Chemical Week

WESTLAKE to Take Stake in Saudi Petchem Project? • CAUSTIC SODA Producers FloatAnother Increase • NEW JERSEY Files Civil Suit Against W.R. Gracewww.chemweek.comThe Worldwide News Source for Chemicals Makers and Processors • June 8, 2005 • $12.00 U.S., $15.00 elsewhere • PMA 40051509SpecialtyChemicalsSticking to TougherPricing Policies

THE WEEK: June 8, 2005contentsVolume 167 • Number 19COVER STORY: MANAGING SPECIALTY CHEMICALS23 Sticking to Tougher Pricing PoliciesProifitability in the specialty chemical sector is finally movingin the right direction again, following a shift in stanceon pricing, producers and analysts say. Tighter markets andrising raw material costs are giving sellers leverage to raiseprices, and more producers say they are willing to give upaccounts that result in low or negative margins. There isalso a growing trend to structure contracts to include valueaddeditems, such as R&D and technical service.www.chemweek.comNewsbriefs6 FTC clears OxyChem purchaseof Vulcan’s chlor-alkali •Albemarle expands flameretardants capacity • EPArejects requests for oxygenatewaivers • Industry-specificclimate change plan proposed• Group attempts to thwartTPI restructuring • Germanrecovery falters • FormerYukos chairman jailedEUROPE/MIDEAST19 Ineos confirms plan for German ethylene unitASIA/PACIFIC20 Formosa expects okay for China petchem planNew Construction Projects22 Asahi considers acrylonitrile plant • M&Gto build PTA plant in Brazil • Degussa plansisophorone unit in Germany • Sumitomoexpands MMA, PMMA in Singapore • GrandTop of the Week8 Westlake to become partnerin Saudi petchems project?8 Lanxess to cut jobs in styrenicsand fine chemicalsBusiness & Finance NewsUNITED STATES/AMERICAS9 GAO takes government totask over security measures9 Sherwin-Williams executiveto head OM Group13 New Jersey alleges that Gracefalsified cleanup report13 Unauthorized GM corncauses trade snafu in Japan15 Plant closures will dentGeorgia Gulf’s earnings17 Octel loses its largestcustomer for TEL17 Shaw Industries buysoverlays plant from Dynea18 Engelhard buys Sinopec’ssyngas catalyst business8913Pacific adds ABS in China • BASF to buildcyclohexane plant • Fluor lands site and utilitiescontract from Sabic • Itochu, Siam Cementand PTT confirm HDPE venture in IranTO SUBSCRIBE GO TO WWW.CHEMWEEK.COMwww.chemweek.com Chemical Week, June 8, 2005 1

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THE WEEK: June 8, 2005contentsPHARMA INTERMEDIATES31 High-Potency APIs: Too Riskyfor New Entrants?Growth in high-potency active pharma ingredientsshows no signs of slowing in the short term, butcompetition is building, and with it the risks ofparticipating in the sector, analysts say. There isconcern that a rush of new entrants could lead toovercapacity and price pressure.www.chemweek.comPharmaceuticals & Fine Chemicals31 Chromos licenses cell line technology to Pfizer31 A-Bio to supply biologic to Novo NordiskCW75Specialty Chemicals39 Cargill acquires Citrico’s pectin business39 International Group buys Honeywell wax unitBasic Chemicals & Plastics40 Producers push for another caustic soda hike40 Plastic demand slips inthe first quarter41 Product Focus: LDPE42 CW Price ReportRegulatory43 Study links phthalates toproblems in male infants43 Bisphenol-A implicated inbreast cancer43 Whistleblower complaintover PFC researchCompanies45 Symyx: Offering HTR andsoftware to speed upchemical research434548 Chemical stocks follow the broader markethigherDepartments5 Viewpoint: Hold onto your prices47 Key Changes47 Leading Indicator:Back in a positive directionFeatures44 Accenture/CWMarketing Survey46 MarketplaceCW75 Index*JUNE 1 145.15WEEK AGO 143.99QUARTER AGO 156.40YEAR AGO 122.78*Jan. 1, 2002 = 100.47TO SUBSCRIBE GO TO WWW.CHEMWEEK.COMwww.chemweek.com Chemical Week, June 8, 2005 3

CHEMICAL WEEKESTABLISHED 1914110 William Street, New York, NY 10038212-621-4900; Fax: 212-621-4800Editor-in-Chief Andrew Wood 212-621-4956Managing Editor/Specialties,Logistics, and IT Esther D’Amico 212-621-4954Senior Editor/News Robert Westervelt 212-621-4944Senior Editor/Environment,Regulatory Issues, and Latin America Kara Sissell 212-621-4831Senior Associate Editor/Basic Chemicals and Plastics,and Chlor-Alkali Marketwire Peck Hwee Sim 212-621-4953Senior Associate Editor/Specialtiesand Finance Kerri Walsh 212-621-4931Associate Editor/Regulatory Issues andIT, and Editor/Daily Newswire Nancy Seewald 212-621-4915Associate Editor Veronica MacDonald 212-621-4983Copy Editor Edmund Berrigan 212-621-4665Editorial Assistant Ryan W. 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KrausDirector of Production & ManufacturingSteven OlsonArt DirectorMario SotolongoAdvertising Production Director John Blaylock-Cooke 212-621-4655Art/Production ManagerGen YeeAssistant Production ManagerRosalene Labrado-PerilloFINANCE/ADMINISTRATIVEVice President of Information Technology Robert PaciorekDirector of Financial Planning Steve Barber 301-354-1502Director of Human ResourcesLisa K. TobioCONFERENCES/TRADE SHOWSDirector of Global Events Seth H. Kerker 212-621-4959Director, Global Event Sponsorships Dana D. Carey 212-621-4972Conference Registration Manager Carla Gutierrez 212-621-4978CIRCULATIONVice President of Circulation Sylvia Sierra 301-354-1661Sr. Fulfillment Manager Velma Artis 301-354-1706Circulation Director Stuart Bonner 301-354-1707Circulation Manager Ben Cross 301-354-1765Subscription Services 815-734-5806; Fax: 815-734-1246List Rentals Jennifer Booher, Worldata 561-393-8200Reprints Darla Curtis 800-211-6356; 301-354-1709Customer Service Line (International) +44 114 220-2440Fax: +44 114 278-0666AN ACCESS INTELLIGENCE PUBLICATIONDivisional PresidentBrian LangilleHold On to Your PricesviewpointAt long last, profitability is moving in the right direction for specialty chemical makers.Encouraged by stronger demand, rising feedstock and energy costs, and tighter supply, manyspecialty producers have been able to raise prices and make them stick, providing big margingains for some product lines during the past 18 months (cover story, p. 23). Specialty chemicalprices improved by an average of 5%-8% in the first quarter alone, and margins are movingback to reinvestment levels. Raj Gupta, CEO of Rohm and Haas, told analysts recently that thisis “the best environment for pricing in decades.”What a far cry from the situation just two years ago, when theeconomy was soft, markets were oversupplied, and powerful buyerswere wresting price reductions from specialty chemical makers.At that time, many specialty firms had business plans that did notinclude price increases. Worse, many were willing to cut pricesto boost volumes, a model that only serves to redistribute overallmarket share at lower margins. The specialty industry was startingto behave like the commodity sector, obtaining little benefit for itsperceived value to the end user.But the current turnaround is being driven by more than justthe push from feedstock costs and tighter supply-demand balances.Analysts point to a new generation of specialty chemicalexecutives that are willing to sacrifice volume for margin, and arestarting to walk away from unprofitable customers. At the sametime, software from companies such as Vendavo and Pros Pricing Solutions are providing producerswith the tools they need to fully analyze their pricing structure, and make sure theyinclude items such as the cost of R&D and technical service.It’s one thing to achieve all this in the current market, but quite another to maintain it if theenvironment starts to change. Already, a hiccup in demand for some plastics has caused theprice of olefins to drop precipitously—those are feedstocks for a range of specialty products.Although this drop is believed to be inventory driven, there are concerns about underlying economicgrowth. They include the poor health of the U.S. auto industry, the impact of higherenergy and gasoline prices on consumer spending, and a possible bursting of the housing bubble,any of which would have serious repercussions on specialty chemical demand.At the same time, retail inflation remains low, suggesting that pricing success in the specialtychemical sector has merely shifted the margin squeeze downstream to those that supply theretail market. That pressure could rapidly move back to chemical firms if downstream marketsslow significantly. Firms including R&H have already expressed caution about the secondquarter. It’s a lot harder for a specialty firm to walk away from business when demand is slowing,and a lot easier to lose pricing power. Now that specialty firms have improved their pricingpractices, the big challenge will be to maintain them over the longer term. Can you hold on toyour prices?—ANDREW WOODChemical Week, ISSN 0009-272X (including Chemical Specialties and Chemical Industries), copyright© 2005 by AccessIntelligence LLC, 1201 Seven Locks Road, Suite 300, Potomac, MD 20854, is published weekly except for ten combinationissues—1/5-12, 2/23-3/2, 4/6-13, 5/25-6/1, 6/29-7/6, 7/20-27, 8/24-31, 9/28-10/5, 11/30-12/7, 12/21-28—and the annualChemical Week Buyers’ Guide, published in October. SUBSCRIPTIONS: One-year rates are $159 in the U.S. and Possessions;$180 in Canada & Mexico; $319 South America & the Caribbean; $499 International. $20.00 Single copy/Back issue sales.Postmaster send address changes to: Fulfillment Manager, Chemical Week, P.O. Box 748, Mt. Morris, IL 61054-0748 USA. Tel: 1-800-774-5733, Fax:815-734-5883, e-mail: wkch@kable.com. For information regarding article reprints only, please contact Darla Curtis, Reprint Sales Manager, 1201 SevenLocks Road, Suite 300, Potomac, MD 20854. 800-211-6356, 301-354-1709, fax 301-340-3819, e-mail: dcurtis@accessintel.com. Periodicals postage paid atRockville, MD and additional mailing offices. Postage paid at Montreal, PQ, GST Account No. 133670737. Publication Sales Agreement #40558009. Returnundeliverable Canadian addresses to: P.O. Box 1632, Windsor, ON N9A7C9. Title registered in U.S. Patent Office. Registered with the British Post Officeas a newspaper. Printed in the U.S.www.chemweek.comChemical Week, June 8, 2005 5

newsbriefs THE WEEK: June 8, 2005■ BDP Acquires Another Logistics FirmBDP International (Philadelphia) says ithas acquired logistics firm Elite Group(Houston). Both Elite and its subsidiarieswill continue to operate under its currentmanagement as an independent subsidiaryof BDP. Terms were not disclosed.The two firms say they will benefit fromeach other’s technology, and the combinationof their worldwide networks.“Eventually we will work on integratingour systems,” BDP says. BDP says thatsince 2002 it has acquired several logisticsfirms in Western Europe, formed apartnership with a Japanese firm, a jointventure in Qatar, and opened offices inChina, Dubai, and Saudi Arabia.■ California Passes Safe Cosmetics ActThe California Senate has passed a billthat would require cosmetic manufacturersto provide the Department ofHealth Services (DHS; Sacramento) witha list of the products sold in the state,and to identify any product ingredientsidentified as causing cancer or reproductivetoxicity. The bill, sponsored byCalifornia Senator Carole Migden (D.,San Francisco), would also require that, iffunding is available, DHS decide whetherthe product ingredients have beenadequately tested for safety to humanhealth. The bill has to be approved bythe assembly before it can be sent to thegovernor for his signature.■ Huber Acquires ATH BusinessJ.M. Huber says it has acquired thealumina trihydrate (ATH) business ofAluChem (Cincinnati). Terms werenot disclosed. Huber says the acquisitionstrengthens its existing position inATH in North America by improving itscost structure, and adding significantcapacity. “The higher production volumesresulting from the acquisition ofAluChem’s ATH business will enableHuber to make better use of its currentoperations, and significantly improveperformance,” says Don Rubright, presidentof Huber Engineered Materials.■ Grace to Shut Darex PlantW.R. Grace says it will shut its Darex specialtypolymers facility at Owensboro, KYby December. The company says that 50jobs will be eliminated as a result of theshutdown.FTC Clears OxyChem’s Purchase of Vulcan’s Chlor-Alkali BusinessFTC says it will allow OxyChem’s proposed purchase of Vulcan’s chemical business, providedthat OxyChem divests Vulcan’s Port Edwards, WI facility (CW, Oct. 20, 2004, p. 8). FTCsays it has agreed to a consent order with OxyChem that calls for the Port Edwards facilityand related assets to be sold within 10 days of the close of the deal. OxyChem has alreadyannounced plans to sell the Port Edwards facility to Erco Worldwide (Toronto), a maker ofsodium chlorate, for $29.5 million. The purchase price for the Vulcan assets is approximately$214 million, plus future contingent payments projected to equal $145 million, Vulcan says.FTC says the consent order will alleviate the possible anticompetitive impact in potassiumhydroxide, and anhydrous potassium carbonate (APC) markets. FTC says the markets for thesechemicals are highly concentrated, with OxyChem and Vulcan as primary competitors and theonly U.S. producers of APC.Akzo Targets Top Coatings Position in ChinaAkzo Nobel CEO Hans Wijers says that the company is aiming to be thenumber one coatings producer in China. “Although we are the world’sbiggest coatings company, we are not yet number one in China,” Wijerssaid, speaking at the recent opening of a new decorative coatings facility inSuzhou near Shanghai. “This is one of our strategic priorities. I’ve alreadystressed the importance of China in our global strategy, and the opening inSuzhou is just the latest stage.” Akzo says that coatings sales in China haveincreased nearly 400% since 1998. “There is huge potential for Akzo NobelWijers: Hugepotential for growth.to benefit from further growth opportunities,” Wijers says. “By continuingto invest in China, we are delivering on our commitment to actively pursueexpansion opportunities, particularly in emerging markets.”Albemarle to Expand Flame Retardants CapacityAlbemarle says it will expand production of its fine precipitated aluminum trihydrate (ATH),and high-purity magnesium hydroxide mineral flame retardants. The company says it will converta former zeolite plant at its Pasadena, TX site to produce ATH. The plant is expected tohave capacity for 25,000 m.t./year, and is scheduled to be completed in 2006, the company says.The project will raise Albemarle’s worldwide fine precipitated ATH production by more than20%, and will serve North American customers, the company says. Meanwhile, Albemarle’sMagnifin Magnesiaprodukte joint venture with RHI Group (Godalming, U.K.) has beguna project to double its 10,000-m.t./year, high-purity magnesium hydroxide flame retardantscapacity at the jv’s Breitenau, Austria site in two stages. That project is also due to be completedin 2006, Albemarle says.EPA Rejects Requests for Oxygenate WaiverEPA has denied requests by California, Connecticut, and New York that they be releasedfrom Clean Air Act mandates that require gasoline sold in densely populated areas contain2% oxygenate by weight. The states have banned methyl tert-butyl ether (MTBE), one of twoadditives used to meet the oxygenate requirement, and the states will have to rely on ethanolfor summer gasoline blends. That rejection could increase gasoline prices up to 8 cts/gallon,the states say. EPA says it grants waivers for the oxygenate requirement only if the states candemonstrate that the requirement hurts or prevents their attainment of federal air qualitystandards. “California, Connecticut, and New York did not make this demonstration,” EPAsays. It is the second time EPA has rejected a waiver request from California; the first wasdenied in 2001. EPA says it agrees with California’s assertion that a waiver could decreasesome smog-forming emissions, but that other pollutants such as carbon monoxide wouldlikely be increased.Astaris Plans R&D FacilityAstaris says it will open an R&D facility at Webster Groves, MO in November. The facility willestablish an independent R&D function for Astaris, which had previously shared research andproduct development space with Solutia. The 10,000-sq ft building will provide both laboratoryfacilities and office space to strengthen Astaris’s product development capabilities across itsentire range of food and technical grade phosphate salts and acids, Astaris says.6 Chemical Week, June 8, 2005 www.chemweek.com

Think Tanks Mull Industry-Specific Climate Change PlanNon-government think tanks, including the Center for Clean Air Policy (Washington), discussedthe possibility of introducing emission-reduction schemes for individual industrialsectors, rather than individual countries, at a meeting that formed part of the EuropeanCommission’s “Green Week,” held recently in Brussels. Industry-specific reduction targetsfor emission of global warming gases could be a viable alternative to the Kyoto Protocol’scountry-by-country system of emission reductions, they say. Industry-specific reductiontargets would remove concerns among countries including the U.S. about the potentiallyharmful effects of the Kyoto treaty on global competitiveness of countries, the think tankssay. An industry-specific scheme could attract the participation of the U.S., which abandonedthe Kyoto treaty, and could be introduced in 2012, they add. Separately, members of theEuropean Parliament (MEPs) have proposed a resolution that would impose taxes on exportsto the European Union from countries that do not sign up for the Kyoto Protocol. The taxeswould balance the commercial advantages gained by countries that do not implement emissionreduction programs, MEPs say.Chinese Firm Enlisted to Thwart Government Restructuring of TPIChina International Trust & Investment Corp. (Citic; Beijing), a state-owned investmentand trading firm, says it plans to form a joint venture with six minority shareholdersin Thai Petrochemical Industry (TPI)—including TPI’s founder and former CEO PrachaiLeophairatana—that will launch a $2-billion bid to acquire 70%-75% of TPI. The jv will alsorepay TPI’s $2.7-billion debt, Citic says. The move challenges a previously announced plan bythe Thai government to restructure TPI’s debt (CW, May 4, p. 7). State-owned energy companyPTT (Bangkok) would purchase 31.5% of TPI and three other government agencies would eachbuy 10% of TPI, as part of that plan. Thailand’s finance ministry signed a preliminary agreementfor the transactions on June 1. Prachai has been fighting to regain control of TPI since2003, when the Central Bankruptcy Court (Bangkok) appointed the finance ministry to devisea debt restructuring for TPI. Prachai says he presented details of the planned jv with Citic to thecourt in late May, and that the court has set a deadline of late August for the jv to raise funds tobuy the TPI stake and repay the company’s debt. The plan would “nullify” the finance ministry’srestructuring of TPI’s debt, Prachai says. The ministry says it will nevertheless proceed with itsplan, which it aims to have in place by early November.BASF Executives to Head Biotech, Agchem Industry AssociationsHans Kast, president and CEO of BASF Plant Science, the biotechnology subsidiary of BASF,has been elected chairman of European biotech industry association EuropaBio (Brussels),effective immediately. He succeeds DSM boardmember Feike Sijbesma, who has completed histwo-year term of office, but will remain a EuropaBioboard member. Kast was previously vice chairmanat EuropaBio. Separately Hans Reiners, president ofBASF Agricultural Products, the agchems subsidiaryof BASF, has begun a two-year term as president ofglobal plant science industry federation CropLifeKast: Newly electedhead of EuropaBio.Reiners: CropLife’snew president.International (Brussels). He succeeds Syngenta CEOMichael Pragnell, who has completed his term ofoffice. Reiners was previously v.p. at CropLife.Germany’s Recovery Runs Out of SteamChemical production increased 5% in Germany in the first quarter compared with the yearearlierperiod, but was up only 0.5% compared with the previous quarter, according to industryassociation VCI (Frankfurt). That compares with quarter-on-quarter output growth of 4.2% inthe last three months of 2004. The year-on-year output increase reflects the “weak” first quarterof 2004 rather than any fundamental improvement so far in 2005, VCI says. “In early 2005,the upward trend continued, but slowed,” VCI says. “Now scepticism is growing as to whetherthe positive trend will last throughout the year.” It cites weakness in the German economy; thestrong euro; high oil prices; and lower exports. VCI nevertheless maintained its full-year productiongrowth forecast at 2%-2.5%.■ Former Yukos Chairman is JailedA Moscow court has sentenced MikhailKhodorkovsky, former chairman of oilcompany Yukos (Moscow), to nine yearsin prison after he was found guilty on sixcharges of fraud and tax evasion. One of thecharges relates to the 1994 privatization offertilizer company Apatit. The trial beganin mid-2004. Yukos owns a petrochemicalcomplex at Angarsk, Russia.■ Sumitomo, Bayer Develop FungicideSumitomo Chemical and Bayer CropSciencesay they have agreed to jointly developBayer’s BYF1047 rice fungicide to treatthe fungal disease rice blast. Bayer saysBYF1047 is effective against the Pyriculariafungus that causes rice blast, which it saysis the world’s most economically damagingdisease in rice. Sumitomo and Bayer willjointly develop BYF1047 primarily for use inJapan. Sumitomo and Bayer will each holdglobal rights to market products containingBYF1047 that are developed as a resultof the collaboration. BYF1047 is due to belaunched in Japan in 2010-11.■ Bidders Vie for Fertilizer FirmA consortium led by private equity capitalfirm Egypt Kuwait Holding Co. (Giza, Egypt)has bid $456 million to acquire 88.25% ofEgyptian Fertilizers Co. (EFC; Cairo), toppingan earlier $450-million bid by HomefieldInternational, a subsidiary of Tata Chemicals(Mumbai), for 100% of EFC. Tata haduntil June 7 to decide whether to make animproved bid for EFC. The Egyptian governmentrecently invited bids to acquire EFC(CW, April 27, p. 15).■ Arkema Signs Vinyl Jobs DealArkema says it has signed a “voluntaryearly retirement agreement” with tradeunions covering 346 of the 523 jobs thecompany plans to ax as part of a previouslyannounced restructuring of its vinyl productsbusiness in France (CW, Feb. 9, p. 7).It will offer the 177 other affected workersalternative employment elsewhere withinthe company, or assistance to set up theirown businesses. Arkema is pursuing theplan despite its rejection by the company’sworks council at a meeting on May 19.■ Sicpa Buys Wacker Pigments UnitSicpa Group (Prilly, Switzerland) says it hasagreed to buy the liquid-crystal pigmentbusiness of Wacker-Chemie, effective July 1.www.chemweek.com Chemical Week, June 8, 2005 7

