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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. Smith 212-621-4847LONDON24-25 Scala Street, London W1T 2HP+44 20 7436-7676; Fax: +44 20 7436-3749Executive Editor Natasha Alperowicz +44 20 7692-5282Managing Senior Editor Ian Young +44 20 7692-5280Senior Associate Editor/Pharmaceuticals,Fine Chemicals, and Environment Alex Scott +44 1494 564316Designer/Office ManagerDelphine MeslinCORRESPONDENTSNORTH AMERICA: TORONTO, Peter Fairley; NEW YORK CITY, Ray Pospisil;PHILADELPHIA, Ken Cottrill.EUROPE: AUSTRIA, George Hamilton; ITALY, John Glover; IRELAND, RobertAllen; FINLAND, Gerard O’Dwyer; GERMANY, Don Kirk; SWITZERLAND, LauraPilarski; RUSSIA, Alexander Bykov; SPAIN, Marco Achon.ASIA/PACIFIC: THAILAND, Jonathan Sikes; CHINA, Nick Driver; INDIA,C. Veeraraghavan; INDONESIA, Gary Nageri Munthe; JAPAN, AndrewMollet; KOREA, Hyung-Jin Kim; PAKISTAN, Rauf Siddiqi; PHILIPPINES, BernardoRonquillo; TAIWAN, John R. Westbrook; AUSTRALIA, Christine Forster.LATIN AMERICA: MEXICO, Carmen Alvarez; VENEZUELA, Jack Sweeney; CHILE,Raul FerroPUBLISHER AND GROUP VICE PRESIDENTLyn Tattum +44 20 7692-5275ltattum@chemweek.com 212-621-4809ADVERTISINGGlobal Sales Director Joseph Mennella 212-621-4918Global Sales Manager/Directories/Classified John G. Markovic212-621-4914Worldwide Sales Manager, Buyers’ Guide/Profiles Chantal Onelien212-621-4928Regional Sales Manager, Europe/AsiaDavid Ricketts+44 20 7692-5278Regional Sales Manager Alexandra Sheppard 212-621-4828Sales/Marketing Assistant Nanette Santiago 212-621-4809InternationalItalyFerruccio Silvera ferruccio@silvera.itJapanKatsuhiro Ishii amskatsu@dream.comTaiwanRudy Teng idpt808@seed.net.twChinaLijuan Wang lwang@fengwei.com.cnIndiaDipali Dhar ddhar@chemweek.comMarketing ManagerSenior Graphic DesignerMARKETINGDeirdre M. SmithTara ZainoART/PRODUCTIONVice President of Production & Manufacturing Michael D. 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
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Page 10 and 11: Think Tanks Mull Industry-Specific
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Page 14: At SAFC, brilliance is all around u
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Page 22 and 23: EUROPE/MIDEASTIneos Confirms Plans
Page 24 and 25: Meet us !ChemSpec Europe 2005, Mess
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Page 42 and 43: HYDROCOLLOIDSCargill Acquires Citri
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Page 46 and 47: HEALTH EFFECTSStudy Links Phthalate
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