan that will create jobs and reinforce the US economy. Rubio is proposing a corporate tax cut and new rules for expensing corporate investments as well as an increased per-child tax credit for families. Democrats strongly criticized Rubio for failing to include how he would fund the tax breaks in his presentation.


Chinese stocks are again in a downward spiraling free fall despite the efforts of Chinese regulators to apply unconventional measures to stop the virtual bleeding. The US Federal Reserve openly admits that quantitative easing and zero interest rates for seven years are unconventional tactics. But blatant forbidding selling, arresting short sellers, banning negative news reports about the state of the market and suspending trade in entire sectors . . . Well—that’s pretty much over the top. But none of the aforementioned really matters, because none of the tactics worked to reverse the market slump. Everyone is asking: “How much farther can the Chinese capital markets fall? The cryptic answer is: Probably another 40% according to the analysts who base their reasoning on both technical and fundamentals.


A New York Times feature covered the Donald Trump and Jeb Bush rival town-hall meetings in New Hampshire last week. The Granite State voters got their first taste of the two candidates radically different political styles. Bush inundated voters with statistics and policy positions, while The Donald accused his “low-energy” opponent of being unelectable while an Aerosmith track thumped away in the background. The highlight of the event was Bush’s continuing inability to trip up Trump, and Trump’s newfound knack for building and winning a Republican coalition.


Without doubt, the stock market’s Fed Fever is worsening. The fate of the free world will hang in the balance in less than a month. On Sept. 17th The Federal Reserve will decide whether or not the interest rates will be raised. They have been at 0 percent for eight years.

Every economic announcement, data point, comment, nuance, and statement has been deconstructed, analyzed, reassembled and synthesized for so much as a hint of what is to come. The Federal Open Market Committee’s July meeting minutes were released and they confused the traders more than ever. Just when a September liftoff looked like it might be a sure thing, everything changed.

The analysts say the Fed is worried about downside risks to its economic projections, risks that warn of tightening too soon and evidence that inflation will remain low. This thinking resulted in the futures market pushing back their expectations of the first rate hike since 2006 from Sept. to Dec. There is now only a one-in-three chance of a September liftoff according to Bank of America Merrill Lynch.


A giant shoe is about to fall on the US economy. The rising rates could make interest on US debt as large as the defense budget. With interest rates rising and anticipated increases in the Federal debt, at some point during the next ten years, annual interest payments will be on pace to exceed the US defense budget, the largest defense budget on the planet.

The long-awaited confirmation of Janet Yellen as the next chair of the Federal Reserve Board makes it almost inevitable that sooner or later, she will preside over that increase in interest rates.

When she does, the rising rates will be perceived as generally good news. The Federal Open Market committee said that rates will only go up when the economy has made obvious progress in recovering from the Great Recession. However, for the federal budget, news about rising rates is just the opposite of good.


The majority of Americans are most likely not aware that the US Treasury blew past the country’s statutory debt limit way back in mid-March. That’s a fact. That means that the Treasury since then, and for several months into the future, will be relying on “extraordinary measures” to pay the government’s obligations. Do not kid yourself for so much as a nanosecond, the US economy is very fragile and on extremely tenuous ground.


Yet another war weakens and threatens the global economy. When China devalued the Yuan, it started the ball rolling downhill. It joined a phalanx of countries around the globe that actively depreciated their currencies against the US dollar and the currency war was in full swing.

Markets have been turbulent ever since, particularly the commodities market, which is already suffering through a weakened position.


According to a Bloomberg report, President Obama may allow most oil exports by the first quarter of 2016. Evercore IS analysts claim that a measure repealing the ban on most oil exports has a 60% likelihood of becoming law by the end of Q1, 2016. The legislation may include a provision that imposes target levels for exports, said the managing director and head of political analysis at Evercore, Terry Haines. Meanwhile, both Democratic and Republican members of Congress could perceive the policy change “as a compromise alternative that overturns the ban and is a significant step on the road to full unregulated repeal,” Haines added.