top of the weekJune 8, 2005Westlake to Become Partnerin Saudi Petchems Project?Westlake Chemical (Houston) willbecome a leading equity partner in apreviously announced, $3.5-billionpetrochemicals complex planned by ProjectManagement & Development Co. (PMD;Al Jubail, Saudi Arabia) at Al Jubail, sourcessay. Privately owned PMD hasbeen trying to develop the project,which will be based on an ethane-and butane-fed steam cracker, forseveral years (CW, June 25, 2003,p. 12). The company announced18 months ago that it had receiveda feedstock allocation for thecomplex from Saudi Aramco. Theproject has been slow getting offthe ground, however, for financialreasons, sources say.Westlake and PMD are expected to be theprincipal equity partners in the complex.Undisclosed shareholders from Saudi Arabiaand other Gulf Cooperation Council countriesare also expected to participate.Westlake declined to comment, but saysit is looking for growth opportunities. “Wecontinue to review a variety of opportunitieseach year with an eye toward securingopportunities that will return value to ourshareholders,” the company says. PMD’sproject is expected to generate an attractivereturn on investment because of its use oflow-cost feedstocks, and its proximity toAsian markets, sources say.PMD says it has selected Fluor Corp. toprovide front-end engineering and designas well as project management consultancyservices for the complex.The facility will produce 1.35 millionm.t./year of ethylene, 700,000 m.t./year ofpropylene, 100,000 m.t./year of benzene, and50,000 m.t./year of butene-1. Downstreamfacilities will have annual capacities for950,000 m.t. of polyethylene (PE), 600,000m.t. of polypropylene (PP), 530,000 m.t.of ethylene oxide and 660,000 m.t. ofethylene glycol (EG), 300,000 m.t./year ofbisphenol A, as well as phenol and cumene.Additional derivative facilities will beinstalled for methylamines, ethanolamine,and ethoxylates, PMD says.The polyolefin units will comprise aProject willinclude olefins,benzene, PE,PP and EG.350,000 m.t.-400,000 m.t./year lowdensityPE plant; a gas-phase high-densityPE (HDPE) line with capacity for200,000 m.t./year; and a swing linear low-/high-density PE (LLD/HDPE) plant.PMD may build two swing LLD/HDPEplants instead of the gas-phaseHDPE unit. The complex willalso include two PP lines eachwith a capacity of 300,000 m.t.-350,000 m.t./year.Several ethylene processtechnology licensers are biddingfor the PMD complex, includingABB Lummus Global, KBR,Linde, Stone & Webster, andTechnip, sources say.The contract will be awarded on a lumpsumturnkey basis. The bidding deadlinewas recently extended to September and theLanxess Outlines German Restructuring; Posts Earnings GainLanxess says it will cut 960 jobs in Germany by the end of 2007 as part of an effort to reduceannualized operating costs by €100 million ($122.8 million). Lanxess also says it has reachedan agreement with German workers that shortens the work week for pay-scale employees from37.5, to 35 hours, in conjunction with a 6.7% cut in pay.Lanxess says it will abide by an employee pact that precludes involuntary dismissals beforethe end of 2007. Headcount will be reduced through attrition, retirements, part-time workingarrangements with older employees, and financial incentives to induce voluntary departures,the company says. Roughly 200 jobs will be eliminated this year, andabout 400 in both 2006 and 2007. Lanxess says it plans to eliminate 500positions in its fine chemicals business, 300 positions in its styrenic resinsbusiness, and a further 160 across other operations at the company.Lanxess had previously stated that up to 1,200 jobs could be eliminated aspart of the restructuring (CW, May 4, p. 15), which had included the possibleclosure of acrylonitirile butadiene styrene (ABS) plants in Dormagen,Germany, and Tarragona, Spain. Lanxess says it plans to reduce operationssubstantially in Dormagen, cutting the workforce at the site by 66%,and to concentrate specialty styrenics production at Tarragona.Lanxess says it will make its fine chemicals unit a stand-alone businesscontract award is expected by year-end.PMD is also scouting for process packagesfor the complex’s downstream units, and hasso far selected Basell’s Lupotech T LDPEand Spheripol PP technologies, sources say.Tecnimont is expected to carry out processdesign for these three Basell process units.Completion of the complex is expected in2008.PMD’s president and CEO, Majed A. Al-Ahmadi, was formerly a senior executive atSharq, an olefins and derivatives joint venturebetween Sabic and a consortium of Japanesefirms led by Mitsubishi Corp. at Al Jubail.PMD’s project is one of five crackers plannedin Saudi Arabia. Their combined ethyleneoutput will be about 6 million m.t./year,doubling the kingdom’s capacity by 2009.Westlake has grown during the past twodecades to become a leading petchems playerand recently underwent an initial publicoffering of stock (CW, Feb. 9, p. 18). Thecompany is 48% owned by the Chao Group(Taipei), which also has petchem operationsin Malaysia and Taiwan.—NATASHA ALPEROWICZHeitmann: Good startto 2005.and invest €50 million to improve its competitiveness. The company says it will shut down severalunprofitable fine chemical plants, but did not disclose locations.Meanwhile, Lanxess reported last week that first-quarter Ebitda before one-time itemsincreased 9.7%, to €181 million, on sales up rose 7.4%, to €1.729 billion. Net income rose169%, to €70 million.Cost reductions, higher selling prices, and the decision to walk away from unprofitable businessin some cases has improved results, Lanxess says. “We have had a satisfactory start to2005,” says Lanxess CEO Axel Heitmann. “But as the year progresses we need to achieve furthersubstantial improvements in earnings, and, above all, intensify our restructuring to makeLanxess globally competitive for the long term.”—VERONICA MACDONALD8 Chemical Week, June 8, 2005www.chemweek.com

UNITED STATES/AMERICASbusiness & finance newsGAO Takes Federal Governmentto Task Over Security MeasuresThe federal government must do more toimprove the security of cargo headed forthe U.S., and to bolster cybersecurity—both key issues for the chemical industry,according to two separate reports recently publishedby the GovernmentAccountability Office(GAO). One report chargesthat two Customs andBorder Protection (CBP)programs aimed at addressingthe threat posed byterrorists smuggling weaponsof mass destructioninto the U.S. are not beingeffectively implemented.Another report criticizes theDepartment of HomelandSecurity (DHS) for notfully addressing national cybersecurity risks,including providing and coordinating incidentresponse and recovery planning efforts.At issue in transportation is CBP’s Customs-Trade Partnership Against Terrorism(C-TPAT) program, which grants preferentialtreatment to participating importers toencourage them to improve security in theirsupply chains through measures includingself-assessments. In return, program participantsface fewer inspections and may qualifyfor fast-track privileges at border crossings.A heavy load: More CBPstaff needed at ports.The GAO report found several problems withthe program, however, including that CBPgrants benefits before program participantsundergo a validation process verifying thattheir security measures are reliable, accurate,and effective. The programeffectively reduces the cargosecurity of participantimporters, and providesonly limited assurance ofimproved security, the reportsays.GAO says that anotherCBP program, the ContainerSecurity Initiative (CSI),has, among other problems,a significant staff shortage.The program aims to targetand inspect U.S.-bound,high-risk cargo containers at foreign ports.However, 35% of U.S.-bound shipmentsfrom CSI ports were not targeted and notsubject to inspection overseas last year—thekey goal of the CSI program—partly due tostaff shortages, GAO says. Also, CSI ports usenonintrusive inspection equipment that variesin detection capability, and there are no minimumtechnical requirements for equipmentused as part of the program, GAO says.One of the benefits of the CSI program,however, is that it has resulted in improvedSherwin Williams Executive to Head OMGOM Group (OMG) has named JosephScaminace president and CEO.Scaminace, formerly presidentand COO at Sherwin-Williams(SW), will also be on the company’sboard of directors. He was with SWfor 22 years.Scaminace takes over OMG afterthe abrupt resignation of CEOand chairman, James Mooney, inJanuary (CW, Jan. 19, p. 9). Boardmember Frank Butler has held theCEO duties on an interim basissince Mooney left the company. Changesbegan in OMG’s management team in late2002 when the company’s share price fellScaminace: Takeshelm at OMG.more than 90% in October 2002 (CW, Nov.6, 2002, p.9). OMG stock jumped 7% lastweek on news of the appointment(p. 48).Mooney’s resignation followedOMG’s restatement of financialfilings from 1999-2003, and delaysreleasing 2003 and first-quarter2004 financial statements to theSEC (CW, March 24, 2004, p. 9).OMG has previously stated thatit will file its 2004 10-K in June,and its first-quarter 2005 resultsby late July, which would make the companycurrent with all SEC filings by August 1.—RYAN W. SMITHinformation sharing between U.S. and foreigncustoms operations, and has heightened thelevel of international awareness about securingthe global shipping system, GAO says.Meanwhile, another GAO report saysthat DHS has not fully addressed any ofits key cybersecurity responsibilities forcritical infrastructure protection. Theseinclude improving public-private informationsharing involving cyber attacks, threats,and vulnerabilities. DHS created the U.S.Computer Emergency Readiness Team(US-CERT) in 2003, a public-private partnershipto improve response to Internetsecurity risks and breaches. However, it hasnot yet developed national cyber threat andvulnerability assessments, or governmentindustrycontingency recovery plans forcybersecurity, the report says.—ESTHER D’AMICO■ Degussa Completes Purchase of CyroDegussa says it has completed the purchaseof the 50% stake in Cyro Industriesit did not already own from joint venturepartner Cytec Industries for $95 million incash (CW, May 4, p. 5). Cyro had sales of$317 million in 2004. The deal includes manufacturingfacilities at Fortier, LA; Osceola,AR; Sanford, ME; and Wallingford, CT; aswell as R&D assets, and sales and technicalservice locations in North America. Cytecsays it will use proceeds to pay down debt.■ Elemica Names McGuigan as CEOElemica, an online back-office clearinghouse for the chemical industry, has namedMike McGuigan president and CEO. Hereplaces Kent A. Dolby, who has retired.Dolby joined Elemica as its first CEO inDecember 2000. McGuigan was previouslyv.p./digital and communications technologyfor BP’s chemical business, as well as chairmanof Elemica’s board.■ DuPont Names NASA Chief to BoardDuPont says that Sean O’Keefe, currentchancellor of Louisiana State University(Baton Rouge) and former administrator ofthe U.S. National Aeronautics and SpaceAdministration (NASA), has been electedto its board, effective July 1. O’Keefe alsopreviously served as deputy assistant to thepresident and deputy director of the Officeof Management and Budget in the currentBush administration.www.chemweek.com Chemical Week, June 8, 2005 9

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UNITED STATES/AMERICASNew Jersey Alleges that GraceFalsified Cleanup ReportNew Jersey’s attorney general PeterHarvey has filed a civil complaintagainst W.R. Grace and two formerexecutives, claiming that the company falselycertified in 1995 that the asbestos contaminationat its Hamilton Townshipplant had been thoroughly cleanedup in accordance with state requirements.New Jersey is seeking$100,000/day for each day the falseinformation stood uncorrected,as well as up to $50,000 for eachfalse document filed with the state.Harvey says the attorney general’soffice will also seek compensationfor attorneys fees and legal costs.The complaint charges that Grace shippedseveral hundred thousand tons of vermiculiteconcentrate milled from ore from the company’smine in Libby, MT to the Hamilton plantfrom 1957 to 1991. It also alleges that thecompany left more than 15,000 tons of contaminatedsoil at the site when it was closedin 1995. Some of the soil had concentrationsof asbestos of up to 40% per sample, the statesays. The executives charged are former environmentalcoordinator Jay Burrill, and formervice president Robert Bettacchi.Harvey: Consideringcriminal charges.business & finance newsNew Jersey has requested that EPA andother federal agencies share any relevant informationwith the state. The U.S. Departmentof Justice has begun a criminal investigationinto Grace’s asbestos plant at Libby. DOJ saysthe company suppressed evidencethat asbestos causes lung damage(CW, Feb. 16, p. 6).New Jersey officials say they arereviewing whether additional legalactions, including criminal charges,can be brought against Grace andother defendants in connectionwith the Hamilton plant. “We havezero tolerance for companies likeGrace” that clearly omitted informationabout the asbestos when reportingabout the plant’s environmental conditions,says Bradley Campbell, commissioner of theNew Jersey Department of EnvironmentalProtection (Trenton).“The defendants acted in complete disregardfor the health and safety of the neighboringcommunity and the future occupants ofthis site,” Harvey says. “We will continue toreview all new facts and all legal options availableto the state in this matter,” he says.—KARA SISSELLUnauthorized GM Corn CausesJapan Trade SnafuJapanese trade authorities say they havedetected an unauthorized strain of geneticallymodified (GM) corn, Syngenta’sBacillus thuringiensis 10 (Bt 10), in a390,000-m.t. shipment of corn from theU.S.—a discovery that has promptedJapanese officials to say they will inspectall U.S. corn exports until the problemhas been eliminated. However, U.S. tradeofficials had not agreed to the inspectionsby CW press time. Japan is the largestimporter of U.S. corn, according to localnews reports.U.S. trade and environmental regulatorshave said the Bt 10 strain, whilenot approved, poses no known healthor environmental risks. The strain issimilar to Syngenta’s approved GMcorn, Bt 11, which is modified to resistthe European corn borer.Syngenta recently announced that ithad accidentally released the Bt 10 strainto U.S. farmers between 2001 and 2004,prompting the European Union to takeemergency measures to step up inspectionof corn shipped from the U.S. (CW,April 27, p. 25). Syngenta has confirmedthe Japanese account, according to localnews reports.A United Nations Biosafety Protocolmeeting in Montreal is attempting to setup rules for preventing GM contaminationof in non-GM foods.—KSwww.chemweek.com Chemical Week, June 8, 2005 13

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UNITED STATES/AMERICASPlant Outage, Lower AromaticsEarnings Hurt Georgia GulfGeorgia Gulf says an unplanned outageat its chlor-alkali plant and lower operatingincome in its aromatics segmentare expected to drag down its second-quarterearnings to 50 cts-60 cts/share ($17 million-$20.5million), down 33%-44% fromthe year-ago quarter. Analysts had expectedsecond-quarter earnings of $1.07/share,according to consensus estimates reported byFirst Call’s (Boston). The company says theoutage is expected to cut earnings by 35 cts-40 cts/share.Georgia Gulf took down its Plaquemine, LAchlor-alkali unit in early April, and broughtforward a two-week planned turnaroundto coincide with the outage (CW, April 20,p. 4). The company says it restarted the plantin early May, and is ramping up production tofull rates. This has forced Georgia Gulf to buymore chlorine, which is rising in price, andto cut caustic soda sales volumes, says DonCarson, analyst at Merrill Lynch (New York).Caustic soda prices are also rising.Meanwhile, lower phenol and acetone pricesin the quarter and higher-priced aromaticsinventories will more than offset falling feedstockprices and pull down Georgia Gulf’saromatics operating income, the companybusiness & finance newssays. Aromatics margins could return to firstquarterlevels this month if prices stabilize, thecompany says.The aromatics segment is expected to postan operating loss of $6 million for the quarter,compared to earlier estimates of a $12-millionoperating income, Carson says. Year-earlieraromatics operating income was $6 million.Georgia Gulf says volumes for chlorovinylsand aromatics are likely to be flat comparedto the first quarter. The company says it is notseeing the typical seasonal increase in volumesduring the second quarter, as customers continueto hold off purchases and work downinventories.The bulk of the shortfall came from lacklustervolumes, lower aromatics margins drivenby declining cumene and phenol prices, aswell as the negative impact of first-in, first-outaccounting, says Kevin McCarthy, analystat Banc of America Securities (New York).June cumene and phenol prices are projectedto be 31% and 27% lower than March levels,McCarthy says. Polyvinyl chloride prices haveremained flat, instead of rising as previouslyexpected, he says. PVC prices could fall in thecoming months with total declines of 5 cts-6 cts/lb by year-end, he adds.—PECK HWEE SIM■ Air Products Forms Urethanes JVAir Products says it has formed a jointventure with Changzhou ShangfengChemical Industry (Changzhou, China)to produce triethylenediamine (TEDA)for the Chinese polyurethane market. AirProducts will be the majority owner andmanager of the new entity, Air ProductsShanfeng Ltd. The jv is headquartered atChangzhou, Air Products says. TEDA is anadditive used in the production of polyurethanefoam.■ Airgas Acquires All of KanoxAirgas says it has completed its acquisitionof Kanox (Hutchinson, KS), a distributorof packaged gases in Colorado, Kansas,and Oklahoma. Airgas initially purchased25% of outstanding stock in March (CW,March 30, p. 15), and purchased all ofthe remaining stock from private investors.Kanox has nine locations, employing120 and generating nearly $23 million inannual sales.■ Degussa Starts Up Dispersions UnitDegussa says it has started up a fumedsilica dispersions plant at Mobile, AL.The plant more than doubles its globalproduction capacity for fumed silica dispersions,the company says. The plant willinitially produce water-based dispersionsof fumed silica, as well as dispersions offumed alumina, fumed titanium dioxide,and fumed mixed oxides, Degussa says.www.chemweek.com Chemical Week, June 8, 2005 15

