Chevron to up phthalic capacity - C&EN Global Enterprise (ACS

Nov 6, 2010 - Chevron Chemical will build a phthalic anhydride plant at Richmond, Calif., which will double the company's present capacity for the che...
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Monteshell Petrochimica to die Montecatini Edison will buy out the Royal Dutch/Shell group's 50% interest in Monteshell Petrochimica, the partners revealed last week. The decision to break up the partnership in petrochemicals is firm, although specific details may not be known until later this week. An extraordinary meeting of MonteshelFs directors has been called for Sept. 30 to formalize the purchase. Monteshell, S.p.A., was formed in December 1963 to take over operations of Montecatini's large petrochemical complexes at Brindisi in the south of Italy and Ferrara in the north, near Venice. The Royal Dutch/Shell group paid about $170 million for its 50% interest in Monteshell. The money was a welcome transfusion for Montecatini at the time, and the Shell group was considered an ideal mate. But when Societa Edison added its financial strength and chemical raw materials base to Montecatini's to form Montecatini Edison, the partnership with Shell became a liability for the Italian giant. While the fate of Monteshell had been the subject of considerable discussion since the Montecatini-Edison merger, Shell's exit could have been safely predicted. Edison owns petrochemical complexes at Mantua and Porto Marghera, and at Priolo in Sicily. As one Italian chemist points out, "It doesn't make sense for Montecatini Edison to compete with a subsidiary." There are other reasons for Montecatini Edison to want to regain full ownership of Monteshell. The Brindisi and Ferrara plants were Montecatini's most modern and efficient. Montecatini Edison management did not rejoice at the thought of them being partially owned by outsiders. Also, Shell's money is no longer an im-

portant factor, since Edison has strong cash reserves. Negotiations had reached the point last week where four financial and accounting executives from Royal D u t c h / Shell in London had flown to Rome for talks. A definite (but undisclosed) selling price had been set, and discussions were far enough along so that the Italian government wanted to be informed of all details. Shell argued that the units are worth considerably more than it paid in 1963, owing to the know-how and technology it brought to the operation of the plants. Montecatini Edison, on the other hand, claimed that they have depreciated in the past two years and that their value is less. The price may turn out to be very near Shell's original purchase price of about $170 million. The Italian government probably will participate actively in the discussions in Rome. Italy currently has a slight surplus in its balance of payments. For the first six months of 1966, her surplus, on a cash basis, was $277.5 million, according to the Banca d'Italia. A $170 million lump sum payment to Royal Dutch/Shell could upset a great deal of government planning. Also, leftist members of the Italian parliament will likely demand assurrances that the state-owned oil company, Ente Nazionale Idrocarburi, will not be harmed by the Montecatini Edison acquisition. The transaction, whether made over a number of years or not, will nevertheless bolster the British pound. London is financial headquarters for Shell Transport and Trading Co. and Royal Dutch Petroleum Co. (the two holding companies that own the Royal Dutch/Shell group of companies ). Finance for the whole group is in sterling and the group's central cash resources are largely held in London. British citizens may hold 40% of the total

Brindisi petrochemical plant Part ownership no cause for rejoicing

shares of the Shell group. All monies obtained from the sale that are returned to the Royal Dutch/Shell group will, therefore, strengthen the pound. Shell says that only the sale of Monteshell Petrochimica is being discussed. Shell's other ventures with Alontecatini Edison will not be affected. Shell is an equal partner with Montecatini Edison in Monteshell Agricola, a pesticide sales organization in Italy. In Holland, Rotterdamse Polyolefinen Maatschappij (60% Shell, 40% Montecatini Edison), has a plant capable of producing about 25 million pounds per year of polypropylene. Middle management in both Montecatini and Edison have been baffled as to why the merger of their firms was proceeding so slowly. Little had been done to eliminate duplication or to centralize operations, they say. In fact, there are a number of examples of new product competition between the new partners. But when president Giorgio Valerio achieves firm control over his petrochemical raw materials base, Montecatini Edison may stop lumbering and start running. The combine is the world's fourth largest chemical company now, with annual sales of more than $1.6 billion.

Chevron to up phthalic capacity Chevron Chemical will build a phthalic anhydride plant at Richmond, Calif., which will double the company's present capacity for the chemical. It thus joins the ranks of phthalic anhydride-expanding companies, principals among which are Puerto Rico Chemical (a Hooker subsidiary) and Monsanto. The phthalic anhydride situation has now gone full circle. A few years ago, there was a rash of expansions which caused overcapacity. This knocked prices down and forced some obsolete plants to close. Now there is a world shortage of the product, prices are rising, and producers are expanding again. The shortage seems to have been foreseen by Puerto Rico Chemical, which first announced it would build a phthalic anhydride plant in Puerto Rico in 1963 at a time when other companies were getting out. The company built the plant in spite of industry snickers, and now is planning to double its capacity (C&EN, Sept. 19, page 27) to 100 million pounds a year. The expansion is scheduled for completion in early 1968. The latest expansion—Chevron's— will raise that company's capacity to about the same level as Puerto Rico Chemical's. Chevron now has a capacity of 48 million pounds (split between Richmond and Perth Amboy,