Chemical Industry News: Production Rebounds, Gas Investments & Commodity Collapse

Quote of the Day

“We would all like to vote for the best man, but he is never a candidate.”

Kin Hubbard

Chemical Industry News

U.S. Chemical Production Rebounds in June

The American Chemistry Council (ACC) reported that the U.S. Chemical Production Regional Index (UY.S, CPRI) went up 0.5 percent in June after a revised 0.1 percent fall in May and flat growth for the month of April. Chemical production by segment was mixed over the same period. Output of pesticides, synthetic rubber, chlor-alkali, plastic resins, and pharmaceuticals experienced gains. However, the gains were offset by the production of organic chemicals, adhesives, acids, phosphates, sulfates, manufactured fibers, other specialties, and fertilizers, all of which, suffered declines. Coatings production remained flat, showing no change.

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The U.S. Environmental Protection Agency (EPA) was sued by The Environmental Justice Health Alliance for Chemical Policy Reform (EIHA) and People Concerned About Chemical Safety (PCACS) for allegedly failing to stop the spill of hazardous substances from industrial sources.

The groups claimed in their lawsuit filed with the U.S. District Court for the Southern District of New York that Congress mandated the EPA to issue regulations as soon as possible in 1972 and the agency failed to do so.

University of Notre Dame researchers have identified a new polymerization mechanism to synthesize hyper-branched polymers.

LSB Industries is getting ready to complete and commission a nitric acid plant and concentrator as well as an ammonia plant at its industrial complex in El Dorado, Arkansas. The company is on schedule to start operations of the nitric acid plant and concentrator by the end of the third quarter. The ammonia plant is planned to be commissioned in the first quarter of 2016. The project was first estimated to cost between $495m and $520m, but latest figures went up to $575m.

U.S.-based G2X Energy has begun mobilization works for its methanol production plant in Lake Charles, Louisiana. The company has secured the necessary state and federal permits required to start construction and is currently doing critical studies and working on local building permits. To manage the construction project, G2X is opening a new office in the region.

Bayer CropScience and Evonik Industries have partnered and invested over $200m to construct two crop protection chemical manufacturing plants in Mobile, Alabama. The production facilities will be located at Evonik’s manufacturing complex in Theodore Industrial Park, Mobile County.

Altamont Capital Partners a U.S.-based private equity firm, has provided financing for Douglas Products to acquire Dow AgroSciences’ businesses.

Earlier this year, Douglas signed a definitive agreement with Dow to acquire its Vikane and ProFume gas fumigant businesses. Altamont has teamed with Douglas’ owners, Bill Fuller and Wes Long, who will have a majority stake in the acquisition.

San Antonio, TX consulting and marketing research firm Frost & Sullivan predict Mexican petrochemical market to reach $1.6bn in 2020. The report, titled Mexico Petrochemical Market Opportunity Analysis, said that the acrylonitrile-butadiene-styrene (ABS) and styrene butadiene rubber (SBR) segment reported its highest revenues last year. The poly butylene terephthalate (PBT) and styrene-butadiene-styrene (SBS) markets are estimated to grow between 2014 and 2020 at compound annual growth rates (CAGR) of 11.3% and 8.7% respectively.

U.S. Petrochemical producers are not fazed by oil price declines. Although oil prices imploded in 2014, experts predict they will decline even further before recovering later in 2015. The falling prices challenge the natural-gas-based U.S. petrochemical industry, but producers are expected to remain competitive with the rest of the world.

Specialty chemicals are expected to grow somewhat faster than the overall economy this year with cosmetic ingredients and catalysts for plastics bringing bright spots to the sales effort. Nonetheless, specialty chemicals used for extracting oil and gas may not fare as well in the face of the current energy glut.

The paint and construction materials market is expected to expand in the U.S. this year as the economy gains momentum. However, construction abroad is sliding as growth in China falters, Europe continues to struggle, and parts of Latin America are still in recession.