UNITED STATES/AMERICASOctel’s Largest CustomerCancels TEL ShipmentsOctel says its largest customer has cancelledtetraethyl lead (TEL) purchaseorders for May, adding that it “believesthat this customer has accelerated its phaseoutof the use of leaded gasoline for motor vehicles,possibly to as early as this year.” Net salesto the customer were $63.6 million in 2004,roughly 26% of its overall TEL sales. “If thiscustomer takes no further shipments, it willsignificantly impact the predicted revenuesfor the company’s TEL business,” Octel says.The customer was not identified, but is mostlikely an Asian country, sources say.The loss of the customer could also affectNewMarket, formerly Ethyl. NewMarketreceives 32% of the net proceeds from thesale of TEL by Octel in all regions of theworld except North America under a marketingagreement. “At this time we are unableto predict the impact of these events on thenet proceeds we receive under the marketingagreements,” NewMarket says.Octel announced in regulatory filings inearly May that there was a possibility of akey customer exiting the TEL market earlierthan had been expected. It says that seniormanagement has visited the country “to betterunderstand and discuss the position,” andbusiness & finance newsthat it continues to work with the customer.Octel says the loss of the customer mayrequire it to review its anticipated TELgoodwill impairment charges, restructuringcosts, and manufacturing capacity plans, aswell as terms of its senior credit facility. “Thecompany has initiated this process and willprovide a further update in its [second-quarter]10-Q” filing with SEC.“TEL has always been a very difficultand uncertain market,” says Paul Jennings,Octel’s acting CEO. Octel will continue to“manage the decline in the TEL business,while improving performance and growingthe performance specialties and performancechemicals businesses, together with theappropriate alignment of corporate costs tothe needs of the business,” Jennings says.The loss of the customer will reduce Octel’s2005 earnings by roughly 28%, according toone analyst. “Our estimate of the effect on our2005 earnings per share (EPS) estimate due toa loss of the customer for the entire year net ofadditional business gained is a reduction of 85cts/share, to $2.20/share excluding goodwillimpairment charges,” says Jeffrey Zekauskas,analyst with J.P. Morgan.—ROBERT WESTERVELTShaw to Buy OverlaysPlant from DyneaShaw Industries Group (Dalton, GA) hassigned a letter of intent to buy Dynea’s decorativepaper overlays plant at Welcome,NC for an undisclosed sum, Dynea says.The companies will negotiate a deal forthe supply of melamine-formaldehyde andurea-formaldehyde-impregnating resinsfrom Dynea to Shaw as part of the sale,Dynea says. The transaction is expected toclose in June.The acquisition supports Shaw’sstrategy to back integrate into the “fastgrowingmarket” for laminate flooring, thecompany says. The facility supplies paperoverlays to laminate flooring and decorativemelamine laminating industries, andwill become part of Shaw’s Hard Surfacesgroup, the company says. Dynea saysthe Welcome facility generated sales of€30 million ($37 million) in 2004, about3% of the company’s total.Dynea says Shaw is the main customerof paper overlays production from theWelcome plant. Dynea says it will continueto produce paper overlays at itsother plants around the world. the companyhas paper overlay plants at Hayward,WS; Portland, OR; Tacoma, WA; CuitibamBrazil; Kitee, Finland; Medan, Indonesia;and Guangdong, China. The paper overlaysbusiness accounts for about 15% ofDynea’s total sales, the company says.—PECK HWEE SIMwww.chemweek.com Chemical Week, June 8, 2005 17

usiness & finance newsDover to Acquire Pioneer’sChlorinated Paraffins BusinessDover Chemical (Dover, OH) has reachedan agreement to acquire Pioneer’s chlorinatedparaffins business, Pioneer says.Pioneer says it will also enter into anagreement to supply Dover with chlorinerequirements for chlorinated paraffinsmanufacture. Terms of the deal werenot announced. Pioneer says it does notexpect any significant financial impactfrom the transaction.The sale does not include manufacturingassets, Pioneer says. Dover willsupply Pioneer customers from its existingchlorinated paraffins plants based atDover and Hammond, IN.Pioneer says it will close its 9,800ton/year chlorinated paraffins unit atCornwall, ON once the sale is completed.Pioneer recently transferred its bleachproduction from Cornwall to an expandedplant at Becancour, PQ. Pioneer alsohas production for pulping additives atCornwell.—ROBERT WESTERVELTUNITED STATES/AMERICASEngelhard Buys Syngas CatalystBusiness from Sinopec UnitEngelhard says it has entered the synthesisgas (syngas) market with the acquisitionof Sinopec’s Nanjing Chemical IndustryCorp. (NCIC; Nanjing, China) syngas catalystbusiness. Terms of the deal and sales ofthe acquired business were not disclosed,although it will be “modestly accretive toearnings and provide positive cash flow fromoperations in the first full year,” says Barry W.Perry, Engelhard’s chairman and CEO.As part of the deal, Engelhard will take overall syngas business operations, catalyst technology,and production facilities from NCICat Nanjing. Syngas is used to make ammoniaand methanol, and in gas-to-liquid (GTL)and methanol-to-olefins processes. “We cannow further assist companies with their GTLplans,” Engelhard says.“Syngas is becoming a crucial intermediatein the emerging gas economy,” Engelhardsays. “It is our belief that the world will shiftto cleaner fuels,” the company says. “Thesenew gas economy technologies are a majoropportunity for us.” The company says thatit is continuing to look into expanding itsChinese operations, but declined to disclosedetails.Separately, Deutsche Bank Securities (NewYork) downgraded Engelhard’s stock frombuy to hold last week, citing sluggishness inthe auto catalysts market. GM and Ford willcut production in the second half of the yearand there is a move away from SUVs to smallervehicles, Deutsche Bank says. “Engelhard’searnings are unlikely to accelerate until thirdquarter2006,” it says. —RYAN W. SMITH18 Chemical Week, June 8, 2005www.chemweek.com

EUROPE/MIDEASTIneos Confirms Plans forEthylene Plant in GermanyIneos has confirmed CW’s exclusive reportthat it plans to build an ethylene plant atthe company’s Wilhelmshaven, Germanysite (CW, Jan. 23, 2002, p. 19). Ineos alsosays it plans to build a chlor-alkali plant andexpand polyvinyl chloride (PVC) capacityat Wilhelmshaven, and construct a 275-kmpipeline that will transport ethylene fromWilhelmshaven to Marl, Germany. Theestimated cost of the project is €1 billion($1.25 billion) and completion is scheduledby 2008, Ineos says. Associated investmentsin utilities and other services are expected totop €500 million.Ineos CEO Jim Ratcliffe presented the plansto the state government of Lower Saxony,Germany at a meeting in Hanover on May24. Ratcliffe confirmed at the meeting thatIneos would soon launch a “pre-engineeringstudy” for the project costing €15 million-€20 million. The study is likely to be completedin about six months, he says. Ratcliffe,and Christian Wulff, prime minister ofLower Saxony, signed a joint declaration forthe study, and the state and German federalgovernments pledged unspecified “financialsupport.” The state government says it hasestablished a working group for “facilitating,coordinating, and supporting the project.”Further details were not disclosed, butIneos sources earlier told CW that theWilhelmshaven cracker would have capacityfor 750,000 m.t./year of ethylene. The plantwill use ethane feedstock. PVC producerEVC International, an Ineos subsidiary,consumes ethylene at Wilhelmshaven that issupplied mainly from Huntsman’s Wilton,U.K. cracker. That source will disappear inlate 2007, however, when Huntsman commissionsa 400,000-m.t./year low-densitypolyethylene plant at Wilton.The Wilhelmshaven plant would be the firstgrassroots ethylene unit to be built in Europesince BASF’s Antwerp cracker came onstreamin 1994. It will also mark Ineos’s entry into ethyleneproduction, and provide much-neededback-integration for EVC, analysts say.The chlor-alkali project will likely involvereplacing the mercury-cell chlor-alkaliunit of Ineos Chlor, an Ineos subsidiary, atWilhelmshaven, with a membrane-cell unit,analysts say. The Wilhelmshaven chlor-alkaliplant has capacity for 130,000 m.t./year ofchlorine.Wilhelmshaven is EVC’s biggest productionsite for PVC. The company says it has350,000 m.t./year of vinyl chloride monomer,and 320,000 m.t./year of suspension-gradePVC capacity there.Ineos has no production at Marl. Theplanned pipeline to Marl would supply othercompanies that consume ethylene there,Ineos says. Ethylene consumers at the siteinclude Lanxess, Sasol Chemie, and Vestolit.ChemSite (Marl), created by Degussa in 1997,has responsibility for attracting chemicalinvestors to the Marl complex. Marl is alsoconnected to northwestern Europe’s ARGethylene pipeline network. —IAN YOUNG■ Kemira Exits FertilizersKemira says it has divested its 14.6%stake in Kemira GrowHow via a placementthat was lead managed by ABNAmro Rothschild. Shares were sold toinstitutional investors in Finland andoverseas, and raised €50.1 million($63 million), Kemira says. GrowHow,the former fertilizers business of Kemira,was spun off via an initial public offeringof shares last year (CW, Oct. 20,2004, p. 5). The Finnish government isGrowHow’s biggest shareholder, with a30% stake■ Commission Ends Carbon Black ProbeCabot says that it has received notificationfrom the European Commission thatit has ended its investigation into possibleprice-fixing in the European carbon blackindustry. European authorities started aninvestigation of the industry in November2002 with surprise inspections at theoffices several carbon black makers inEurope (CW, Dec. 4, 2002, p. 13).www.chemweek.com Chemical Week, June 8, 2005 19

usiness & finance newsASIA/PACIFICFormosa Expects Taiwan Approvalfor Petchem Investment in ChinaFormosa Plastics says it hopes to receiveTaiwanese government approval soonfor previously announced plans todevelop the company’s Ningbo, China petrochemicalscomplex into an integrated sitethat will include an olefins plant (CW, June9, 2004, p. 18). Formosa alsotells CW that it plans to expanddownstream facilities at Ningbo,some of which have already begunoperating.The government of Taiwan hasuntil now withheld approval forplans by Taiwanese companiesto invest in projects to buildethylene facilities in China. Thatis expected to change, however.“We hope that before the end of this yearthe Taiwanese government will relax ruleson construction of olefins plants in China,”says Sidney H. Chow, chairman of thePetrochemical Industry Association ofTaiwan (PIAT; Taipei).Formosa has applied to the Taiwanesegovernment for permission to builda naphtha cracker with capacity for1.2 million m.t./year of ethylene, as well as19 downstream units, at Ningbo, FormosaCracker and 19downstreamunits plannedfor Ningbo.Plastics president C.T. Lee tells CW. Thewhole project, which may also include a10-million m.t./year refinery, could cost$8 billion, Lee says. Formosa operatesa 300,000-m.t./year polyvinyl chloride(PVC) plant and a 150,000-m.t./yearacrylonitrile butadiene styrene(ABS) unit at Ningbo, and isbuilding three additional facilitiesthere. They are a Novolen-processpolypropylene (PP) facility withcapacity for 450,000 m.t./year;a 160,000-m.t./year acrylic acidplant and 230,000-m.t./yearacrylic esters complex based onNippon Shokubai's process; and a30,000-m.t./year superabsorbentsunit. All three are due onstream at the endof 2007, Lee says.Future plans call for expansion of thePVC unit to 1 million m.t./year; doublingPP capacity to 900,000 m.t./year; andtripling ABS capacity to 450,000 m.t./year. Formosa is also planning to buildunits with capacity to produce 250,000m.t./year of polyethylene, 300,000 m.t./year of polystyrene, and 600,000 m.t./yearof ethylene glycol. Those projects can onlygo ahead in conjunction with the plannedethylene unit, the company says. “We arenot planning anything else now becausewe are short of raw materials at Ningbo,”says C.S. Wang, vice chairman of FormosaPlastics.Formosa Petrochemical Corp. (FPC), aFormosa Plastics subsidiary, will completea 1.2-million m.t./year ethylene plant atMailiao, Taiwan in October 2006. Thecracker will lift Formosa’s ethylene outputto 2.9 million m.t./year, Lee says. Theextra capacity has already been allocatedto downstream users at Mailiao, but “isnot sufficient to meet demand,” he says.The company needs additional ethylenecapacity at other locations, includingChina, he adds.Formosa’s cracker at Ningbo is one oftwo planned olefin complexes in Chinawith Taiwanese participation, Wang says.The company is planning to team up withseveral Taiwanese olefins consumers thatare planning to jointly build a crackercomplex at a different location in China.“We have looked at six possible locations,including Dalian, Tianjin, Qingdao,Yangzhou, and Zhuhai,” Wang says. Thatproject would also subject to Taiwanesegovernment approval. The Ningbo complexwould be 100%-owned by Formosa, thecompany says.—NATASHA ALPEROWICZ20 Chemical Week, June 8, 2005www.chemweek.com

Meet us !ChemSpec Europe 2005, Messe Düsseldorf,June 22–23, Hall 6, Stand G13+G17Where do you want to grow?Looking for an attractive place to thrive?We’ve got it – ChemSite!ChemSite is the place to be for chemical industry investors,located in Europe’s biggest industrial area, the Ruhr region,in the German State of North Rhine-Westphalia.Your advantages Access to a huge European market (378 millioninhabitants) A combined 240 hectares (600 acres) of availableindustrial property at six different sites, perfect fornew production plants Large chemical cluster with an extensive materialsflow network Sophisticated infrastructure On-site services tailored to your needs Skilled and flexible workers Rapid and cost-efficient execution of investmentprojects Support from the State Government and localcommunities Community, which welcomes the chemical industryBy the way: You will have prominent neighbors –companies like BP, Degussa, ISP, LANXESS Buna,Rohm and Haas, SABIC Polyolefine and Sasol alreadyproduce at ChemSite sites. You want to know moreabout us? Please contact:ChemSite Europe:Dr. Jörg Marthjoerg.marth@infracor.deChemSite USA:Ulrich Gamerdingernrw.usa@ugamerdinger.comwww.chemsite.deChemSite Japan:Hiroshi Miekinrwjapan@gol.com

new construction projectsAsahi Considers Acrylonitrile PlantAsahi Kasei is planning a $150-million project to build an acrylonitrile plant, CW haslearned. The plant is expected to be built outside Japan, possibly in China, and have capacityfor about 200,000 m.t./year, says Taketsugu Fujiwara, president and representativedirector at Asahi. “We are the second-largest producer of acrylo, behind Innovene, with770,000 m.t./year capacity, and we are the number-one supplier in Asia including China,”Fujiwara says. Asahi aims to maintain that position, he adds.The company says it has not decided where the acrylo plant will be located, but thatit would like to complete the project within 2-3 years. The plant will be built close to apropylene source. “It is easy to transport acrylonitrile, but difficult to ship propylene andammonia,” Fujiwara says.Propylene may be sourced via Asahi’s newly developed Omega catalytic cracking process,which converts C 4and C 5raffinate streams to produce propylene and ethylene in a 4:1 ratio,the company says (CW, March 23, p. 21). Asahi is building a 60,000-m.t./year demonstrationunit for the technology at Mizushima, Japan. Asahi says it will not expand the unit tocommercial scale because there is insufficient feedstock available. The company says it is intalks with olefins producers in China, Korea, and Taiwan regarding the possibility of buildingan Omega-process plant in one of those countries.Asahi is very short of propylene, Fujiwara says. “We buy more than 400,000 m.t./year,”he says. The Omega process’s benefits include low investment costs and value addition tocracker or refinery side streams. A cracker with capacity for 1 million m.t./year of ethylenecould yield 150,000 m.t./year of propylene via the Omega process, Fujiwara says.M&G to Build WorldscalePTA Plant in BrazilM&G (Milan) says it will build a750,000-m.t./year purified terephthalic acid(PTA) plant at Ipojuca, Brazil, where thecompany is building a previously announced450,000-m.t./year polyethylene terephthalate(PET) bottle resin plant (CW, Jan 12, p. 15).The PTA plant will use Invista technologyNot enough: M&G’s existingPTA unit at Paulinia.and be completed in the first quarter of 2008,M&G says. It will be M&G’s second PTAmanufacturing operation in Brazil. M&Ghas a majority share in a 255,000-m.t./yearPTA joint venture with BP at Paulinia. M&Gsays it plans to use about half of the additionalPTA capacity to supply the new PET plant;the rest will be available for the merchantmarket. The PET plant is due for completionin 2006. It will raise M&G’s capacity inBrazil to 650,000 m.t./year, and its total to1.7 million m.t./year. The plant will also reinforceM&G’s position as the second-largest—NATASHA ALPEROWICZproducer of PET, behind Eastman Chemical’sVoridian division. M&G’s existing PETcapacity in Brazil is a 200,000-m.t./year unitat Pocos de Caldos.Degussa to Build IsophoroneUnit in GermanyDegussa says it will build a solvent isophoroneand derivatives complex at Herne, Germanyby 2007. Degussa says it is the leading playerin isophorone chemistry. The company operatesthree isophorone production lines, two ofwhich are at Herne; the other is at Mobile, AL.Isophorone is used mainly in the formulationof industrial paints. Isophorone derivatives,such as isophorone diamine and isophoronediisocyanate, are used in solvent-free coatingsfor industrial flooring, and in the productionof light- and weather-stable automotivepaints, Degussa says.Sumitomo Expands MMA andPMMA Capacity in SingaporeSumitomo Chemical says it will build a90,000-m.t./year methyl methacrylate(MMA) production line, and a 50,000-m.t./year polymethyl methacrylate (PMMA) facilityat Jurong Island, Singapore. It will beSumitomo’s third MMA line in Singapore, andis due to be completed in first-quarter 2008.The project will increase Sumitomo’s MMAcapacity at the site to 223,000 m.t./year, andits worldwide total to 413,000 m.t./year. Thecompany also operates MMA plants in Japanand Korea. It will also double Sumitomo’sPMMA capacity in Singapore, to 100,000m.t./year, and increase its worldwide total to244,000 m.t./year.Grand Pacific PetrochemicalExpands ABS in ChinaGrand Pacific Petrochemical Corp. (GPPC;Taipei) is raising acrylonitrile butadiene styrene(ABS) capacity at Zhenjiang, Chinaby 100,000 m.t./year, to 250,000 m.t./year,sources say. The project is due for completionin late 2006. GPPC plans to ship styrene fromTashe, Taiwan to Zhenjiang. GPPC has twostyrene plants, an 80,000-m.t./year ABS plant,and a 25,000-m.t./year polystyrene (PS) unit,at Tashe. BC Chemical, a wholly owned subsidiaryof GPPC, also has a 70,000-m.t./yearPS unit at Lu Chuh Hsiang, Taiwan.BASF Builds Cyclohexane Plantin GermanyBASF says it is investing €12 million($14.7 million) to build a 130,000-m.t./yearcyclohexane plant at Frisenheim Island,Germany. The plant is due onstream at yearend.Further details were not disclosed.Fluor Lands Utilities andSite Facilities Deal at YanbuSabic says it has awarded Fluor Corp. a letterof intent to build utilities and site facilities ata previously announced petrochemical complexto be built by Sabic’s Yanbu NationalPetrochemical Co. (YanSab) subsidiaryat Yanbu, Saudi Arabia. The complex willproduce 1.3 million m.t./year of ethylene;400,000 m.t./year of propylene; a combined900,000 m.t./year of high- and low-densitypolyethylene; 400,000 m.t./year of polypropylene;700,000 m.t./year of ethylene glycol;and 250,000 m.t./year of aromatics.Itochu, Siam Cement, and PTTConfirm HDPE Venture in IranItochu has confirmed that it has signed a contractwith National Petrochemical Co. (NPC;Tehran) to participate in a high-densitypolyethylene (HDPE) manufacturing jointventure at Bandar Assaluyeh, Iran (CW, May18, p. 7). Itochu, Siam Cement, and PTT(Bangkok) will hold a combined 60% sharein the jv, and NPC will have the rest. Theplant will have capacity to produce 300,000m.t./year of HDPE, and cost ¥25 billion($231.5 million). Completion is due in 2008.22 Chemical Week, June 8, 2005 www.chemweek.com

