🏭 August 2022: Round-Up

Good morning. Welcome to the first edition of The Column's monthly round-up. I'm not exactly sure how I'm going to do these, so expect it to be inconsistent until I figure something out that makes sense.

Here's what we talked about in August:

• Aug 15th: Ineos and Sinopec's $7B JV & Indorama's battery electrolytes

• Aug 17th: OxyChem's chlor-alkali site upgrade & Proman's melamine technology

• Aug 19th: LG Chem and ADM's new PLA JV & Dow's plans for small nuclear reactors

• Aug 22nd: Helium drilling in Canada & Chemous' titanium dioxide in Florida

• Aug 24th: MTO from natural gas in Uzbekistan & Sasol's fermentation waste burning plans

• Aug 26th: SABIC's new polymer for fiber optics & ammonia production halts in Europe

• Aug 29th: Oxy's updated DAC plans & Ineos' phenol acquisition

• Aug 31st: Sinopec's new CO2 capture plant & BASF, Mercedes, and recycling tires

The Column covers a broad range of topics, but I think I can fit each into one of three narratives: scale, specialty, and sustainability. Eventually, in a few decades, I think these narratives may become one, but for now the industry is dealing with some dissonance.

Scale 🌎

We saw Ineos and Sinopec sign a pretty big agreement to collab on some new capacity in China. The deal gives Ineos access to a huge steam cracker complex in China plus a couple of units (still to be built) downstream. Ineos also ended up buying Mitsui's phenol complex in Singapore, further adding to its Asian footprint.

OxyChem's $1.1B plans to expand their chlor-alkali site in La Porte, Texas shouldn't be overlooked. The move is part of a broader trend away from diaphragm-based electrolyzers and is critical to the company's long-term viability.

Natural gas (as a feedstock) came up a couple of times. There's a large joint venture project currently in the works in Uzbekistan that is planning to implement MTO to convert all of their natural gas into useful chemicals and polymers. That's starkly contrasted by Europe's dire need for natural gas. Natural gas is so expensive in the region that ammonia producers are shutting down their plants (impacting fertilizer and crop production).

Some thoughts...

• Ineos seems to behave very differently than other companies when it comes to acquisitions. I guess it has something to do with them being a private company? Does anyone know how their cash flow looks? I'm pretty sure people were concerned about it around the time LyondellBasell went under, but somehow it has worked out for Ineos.

• OxyChem didn't mention how much more capacity they plan to unlock when upgrading that electrolyzer. Why didn't they disclose that information?

• The decision to go the MTO route in Uzbekistan is an interesting one. They are going the same routes that South Africa (Fischer-Tropsch) and China (MTO) went, but not for the same coal-based motivations. Is this politically motivated or is there an economic piece that I'm missing?

• How long can companies who make ammonia in Europe survive without going bankrupt? Is there any risk of that actually occurring, or are they all sufficiently diversified in other regions?

Specialty 🔍

We talked about a new melamine plant that is going to be built in China, and a bit on why Proman's technology was selected. Nothing crazy here—it's just going to be the world's largest melamine plant and extends Xinji's lead as the world's largest producer of this stuff.

Helium production and titanium dioxide production were the two weird ones for the month. There's a company up in Canada that is drilling for helium, which is a very new thing, and Chemours started mining sand in Florida to make titanium dioxide.

The last one worth mentioning is SABIC's new polyetherimide. This was particularly interesting because it's one of the very few cases we run into where plastic steals an application away from glass. That may have been the trend in the 20th century, but that's certainly not the trend anymore (we seem to be reaching some sort of application saturation).

Some thoughts...

• I try to cover melamine every time I see it because it's so weird. It's a product that is basically made from fertilizer that ends up being dinnerware, dry erase boards, and the Mr. Clean Magic Eraser. The weirdest thing to me is that when it's used to make plates the advertisers aren't afraid to mention that it's made from melamine. I think people aren't afraid of it because they don't know what it is.

• Understanding the locations of petroleum reserves is one thing, but understanding the locations of helium reserves is another. Since all the helium comes from decaying uranium and thorium, I figure either it's the rocks that catch helium that vary, or it's the amount of uranium and thorium deposits that vary. Or is it both? Does anyone know anything about this?

• I thought the bit on SABIC's new polymer for fiber optics was really interesting, so I tweeted about it. We seem to be at the tail end of cases where polymers steal an application from another material (in this case, glass).

Sustainability 🌱

Battery materials didn't come up as much as it usually does, but we did see Indorama look into the feasibility of producing electrolytes in the US. That ties back to ethylene oxide and the cost advantages of making this stuff in the US instead of in Asia.

As far as bio-based stuff goes, we saw LG Chem and ADM commit to terms for a new joint venture. The plan is to use ADM's corn to make lactic acid so LG Chem can polymerize it and sell it to people who market it as biodegradable.

For reducing emissions there were two developments worth noting. Dow Chemical expressed interest in placing a small modular nuclear reactor at one of their sites, and Occidental Petroleum committed to building their first direct air capture plant.

Some thoughts...

• We talked about Indorama potentially entering the battery electrolyte market in the US, but I can't really tell whether this is a significant business opportunity, or if it's just a flashy thing to tell the media that you're doing. Is anyone familiar with the ethylene carbonate market?

• PLA is weird because people debate about how biodegradable it is every time it comes up. Why do we care so much about whether it takes a year or 100 years for it to by degrade? We should care more about whether PLA can scale to 100 million tons per year instead of fighting about the residence time of a material with an acceptable end-state.

• There's been some renewed interest in nuclear power lately, and small modular nuclear reactors may just be industry's saving grace for the time being. Expect the other big chemical companies to follow Dow's lead on this one.

• Sasol's announcement about burning fermentation waste is rather meaningless. Is burning that stuff really the best way to solve for our heat and electricity problem? No, it's not. But it does reduce their emissions, and it does get them closer to their emission reduction goals. It just won't take them across the finish line.

• Oxy updated us on their plans to actually move forward with direct air capture in West Texas. This one is sort of a big deal and I'm pretty sure it's related to the carbon credits offered by the Inflation Reduction Act. People will fight about this one.

Anyways, that was August. Thank you to all of you who signed-up to go paid before September 1st, and thank you to all of you who read the free edition. I hope everyone finds the monthly round-up to be useful—feedback is encouraged.

Oh, and Monday is Labor Day, so the next edition will be sent to the paid community on Wednesday.

All views represent those of the author not their employer.