The American Chemistry Council (ACC) is cautiously optimistic about the growth of the U.S. housing industry, where every building start represents approximately $15,000 in chemical sales. Interest rates are still at historic lows, although finances among first-time homebuyers remain weak. The ACC predicts new housing starts will rise by 20% in 2015 when compared to the previous year. Overall construction, including commercial buildings and infrastructure is expected to rise around 6.7% this year according to the trade association.

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Oil & Gas News

Saudi Arabia’s Sabic Considers U.S. Shale Gas Investments

A Bloomberg article said that according to acting Chief Executive Officer Yousef al Benyan, Saudi Basic Industries Corp., the world’s second-largest chemical manufacturer, plans to expand their investment program in the U.S. by investing in U.S. shale gas projects through joint ventures.

Al-Benyan said in an interview in Riyadh that Sabic, as the company is known, signed an agreement with Enterprise products Partners L.P. of Houston, Texas to get shale gas. He went on to say that the company may use the feedstock in the U.S. or export it abroad to other countries like the U.K. Sabic has converted crackers at U.K. plants to use shale gas as feedstock to produce olefins and their derivatives at more competitive prices.

“The main areas in the U.S. we are looking to invest in are the northeast and the south as they fit our overall expectations including government support, labor laws and unions,” al-Benyan said. “At this point we are not looking to acquire any U.S. companies.”

Sabic bought General Electric Co.’s plastics unit for $11.6 billion in 2007, said in April that it plans to expand in China as well as the U.S. because growth in Saudi Arabia is difficult for the company due to the shortage of gas. The Marcellus shale formation that is spread across Pennsylvania, West Virginia and Ohio is the country’s biggest natural gas producer, with output rising more than 14-fold since January of 2007.

Click Here For More On Shales Gas Investments

Crude oil fell back into a bear market erasing $100 billion from disappointed U.S. shale drillers that were hoping for higher prices. The Bloomberg Intelligence North America Independent Explorers and Producers Index said that West Texas Intermediate, the benchmark U.S. contract, fell 22 percent since June 10 to $48.14 a barrel.

Crude’s recovery quickly withered amid the worldwide glut that shows no signs of easing. U.S. production is near the highest level in forty years. Saudi Arabia and Iraq’s output also surged to record levels, and Iran is set to resume exports after reaching a nuclear agreement with world powers.

“The commodity price is telling the U.S. shale sector to shrink,” Subash Chandra, an oil analyst at Guggenheim Securities LLC in New York was quoted as saying. “Barrels from the U.S. are on a collision course with barrels coming out of Iran, Saudi Arabia and elsewhere.”

Saudi Arabia could be bankrupt by end of the decade according to an article in Peak Oil News. The troubled country has had to borrow billions over the past year. Saudi Arabia was among the richest nations on the planet before it had to sell more that $4 billion in bonds to maintain levels of spending on public works as well as finance the Yemen war. According to Falad al-Mubarak, head of the Saudi Arabian Monetary Agency (the nation’s equivalent to the U.S. Federal Reserve), the Saudi government has also had to draw on its reserves of foreign currency to stay afloat. Mubarak predicted “an increase in borrowing” in the face of a projected $130 billion deficit. The primary cause of the predicament is the dramatic drop in the price of crude oil. From a peak of $125 a barrel in February 2011, the price for a barrel has currently fallen to under $50. Experts predict that it may be years before petroleum prices recover.

A Reuters article by John Kemp claims that U.S. oil imports are on the rise as the West Texas Intermediate (WTI) contango deepens. Futures prices are making the storage of surplus crude in the U.S. increasingly profitable. This coincides with a strong period of oil imports and a continuing buildup of already burgeoning stockpiles.

WTI crude futures suggest that the market is paying more than 61 cents per month to cover financing costs and storing oil at the Cushing deliver hub during the fourth quarter of 2015.