SpecialtyCOVER STORYChemicalsSticking to TougherPricing PoliciesProfitability in the specialty chemicalsector is finally moving in theright direction again, following ashift in stance on pricing, producersand analysts say. Tightermarkets and rising raw materialcosts are giving sellers leverage to raise prices,and more producers say they are willing togive up any accounts that result in low or negativemargins. There is also a growing trendto structure contracts to include value-addeditems, such as R&D and technical service.That represents a big shift from just a fewyears ago, when specialty producers oftenhad business plans that did not include priceincreases, and in many cases sellers negotiatedprices downward to grow or maintain marketshare, analysts say. After outshining basicchemical firms a decade ago with higher margins,specialty profits began to contract in thelate 1990s when products began to commoditize,prompting many products to be sold onprice rather than services and product differentiation,says Robert Ottenstein, analyst atMorgan Stanley (New York).Rising raw material costs and pricing poweramong customers continue to put pressure onspecialty chemical profits, and those costs areforecast to continue rising, specialty firms say.However, it is those rising costs, and tighteningsupply for many specialty chemicals, thathave provided a key opportunity for specialtychemical makers to raise prices, Ottensteinsays. In some cases, specialty firms have beenable to offset or even beat raw material costincreases, leading to an expansion in margins,analysts say.Many specialty chemical firms loweredprices in 2001-03 to increase volumes becausethey believed they did not have pricingpower against a consolidating customer base,Ottenstein says. Average gross margins forspecialty firms fell from about 36% in firstquarter1999, to about 30% in fourth-quarter2004, he says. Selling prices began to stick inthe second half of 2004, however, because ofa recovering industrial economy and limitedcapacity expansions in the specialty marketduring 2000-04, tightening supply, he adds.Several specialty chemical makers attributedbetter first-quarter earnings to higherselling prices. Average prices for specialtychemical firms improved 5%-8% during thefirst quarter, says Jeffrey Zekauskas, analystat J.P.Morgan (New York). “We expect largespecialty chemical firms including Rohm andHaas (R&H) to offset all of their raw materialcosts in 2005 with higher selling prices,”Zekauskas says.R&H is “successfully implementing priceincreases to recover the extraordinary run-upin raw material and energy costs, while maintainingtight control over operating costs,”says Raj Gupta, chairman and CEO. “As aresult, we are able to generate solid earningsand restore profit margins,” Gupta says. R&Hsays prices are expected to be 6% higher in2005 than they were in 2004. The companywarns, however, that price increases may stillnot be enough to offset the fast pace of risingraw material costs.Ciba Specialty Chemicals says its sellingprices for the first quarter increased 1%compared to the year-ago period, “more thancompensating for last year’s 3% decline.”Price improvements differed from business tobusiness, depending on market competitionand specific raw material costs, Ciba says.There has been particular success in the plasticsadditives market. Albemarle, Crompton,and Great Lakes Chemical all reported higherfirst-quarter profits helped by price increaseswithin their plastic additives divisions (p. 26).Albemarle and Great Lakes nominated severalwww.chemweek.comChemical Week, June 8, 2005 23

COVER STORYrounds of price increases within their brominatedflame retardants businesses.“Specialty chemical makers have a betterseat at the table to negotiate prices with customersfor the next two years,” says RaphaelGonzalez Caloni, v.p./marketingat pricing software firm Vendavo(Palo Alto, CA). They havereached a point where they can“step back and reevaluate theirpricing strategies,” GonzalezCaloni says. However, companieshave been taking the approachthat if costs rise, they will raiseprices, and if the price hikes stick,they are successful,” he says. Thatstrategy is not enough, however,because when raw material costsbegin to recede and economicgrowth slows, specialty makers areforced to lower prices, he adds.Some key basic chemical priceshave begun to fall sharply, because of highinventory levels and weak demand in Asia.Ethylene fell 2 cts/lb and propylene dropped8 cts/lb in May.Some specialty producers, including R&Hand Cytec Industries, have warned that globaldemand growth is beginning to slow. “Highoil prices and energy costs, as well as risinginterest rates, are having an effect on global■ PRICING POWER*COMPANY2005 EARNINGSESTIMATEEARNINGS IMPACT FROM1% PRICE INCREASEdemand, with some markets—notably buildingand construction—showing signs ofslower growth after a robust pace in 2004,”Gupta says.Cytec will continue to “aggressively” raiseprices to offset costs for the remainder ofthe year, but warns about growth slowing,says David Lilley, chairman, president, andCEO. “We are concerned with the slowdownin demand, which we, and ourcustomers, have seen in the latterpart of the quarter, particularlyin Europe and Asia in our performancespecialties and surfacespecialties segments. At present,we do not foresee a significantdecline in raw material and energycosts,” Lilley says.Chemical companies need toapproach the management of sellingprices and increases with thesame rigor they use to managemanufacturing costs and otherbusiness processes, GonzalezCaloni says. “They need to structureterms of their rebates, freightallowances, and other discounts to changewith the market dynamics, such as a changein demand, or manufacturing costs,” he adds.Chemical makers must also evaluate the% OF CURRENTEARNINGS ESTIMATE3M $4.25/share 17 cts/share 4%Avery Dennison 3.3 39 12Crompton 0.45 14 32Ecolab 1.35 10 7Ferro 1.0 29 29Great Lakes Chemical 1.25 22 17Lubrizol 2.8 31 11NewMarket 1.25 35 28PolyOne 0.73 15 21Rohm and Haas 1 2.64 23 9A. Schulman 1.15 22 19Sigma-Aldrich 3.6 14 4*Earnings impact from 1 ct/lb price hike. 1) First Call (Boston) consensus estimate.Source: Morgan Stanley (New York).C M Y CM MY CY CMY KAT THE FOREFRONT OF FLUORINATED INTERMEDIATESMiteni’s great expertise in fluorinechemistry allows the company tooffer advanced intermediates withthe widest possible range offluorination technologies.Miteni’s new multipurpose pilotplant speeds up fluorochemicaldevelopment and allows theproduction of tonne quantities ofhighly specialized fluorinatedcompounds.The company has strongly investedin this new facility which, added tothe company’s strong expertise andits highly qualified personnel, isbelieved will be of great interest toany business involved withfluorochemicals.(trifluoromethyl)benzenederivatives1-[4-(trifluoromethyl)phenyl]propan-1-oneMitenithe fluorochemicals specialist4-bromo-1-fluoro-2-(trifluoromethyl)benzeneCF 3 • CHO • CH 2 OHCOOH • CN• Via Mecenate 90 • 20138 Milano • Italy• Tel. ++39 02 580 399.1 • Fax ++39 02 580 399 36 • www.miteni.it

margins generated by each customer theyserve, Gonzalez Caloni says. Crompton saysit has stopped doing business with the 30% ofits customers that did not generate a positivemargin. Vendavo research finds that customerswho pay the most per pound are notnecessarily the most profitable for suppliers.Those customers may not pay forservices, or they may receive rebates thatcost suppliers more to deliver than theyare getting paid for, he says.Improved pricing has the potential to bea secular trend within the specialty chemicalsfield because of new managementattitudes toward pricing, and pricing softwarethat allow companies and customersto better understand why price hikes arenecessary, Ottenstein says.“We now see attitude changes” withinspecialty chemical management, most notablyplastic additives, led by CEOs such asCrompton’s Robert Wood, Ottenstein says.Pricing has been a key focus for Cromptonsince Wood took the reins in January 2004.Crompton’s selling prices improved 4% lastyear, compared to 2003. Wood told investorsGupta: Better pricinglifts earnings.Lilley: Aggressivelyraising prices.Wood: Making pricinga priority.in February that too many of Crompton’s customershad been “often lavished with specialservices at no charge,” and the company had“too many products” that did not fully covercosts. Crompton went through a program totrain its sales force to understand the importanceof raising prices and implementingthose hikes, Wood says.Wood says he plans to apply Crompton’spricing practices after the company mergeswith Great Lakes Chemical (CW, March 16,p. 8). The combined companies, to be namedChemtura, will focus on improving sellingprices rather than market share gain becauseraw material costs will continue to rise, Woodrecently told CW. “When companies fight formarket share, prices come under pressure. It isan important distinction of how we run ourbusiness,” he says.Supply and demand is tight in many of DowChemical’s specialty product lines, with nota lot of new capacity coming onstreamin the near term, says Phil Cook, seniorv.p./performance chemicals and thermosets.“Any time product is short asupplier makes choices about which customersit can continue to supply. Thesechoices are not easy, especially when youhave to tell a customer that we can’t supplythem any more,” Cook says.This new approach to pricing isessential to prepare for economicslowdowns and receding raw materialprices, because chemical firms will havealready weeded out customers and productlines that did not deliver a profit, GonzalezCaloni says. It remains to be seen, however,if producers will stick to their new pricingstrategies when raw material costs begin torecede or demand growth slows, analystssay.—KERRI WALSHwww.chemweek.comChemical Week, June 8, 2005 25

COVER STORYSniffing Out the Most Dynamic Specialty MarketsPrice increases may be improvingmargins in the specialty chemicalsindustry, but only a handful of sectorsare growing at double-digit rates, “resultingin a lack of any great specialtychemical markets,” says David Begleiter, analystat Deutsche Bank Securities (New York).Among the most dynamic markets are plasticadditives, which has had successful priceincreases; personal care, which is a leader innew product development; and food ingredients,which has gone through a slew of M&A.Volumes have recovered in plastic additives,but it is pricing that has been the key driver ofprofit growth for the sector. Underlying U.S.demand growth has been a mere 2%/year,according to SRI Consulting (SRIC; MenloPark, CA). However, first-quarter sales andprofits for leading producers have outpacedthat rate, helped byhigher selling pricesand the recent uptickin the plastics market,producers say.A l b e m a r l e ,Crompton, and GreatLakes Chemicals eachreported higher salesand profits from theirplastic additives unitsRohr: Pricing helpedoffset costs.in the quarter. “We realized the results ofexceptional pricing execution, offsetting over$20 million of raw material and energy costincreases in polymer additives and fine chemicals,”says Mark Rohr, president and CEO ofAlbemarle. “Continued growth in demandshould allow us to further support marginimprovement in 2005.”Feeding frenzy: M&Atakes off in food additives.Albemarle’s polymer additives segmentposted first-quarter net sales up 14.7%, to$198.1 million, compared to the year-agoperiod. “This represents the ninth straightquarter of record sales, and can be attributedto continuing improvement in pricing acrossthe segment,” Albemarle says. The segment’soperating profit, including joint ventures,26 Chemical Week, June 8, 2005www.chemweek.com

grew 16.9%, to $23.8 million, as pricing gainsoutpaced the continued rise in raw materialcosts, the company says.Great Lakes’ industrial performanceproducts businesses, which includes plasticadditives, reported net sales up 22%, to$280.5 million. “An 11% increase in sellingprices led the gain in sales,” the company says.“Strong demand in key end markets for polymerstabilizers led to a 7% increase in salesvolumes,” it says. Operating income morethan doubled, to $26.0 million, reflecting“solid pricing momentum and a stronger salesmix,” it adds.Albemarle, Dead Sea Bromine, and GreatLakes have each announced several roundsof price increases for brominated flame retardantsduring the past year.Ciba Specialty Chemicals says selling pricesfor its plastics additives improved 4% in thefirst quarter, compared to year-ago levels.Ciba’s first-quarter operating income beforerestructuring costs from its plastics additivesunit rose 12%, to SF65 million ($52 million),on sales down 2%, to SF461 million. Plasticadditives’ operating income margin beforerestructuring rose from 12.3%, to 14.2%, thecompany says.The plastics additives segment has alsoundergone its share of M&A during thepast few years, and the biggest deal recentlyis Crompton’s offer to buy Great Lakes for$1.8 billion. The combined business willinclude a $2.5-billion/year operation in plasticadditives and flame retardants. Those productlines will account for 60% of revenues, and40%-50% of operating income, Cromptonsays. The combined plastic additives businesseswill continue to grow at GDP rates, thecompany says.FOOD FOR THOUGHT. The food additivesindustry has been among the most active inthe specialties industry for M&A in the last12-18 months. The sector’s overall growth hasbeen creeping along at only 2%/year, SRICsays. However, the latest diet trends, includingdemand for low-fat and low-carbohydratefoods, may cause growth spurts in certainfood ingredient markets, spurring some companiesto rush to enter the market, or getbigger, analysts say. Food ingredient supplierCargill entered the pectin sector last monthwith the acquisition of Citrico’s global pectinbusiness (p. 39). The deal positions Cargill asthe third-largest pectin supplier, after J.M.Huber’s CP Kelco and Danisco.Private equity firms have also been eyeingthe food ingredients sector for the past fewyears. Private equity firm PAI Partners (Paris)www.chemweek.comTrusted Partner.With GuaranteedConfidentiality.If you are looking for a competent and trustworthy partner to develop newermolecules, give us a try.Besides sharing your concern for strict confidentiality, we are also equippedwith research capabilities, laboratory infrastructure and of course__some ofthe best scientific brains in the field of pharmaceutical research.Alpha Drug India Ltd.Oberoi Chambers-II, 4th-5th floor,Plot No. 645-646, New-Link Road,Andheri (W), Mumbai 400 053, INDIATel: 91-22-26747900Fax: 91-22-26736178 / 93Plant: Villages Kolimajra & Samalheri,P. O. Lalru, Dist. Patiala 140 501, INDIATel: 91-1762-275210 / 275519Fax: 91-1762-275308 / 275292E-mail: alphadrug@alphadrug.co.in • Website: www.alphadrug.com

COVER STORYrecently agreed to acquire food ingredientsfirm Chr. Hansen (Horsholm, Denmark)from Chr. Hansen Holding for DK8.2 billion($1.3 billion). The business to be purchasedmakes colors, cultures, enzymes, flavors, seasonings,sweeteners, and food additives (CW,May 11, p. 4). Private equity firm Equitybought Degussa’s €50-million ($61 million)fruit systems business earlier this year for anundisclosed sum.+ c m y kItemCas No2-Acetyl-5-chlorothiophene 6310-09-42-Aminoacetophenone 551-93-94-Amino-3-fluorophenol 399-95-1Bromocresol Green 76-60-8Brederecks Reagent 5815-08-79-Bromoanthracene 96% 1564-64-33-Bromofuran 22037-28-14-Bromoindole 10075-50-03-Butene-2-one 78-94-43-Butyne-1-ol 927-74-23-Chlorophenol 99% 108-43-0Cis-1,4-Diacetoxybuten 25260-60-02,6-Diacetylpyridine 1129-32-2Ethoxycarbonylisothiocyanate 16182-04-01-Ethoxynaphthalene 5328-01-8N-Ethylmethylamine 624-78-2Furan-2-boronic acid 13331-21-23-Furoic Acid 98 % 488-93-7Glutaric anhydride 108-55-42-Hexanone 591-78-6Indole-7-carboxylic acid 14074-88-0[R]-Indoline-2-carboxylic acid 98167-06-7Luminol Free Acid 99+% 521-31-33-Methoxybenzylamine 5071-96-56-Methoxy-2-tetralone 2472-22-25-Methoxyindole 1006-94-6Murexide 3051-09-0Naphthalene-2-boronic acid 32316-92-0Ninhydrine 485-47-24-Nitroindole 4769-97-5Pentafluorophenyl boronic acid 1582-24-73-Pentyn-1-ol 10229-10-4Quinoline-6-Carboxylic Acid 10349-57-2Thiophene-2-boronic acid 6165-68-01-(Trimethylsilyl)-1-Propyne 6224-91-5Triphenylamine 603-34-9ResourceResearchInternationalBUYING AGENTSDegussa plans to sell its remaining foodingredients business, which generated sales of€520 million last year, including the fruit systemsunit. There is “plenty of interest” fromchemical companies and private equity capitalfirms in the food ingredients unit, Degussatold CW recently (CW, March 16, p. 14).Orica recently acquired Keith HarrisFlavours and Fragrances from KH Foods(Thornleigh, Australia) for A$14.5 millionYour global search ends here...!A vibrant vendor base spread acrossIndia, we can bring enormoussourcing opportunities for specialty,fine chemicals and pharma intermediates to you by sourcing thesechemicals as well as getting themcustom manufactured.Our Specialities are: Unique open and transparentpolicy enabling moral binding withUnique open and transparent policyenabling moral binding withoverseas Customers. Sourcing /custom manufacturing basedNOT upon overseas Customers.Sourcing / custom manufacturingbased NOT upon chemicaldirectories but upon CHEMISTRY,which in turn is well-supportedchemical directories but uponCHEMISTRY, which in turn is wellsupportedby a panel of experts &hence globally competitive prices asa result of by a panel of experts &hence globally competitive prices asa result of combination of rightchoice chemistry and establishedcommercial acumens combinationof right choice chemistry andestablished commercial acumens A number of satisfied and loyaloverseas customers in Germany,Switzerland, USA, A number of satis.ed and loyal overseas customers inGermany, Switzerland, USA, Japan,China and Taiwan A large pool of vendors capable ofcustom manufacturing at shortnotice and working up A large pool ofvendors capable of custommanufacturing at short notice andworking up different kinds ofchemistry including hydrogenation,cyanation, ethynylation, butyl lithiumand different kinds of chemistryincluding hydrogenation, cyanation,ethynylation, butyl lithium andacetylenic chemistry.62, Wadia Building, 3rd Floor,9B, Cawasji Patel Street,Fort, MUMBAI 400 001, INDIATel.: +91-22-5636 9451/52Fax: +91-22-5636 9454Email: info@rri2000.comPlease ask for our exclusive list of more than 2000 readily sourceable fine chemicals($11.2 million). Keith Harris is a producerand supplier of flavors, fragrances, and coloradditives to the food, beverage, cosmetic, andindustrial industries.National Starch andChemicals, meanwhile,says it has been focusingon new products andcapacity to keep up withfood industry demandtrends. It opened a‘There’s a lackof any greatspecialtychemicalmarkets.’$20-million starchesplant at Shanghai toserve Asian marketsearlier this year. Theplant produces specialty food starch ingredientsincluding corn, tapioca, potatoes, andrice, as well as pharmaceutical-grade starches,and industrial starches for papermaking (CW,March 2, p. 25).National Starch doubled the planting ofhigh-amylose corn used to make its Hi-maizebrand starch. That increase coincided withthe company’s expansion of its Hi-maizebrand starch, used in low-carb foods, by 33%at Bridgewater, NJ (CW, July 14, 2004, p. 25).National Starch renamed its food productsdivision National Starch Food Innovation(NSFI), and opened a “process innovationcenter” at its Bridgewater headquarters.There is particularly strong demand fortexturizers and other products used inlow-carb foods, analysts say. Removingcarbohydrates generally results in “a huge formulationchallenge,” because taking out 20%of one ingredient and replacing it with 20%of another does not usually work, says DonCoffey, general manager/methylcellulose foodstabilizers at Dow Chemical. Dow producesmethylcellulose, which can be used as textureimprovers.GETTING PERSONAL. The personal care industryhas been a particularly hot market for newproduct development, especially for skin careproducts for men and anti-aging and antiwrinklecreams for both men and women,producers say. Demand for chemicals used inthis sector is growing at about 4%-7%/year.Interest in anti-aging skin care products is notnew, but big-name suppliers including Procter& Gamble and Unilever have jumped on thebandwagon by launching products, givingmore opportunity for chemical makers whosupply the personal care industry, producerssay.Chemical suppliers to the personal care markethave been responding to those demandswith new products and innovation, and haveadded capacity. Degussa’s Goldschmidt unit28 Chemical Week, June 8, 2005www.chemweek.com