N.J. ). The new facility should also be completed early in 1968. Monsanto's new plant at Chocolate Bayou, Tex., will be larger, with a capacity of 75 million pounds per year. Construction at the Texas site will be completed in the second quarter of next year, bringing more immediate relief to current tight supplies. The three major expansions will add about 175 million pounds a year to the U.S. total, which is currently just about 700 million pounds a year (including Puerto Rico Chemical's plant in Arecibo). Projected need for 1970 is about 890 million pounds. There are several smaller phthalic anhydride expansions planned. These expansions vary from 7 to 15 million pounds a year and add up to an additional 50 million pounds or so. Sometime in 1968, therefore, the country should have enough capacity to meet its projected 1970 demand. Phthalic anhydride's price pattern has been erratic, and producers continue to list prices different from each other (C&EN, Sept. 19, page 32). The price was high in 1960—about 19 cents a pound. Overcapacity in 1963 halved the price to less than 9 cents. The current shortage has pushed the price up again, to about 12 cents. But some companies, such as Allied Chemical, list lower prices—10 1 / 2 to 11 cents for molten phthalic and 11 cents for flake. Puerto Rico Chemical lists 11 cents a pound for each. Monsanto will be up to 12 cents for molten and 13 cents for flake, effective Oct. 1.

Nopco selling feed antibiotic Nopco Chemical has started marketing chlorotetracycline for incorporation into animal feed products. It is buying the antibiotic from an undisclosed producer. The Newark, N.J., company is selling the product under the name Nopco CTC. Nopco considers widely used chlorotetracycline to be one of the most effective broad-spectrum antibiotics available to livestock and poultry raisers. (American Cyanamid's patent covering chlorotetracycline expired only recently.) Antibiotic-containing feeds are used to prevent and treat many animal diseases which inflict large financial losses on livestock and poultry producers. The company expects fair weather for its Nopco CTC, even though the future for this and many other antibiotics in feed is clouded as a result of the Food and Drug Administration's recent regulatory action concerning antibiotics (C&EN, Aug. 29, page 33). In the action, besides reducing to zero the allowable tolerances of chloro-

tetracycline and oxytetracycline as preservatives of poultry and seafood, FDA issued new data criteria for companies selling antibiotics for this purpose. The Anns involved must submit data concerning levels of residue on all edible products from livestock and poultry. The tolerance is zero for such products. FDA's concern is that infectious organisms might be developing an immunity to the antibiotics used in animal feed, thus eliminating effective weapons against the disease-causing organisms.

Du Pont's Parlin strike ends Du Pont's photo products plant at Parlin, N.J., was on the road back to full production last week as 1600 hourly paid employees ended a 74-day strike. On the previous weekend, they voted to accept the company's offer of an immediate 14 cent-an-hour wage increase and an additional 10 cents next March 1. The two-year pact also allows for reopening of negotiations on wages in January 1968. The wage settlement was the same as that reached earlier in the year at the Hercules plant in Parlin (C&EN, Aug. 22, page 16). The negotiating committee for the union (Local 527 of the International Chemical Workers Union) did not recommend acceptance or rejection of the company offer although it did agree to put it to a membership vote. According to the company, agreement on economic matters had been reached Sept. 1, but the company's refusal of reinstatement to two strikers charged with assault held up final settlement. As approved by the membership, the new pact calls for the two men to be put on leave of absence without pay pending a final review of their cases by the company. If the company's final decision is to terminate employment of the two men, the union can ask that the matter be submitted to arbitration. By the first of this month, the Du Pont strike had cost the International Chemical Workers Union's strike fund $134,000 to become one of the most expensive strikes in the union's history. (The union pays striking members $20 a week.) At the end of the union's fiscal year on June 30, its strike fund amounted to $984,978. During the year, it paid out to members on strike benefits amounting to more than $449,000. Fund income (from interest on investments and per capita payments from members) amounted to about $303,000. The $146,000 deficit was the largest in the history of the strike fund.

Bommarito is new URW head The United Rubber Workers Union has revamped its first-string negotiating team in preparation for next spring's round of contract talks with the nation's five major rubber companies. At URW's convention in Bal Harbour, Fla., delegates elected as president by acclamation 51-year-old Peter Bommarito, who has been a URW vice president since 1960 and has a reputation for being a skilled negotiator. He promptly served notice to the rubber industry that his union will be "playing for big stakes next year." Mr. Bommarito succeeds George Burdon, who withdrew from the race at the last minute, sensing a lack of popular support as a result of the convention's overwhelming refusal to support a Burdon-backed resolution that union officials' wives be allowed travel expenses. Just what issues will be at stake in next spring's negotiations wasn't spelled out in much detail. The Burdon-Bommarito election split so dominated the convention that any specific discussion of contract objectives had to be deferred. The union's international policy committee will meet early next year, most likely in Cleveland, Ohio, to settle on economic programs and goals for the coming negotiations. In his acceptance speech Mr. Bommarito promised that the union would "explore avenues and solutions which too often had been shunted aside in the past." A few of the items which the new president suggested in his pre-election campaigning are a guaranteed annual wage, cost-of-living escalator clauses, and stricter enforcement of contract provisions at the plant level. As in the coming auto and steel negotiations, skilled workers seem due for special consideration. According to Mr. Bommarito, the union will make every effort in "securing for skilled tradesmen in the union the justice they deserve without sacrificing in any fashion the wages and benefits to which the production workers are entitled." Some observers view the election of insurance and pension director Kenneth Goldham as vice president as a clue that major concessions will also be sought in this area. As for wages, a union official told an opening session of the convention that the Administration's 3.2% guideline policy has already received a "death blow" and required only the administration of the "last rites." The contracts which expire next year cover about 80% of the 180,000 URW membership. Two-year contracts covering working conditions and wages expire April 20, and threeSEPT. 26, 1966 C&EN