The WTI contango has tripled for the fourth quarter of 2015 from less that 20 cents per month at the beginning of June.

Baker Hughes, the largest suppliers of oilfield services in the world says that U.S. oil drillers are adding rigs despite the collapse of crude prices. U.S. oil producers recently added 21 oil rigs in one week, the most in more than a year, which suggests that drillers are moving more aggressively than originally expected. The total rig count is now up to 659, the highest since late May according to Baker Hughes in a Reuters news agency report.

A drop in oil prices this month will more than likely be short-term and will not deter OPEC from adhering to its practice of keeping output high to defend market share, according to delegates from Gulf OPEC members, and other nations.

Failing Chinese stock markets and the Greek debt debacle have caused concern about demand. The Iranian nuclear deal could easily lead to higher oil exports from the Islamic Republic. Benchmark Brent crude, is trading for less than $57 a barrel, has fallen more than 10 percent in July alone.

OPEC made a major policy shift last November against cutting its production target of 30 million barrels per day (bpd) to uphold prices, seeking instead to defend market share against U.S. shale oil and other competitive sources. The group reconfirmed its support of the strategy at a meeting in June.

A Reuters report by Alex Lawler said that Iraq’s southern oil exports are heading for another record in July. The country’s southern oil exports have risen above 3.0 million barrels per day (bpd) so far in July. According to loading data and an industry source, shipments from OPEC’s second-largest producer are on target for a monthly record. The Iraqi boost indicates a continuation of high output from the Organization of the Petroleum Exporting Countries that are focusing on protecting market share as opposed to curbing supply to support prices.

Credit: Live Mint

Economy

Commodity Collapse Maintains Momentum During Worst Week of 2015

A Bloomberg report by Luzi-Ann Javier said that the commodity collapse that sent gold spiraling down to a five-year low and pulled crude oil into a bear market is not showing any indications of abating.

The Bloomberg Commodity Index dropped 4.3 percent, the most since November and extended a fall to a 13-year low. Shares of Freeport-McMoRan Inc., the largest publicly traded copper producer, are braced for the worst week since 2011 as the metal fell to a six-year low in New York. Brent oil is headed for the longest run of weekly declines since January.

New evidence of the slowdown in China the world’s largest consumer of metals, grains and energy, helped prices extend losses last week. The Bloomberg commodity measure has fallen approximately 28 percent over the past year amid expanding gluts. Investors continue to hold a net-long positing, or bets on a price increase, across raw materials. They increase those bets in each of the past four weeks, leaving bulls vulnerable to endure the agony of July’s rout.

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A Wall Street Daily report said that the Canadian economy has effectively entered a recession. Last week, the Bank of Canada (BoC) “unexpectedly” slashed the benchmark lending rate to 0.5% and cut its economic growth predictions for 2015. The BoC noted, “Real GDP is now projected to have contracted modestly in the first half of the year.” It is clear that the collapse of commodities prices is having a more dramatic impact than many expected.

According to the Fiscal Times, the cost of food is going to rise after several years of modest increases and relatively low prices. Overall prices are expected to rise approximately 3 percent this year according to a recent U.S. Department of Agriculture report. That could have a profound effect on consumers, considering that Americans already spend 10 percent of their income on food.

Ronald Plain, a professor of agricultural economics at the University of Missouri said that, “Consumers are just going to have to budget more money for food. Eating isn’t really something that people can give up, and there’s not much you can do about the prices.”

A U.S. Government report said that the number of Americans filing new applications for unemployment benefits dropped to is lowest level in over 41-1/2 years, implying that the labor market maintained a solid pace of job growth throughout July. Other data supported an upbeat assessment of the economy. The bullish jobs picture, along with a robust housing market brings the Federal Reserve a step closer to raising interest rates this year.

However, detractors of the government reports touting robust markets, low unemployment, and strong job creations say the reports are misleading. The jobs being created are mostly low paying, and more Americans are working two and three part-time jobs just to make ends meet.