New make-up: Personal caresuppliers get more innovative.has built a “competence center” at Hopewell,VA that develops personal care productsexclusively for the North American market,says John Dougherty, Goldschmidt businessline director/personal care. It is the company’sfirst center for this product line outsideGermany, Dougherty says.Goldschmidt has also upgraded its manufacturingfacilities serving the personal caremarket, including modernizing its organomodifiedsilicones and oleochemicals plants atMapleton, IL and Hopewell. It also has addedcapacity at Steinau, Germany, which is scheduledto come onstream during the next 2-3months, Dougherty says.Degussa says it has formed a global team tofind joint venture partners and acquisition targetsfor its personal care business, especially itscosmetics ingredients unit. The company wouldnot comment on potential targets, however.The company claims to be the largest chemicalsupplier to the personal care segment.Rhodia is focusing on innovation and geographicexpansion to build its personal carebusiness, says Pascal Juéry, v.p./personal care.The company’s personal care business increasedsales by 10% in 2004, led by strong growth inAsia, Juéry says. The company expects similargrowth this year, he says. Mature marketsin North America and Europe are movingtoward finer segmentation, with products specificallydesigned to meet specific consumerdemands such as teenagers, he adds. Rhodiahas launched surfactants for skin and hair careproducts, as well as polymers for hair conditionersand styling, Juéry says.■ GROWING PAINS*(in millions of dollars)Market Market Size AnnualGrowth Rate(2003-2008)I&I cleaners $14,606 2.00%Electronic chemicals 12,778 3.30%Flavors and fragrances 11,271 2.8Specialty surfactants 10,119 1.7Printing inks 10,062 2.6Specialty coatings 9,542 3.5Water-soluble polymers 9,503 2.6Food additives 9,472 2.1Catalysts 9,374 3.1Specialty paper chemicals 8,746 2.3Cosmetic chemicals 7,843 1.9Plastic additives 5,231 2.8Adhesives and sealants 5,093 2.2Water treatment chemicals 4,658 2.4Oil field chemicals 3,314 2.4Textile chemicals 3,235 -0.2Lubricating oil additives 3,064 0.6Synthetic dyes 2,780 -0.5Flame retardants 1,595 2.4Synthetic lubricants 1,548 2.2rubber chemicals 1,212 0.8Corrosion inhibitors 773 1.2Mining chemicals 160 0.5*Growth rates of select U.S. specialty chemical markets. Source: SRIConsulting (Menlo Park, CA).Several firms have strengthened their positionin personal care via acquisition. Theyinclude ISP, which acquired BiochemaSchwaben (Bavaria, Germany), a formulatorof preservatives and biocides; and Lubrizol,which boosted its presence in the sector withits purchase of Noveon last year (CW, April21, 2004, p. 8). —KWwww.chemweek.comChemical Week, June 8, 2005 29

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■ Chromos Licences to PfizerChromos Molecular Systems (Burnaby,BC) says it has extended a deal with Pfizerunder which Pfizer will use Chromos’sartificial chromosome expression (ACE)cell line engineering technology for manufacturingbiologic drugs. Terms werenot disclosed. ACE generates high-yieldcell lines for therapeutic proteins, includingmonoclonal antibodies, Chromossays. The company has recently licensedACE to Cambridge Antibody Technology(Cambridge, U.K.), Lonza, and Johnson& Johnson subsidiary Centocor (Malvern,PA). Chromos is also offering scale-upand manufacture of its cell drugs usingACE under a manufacturing alliance withAppTec Laboratory Services (St. Paul,MN).■ A-Bio to Supply Novo NordiskContract biologics manufacturer A-Bio(Singapore) says it has agreed to a dealto supply Novo Nordisk (Bagsvaerd,Denmark) with clinical supplies of anundisclosed biologic drug. Terms werenot disclosed. The deal includes processdevelopment work, A-Bio says. A-Bio iscurrently manufacturing on a pilot scale,and is building a commercial-scale plantin Singapore with four 10,000-liter reactors,due to come onstream in 2006. Thecompany agreed to a deal late last year tosupply a vaccine to GlaxoSmithKline.■ Strong Growth in Antibodies MarketThe market for drugs derived from monoclonalantibodies will increase 11.5%/yearto almost $26 billion in 2010, accordingto a study by Business CommunicationsCo. (Norwalk, CT). There are currently 18monoclonal antibody drugs on the market;a further 80 in clinical trials; and 420in development, the study says.■ BMS Applies Codexis TechnologyBristol-Myers Squibb has signed a researchagreement with Codexis (RedwoodCity, CA) under which it will evaluateCodexis’s enzyme-based processingtechnology to improve on an existing biocatalyticprocess for the manufacture ofan undisclosed drug candidate, Codexissays. Financial terms were not disclosed.Codexis told CW recently that it expectsto double sales during 2005 by addingbetween four and six “big pharma deals”(CW, May 18, p. 21).pharmaceuticals & fine chemicalsPHARMA INTERMEDIATESHigh Potency API Manufacture:Too Risky for New Entrants?The manufacture of high-potency activepharma ingredients (HPAPIs) hasbecome an attractive niche sector forcustom manufacturers, generating doubledigitsales growth at a time when annual bulkAPI annual sales growth has slowed to justa few percent. Growth in HPAPI manufactureshows no signs of slowing inthe short term, but competition isbuilding, and with it the risks ofparticipating in the sector, analystssay. There is concern that a rush ofnew entrants could lead to overcapacityand price pressure as hasbeen experienced in the productionof conventional APIs.The HPAPI contract manufacturingmarket is worth $500million-$600 million/year, orabout 15% of the total API market,but this could increase to about70% of the total API market by2010, as more HPAPI drugs gainFDA approval, says Enrico T.Polastro, v.p. at A.D. Little Benelux(Brussels). Depending on the takeuprate of HPAPI-based drugs,that growth rate could be far lower,however, Polastro says.There are opportunities for newentrants to the sector, althoughcompetition is increasing andbecoming fiercer, Polastro says. “It isbecoming an increasingly crowdedniche,” he says. Even with a dramaticlift in HPAPI demand, thereare still risks: “Investing now mightnot be the wisest thing to do unlessentry involves low outlay,” he adds.Leading players in the HPAPI field includeAerojet Fine Chemicals (AFC; RanchoCordova, CA), Antibioticos (Milan), Heraeus(Hanua, Germany), Johnson Matthey, Pfizer,Schering, Sigma Aldrich Fine Chemicals(SAFC), Solutia, and Teva PharmaceuticalIndustries (Petach Tikva, Israel).HPAPIs are attractive on the one handbecause the plants required to manufacturethem are small-scale. On the otherhand, containment buildings required formanufacturing HPAPIs are costly to installCarleone: Productorders are good.Hanko: Growing inline with customers.Polastro: Growth hardto predict.and manage. APIs are defined according toperformance-based exposure control limits,where category 1 is a normal API; category 2is an API that is a mild irritant; category 3 isan HPAPI that may cause reversible sensitisation;category 4 HPAPI may be deadly; andcategory 5 HPAPI is so potent that even atrace of the chemical may be fatal.Cytotoxic drugs, many of whichhave applications in cancer treatment,are a key growth segmentwithin the HPAPI sector, analystssay. The intermediates for manysteroids, including statins, as wellas narcotics, are also classified asHPAPIs. Steroids currently makeup about 60% of the HPAPI market,anticancer 20%, and otherdrug categories make up theremaining 20%, Polastro says.A problem for those looking toenter or expand their position inHPAPIs, is that it is difficult topredict growth, Polastro says. “Thedust has not yet settled to showwhether this field promises majorgrowth—or it might be that capacityis adequate or over-abundant,”he says. “There has been a lot ofinterest in this field of late. Manycompanies have said they plan toexpand capacity, but it is unclear ifall of them will proceed,” he adds.Firms that have entered the fieldrecently include SAFC, via itsacquisition of Tetrionics (Madison,WI) last year (CW, June 30, 2004,p. 37). Prior to SAFC’s purchase,Tetrionics is planning to double HPAPIcapacity as well as increase capacity for otheractivities by more than doubling its Madisonfacility to 61,500 sq ft. SAFC says it is abouthalfway through the project, which is duefor completion in 2006. The expansion willadd scale-up and analytical laboratories, fivecGMP kilolab manufacturing suites, andwarehouse and storage facilities, the companysays.SAFC says its focus in the HPAPI fieldis from early phase through to small-scalecommercial production. “We are buildingwww.chemweek.com Chemical Week, June 8, 2005 31

pharmaceuticals & fine chemicalsdevelopment and manufacturing relationshipsin HPAPIs with future commercialmarket potential for each project of 200kg/year or less,” says Matthew J. Hanson,manager/pharma market segment for SAFC.“Our business is strong and we are on trackto meet our goals for 2005,” Hanson says.Pharma companies are increasingly outsourcingHPAPI development and manufacture tocontract research and manufacturing organizations,particularly in oncology therapeutics,he says.Competition in HPAPIs is increasing, butthe majority of new investment is comingfrom companies that already compete in thesegment, Hanson says. SAFC has also seen“interest and investment” from companiesin India and China. SAFC says Tetrionics’“main competitive advantage” is its 15 yearsof experience producing HPAPIs. SAFC saysit continually looks for ways to enhance itsservice offering in HPAPIs and is exploring “anumber of potential areas,” including conjugatedmolecules for future HPAPIs.Other companies that have expandedtheir HPAPI capacity or plan to increasecapacity include Helsinn Fine Chemicalsand Solutia Pharmaceutical Services.Helsinn does not provide a breakdown ofindividual business activities but says thatHPAPI manufacture is a “key part” of itsstrategy and a contributor to the firm’s70% sales growth in 2004 (CW, March 16,p. 23). Helsinn says it will expand HPAPIfacilities at its main site at Biasca by bringinga cGMP small-scale manufacturingplant onstream by the end of 2005.Firms can stay ahead of low-cost competitorsand establish niche capabilities withinthe field by introducing novel HPAPItechnologies, Polastro says. New technologydevelopments include conjugatedHPAPIs. Solutia subsidiary Carbogen saysit is developing conjugated HPAPIs towhich other active molecules are attached.Solutia recently increased HPAPI productioncapacity and says it has a good pipelineof orders (CW, Nov. 3, 2004, p. 24).Containment fluid: HPAPIfacilities at Heraeus.Pharmaceuticals: d.simonnet@snpe.comAgro & Specialty Chemicals: l.pichon@snpe.comUnited States: d.slick@snpe.comJapan: s.nagai@snpe.comEngland: g.morgan@snpe.comGermany: k.reinhard@snpe.comwww.isochem.fr>ISOCHEM: Building the molecules of lifeISOCHEM teams up with you to improve the qualityof life, by delivering fine chemical products andservices for your markets.Visit us at ChemSpec EuropeJune 22-23, 2005Stand B9www.chemweek.com Chemical Week, June 8, 2005 33

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pharmaceuticals & fine chemicalsPfizer is a major custom manufacturer ofstatins and HPAPIs via its contract manufacturingsubsidiary Pfizer CentreSource (PCS;Kalamazoo, MI), which has annual sales ofabout $400 million (CW, March 9, p. 24). Thecompany says it is optimistic that it will be ableto grow its cytotoxics sales “in the 15%/yearrange.” PCS recently installed a new cytotoxicshigh-containment tablet production facilityat Feucht, Germany. “A lot of our solid-dosagebusiness development effort during the pastyear has focused on marketing that capacity,”says Michael J. Kosko, v.p./global contractmanufacturing at PCS. “We hope to be addingcapsules in the near future,” Kosko says. “Themarket place has been very receptive to whatwe have to offer.”Aerojet Fine Chemicals says HPAPI chemistryis one of its core growth areas, alongsidesimulated moving bed (SMB) chromatography,and explosive reactions including azidechemistry. The company says it is expandingHPAPI capacity “significantly” this year tomeet increasing customer demand. Aerojetsays it is generating sales growth of about15%/year in HPAPIs, SMB chromatography,and azide chemistry. All of Aerojet’s facilitiesare at a large site at Rancho Cordova. Aerojethas been put up for sale by its parentcompany GenCorp. Furtherdetails were not disclosed, althoughAerojet says it expects a buyer tobe announced within the next fewmonths.Aerojet has sales in HPAPIs ofabout $15 million/year about 20%of GenCorp.’s total. The companyanticipates this will grow at about15%/year during the next fiveyears. Aerojet has three stand-alone buildingsat Rancho Cordova dedicated to HPAPIproduction each with separate sets of utilityand support and water systems, and reactorsranging from 50 gal to 200 gal. Each also hasseparating and drying capability, includingfilters and conical dryers, the company says.“These two buildings have produced over1 m.t. of HPAPIs during 2004, running atAerojet isexpandingHPAPIcapacity‘significantly.’about 70% utilization,” says Joseph Carleone,president of Aerojet. “One of these two buildingsis currently being expanded,” Carleonesays. The project will increase capacity at thebuilding by about 30% and willalso make manufacture at the facilitymuch more flexible. Aerojet’salso plans another HPAPI buildingin 2007, he says.Aerojet’s third HPAPI buildingfeatures an SMB chromatographyunit used to purify cytotoxic products,including, the cancer drugpaclitaxel and its derivatives. Thebuilding also houses two 20-galreactors, together with filtering and dryingequipment. This facility was built as part ofan alliance with Bioxel Pharma under whichAerojet produces paclitaxel for Bioxel. It hascapacity to produce 120 kilograms/year ofpure paclitaxel. “Orders of existing productsare quite good. Several of our cancer productshave multi-year agreements extending through2009 and 2010,” Carleone says. The companyIN PRECIOUS METALS CHEMISTRY ONE STEP AHEADThe Precious Metals Chemistry business unit is your global partner for: bulk scale production of high specification precious metals chemicals and catalysts state of the art precious metal refining and separation technologies extensive know-how in organometallic chemistry and catalysis together with Solvias a unique offering for “Enantioselective catalysis“Inorganic CompoundsFor applications in: Supported catalysts Homogeneous catalysts Electroplating Fuel cellsOrganometallicChemicals and CatalystsUsed in: Life Science industry Silicone industry Bulk, specialities andPolymers PetrochemicalsRefiningTechnologies High PGM return rates Fast recovery times Wide range of materialsbeing processedContact our dedicated team of catalytic chemists and marketing experts! ecolyst@eu.umicore.com www.umicore.comUmicore tel (Europe, Asia) + 49 6181 59 24 04 Umicore tel (USA) +1 908 226 2000 Umicore AG & Co. KG – Precious Metals Chemistry – P.O. Box 1351 – D-63457 Hanau-Wolfgang – Germany

pharmaceuticals & fine chemicalsBetter utilization: Aerojet’sfacility at Rancho Cordova.increased its capacity utilization to 82% in2005, up from 70% last year.“On the surface, the HPAPI niche carriesvery good margins,” Carleone says. “However,one must be very cautious: since order quantitiesare typically small, processes usually quitechallenging and lengthy, and the cost of theproduct very, very high, execution on theseprojects must be flawless,” he says. “One lostor re-processed batch in mostcases will wipe out the entireprofit on the order. Therefore,the bid margins must be highin order to offset the risk inmanufacturing,” he adds.“We do not see the marginsin this niche increasing, butremaining stable,” Carleonesays. “We see the existingplayers in this niche expandingcapacity, but we do not see‘brand new’ players emergingin the U.S. or Europe as fullscalemanufacturers. At thekilo laboratory scale, however, there are somenew entrants.”“Our major competitive advantage is ourlong history and experience in this field,”Carleone says. “We believe we have the knowhowand reputation to continue to succeed.Also, with a large site we are able to expandor build new capacity easily,” he says. Aerojetis also developing production processes forever-more complex HPAPI molecules. “Aerojetis bidding on several opportunities for conjugatedHPAPIs,” he adds.Degussa produces HPAPIs via its pharmacontract manufacturing subsidiary Raylo(Edmonton, AB). HPAPI manufacture is“an interesting market for us although nota core of our business,” says Rudolf Hanko,v.p. and general manager/exclusive synthesisat Degussa. The company has severalHPAPI projects at Raylo, although historicallyDegussa has not been a big player andinitially entered into HPAPI manufacture tomeet the requirements of one of its customers,Hanko says. HPAPI sales presently accountfor less than 10% of Degussa’s sales in finechemicals.Although there is a clear trend that drugare getting more potent, the competitionis increasing and “it is not the right time toinvest in HPAPIs to become a big player—toomany players see themselves as sizeable players,”Hanko says. High investment costsrequired for manufacturing HPAPIs are oneDüsseldorfJune 22–23, 2005Booth No. E 31Have you ever talked to SF-Chemabout custom synthesis?You should!Fine chemicals and custom manufacturingLeading-edge technology in sulfur and chlorine chemistrySF-Chem . CH-4133 Pratteln 1 . SwitzerlandPhone +41 61 825 31 11 . Fax +41 61 821 80 27 . contact@sf-chem.com . www.sf-chem.comwww.chemweek.com Chemical Week, June 8, 2005 37

pharmaceuticals & fine chemicalsreason why Degussa is not expanding capacity,he says. However, should any of the drugcandidates Degussa is manufacturing in precommercialquantities be approved for marketuse “then we are willing to make a commitment,”he adds.Privately owned precious metalsand technology group Heraeus(Hanau, Germany) manufacturesHPAPIs at Hanau. The companyis focused on the production ofprecious metal APIs, including theplatinum-containing generic anticancertreatment HPAPIs cisplatinand carboplatin, as well as organic,cytotoxic HPAPI compounds thatare difficult to handle. Heraeus’sbatch production capacity ranges from onegram to hundreds of kilograms of nonsterileHPAPIs. The firm’s HPAPI business “representsa significant and very interesting sharewithin our chemical division with respectto sales and profits,” says Michael Schwarz,manager/pharma business unit.‘It is not theright timeto invest inHPAPIs tobecome a bigplayer.’The outlook for Heraeus’s HPAPI businessis one of strong growth, Schwarz says. “Weexpect the market to grow by 10%-15%/year,or even more,” he says. However, “there isincreasing competition, especially comingfrom Asia and South America,” Schwarz says.“On the other hand, first-class reputation,documentation, productquality, and reliability will remainvery important factors. Here we seeadvantages for European producers,”he says.Heraeus is experienced in producingconjugated HPAPIs andhas developed a fermentationprocess that uses genetically engineeredbacteria, Schwarz says. Thecompany has completed the final engineeringphase to install a new fermentation unitat Hanau for startup in the second quarter of2006. The fermentation plant will be dedicatedto HPAPI production, and will offerhigher purity at extremely low cost, Schwarzsays. Heraeus advises against API manufacturersentering the sector, however. “There areseveral well well-known players available whooffer sufficient capacity,” he says.Johnson Matthey (JM), meanwhile, sayscustom manufacturers will have to participatein the HPAPI sector if they are to survive.“The trend is for all custom API manufacturersto develop HPAPI capabilities or berelegated from the custom and fine chemicalindustry,” says Steven Van Kouwenberg, headof high-potency activities at Johnson MattheyPharma Services. JM’s expectations are high inthe short term and the company is expectingsales growth in HPAPIs “to exceed 20%/yearfor the next few years,” Van Kouwenberg says.JM’s projects range from small scale, to tensof kilograms.The company is willing to support technologiessuch as molecular conjugation butintends to develop only the equipment neededto compete and be safe, Van Kouwenberg says.“We are not intending to compete with ourcustomers or offer new technology options inthe HPAPI field,” he says. —ALEX SCOTT38 Chemical Week, June 8, 2005www.chemweek.com