According to an ABC News study, Americans work more than anyone in the industrialized world. More than the English, French, Germans and Norwegians, and recently, even more than the Japanese. Americans also take fewer vacations work longer days, and retire later; not because they like work, but because they find it necessary if they want to keep their “heads above water.”

Is China’s ailing economy contagious? Will it infect the world while it struggles to recover? China is the second largest economy on the planet. Everyone fears that with its economy in a slump, China will pull the rest of the world down with it, and that includes the U.S. That could be a very frightening scenario when considering how slowly the global economy is currently growing and how few resources are available to any country to jump start business.

Make no mistake; the world economy is fragile. “We need all the growth we can get. A slowdown in China will not help,” said David Joy, chief market strategist at Ameriprise Financial.

Nonetheless, and indicator of U.S. economic activity surged in June, and widely surpassed analyst expectations by showing signs of a more robust economic outlook.

The Conference Board, a global, independent business membership and research association working in the public interest said that its Leading Economic Index rose 0.6 percent to 123.6 in June following a revised figure of an 0.8 percent increase in May and a 0.6 percent increase in April.

The leading indicators index forecast by analysts polled by Thomson Reuters inched up 0.2 percent in June. Although reports by respected analysts and financial experts paint a picture of sustained economic stability and growth, the average American still feels as if they are struggling to stay afloat and do not feel as if they are getting ahead.

Chemical Industry News: Plastics, Crude Oil Exports and Capital Investments

Quote of the Day
“America will never be destroyed from the outside.
If we falter and lose our freedoms, it will be because we destroyed ourselves.”

Abraham Lincoln

Chemical Industry News

Research has revealed that plastics and shale gas are the leaders in the American business arena. Since 2010, the plastics industry has announced or anticipated nearly $47 billion in total U.S. investments to come online during the next decade. This includes $25 billion in new capacity to produce plastics and resins. By 2020, the capacity to produce the plastic resin most advantaged by shake gas, polyethylene, is expected to grow more than 59 percent. Polyvinyl chloride and polypropylene resins are also expected to benefit from an abundance of affordable shale.

Over the next decade, more than $19 billion in increased capacity to process plastics and related materials is anticipated to come online in the U.S. Over 460 plastics processing projects have been announced in more than 40 states, with numerous projects in Indiana, Michigan, Wisconsin, Texas, Illinois and Ohio.

Currently, the American plastics industry employs more than 600,000 people. Production from new capacity is forecast to increase industry employment by more than 20%, adding 128,000 direct new jobs, 173,000 indirect jobs, and 161,000 payroll-induced jobs. The plastics industry is expected to grow by 462,000 employees with a payroll of $27 billion.

In the next ten years, the U.S. plastics industry is expected to support 2.7 million American jobs. If all predictions are anywhere near accurate, plastics will become a major driver of U.S. exports. Net exports of plastics could more than triple, growing from $6.5 billion in 2014 to $21.5 billion by 2030.

The United States is the largest national producer of chemical products in the world. The industry supports 25% of the U.S. $4.2 trillion GDP and provides Americans with close to seven million jobs.

The American chemical industry produces 15% of the world’s chemicals with around $189 billion or 12% of U.S. exports. The American Chemical Council (ACC) reports that the U.S. safely shipped 866 million tons of chemicals in 2013. That would fill enough rail cars end to end to circle the planet three times.

An ACC report says that the specialty chemical market volumes in the U.S. fell by 0.8% in May, continuing a series of declines since December of last year, according to the ACC Weekly Chemistry and Economic Report from Washington, D.C. “Weakness in oilfield chemicals and other segments weighed on overall volumes,” the ACC report said. Of the 28 specialty chemical segments monitored by the ACC, only six expanded in May, with two that were flat and 20 declining.
The long outdated Toxic Substances Control Act is making a significant move toward reform. The House is expected to vote on the TSCA Modernization Act on Tuesday, June 30 if all goes as planned. The bill got a green light from the House Energy and Commerce Committee early this month without any opposition.

At a recent mayor’s meeting, a hundred business groups got together and signed a letter to President Obama asking him to abandon his plan to restrict ozone pollution levels. The letter was sent the same day the president spoke at the annual meeting of the United States Conference of Mayors in San Francisco. The group argued that the Environmental Protection Agency’s (EPA) proposal to set the ozone limit at 65 to 70 parts per billion — down from the current 75 parts per billion — was too severe and would stifle economic activity.

To compound the ozone reduction opposition, Rep. Glenn Grothman, R-Wis., unveiled legislation that would prevent the EPA from drafting stricter ozone standards. If the bill passes, Congress would have the sole authority to set the ozone standards, not the EPA.

The World Plastics Council (WPC) strongly supports the leaders of the G-7 who defined a bold action plan to reduce marine litter at their recent summit in Germany. “Marine litter is a global challenge that requires a global response,” said Mr Abdulrahman Al-Fageeh, the newly elected Chairman of the World Plastics Council and Executive Vice President, Polymers SBU, SABIC.

“The plastics industry is contributing a number of concrete solutions to this global challenge. One of these solutions is the Operation Clean Sweep® program that is currently being rolled out globally and along our value chains”, said Al-Fageeh. He went on to say that the plastics industry is successfully contributing to reducing the loss of plastic pellets, and they are pleased that the G-7 leaders have recognized this as an important measure.”

At a recent congressional hearing, the Senate put the U.S. environmental regulator in a defensive posture over the handling of the nation’s controversial renewable fuels program. This was the first meeting since the new biofuels targets last month provoked a furor among oil refiners and corn farmers.

The hearing, held by the Senate subcommittee on regulatory affairs and federal management, allowed the U.S. lawmakers to strongly criticize the EPA for years-long delays to quotas, and for last month, setting unattainable targets for the amount of corn-based ethanol and other biofuels necessary for the nation’s motor fuel supply over the next two years. The congressmen also questioned the future of the 10-year-old Renewable Fuels Standards (RFS), that critics say has increased prices of food and fuel at the pump.

Oil Gas TheChemCo.com

Oil & Gas

Harold Hamm, chairman ad CEO of Continental Resources and chairman of the Domestic Energy Producers Alliance recently wrote an opinion piece urgently encouraging Congress to end the ban of crude oil exports that has prevented the U.S. from becoming energy independent and has limited the nation’s geopolitical power. The article said that maintaining the ban would only hurt the hydraulic fracturing boom, worsen job losses, slow down the manufacturing industry make the nation dependent again on foreign oil and benefit the few. “Without the ability to export crude oil, we are chasing our allies into the open arms of dictatorial regimes,” he said.

A $48 billion stock-based takeover offer from pipeline magnate Keley Warren was firmly rejected by Williams Cos. The offer was specifically designed to derail consolidation of the North American natural gas and oil hauler. In a statement that did not identify the bidder, Williams said that the offer devalued the group and hired banks to explore alternatives. The offer was valued at $64 a share, a 32 percent premium to Friday’s closing price, Energy Transfer Equity LP said in a statement that confirmed it was the bidder. According to the statement, the offer is worth $53.1 billion, including debt and other liabilities.

A Stanford University study found that the volumes of wastewater injected into disposal wells may be linked to seismic activities or earthquakes in Oklahoma. However, Energy in Depth (EID) a research, education, and public outreach program launched by the Independent Petroleum Association of America, said the research did not consider a few accounts of seismic activity in the 1980s when high wastewater disposal volumes were also present.

Rising OPEC output was met with forecasts for a contraction in U.S. supply, causing hedge funds to reduce both bullish and bearish bets on oil for a fourth week.