HYDROCOLLOIDSCargill Acquires Citrico’sWorldwide Pectin BusinessCargill has entered the pectin sector withits recent acquisition of the global pectinbusiness of Citrico (Malchin, Germany),a manufacturer of citrus-based products for thefood, beverage, and pharmaceutical industries.Terms were not disclosed. The deal positionsCargill as the third-largest producer in the$320-million global pectin market, behindJ.M. Huber’s CP Kelco unit, and Danisco,analysts say. Citrico’s pectin production andsales operations at Malchin will be integratedinto Cargill’s texturizing business, whichincludes specialty starches, xanthan gum, andsoy protein products, Cargill says.Cargill says the deal strengthens its texturizingand stabilizing ingredients portfolio,which includes products from its Cerestar(Mechelen, Belgium) business, which producesspecialty starches, as well as erythritoland other artificial sweeteners.The acquisition supports Cargill’s efforts tobecome a leading provider of specialty ingredientsand ingredient systems to food andbeverage companies worldwide, says RobertParmelee, president of Cargill Food SystemM&ADesign. “Cargill’s ability to leverage pectinwith the company’s global juice, orange processing,and soya protein assets, as well as ourspecialty flavoring and formulation expertise,strengthens our ability to partner with customerson a broader array of innovative newsolutions, such as beverage compounds, in thefuture,” Parmelee says.Cargill has been expanding operations inthe food ingredient sector in the last yearthrough acquisitions, alliances, and capacityexpansions. Deals so far this year haveincluded Cargill’s purchase of the grain andoilseed meals trading business of Pagnan(Milan); its agreement to buy an industrialchocolate facility at Klein Schierstedt,Germany from Ludwig Schokolade, a subsidiaryof Krueger (Bergisch Gladbach,Germany); and an alliance with BayerCropScience to produce specialty canola oilfor the supply of high-stability oil to Cargill’sfood industry customers.Demand for pectin-based products is strongand producers, including Kelco and Danisco,have announced expansion plans. Kelco saysInternational Group Buys Honeywell’sU.S. Industrial Wax BusinessThe International Group Inc. (IGI;Toronto), a marketer and producer ofpetroleum-based wax products, hasacquired the U.S. industrial wax operationsof Honeywell Chemicals, part of HoneywellSpecialty Materials, Honeywell says. Termswere not disclosed.The deal includes Honeywell’s wax operationsat Farmers Valley and Titusville,PA, and Marshall, TX, and completesHoneywell Specialty Materials’ previouslyannounced plans to divest its noncoreindustrial wax business (CW, May 7, 2003,p. 20). Honeywell sold its Europeanand Asian industrial wax operations tospecialty wax producer Paramelt BV(Heerhugowaard, the Netherlands) inApril. That deal included a plant at Suzhou,Shedding light: Deal completes Honeywell’sindustrial wax divestment plan.China and a facility at Eupen, Belgium,which had combined sales of $47.5 millionin 2004, Honeywell says. Honeywell says ithas retained its specialty additives business,which includes performance additives.Honeywell Specialty Materials announcedplans in 2003 to focus investment on selectcore businesses built around technologiesincluding fluorines, advanced fibers andcomposites, reagents, electronic materials,and barrier solutions.—EDspecialtiesit is expanding capacity at its Limeira, Brazilpectin plant by 25%. Total plant capacity wasnot disclosed. Kelco says it will also completeanother expansion at Limeira by the first quarterof 2007. Danisco says it invested DK300million ($50 million) to build a new pectinplant at São Paulo that will expand its total pectinproduction capacity by 35%. The companydid not disclose capacity specifics. The plant isscheduled to be online in 2007. Danisco saysit is building the plant because its Smirice,Czech Republic and Tecoman, Mexico pectinplants are running at full capacity.—ESTHER D’AMICO■ Enzymotec Boosts Capacity in IsraelBiotech firm Enzymotec (Migdal HaEmeq,Israel), a developer of lipid-based ingredientsfor nutraceuticals and functionalfoods, has increased production capacityby 33% at its Haifa, Israel facility, saysAriel Katz, president and CEO. The companydid not disclose capacity figures. Theexpansion will help the company meet ananticipated demand increase from thedietary supplement and functional foodsindustries, Enzymotec says. The company’sproduct line includes a structuredlipid that improves the calcium absorptionand energy intake of newborns.■ Ashland Completes Car Brite BuyAshland’s Valvoline division says it hascompleted the purchase of Car Brite,a producer of professional automotivereconditioning products including interiorand exterior cleaners, from E&A Industries(Indianapolis) (CW, May 11, p. 7). Termswere not disclosed.■ Specialty Price WatchDegussa’s Peroxygen Chemicals unitsays it is raising prices worldwide for itsentire line of Quab cationizing reagentsby 15%-25%, effective July 1 or as contractsallow • Degussa’s GoldschmidtChemical subsidiary says it is increasingNorth American list and off-list pricesfor oleochemicals by a minimum of 5%,depending on product, effective June 15or as contracts allow. Goldschmidt citesrising energy and raw material costs •Dow Chemical’s Ucar Emulsion Systemsunit says it is raising off-list prices by5 cts/wet lb for its emulsion products fortraffic paint applications, effective June 15.www.chemweek.com Chemical Week, June 8, 2005 39

asic chemicals & plasticsINORGANICSProducers Push for Another Caustic Soda HikeChlor-alkali producers have announcedanother increase for caustic soda, thethird this year. OxyChem led theinitiative with a $30/ton increase effectiveimmediately, or as contracts permit. DowChemical, Formosa Plastics, Olin, Pioneer,and PPG Industries separately issued similarincreases. Producers recently pushed througha $40/ton increase, which boosted causticsoda contract prices to $365-$375/ton fob.Market players report stronger demandfrom the bleach and water treatment■ DuPont Starts Up Nylon ExpansionDuPont Engineering Polymers says it hasstarted up a 14,000-m.t./year Zytel HTNhigh-performance nylon resins expansionat Richmond, VA. The expansion morethan doubles capacity of DuPont’s ZytelHTN (CW, Oct. 29, 2003, p. 23). ZytelHTN is an aliphatic-aromatic polyamide.■ Producers Seek HCl IncreasePioneer and Vulcan Chemicals have separatelyannounced hydrochloric acid (HCl)price increases of $12/ton, about 15%, onall grades of HCl, effective immediately,or as contracts permit. Pioneer says it isseeking a $15/ton increase on the U.S.West Coast, and C$15/m.t. in Canada.Producers cite a tight supply-demandbalance in the market.■ Basic Chemical Price WatchFMC says it is seeking hydrogen peroxide(H 2O 2) price increases of 7 cts/lb, on a100% basis, in the U.S. and Mexico, andC$195/m.t. in Canada, effective July 1, oras contracts permit. Producers announceda 5-cts/lb increase, about 10%, on H 2O 2earlier in the year (CW, Feb. 9, p. 26). FMCsays it plans to implement the full 12 cts/lbincrease where contracts permit. • VulcanChemicals and distributor Basic ChemicalSolutions (BCS; Redwood City, CA) haveseparately announced price increaseson potassium hydroxide (KOH) of $1.50/hundred weight for 45% KOH, and $1.65/hundred weight for 50% liquid KOH, about10%. Vulcan’s increases are effectiveimmediately, or as contract terms allow;BCS’s are effective July 1.40035030025020015010050HEATING UP*(in dollars/m.t.)J’04*U.S. chlor-alkali contract prices, fob Gulf Coast. Source: CW research.segments, following an extended soft periodcaused by cool and wet weather across muchof North America. Caustic soda supply is notas tight as earlier in the year, but spot volumesare still difficult to find, sources say. Ordercontrolprograms remain in place, they say.Planned and unplanned outages in Apriland May reduced operating rates, and keptsupply tight, producers say. Operating ratesin April dropped three percentage pointsfrom March and six percentage points fromPOLYMERSCausticChlorineJ A S O N D J’05F M A Mthe beginning of the year, to 93%, says theChlorine Institute (Arlington, VA). GeorgiaGulf says it restarted its Plaquemine, LAunit in early May as scheduled. It took downthe plant in early April (CW, April 20, p. 4).Dow Chemical took down its 1.07-millionton/year Plaquemine plant for a one-monthplanned maintenance in May. Dow says ithas planned smaller turnarounds on variousparts of its Freeport, TX chlor-alkali facilityin June.Producers say chlorine demand growth isin line with expectations, and supply is balancedto tight. Chlorine prices rose $20/tonin April to $345-$375/ton fob. Demand fromsome segments, including the methylene dipara-phenyleneisocyanate and agriculturalsectors, are ahead of last year, producerssay. The steady decline in polyvinyl chloride(PVC) prices in China has eliminated exportopportunities for the U.S. and could forcePVC production cutbacks in the U.S., however,they say. This could prompt producersto turn back chlor-alkali operating rates andtighten caustic soda supply further, sourcessay.— PECK HWEE SIMPlastics Demand Slips in First QuarterNorth American demand for thermoplasticresins fell 0.5% in the firstthree months of the year comparedto the year-ago period, to 20.17 billion lbs,says the American Plastics Council (APC;Arlington, VA). The sharpest fall came fromacrylonitrile butadiene styrene and styreneacrylonitrile, which together dropped 8.5%,to 394 million lbs, APC says. Sales and captiveuse of polypropylene (PP) fell 2.6%,to 4.42 billion lbs, it says. Polystyrene (PS)demand also took a hit, falling 0.6%, to1.64 billion lbs.Total polyethylene (PE) demand inched up0.8%, however, to 8.94 billion lbs, helped bya 4.2% rise in linear-low density PE demand,to 2.9 billion lbs. Low-density PE demanddeclined 2.7% to 1.94 billion lbs, but highdensityPE rose 0.3%, to 4.1 billion lbs,APC says. Sales of polyvinyl chloride (PVC)climbed 0.5% to 3.96 billion lbs, it says.First-quarter polymers demand cameunder pressure from high inventories andpersistently weak demand from Asia. Marketplayers say they expect demand to rebound inthe second half of the year, when inventoriesare worked down, and Asian buyers re-enterthe market.PE prices lost 2 cts/lb in April, and 4 cts/lb in May, to 67 cts-78 cts/lb del, sourcessay. PP prices also shed 2 cts/lb for April, to63.5 cts-70 cts/lb, and may fall sharplyfor May in line with the 8-cts/lb dropin propylene feedstock prices, analystssay. PS prices rose 1.5 cts/lb in April, to97 cts-100 cts/lb, but will likely fall in Mayas well, due to a steep fall in benzene prices,they say. PVC prices shed a penny in Aprilafter rising 2 cts/lb in March, to 59 cts-61 cts/lb del. Prices rolled over in May, andproducers are trying to maintain prices thismonth.— PHS40 Chemical Week, June 8, 2005www.chemweek.com

product focusPricesU.S.: 75 cts-78 cts/lb del, May contracts;$1,500/m.t. fob, spot exportsEUROPE: €1,030-€1,150 /m.t. del, May; $980-$1,000/m.t. fob, exportsASIA: $980-$1,000/m.t. c&f, spotOutlookStrong demand and higher feedstock costsfueled sharp price increases for low-densitypolyethylene (LDPE) in 2004, helpingto boost margins to healthy levels, saysPat Duke, v.p./polymers at DeWitt & Co.(Houston). However, inventory build-upand reduced Chinese purchases have lowereddemand and partly reversed price gains so farin 2005, Duke says.Sources expect buying activity fromChina to resume soon. “It looks as thoughprices have hit the bottom, and sales volumesare expected to recover in June,”Duke says. “Prices should recover in thethird quarter, and the LDPE market shouldbe back to normal at the end of the year,” hesays. A brief setback in LDPE margins earlythis year due to slack demand and oversupplyshould be reversed before the year’s end,he adds.North American prices increased by atotal of 10 cts/lb over the past year, “but byMay 2005, prices came under pressure andbegan to lose ground as converters founddifficulty in passing the increases on tothe retail sectors,” Duke says. LDPE priceslost 2 cts/lb in April, and 4 cts/lb in May,sources say.North American LDPE demand rose6.1% in 2004, on the back of a 4.5% boostin domestic demand and a 12.1% jump inexports, says the American Plastics Council(APC; Arlington, VA). Higher direct LDPEfilm sales as well as sales to resellers, distributors,and compounders contributed tothe growth, APC says.Global LDPE demand is projected to growat 3.3%/year through 2010, DeWitt says.North American LDPE capacity is forecastto grow at 1.3%/year from 2004 through2010, but global capacity growth is expectedto increase 4.1%/year, the firm says.TechnologyLDPE is produced by high-pressure tubularor autoclave process. Tubular processes,licensed by Basell, ExxonMobil Chemical, andSabic, have a higher ethylene conversion rate,GLOBAL CAPACITY2005 total: 17.24 million m.t.Latin America5.6%Eastern Europe7.8%Africa/Mideast8.1%NorthAmerica22.9%Source: DeWitt & Co. (Houston).WesternEurope28.8%Asia26.8%analysts say. ExxonMobil also supplies autoclavetechnology, along with Polimeri Europaand SembCorp Simon-Carves. The tubularprocess’s cost-effectiveness led to a recent trendof larger scale units of 300,000 m.t./year ormore being planned, analysts say.Producers(in thousands of m.t./year)NORTH AMERICAU.S.Equistar Chemicals 759Dow Chemical 727ExxonMobil Chemical 669DuPont 485Westlake 385Eastman Chemical 295Chevron Phillips Chemical 280Huntsman 195CanadaNova Chemicals 145Dow Chemical 95AT Plastics 70Mexico 375SOUTH AMERICABrazil 795Chile 46Columbia 57Venezuela 85WESTERN EUROPELDPEAustria 245BelgiumExxonMobil Chemical 700Borealis 120Finland 190FranceTotal Petrochemicals 590Basell 430Polimeri Europa 200GermanyBasell 430BP Köln 370BSL 160Polimeri Europa 140ItalyPolimeri Europa 510The NetherlandsSabic 590Dow Benelux 265Norway 150Portugal 145Spain 432Sweden 185U.K. 170EASTERN EUROPEMIDEAST/AFRICAASIA PACIFIC1,6081,198Australia 90ChinaSinopec 380PetroChina 277Shanghai Petrochemicals 160Qilu Petrochemicals 140Maoming Petrochemicals 100India 295JapanJapan Polyolefin 218Japan Polychem 205Sumitomo Chemical 196Nippon Unicar 180Tosoh 179DuPont-Mitsui 170Ube Industries 147Asahi Kasei 80North Korea 25South KoreaHanwha Petrochemical 350LG Chem 160LG Daesan 135Lotte Daesan 140Samsung TotalPetrochemicals 100Malaysia 475Singapore 250TaiwanFormosa Plastics 210USI Far East 140Asiapolymer 100Thailand 250Source: CW research.www.chemweek.comChemical Week, June 8, 2005 41

cw price reportCOMMENTARY U.S. EUROPEEthylene prices continue to fall on weakerdemand downstream. U.S. spot prices havefallen 1.5 cts/lb in the past week, and Europeanprices tumbled more than $100/m.t., marketsources say. Ethylene markets are shifting frombalanced to long, and European cracker operatorssay they have pulled back operating rates by5%-10% in response. European propylene spotprices also declined, by about €40/m.t., but U.S.prices were steady. Butadiene also held steady, asbuying interest is healthy, sources say.Aromatics prices were mixed as rising energyprices coincided with less than stellar demand,market players say. U.S. benzene prices inchedup 5 cts/gal and mixed xylenes firmed 3 cts-4 cts/gal, but toluene dropped about 2 cts/gal, sourcessay. European benzene, toluene, and xylenesprices each slipped about $10/m.t. last week.June benzene contracts plummeted 70 cts/gal inthe U.S., to $2.30/gal fob, and European contractstumbled €166/m.t., to €529/m.t.June styrene contracts were settled in Europeat two separate prices: €782/m.t. del and €750/m.t. del, a decline of €180/m.t. and €212/m.t.,respectively, after some market players disagreedwith the “abnormally” higher settlement inMay, one source says. Spot styrene held flat inthe low 40-cts/lb range in the U.S. last week,but European prices declined $10/m.t. on a lackof pickup in demand, sources say.Methanol prices were largely steady amid thintrade. Methyl tert-butyl ether prices swung up byabout 10 cts/gal in the U.S. and $50-$70/m.t.in Europe in anticipation of the summer drivingseason, sources say.Polymers prices are under pressure from highinventories and weak demand, market playerssay. U.S. polyethylene (PE) prices lost an averageof 4 cts/lb for May, sources say. Polypropylene(PP) prices could decline as much as 6 cts/lb dueto the sharp drop in May propylene prices, theysay. U.S. polyvinyl chloride (PVC) producers gaveup a penny of the 2-cts/lb increase implementedfor March, and kept April and May flat.Lower demand pulled down European PEprices €50-€200/m.t. for May, with linearlow-density PE hardest hit, sources say. PEproducers have proposed rollovers for Junecontracts. European PP prices declined by €20-€40/m.t. on flat demand. Polystyrene prices lost€100/m.t., and PVC was down about €40/m.t.NOTE: Due to a production error, the price table in theMay 25/June 1 issue was incorrect. Please go to www.chemweek.com and click on the issue date for thecorrect chart.ETHANESPOT CONTRACT SPOT CONTRACT48-49 cts/gal fob ▼NAPHTHA 139-140 cts/gal fob ▲ $450-460/m.t. cif ▲GASOIL 120-124 cts/gal fob $460-470/m.t. cif ▲PROPANEBUTANE79-80 cts/gal fob ▼93-94 cts/gal fob ▼ETHYLENE 25-26.5 cts/lb del ▼ 38 cts/lb del May ▼ $700-720/m.t. cif ▼ €750/m.t. del Q2PROPYLENEchemical-grade 33-34 cts/lb del 33.5 cts/lb del May ▼ €580-600/m.t cif ▼ €705/m.t. del Q2polymer-grade 34-35 cts/lb del 35 cts/lb del May ▼ €600-620/m.t cif ▼BUTADIENE 45-50 cts/lb fob 44 cts/lb del Apr. $920-940/m.t. fob €702/m.t. del Q2BENZENE 225-230 cts/gal fob ▼ 230 cts/gal fob June ▼ $740-750/m.t. fob ▼ €529/m.t. fob June ▼TOLUENE 1 187-189 cts/gal fob ▼ $550-560/m.t. cif ▼MIXED XYLENES 187-189 cts/gal fob ▲ 185 cts/gal fob May $480-500/m.t. cif ▼STYRENE 43-44 cts/lb fob 71-78 cts/lb fob Apr. $720-730/m.t. fob ▼ €750/m.t.,€782/m.t.del June ▼METHANOL 85-90 cts/gal fob ▼ 95 cts/gal fob Apr. €210-220/m.t. fob ▼ €230/m.t. fob Q2MTBE 187-188 cts/gal fob ▲ $625-650/m.t. fob ▲45 cts403530252015105070 cts6050403020100ETHYLENE (U.S. contracts; cts/lb)J J’03STYRENE (U.S. spot; cts/lb)J’04$4.54.03.53.02.52.01.51.00.50100 cts9080706050403020100BENZENE (U.S. spot; dollars/gal)A S O N D J F M A M J J A S O N D J F M A MJ J A S O N D J’04’05’04’05JASONDJ’05FMAMJJ’04METHANOL (U.S. spot cts/gal)JASONDJ’05EXPORT DOMESTIC EXPORT EULDPE $1,200-1,210/m.t. fob 75-78 cts/lb del May ▼ $1,220-1,240/m.t. fob ▼ €1,030-1,150/m.t. del May ▼LLDPE 2 $1,010-1,030/m.t. fob 67-68 cts/lb del May ▼ €930-950/m.t. del May ▼HDPEblow molding $1,000-1,050/m.t. fob 71-72 cts/lb del May ▼ $1,120-1,140/m.t. fob ▼ €950-1,000/m.t. del May ▼injection molding $990-1,000/m.t. fob 68-69 cts/lb del May ▼ $1,100-1,120/m.t. fob ▼ €900-950/m.t. del May ▼PPhomo-injection $980-1,000/m.t. fob 63.5-65.5 cts/lb del Apr. $1,120-1,140/m.t. fob ▼ €980-1,000/m.t. del May ▼copolymer $1,020-1,050/m.t. fob 66-70 cts/lb del Apr. $1,180-1,200/m.t. fob ▼ €1,020-1,040/m.t. del May ▼PSgeneral purpose $1,450-1,460/m.t. fob 97-98 cts/lb del Apr. $1,350-1,400/m.t. fob ▼ €1,200-1,250/m.t.del May ▼high-impact $1,520-1,540/m.t. fob 99-100 cts/lb del Apr. $1,400-1,450/m.t. fob ▼ €1,250-1,290/m.t.del May ▼PVC 3 $920-940/m.t. fob 59-67 cts/lb del Apr. ▼ $900-920/m.t. fob ▼ €780-800/m.t. del May ▼1) Nitration-grade. 2) Butene-based. Hexene based + DM 0.1/kg; octene based + DM 0.2/kg. 3) General-purpose. CW Price Report is compiledthe Wednesday prior to publication through consultation with producers, consumers, and traders. Prices are quoted fob (free-on-board),cif (cost, insurance & freight), c&f (cost & freight), or frteq (freight equalized). References are NWE (Northwest Europe) port for Europe andUSG (U.S. Gulf) port for the U.S., and reflect recent large-volume transactions.FFMMAAMMJJ42 Chemical Week, June 8, 2005www.chemweek.com