Based on EIA estimates, daily production from shale formations such as North Dakota’s Bakken and Texas Eagle Ford is expected to shrink 1.3 percent to 5.58 million barrels this month. It is predicted to drop further in July to 5.49 million barrels, the lowest level since January.

The net-short position on U.S. natural gas dropped 23 percent to 75,742. The measure includes an index of four contracts adjusted to futures equivalents. Nymex gas rose to $2,894 per million British thermal units.

For the seventh time, U.S. oil inventories decreased to 457.9 million barrels in the week ending on June 12. However, that is still 80 million more than the year before. For the first time in eight weeks, supplies at Cushing, Oklahoma, the delivery point for WTI futures increased.

Sabine Oil & Gas Corp., Houston, has decided to skip a $21 million interest payment and enter a 30-day grace period to either make the payment or slide into a debt default. The company drills for oil and gas in Texas and Louisiana.

Data from Baker Hughes, Inc. reports that the U.S. drilling rig count decreased to 9 units during the week ended June 12 to settle at 859 working rigs.

The International Energy Agency (IEA) said that the climate change conference to be held in Paris in December has prospects of achieving meaningful commitments to reduce dioxide (CO2) emissions as key countries such as the U.S. and China offer increased concessions.

Energy-related CO2 emissions could decline at nearly twice the rate achieved since 2000 if the European Union honors it’s pledge to cut GHG (greenhouse gas) emissions by at least 40% by 2030 (relative to 1990 levels). The IEA said that would make it one of the world’s least carbon-intensive energy economies.

Respected analysts concur that U.S. propane prices could fall another 40%, a trend that could further drag down propylene prices while raising those for ethylene.

According to ICIS, American polymer-grade propylene (PG) prices fell to a six-year low, with the June contracts dropping to 40.00 cents/lb. ($644/ton).

ICIS analysts show that the European ICIS Basket of Automotive Petrochemicals (IBAP) rose for the third consecutive month in May, climbing to its highest level since November of 2014.

An ICIS margin report showed that U.S. spot ethylene margins rose 2.3% for the week ended 5 June, boosted mostly by a rise in spot prices. Margins for ethane-based spot ethylene rose to 30.15 cents/lb. ($665/ton) for the same period from 29.48 cents/lb. from the previous week. A drop in ethane costs also boosted margins, which dropped to 7.92 cents/lb. from 8.09 cents/lb.

As surging butadiene (BD) and aromatics values outweighed a drop in propylene values, Ethan cracker co-product credits rose to 2.57cents/lb. from 2.51 cents/lb.

Front-month June ethylene was hard bid at 35.75 cents/lb. against offers at 36.50 cents/lb.

PBF Energy, Inc. agreed to purchase the 189,000 barrel-a-day Chalmette, Louisiana refinery for $322 million from Exxon Mobil Corporation and Petroleos de Venezuela SA, marking the New Jersey-based Exxon’s first appearance on the Gulf Coast. The transaction is anticipated to close by year-end and boost 2016 earnings by 20 percent as PBF shares jumped 17 percent to $31.04.

The Bureau of Labor Statistics Producer Price Index reported that U.S. exploration and production companies realized a 19.6% decline in oilfield drilling costs from June 2014 to May 2015 as oil and natural gas prices dropped by 49% amid the price slump. The Energy Information Administration (EIA) said that lower rates from drilling service providers were driven by the “downward pressure” on E&P capital expenditures.

According to a Bloomberg Intelligence index of 62 companies, the debt that fueled the U.S. shale boom now threatens to be its downfall. The number of shale drillers that have interest expenses of more than 10% of their revenue went up from 12 last year, to 27 this year. While drillers’ revenues fell, the index revealed that their total debt at the end of the first quarter also went up 16% from the previous year to $235 billion. The companies also realized a higher expenses-to-income ratio in the first quarter amid a record high output, spending $4.15 per dollar of earnings compared with $2.25 in the previous year.