HEALTH EFFECTSStudy Links Phthalates to GenitalProblems in Male InfantsArecent study has reported a possiblelink between pregnant women’sexposure to phthalates and abnormalgenital development inmale infants. The study, leadby researcher Shanna Swan atthe University of Rochester’sDepartment of Obstetrics andGynecology (Rochester, NY),is the first to indicate that exposureto phthalates at currentlevels found in the environmentcan adversely affect human maledevelopment, the authors say.The researchers say that the study’s findingswould have to be confirmed by broader studiesemploying larger groups of people beforeany firm conclusions can be drawn, however.Researchers collected data from 85 maleinfant-mother pairs, and the children, aged3 months to 26 months, were examined forwhat researchers say are genetic indicatorsof normal reproductive development. Thosemarkers include the distance between the anusand penis, known as the anogenital distance,as well as testicle and penis size. Researcherssay those traits are indicators in laboratoryPLASTIC ADDITIVESExtremely low doses of bisphenol-A(BPA) can alter the mammary glandsof female mice, making them moresusceptible to breast cancer, according to anew BPA study. Ana Soto, professor of anatomyand cellular biology at Tufts UniversitySchool of Medicine (Boston), headed thestudy, which was published in the Journalof Endocrinology. BPA is an endocrine disruptingchemical that can leach from plasticproducts, including polycarbonate (PC)and epoxy resins, and some researchers havelinked it to adverse health effects includingdevelopmental problems and liver damage(CW, May 18, p. 31).Soto’s study exposed mouse fetuses to 250nanograms of BPA per kilogram of bodyweight daily, or about 1% of what EPA deemsStanley: Methodologymay be flawed.animals of whether the offspring is likely to beat risk for undescended testicles, poor qualitysperm, or a low sperm count.“Higher levels of four phthalatemetabolites—mono ethyl phthalate,mono n-butyl phthalate,mono benzyl phthalate, and monoisobutyl phthalate—were foundto correlate with a higher thanexpected number of abnormalitiesin genital development,” says thestudy, which was first published inthe online version of EnvironmentalHealth Perspectives. Smaller testiclesand anogenital distances were found in childrenborn to women who were exposed to thesame levels of phthalates found in about 25%of the U.S. population. The National Instituteof Health (Bethesda, MD) and EPA commissionedthe study.Critics of the study say that the small groupof subjects and the formulas the researchersused to account for the difference in the children’sages make the study’s findings suspect.Part of the debate over the study’s significanceis whether smaller anogenital distances areindicators of future reproductive problems.Bisphenol-A Linked to Breast Cancersafe for human exposure, the researchers say.The mice exposed to BPA developed significantlymore tissue in parts of their mammaryglands than the control mice, which researcherssay indicates that the exposed mice wouldbe at increased risk for breast cancer. Sourcessay Soto’s study is important because it is thefirst to show that prenatal exposure to BPAcould change mammary development.Steve Hentges, executive director/PC unit atthe American Plastics Council (Washington),says that Soto’s research on BPA is inconclusive.“Any single study does not give a completepicture. This is very preliminary research,and even the authors caution about the relevanceof this study to humans. Quite a bitmore animal testing is needed,” Hentges says.— RYAN W. SMITHregulatory“Anogenital distance has no known significance,”says Marian Stanley, manager ofACC’s phthalates esters panel. “The authorsare not reporting any negative health effectson the male reproductive system,” Stanleysays. “In fact, the paper says it found ‘no frankgenital malformations.’”Stanley says the authors of the study alsoconcede that they went through a numberof statistical models before they found anysignificant differences in the infants bornto mothers with high levels of phthalates intheir urine. “As of now, the authors have yet todemonstrate that their data are solid, or thatthey are meaningful,” she says.—KARA SISSELLWhistleblower FilesComplaint Over PFC ResearchA Minnesota state scientist has filed a federalwhistleblower protection complaintagainst the Minnesota Pollution ControlAgency (MPCA; Minneapolis) for allegedlyissuing reprimands and restraintsregarding her attempts to disclose andresearch perfluorochemical compounds(PFCs) that she suspected had come from3M-related manufacturing and disposalsites, and were contaminating fish in thestate’s Voyageurs National Park.Scientist Fardin Oliaei, coordinator forMPCA’s emerging contaminants division,sought to open scientific investigationsinto the PFC contamination she found infish taken from the waters of the park,which was considered pristine. Oliaeirequested authorization to conduct aninvestigation into the source of the contamination,which MPCA denied, the complaintsays. Oliaei alleges that the MPCA commissioner,a former 3M executive, told her thatthe MPCA would terminate the emergingcontaminants program, “and you are theonly one in the program.”Oliaei has allegedly been forbidden tosupply information that had been requestedby members of the state legislature.Federal whistleblower protection lawsprotect employees who disclose pollutionthreats from “shoot-the-messenger retaliation”by a government agency, attorneyssay. OSHA is required to investigate allwhistleblower protection claims, and isexpected to have preliminary findings collectedby mid-June. MPCA did not returncalls for comment.—KSwww.chemweek.com Chemical Week, June 8, 2005 43

A CHEMICAL WEEK Custom Publicationarketing is back on the priority list for chemical industry executives, according to a recentAccenture/Chemical Week survey. Results show a majority of companies surveyed predict thatinvestments in Marketing—including marketing, sales, and customer care/service—will drivebusiness value for their organizations over the next five or more years.However, industry leaders admit they have not yet sharpenedtheir Marketing capabilities. Not a single respondent rated his/her company as having already achieved Marketing excellence.In fact, the overwhelming majority, 87% rate their organizationsat or around average. That opens the door for companiesto build competitive advantage by developing high-performanceMarketing capabilities.The time is now. A confluence of factors is causing chemicalcompany leaders to view Marketing as a way to improve growthand profits. Not only are supplies constrainedand prices escalating, but thechemical industry is also approachingthe top of its business cycle. Withlittle room for cost-cutting in manufacturing,companies are seeking todrive and sustain operational excellenceto other parts of their business,especially Marketing and supplychain, before the next downcycle.And the time is right for anotherreason. Investments made by chemicalcompanies in enterprise resourceplanning (ERP) systems over the pastIfive years are now bearing new fruit with added value: Significantdata about customers and products that can support customersegmentation, a focus on profitable customers and products, andan understanding of changing demand patterns.The Accenture/CW survey spanned the chemicals industry.The companies ranged in size from more than $10 billion inannual revenues to less than $500 million, and represented allindustry segments. With 33 senior executives responding, thefindings paint a picture of an industry recognizing Marketing’simportant role in delivering shareholder value in the years ahead:more than two-thirds, 76%, reported that Marketing was eitherthe top priority or a major priority for their company today, growingto 82% percent or more years from now.Leaders see Marketing’s highest priorities in two key areas(Chart): entering new markets (76% cite this as a top-threepriority; with 24% ranking it as the number-one priority) andincreasing profitability of current customers (67% and 36%).With many businesses focused on growth in Asia, and a shift inpower from customer to supplier, this is to be expected. What issurprising is the low ranking given to customer loyalty and retention.Supported by its projects with hundreds of clients in a rangeof industries, Accenture takes the view that loyalty is the platformhigh-performance businesses use to address a host of importantobjectives, including the ability to sustain a new market position.When asked to rank the specific capabilities that would allowtheir businesses to achieve their objectives, respondents cited harnessingtalent and technology as their top pick. This is consistentwith businesses seeking a return on ERP investments. However,it also highlights a renewed focus on skills within the Marketingworkforce.Accenture’s research highlighted four other fundamentalcapabilities that assist in out-performing competitors:• Developing and delivering the branded customer experience• Creating and shaping demand• Translating foresight and insight into marketing productivity• Drive marketing to meet performance objectives In the survey, respondents rankeddeveloping and delivering the brandedcustomer experience, as least important.This finding is no surprise.Accenture’s work with chemical companieshas helped us realize that manyexecutives fail to understand how abranded experience creates and sustainsa differentiated value in theirB2B business model.Accenture’s research acrossindustries indicates that chemicalcompanies lag other companies intheir Marketing execution. What iskeeping them behind? In this survey, some 54% of executivespoint to “a lack of management priority/too many competing initiatives”as the most significant of the top three obstacles.But there is hope. Very few respondents feel they cannotachieve the level of Marketing capabilities they want. And yet63% recognize that getting there will continue to be a majorchallenge.Industry executives recognize the importance of Marketing,have clear sight to their main objectives, and understand howthey would like to invest. The disconnect appears to be an inabilityto find the formula to overcome competing initiatives anddrive comprehensive and sustainable performance improvementthrough Marketing.The business value is there. Accenture research 1 shows thatMarketing efforts that harness customer insight and significantlyreduce delivery and operation costs can contribute up to 10%improvement in return on sales (ROS), simplify business models,and improve asset turnover and customer satisfaction.The secret is in execution: construct a well-designed, comprehensiveprogram, with senior executive sponsorship, to translate“what needs to be done” into “how to do it” into “sustainable businesschange”—the industry’s missing link.1) Accenture 2004 High Performance Marketing and Customer Management StudyJames G. Bogues is a partner in Accenture’s Global chemical practice. He isalso the practice leader responsible for Accenture’s Marketing & Sales offeringswithin the global chemical industry. E-mail: james.g.bogues@accenture.com.44 CHEMICAL WEEK, JUNE 8, 2005 www.chemweek.com

Symyx: Speeding Up Chemical R&DCombining Software with High-Throughput ResearchSymyx Technologies, the company that pioneeredhigh-throughput research (HTR)for the chemical and material sector,boasts one of the few profitable business modelsamong early stage technology companies.The company tripled its operating income lastyear, to $16.3 million, on revenues up 32%, to$83.2 million, and it expects tobreak the $100 million sales barrierthis year, says president IsyGoldwasser. The company isbeing helped toward that goal byexpansion into R&D software tocomplement its position in HTRcollaborations and tools, as well asgrowing royalties from commercialproducts arising from dealswith customers and its own R&Defforts, Goldwasser says.“Symyx has created, validated,and practiced new, broadlyapplicable R&D technologies that increaseexperimental throughput up to 1,000 times,”Goldwasser says. The company has more than25 HTR collaborations, which together accountfor nearly half of total revenues; the sale ofHTR tools accounts for a further 25%. Its twolargest deals are a five-year collaboration withExxonMobil Chemical that will generate fees of$200 million over five years, and afive-year deal with Dow Chemicalthat will generate about $120 million.Symyx has other partners inthe chemical sector, as well as firmsin the automotive, biotech, instrumentation,imaging, and pharmaindustries.Symyx is already generating royaltiesand licensing fees from threeproducts discovered using its HTRtechniques. The first is an X-raystorage phosphor for computedradiography, developed under a collaborationwith Agfa. The secondis a range of catalysts developedunder its collaboration with Dow that are beingused in Dow’s Versify range of plastomers andelastomers. The third is a series of polymercontrol agents for semiconductor applicationsthat were discovered by Symyx and licensed toJSR (Tokyo). There are 13 more candidates forGoldwasser: Raisingexperimental throughput.commercialization through the end of 2008,Goldwasser says.Among those likely to be commercializednext year are a catalyst for commodity chemicalsfor Celanese; a second polyolefins catalyst forDow; a personal care polymer for Unilever; anda polyethylene monitoring sensor for UnivationTechnologies. Symyx has alsodeveloped a sensor for oil andgas exploration that it intendsto license. Products for potentialcommercialization in 2007include a third polyolefins catalystfor Dow, an automotive oil sensorfor Hella, and lab equipmenttechnologies developed by Symyxthat are being licensed to Cannon.A fourth Dow polyolefins catalystand a commodity chemicals catalystfor ExxonMobil are due in2008.Symyx is easily the leader in HTR for thechemical and material sector, well ahead ofsmaller rivals HTE (Heidelberg, Germany)and Avantium (Amsterdam), Goldwassersays. “We are the pioneer of high-throughputresearch in this sector, and we are 4-5years ahead of anyone else,” he says. “We have$350 million invested in this business, which■ COMPANY SNAPSHOTSYMYX TECHNOLOGIES (SANTA CLARA, CA)Financials:Key businesses:Positives:Negatives:Outlook:2004 revenues: $83.2 million; Operating income:$16.3 million.High-throughput research (HTR) services and tools;R&D software.Leading position in HTR; strong pipeline of commercialproducts; diversification into R&D software.Lumpy revenue stream due to timing of contract R&Dpayments.Growth in royalty and licensing, and R&D softwareleading to more stable revenue growth.surpasses everyone else combined,” he adds. “It issignificant that we have clients like ExxonMobiland Dow. They have never done this kindof work before—changing R&D processes.Companies like that don’t usually take a broadleap of faith, but they did. They could have hadcompaniesjust an arm’s length agreement with us, but theywent well beyond that.”Meanwhile, Symyx’s software business isexpected to generate sales of $20 million thisyear, Goldwasser says. The company’s offeringsinclude its proprietary Renaissance softwaredesigned to increase efficiently in manual andHTR experiments, and its recent acquisitionof IntelliChem and Synthematix, provider ofan electronic lab notebook for scientists in thechemical and pharma industries to capture andshare data. The combined software can be usedto assemble and integrate data from multiplesources, and can also be linked with companies’ERP systems, he adds. “Customer analysisshows productivity increases of at least 20%,”Goldwasser says.HIGH MARGINS. Analysts say the business hashigh margins and should grow quickly. “Symyx’ssoftware business could grow to $100 million inrevenues over the next five years, with operatingmargins of approximately 20%,” says JeffreyZekauskas, analyst at J.P. Morgan (New York).“We expect the company to sign severallarge software deals in the second half of 2005,and for the business to be profitable in 2006,”Zekauskas says. This could also help smooth outthe “lumpy” revenue stream that results fromthe timing of R&D fee payments, or if any ofits products in development arenot successfully commercialized,analysts say.There is still a lot of potentialfor Symyx to increase its penetrationin the chemical andmaterial sectors, Goldwassersays. The company recentlyformed a deal with Accenturethat aims to boost marketingof its services, particularly software,to the largest chemicalfirms, the company says. “Wehave demonstrated that we candramatically increase R&Dquality, speed, and productivity,”Goldwasser says. “Symyx’s software, HTRtechnologies, research and integration deliversresults that companies could not achieve ontheir own,” he says. “We are bringing change toan industry that resists change.”—ANDREW WOODwww.chemweek.com Chemical Week, June 8, 2005 45

cw marketplacePhone: 212 621 4914 Fax: 212 621 4949 E-mail: jmarkovic@chemweek.comCHEMICALS WANTEDA SURPLUS COMPANY that will buy yourexcess chemicals, resins, oils, plasticizerspharmaceuticals, pigments,dyes, etc. JF Chemical Sales, Inc.227 Main St., Huntington, NY 11743,631-424-6880, Fax: 631-424-6884;Email: Jfchemical@CS.comCHEMICALS WANTEDSURPLUS AND SALVAGE IS OUR SPECIALTYWith 50+ years in the chemicalindustry we can offer immediatepayment for your surplus,excessinventory,chemical raw materials.We are #1 source for surplusmaterials. Visit us @ www.rambachcorp.comor call 973-589-7774 Fax 973-589-2615 THEAHART/RAMBACH CORPORATIONCHEMICALS WANTEDCASH FOR OFFGRADE, SURPLUS-resins,plastics, chemicals, colors, plasticizers,oils, rubbers, silicones, etc.Morgan Materials, Inc., P.O. Box68, Buffalo, N.Y. 14207. Ph: 716-873-2000, Fax: 716-873-2181, E-mail: dsadkin@morganmaterials.comEst. 1962CUSTOMER SERVICEPARTICLE SIZEPROBLEMS ?FINE GRINDING CORP.HAS BEEN SOLVINGTHEM SINCE 1962USING AIR JET &MECHANICAL MILLS,BLENDERS & SCREENS.EMPLOYMENT OPPORTUNITIESScientist - LexiconPharmaceuticals is currently seekinga Research Scientist for ourPrinceton, New Jersey location.Responsibilities include design,syntheses and purification oforganic molecules from complexmixtures using modern techniques,as well as research and developmentof new drug candidates forneurological disorders. Candidatesmust possess a Ph.D. in OrganicMedicinal Chemistry or Chemistry.Candidates must alsohave oneyear of relevant professionalexperiencewith complex compounddetermination and multi-step naturalproducts syntheses involvingorganometallic chemistry, carbohydratechemistry, peptide chemistryand heterocyclic chemistry. Pleasesend resumes indicating salaryrequirements and referencingJob Code 876LD to:LexiconPharmaceuticals, 350 Carter Road,Princeton, New Jersey 08540, Attn:HR Rep. Only those selected forinterviews will be contacted.Lexicon is an Equal OpportunityEmployer.CHEMICALS OFFEREDS E R V I C E S(INTERNATIONAL STANDARDS)BARIUM :-ACETATE / BORATE / BROMIDE / CARBONATE /FLUORIDE / IODIDE / OXALATE / PERCHLORATEBISMUTH :-ACETATE / AMMONIUM CITRATE / BROMIDE /SUB-CARBONATE / SUB-CHLORIDE / CITRATE /FLUORIDE / HYDROXIDE/ NITRATE /TRI-CHLORIDE / TRI-OXIDECADMIUM :-ACETATE / BROMIDE / CARBONATE /CHLORIDE / FLUORIDE / IODIDE / NITRATE /OXALATE / OXIDE / PERCHLORATE / SULFIDE /SULPHATECOBALT (II) :- [COBALTOUS]ACETATE / BROMIDE / CARBONATE /CHLORIDE / CITRATE / FLUORIDE / HYDROXIDE /NITRATE / OXALATE / OXIDE / SULPHATECOPPER (II) :- [CUPRIC]ACETATE/ BROMIDE/ CHLORIDE / CHROMATE /CHROMITE / CITRATE / FLUORIDE /HYDROXIDE / NITRATE / OXIDE / SULPHATELITHIUM :-ACETATE / BENZOATE / BORATE / BROMIDE /CHLORIDE / CHROMATE / CITRATE / FLUORIDE /NITRATE / PERCHLORATE / SULPHATE / IODIDEMAGNESIUM :-ACETATE / BROMIDE / CHLORIDE / CHROMATE /CITRATE / NITRATE / PERCHLORATE /SULPHATEMANGANESE :- [MANGANOUS]ACETATE / BROMIDE / CARBONATE /CHLORIDE / CITRATE / DIOXIDE / FLUORIDE /PERCHLORATE / SULPHATE / OXALATENICKEL :-ACETATE / BROMIDE / CARBONATE /CHLORIDE / CITRATE / FLUORIDE / NITRATE /OXIDE / SULFIDE / SULPHATESTRONTIUM :-ACETATE / BROMIDE / CARBONATE /CHLORIDE / CHROMATE / FLUORIDE / NITRATE /OXALATE / PERCHLORATE / SULPHATETIN (II) :- [STANNOUS]BROMIDE / CHLORIDE / SULPHATEZINC :-ACETATE / BROMIDE / CITRATE / CHROMATE /FLUORIDE / IODIDE / NITRATE / PERCHLORATEAvailable in SKLR, SKAR and many otherINORGANIC CHEMICALS as per your specification.RECENTLY UPGRADED PROCESS SUITESINCLUDES TEMPERATURE AND HUMIDITYCONTROL WITH HEPA FILTER.H. TIMOTHY EVERETTFINE GRINDING CORP.241 E. ELM ST.CONSHOHOCKEN, PA 19428PH: 800-726-7429FAX: 610-828-2584Specialist in Design, FailureAnalysis, and Troubleshooting ofStatic and Rotating EquipmentPhone: 281-282-9200Fax: 281-282-9333www.knighthawk.com• Failure Investigations• Forensic Analysis• 3rd Party Design Audit• Field Services• Testing24/7 Around the World - Houston, Texas USAContact Manufacturers:CHEMICAL INDUSTRIES TM57/61, Sheriff Devji (Chakla) Street,Masjid (W), Mumbai - 400 003. (INDIA)Tel. : 91-22-5637 02 99TMTelefax : 91-22-2343 73 80 1968E-mail : skci@mtnl.net.inWebsite : skchemind.com We Serve Since 1968AT YOUR SERVICE FOR QUALITY SINCE 196846 Chemical Week, June 8, 2005 www.chemweek.com

leading indicatorkey changesThe leading indicator for the chemicalindustry rose in May, following a steepdrop in April, but has not yet regainedthe high point set in March.Industrial production in the chemicalprocessindustries declined 0.4% in May,while overall manufacturing productiondropped 0.3%. Output was lower in buildingproducts, paper, and petroleum refining,but higher in rubber and plastics productsand nonferrous metals. In manufacturingas a whole, production of durable goods wasdown 0.5%, and nondurables fell 0.2%.Chemical output was not immune to thegeneral downturn—production was off 0.3%for the month.New orders in the manufacturing sectorwere also weak. Total orders rose 0.1%, withthe durable goods component down 2.3%.May was the third consecutive monthlydecline for durable goods’ bookings. Ordersfor construction materials and supplies roseby 1.6%, however.Data published by the Institute for SupplyManagement (ISM; Tempe, AZ) also showweakness in manufacturing. ISM’s neworders index fell to 53.7% in April, comparedto a high of 70.7% in November2003. This indicates that only 53.7% offirms experienced rising order volumes inthe latest month, analysts say. Only 51.5%of firms reported slower deliveries in April,compared with 66.4% a year earlier, ISMsays.Sales of new and existing homes remainstrong, and long-term interest rates arestill low. The housing market may begin toweaken, however. The federal deficit is notreceding and the Treasury is contemplatingreturning to the long-bond market withnew issues, thereby adding to the supply ofdebt and pushing interest rates up, analystssay. Rising inflation may also halt growthin housing, they say. —ARNOLD PEARLMANBASF has appointed Fred P. Rullo as director/salesfor BASF’s intermediates business inNorth America. Rullo most recently servedas director/sales, NorthAmerica for Noveon’sthermoplastic polyurethanesbusiness.BRENNTAG has hiredSusan Musselman asnational accounts executive.Musselmen wasmost recently programmanager for procurementand e-sourcing atAir Products.SUN CHEMICAL hasnamed Scott Butleras technical sales manager/NorthAmericafor its performance pigmentsbusiness.Fred P. RulloSusan MusselmanIndicatorRevives■ CHEMICAL INDUSTRY% change % changeLATEST PREVIOUS YEAR AGO PREVIOUS YEAR AGOFreight car loadings–chemical (week of May 14) 30,400 30,534 31,241 -0.4 -2.7Electric power use (1987 avg.=100; March) 87.0 87.6 87.6 -0.2 0.0Employment (in thousands; seasonally adjusted; April) 877.5 876.7 890.8 0.1 -1.5Average weekly hours (production workers; April) 42.4 42.2 43.0 0.5 -1.4Average hourly earnings (production workers; April) 19.58 19.47 18.96 0.6 3.3■ GENERAL ECONOMY200180160140120100806040200Latest MonthDecember 183.87Month AgoNovember 182.52Year AgoDecember 172.46M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M’02’03’04’05%change% changeLATEST PREVIOUS YEAR AGO PREVIOUS YEAR AGOBusiness Week Index (1967=100; week of April 30) 241.1 240.4 219.1 0.3 10.0Personal income (in billions; seasonally adj. at annual rate; March) $10,758.3 $10,010.3 $9,484.9 0.5 6.1Retail sales–nondurable (in billions; March) $2,491.6 $2,492.5 $2,337.7 0.0 6.6Retail domestic vehicles* (in millions; seasonally adj. at annual rate; April) 13.79 13.43 13.24 2.7 4.2Housing starts (in thousands; seasonally adj. at annual rate; April) 2,038 1,836 1,968 11.0 3.6Consumer sentiment index (second-quarter 1966 avg.=100; May) 85.3 87.7 90.2 -2.5 -5.4Vendor performance (% of companies reporting slower deliveries; April) 51.5 52.5 66.4 -1.9 -22.4Electric power output (in millions of kWh; week of May 14) 68,636 65,573 71,274 4.7 -3.7Exchange value of U.S. dollar (trade weighted; March 1973=100; April) 82.23 80.89 87.42 1.7 -5.9*Autos and light trucks. Sources: Compiled for Chemical Week by Haver Analytics (New York) from data issued by the Association of American Railroads, Edison ElectricInstitute, Federal Reserve Board, Bureau of Labor Statistics, and Department of Commerce.2002J MJJASOND2003J FMAMJJASOND2004J FMAMJJASONDAchim Noack hasbeen promoted tomanaging director ofBAYER TECHNOLOGYSERVICES. Noack previouslyheaded the BayerTechnology Services’regional office.Scott ButlerDEGUSSA has namedCraig Vail as regional sales manager for itsAerosil and silanes business. Vail was previouslywestern sales manager for the company’sfine chemicals business.ATRION INTERNATIONAL has appointedPatrick Eisma as general manager for itsEuropean headquarters in Nijmegen, theNetherlands.Daragh L. Porter has been named v.p./finance, and treasurer for ASHLAND. Porterwas most recently general auditor.Walter W. Zywottek has been named generalpartner and executive board member ofMERCK KGaA. Zywottek was previously presidentand CEO of VWR International.2005J FMAKlaus Moll has been elected chairman ofLURGI AG’s executive board.CHEMLOGIX has appointed William D.Snyder director/business development.www.chemweek.com Chemical Week, June 8, 2005 47

cw75 stock performance160140120100M J J A S O N D J F M A M’04’051) Morgan Stanley composite index. Source: CW research.300250200150CW 75(index; Jan. 1, 2002 = 100)CW 75 stock indexWorld index 1SECTOR COMPARISON(index; Jan. 1, 2002 = 100)BasicWorld index 1CW75 Index*JUNE 1 145.15WEEK AGO 143.99QUARTER AGO 156.40YEAR AGO 122.78*Jan. 1, 2002 = 100.The CW75 Index rose about 1% for theweek ending June 1, in line with broadermarket indexes. Basic chemical sharesrose 2.1%, specialty chemical stocks, 1.6%,but diversified shares were flat.Georgia Gulf’s shares had a wild ride lastweek. They topped the leaders list as of marketclose on June 1, with a 9% rise on the previousweek, but then sank after the companywarned that it would fall short of analysts’second-quarter estimates, due to plant shutdowns.The company says it expects to earn50 cts-60 cts/share, compared to analysts’estimates of about $1.10/share. However, theshares quickly regained ground and were tradingabove their June 1 high late last week.OM Group’s stock rose 7%, to $25.33 onnews that the company has appointed formerSherwin-Williams president and COOJoseph Scaminace as its next president andCEO.DiversifiedSpecialty100M J J A S O N D J F M A M’04’051) Morgan Stanley composite index. Source: CW research.CompanyTickerCategory*Marketcap($ millions)Closing price■ LEADERSCOMPANY NAME TICKER 1-WEEKCHANGE (%)Georgia Gulf GGC 9.0%Wellman WLM 8.8%OM Group OMG 7.0%Nova Chemicals NCX 6.9%Methanex MEOH 6.5%H.B. Fuller FUL 5.3%PolyOne POL 5.3%Mosaic MOS 5.0%FMC FMC 4.7%Cabot Microelectronics CCMP 4.4%1-Week change1-Week changevs. CW75 indexYTD % changeYTD change vs.CW75 indexTrailing P-EDividend yield52-week high52-week low3M MMM D 59,259 77.00 -0.1% -0.9% -5.2% -3.0% 19.8x 2.18% 88.55 72.23 1.3%DuPont DD D 46,876 47.06 0.7 -0.1 -2.6 -0.5 22.7x 3.14 54.47 38.99 0.9Dow Chemical DOW D 44,258 46.04 0.5 -0.3 -6.4 -4.3 12.1x 2.91 56.38 37.16 1.2BASF BF D 35,972 67.20 -0.7 -1.5 -3.5 -1.4 12.2x 3.38 74.69 48.63 0.1Bayer BAY D 24,991 34.22 0.1 -0.7 3.0 5.2 22.8x 2.13 34.80 23.78 0.0Monsanto MON D 15,617 58.23 3.2 2.3 5.5 7.6 29.3x 1.17 65.42 33.53 2.5Praxair PX S 15,492 47.89 2.5 1.7 8.9 11.0 21.9x 1.50 49.42 36.18 1.0Sasol SSL B 15,406 25.10 0.9 0.1 17.6 19.7 13.5x 2.95 26.55 14.24 0.1Air Products APD S 14,129 61.62 2.6 1.8 6.8 9.0 21.2x 2.08 65.47 47.34 1.4Syngenta (ADR) SYT D 11,892 21.13 0.0 -0.8 -1.0 1.1 24.3x NA 23.26 15.45 0.1PPG Industries PPG D 11,420 66.51 0.8 0.0 -1.1 1.0 17.5x 2.83 74.22 55.09 1.1Akzo Nobel AKZOY D 11,295 39.52 -3.1 -3.9 -4.5 -2.3 10.9x 1.90 45.60 29.76 0.1Rohm and Haas ROH S 10,563 47.07 2.1 1.3 7.7 9.8 19.6x 2.46 49.67 36.09 1.3PotashCorp POT B 10,000 90.42 2.3 1.5 9.3 11.4 26.8x 0.66 91.84 42.05 1.6Solvay SVYSY D 9,391 111.00 0.0 -0.8 2.5 4.7 NA NA 121.00 78.09 0.0BOC Group BOX S 9,220 36.94 -1.0 -1.8 -1.8 0.4 13.3x 5.09 39.95 30.86 0.0Clorox CLX D 9,036 58.60 0.3 -0.5 0.4 2.5 10.0x 1.91 65.75 48.22 2.5Ecolab ECL S 8,352 32.70 0.7 -0.1 -6.7 -4.5 26.8x 1.07 35.40 28.81 0.8DSM (ADR) DSMKY D 6,512 17.00 -2.9 -3.7 5.9 8.1 NA NA 18.85 11.50 0.0Sherwin-Williams SHW S 6,282 45.16 3.1 2.3 2.1 4.3 15.3x 1.82 46.28 37.29 2.6Lyondell Chemical LYO B 6,010 24.42 0.5 -0.4 -14.2 -12.0 18.0x 3.69 35.32 14.70 6.2Avery Dennison AVY S 5,859 53.02 0.5 -0.3 -10.4 -8.3 18.7x 2.87 65.28 49.25 1.4ICI ICI S 5,598 18.79 0.2 -0.6 3.4 5.5 13.8x 2.93 21.65 14.43 0.1Mosaic MOS B 5,121 13.33 5.0 4.2 -18.3 -16.2 NM 0.00 18.58 12.15 1.4Ashland Inc ASH D 5,021 68.91 2.1 1.3 19.0 21.2 10.2x 1.60 69.59 45.98 4.9Eastman Chemical EMN D 4,771 59.47 1.4 0.6 3.8 5.9 14.0x 2.96 61.57 41.15 3.2Ciba (ADR) CSB S 4,315 30.45 0.2 -0.6 -17.2 -15.1 14.8x 5.02 36.92 28.76 0.0Huntsman HUN D 4,207 19.02 2.2 1.4 NA NA NA 0.00 30.00 18.15 2.3Sigma-Aldrich SIAL S 4,176 60.65 1.6 0.7 0.9 3.1 17.2x 1.25 64.60 52.77 2.2Engelhard EC D 3,587 29.74 1.6 0.8 -2.6 -0.5 15.3x 1.61 32.34 26.28 1.9IFF IFF S 3,540 37.58 0.7 -0.1 -11.9 -9.8 18.8x 1.97 43.01 34.78 2.0MEMC WFR S 2,875 13.75 -0.9 -1.7 3.8 5.9 11.6x 0.00 14.95 7.33 2.2Nova Chemicals NCX B 2,783 33.03 6.9 6.1 -29.8 -27.7 9.0x 0.97 52.05 25.59 2.0Lubrizol LZ S 2,686 39.63 1.6 0.8 8.9 11.1 23.9x 2.62 43.28 31.46 1.2Nalco Holding NLC S 2,549 17.99 2.5 1.7 -7.8 -5.7 NA 0.00 20.94 15.15 0.6Agrium AGU B 2,528 19.15 3.0 2.2 13.6 15.8 10.0x 0.57 19.70 12.90 1.2Valspar VAL S 2,481 48.19 2.0 1.2 -3.2 -1.1 18.7x 1.66 50.61 40.81 1.7Scotts SMG D 2,428 72.52 2.4 1.6 -1.4 0.8 20.8x 0.00 74.00 55.76 1.6Shanghai Petrochemical SHI B 2,376 33.00 -3.6 -4.5 -5.4 -3.3 4.9x NA 42.28 26.23 0.2Church & Dwight CHD D 2,284 35.98 -0.3 -1.1 7.4 9.5 24.8x 0.67 37.43 26.71 1.0Methanex MEOH B 2,279 19.07 6.5 5.7 4.9 7.0 8.8x 1.68 20.21 11.50 1.8FMC FMC D 2,145 57.18 4.7 3.9 18.4 20.5 9.9x 0.00 57.78 38.44 2.2RPM International RPM S 2,094 17.82 4.1 3.3 -7.8 -5.7 18.4x 3.37 19.62 13.50 1.6Cytec Industries CYT S 1,923 41.83 -0.8 -1.6 -18.3 -16.2 22.3x 0.96 54.53 39.72 4.9Airgas ARG S 1,850 24.54 3.9 3.0 -7.3 -5.1 21.0x 0.98 27.09 20.69 1.5Cabot Corporation CBT D 1,836 29.17 1.1 0.3 -23.8 -21.7 54.0x 2.19 40.22 27.51 1.4Crompton CK S 1,821 15.50 0.6 -0.2 32.4 34.5 NA 1.29 16.18 4.91 2.3Albemarle ALB S 1,798 38.61 1.3 0.5 0.1 2.3 25.9x 1.55 40.33 28.11 1.5Great Lakes Chemical GLK S 1,786 34.30 0.6 -0.2 21.1 23.3 21.8x 1.17 35.38 22.58 2.3Hercules HPC S 1,587 14.04 4.2 3.3 -5.5 -3.3 NM 0.00 15.55 10.30 1.7Westlake Chemical WLK B 1,568 24.12 -1.7 -2.6 -27.7 -25.5 9.0x 0.25 37.67 14.50 1.7Minerals Technologies MTX S 1,396 68.08 1.7 0.9 2.2 4.4 23.2x 0.29 69.45 53.37 2.4Olin OLN D 1,360 19.11 3.4 2.6 -11.6 -9.4 15.0x 4.19 25.08 15.48 2.5Georgia Gulf GGC B 1,158 33.95 9.0 8.2 -31.7 -29.6 9.1x 0.94 58.57 29.47 9.2Rhodia RHA D 1,111 1.77 -0.6 -1.4 -34.4 -32.3 NA 0.00 3.20 1.13 0.1ATMI ATMI S 1,051 28.30 3.9 3.1 25.6 27.8 27.5x 0.00 28.86 17.18 3.7Sensient Technologies SXT S 977 20.68 3.0 2.2 -12.6 -10.4 13.5x 2.90 23.91 18.56 1.0H.B. Fuller FUL S 944 32.77 5.3 4.5 15.9 18.1 25.2x 1.50 32.80 24.91 1.9MacDermid MRD S 889 29.35 1.2 0.4 -18.6 -16.4 17.5x 0.82 37.09 26.32 0.8Symyx Technologies SMMX S 862 26.43 2.3 1.5 -12.0 -9.9 NM 0.00 32.20 16.51 1.9Ferro FOE S 822 19.61 3.6 2.8 -14.1 -12.0 35.7x 2.96 26.32 16.64 2.1Cabot Microelectronics CCMP S 783 31.70 4.4 3.6 -20.9 -18.7 19.0x 0.00 41.98 25.50 5.5NL Industries NL B 754 15.54 4.2 3.3 -28.9 -26.8 3.5x 6.44 24.72 11.70 0.4OM Group OMG S 721 25.33 7.0 6.2 -21.9 -19.7 8.6x 0.00 37.76 19.35 5.7Compass Minerals CMP B 719 22.89 1.9 1.1 -3.3 -1.2 17.3x 4.81 26.51 17.67 2.9Rogers ROG S 681 41.44 3.3 2.5 -3.9 -1.7 21.6x 0.00 71.36 33.87 1.3PolyOne POL D 622 6.77 5.3 4.5 -25.3 -23.1 17.8x 0.00 10.25 6.11 1.9Arch Chemicals ARJ S 566 23.97 3.1 2.2 -15.4 -13.2 27.9x 3.34 30.38 22.63 1.7A. Schulman SHLM S 511 16.68 -1.4 -2.2 -20.8 -18.7 16.5x 3.48 22.19 15.92 3.3Cambrex CBM S 480 18.17 -0.1 -0.9 -32.8 -30.6 NM 0.66 27.09 17.70 1.0Albany Molecular AMRI S 386 11.95 3.4 2.6 7.3 9.4 NA 0.00 13.71 8.01 2.0Wellman WLM B 373 11.48 8.8 8.0 8.3 10.4 NA 1.74 15.35 6.25 4.5American Vanguard AVD S 336 18.47 1.9 1.1 0.7 2.8 24.3x 0.60 22.88 13.57 0.9Stepan SCL S 193 21.41 2.9 2.1 -10.5 -8.4 22.3x 3.64 25.51 20.54 0.6Aceto ACET S 180 7.42 3.8 3.0 -41.4 -39.3 16.9x 1.35 13.33 6.53 0.7*D = Diversified. S = Specialty. B = Basic. Source: CW research.■ LAGGARDSCOMPANY NAME TICKER 1-WEEKCHANGE (%)Shanghai Petrochemical SHI -3.6%Akzo Nobel AKZOY -3.1%DSM (ADR) DSMKY -2.9%Westlake Chemical WLK -1.7%A. Schulman SHLM -1.4%BOC Group BOX -1.0%MEMC WFR -0.9%Cytec Industries CYT -0.8%BASF BF -0.7%Rhodia RHA -0.6%Weeklyvolume48 Chemical Week, June 8, 2005 www.chemweek.com

Specialty Chemicals:The Specialty Chemicals Update Program (SCUP) focuses on the businessenvironment and market dynamics for major specialty chemicals segments. Broughtto you by SRI Consulting, SCUP presents comprehensive information that is criticallyimportant in developing a strategy for success in the rapidly changing specialtychemicals business.Presenting Highlights from a Recent ReportACTIVE PHARMACEUTICAL INGREDIENTSThis report focuses on the business and market characteristics of the active pharmaceuticalingredients industry, from the viewpoint of the current Good Manufacturing Practices (cGMP)fine chemicals producer. Starting with the nearly $500 billion global pharmaceuticalmarket, the report divides the data by region, market, segment and technology and providesconsumption and forecast information. The report also identifies the critical business factors,success strategies and issues impacting this segment of the industry. These issues include thegrowth of generic drugs, outsourcing by innovator companies, overcapacity and theincrease in low production cost cGMP facilities in India and China.Smart Research. Smart Business.www.sriconsulting.comMENLO PARK HOUSTON BEIJING TOKYO ZURICH