 

Economy Chemical Industry News
 

The Economy

An American Chemistry Council report said that the U.S. chemical industry’s capital investments increased 64% from 2010 to 2014, and they will probably increase 37% by 2018 to reach $45.8 billion. ACC Chief Economist Kevin Swift said that the American chemical industry is bringing in an increasing share of global chemical investment. Meanwhile, approximately 61% of new chemical investments in the U.S. are from outside the country.

Swift also said that the American chemical industry is highly competitive and is anticipated to grow more quickly than the GDP. Approximately $142 billion has been invested in 231 shale-related projects in the U.S., according to Swift. Celanese Chairman and CEO Mark Rohr added that demand growth for petrochemicals is expected to come largely from overseas sources.

The St. Petersburg International Economic Forum witnessed several production, refining, and production agreements signed by Rosneft (Moscow) and BP, which owns 19.75% of Rosneft. Igor Sechin, Rosneft chairman and David Campbell, president of BP Russia, signed the documents. As part of the agreements, BP will have sole ownership of the Gelsenkirchen refinery in Germany, which includes two ethylene plants with combined capacity of 1 million m.t./year.

Univar closed a $770-million IPO with their first day of trading at $25.40, up 15% from the initial IPO. The shares trade on the New York Stock Exchange (NYSE) under the symbol UNVR.

The continued trend of small monthly declines since the beginning of the year marked the preliminary value for the April 2015 CE Plant Cost Index (CEPCI; the most recent available). The CEPCI for April is 1.8% lower than the corresponding value from the same time a year ago. The preliminary value for the Equipment subindex in April decreased for the second consecutive month while the Construction Labor subindex was higher. The Buildings subindex for April saw a very small decline while the Engineering & Supervision subindex was also slightly higher. The May 2015 CPI value of output remains below the corresponding value from 2014, while the latest Current Business Indicators numbers were generally similar to the previous month’s values.

Dr. Marvin L. Baker of High Technology Associates presided over speakers from the U.S. and Germany as they presented at the Houston Business Forum. The event focused on the Houston petrochemicals industry and considerations for European companies seeking to establish a U.S. presence.

Although the American recycling business was once profitable for cities and private employers, in recent years it has been stalling and has become a money-sucking enterprise. Although the District of Columbia, Baltimore, and many counties in between have annually contributed millions to support one of the nation’s busiest facilities in Elkridge, MD, it is still losing money. It is an accepted fact that nearly every facility like it in the entire country is running in negative figures. Sadly, Waste Management and other recyclers say that over 2,000 municipalities are paying to dispose of their recyclables instead of the other way around.

According to Commerce Department figured issued by Washington, gross domestic product shrank at a 0.7 percent annualized rate in the first quarter, revised from a previously reported 0.2 percent gain. The reading is the weakest since adverse winter weather quashed growth at the beginning of 2014.

Michael Gapen, New York-based chief U.S, economist for Barclays Plc. said, “The economy slowed in the first quarter, but we’ll see an acceleration in the second. He went on to say, “It keeps the Fed in line for a rate hike in September.

Economic outlook for Latin America — grim. New leadership is coming into power in Latin America, and the free market is in serious decline as the hard left showed unexpected gains. Any prospects Columbians had for enjoying even modest prosperity have been severely hampered by a new wealth tax. The Venezuelan economy is on a downward spiral into chaos and Brazil is struggling hard to deal with a worsening recession, while the Argentinian economy continues to shrink.

Executives from industry groups gathered at an event concurred that ending restrictions on natural gas exports would bring more jobs, pipelines and prosperity to Pennsylvania and help U.S. allies in Europe realize relief from their dependence on Russia. Gas exports alone would add as much as $10 million in income and create 60,000 jobs by 2035, American Petroleum Institute Upstream and Industry Operations Director Erik Milito said. He went on to say that exporting gas to allies is a national security issue as Russian President Vladimir Putin “has his finger on the lever of gas supplies.”