commodity staplefiber—hecalls it the flywheel of thefiberbusiness—to home furnishing and nonwoven fabric makers. But DAK will also sell "differentiated" fibers to apparel makers. For instance, DAK is offering a fiber called Dacron Plus for apparel. "It is a patented oval-shaped fiber that blends more easily and feels softer than most other polyesterfibers,"Walker says.
SHELL BUILDS UP IN ASIA-PACIFIC Petrochemical company's new structure emphasizes big, low-cost operations JEAN-FRANCOIS TREMBLAY, C&EN HONG KONG
ANOTHER ADVANCE isafiberblend called Hydrotec, for use in active wear and school uniforms. Walker calls it a 'Smashable wooL,, Hydrotec is a blend ofpolyester, wool, and acrylic that yarn spinners make using technology licensedfromDAK. Ultimately, DAK is counting on expanded trade with South America to fuel demand for U.S.-producedfiberand fabric that is assembled in South America and sold back to the U.S. and to other countries. In the resins business, DAKis counting on a return to historic growth levels for PET of 8 to 10% annually in the U.S. and 20% in Mexico and South America. Camberos says he knows those growth rates will vary up or down in any one year. "Volatility is typical of this market. We don't see it going away" So DAK will cope with the volatility; it still plans to spend $50 million over the next year to double PET resin capacity at its Charleston site and to increase efficiency and give a marginal boost to PTA capacity at Cape Fear. DAK has only about a 5% share of the PET market, but it envisions strong growth, especially for custom packaging of such items as beer, health drinks, beauty products, and pharmaceuticals. Tom Sherlock, thefirm'sresins business director, expects the conversion in these markets from glass and other plastics to PET to drive growth as high as 15% annually Camberos says R&D spending, at about 3% of revenues, or $20 million annually, will help DAK to expand its PTA,fiber,and PET packaging resins business. It is especially important that research help keep the domestic PET business strong. "We want to make sure Asian producers do not gain a significant position in packaging, as they have done in textiles," he says. Where DuPont saw a mature business that no longer had the growth potential it sought, DAK sees growth opportunities. Sure, Walker admits, "we operate in a tough environment, and it has been tough, too, for our customers." But Camberos vows that DAKwill maintain profitability in the PTA value chain by taking the technical lead and becoming the lowest cost producer of monomers, resins, and fibers. • HTTP://PUBS.ACS.ORG/CEN
S
HELL CHEMICALS IS ABOUT TO
make its presence felt more forcefully in Asia. It is preparing to build a large petrochemical plant at Nanhai in southern China and is considering another complex in Singapore. The company's competitors in Asia not only will see more of Shell, they will face a less costly Shell. The firm's new organizational structure stimulates its managers to minimize costs of production. The growing presence in Asia of multinational petrochemical companies is putting local companies under pressure. Unlike Shell's, most Asian petrochemical plants are not integrated with refineries, and they use production processes licensed from other companies. "The money in chemicals is in buying cheap," says Rein Willems, head of global procurement at Shell Chemicals. "Ifou buy feedstock cheap. If you look at where the costs ofpetrochemicals are, 70% of that is hydrocarbons." Although they buy some feedstock from third parties, most Shell Chemicals plants source their material from Shell refineries located nearby According to Willems, a petrochemical producer trying to contain costs will meet with far more success by
sourcing feedstocks skillfully than by cutting staff. Salaries, he adds, represent no more than 15% of the cost of production. "I am telling you all the secrets," he jokes. Under the structure Shell Chemicals implemented just over a year ago (C&EN, Dec. 18,2000, page 12), some of its top managers are simultaneously responsible for product lines, business functions, and geographical territories. FROM HIS BASE in Singapore, Willems oversees operations in the Asia-Pacific region and the Middle East. In addition to managing the procurement needs of the entire company Willems oversees four of Shell Chemicals' seven product lines: lower olefins, aromatics and phenol, glycols, and solvents. In London, Scott Roberts, a Shell executive with seniority and professional scope similar to Willems', oversees Europe and Africa and Shell's global manufacturing operations. In Houston, Fran Keeth manages the Americas, global customer fulfillment (delivering goods and receiving payment), as well as higher olefins, styrene and propylene oxide, and propanediol (C&EN, July 2,2001, page 15). l b preserve its market share as the overall market grows, Shell will have to invest
Asian operations Shell Chemicals' presence is growing LOCATION Ellba Eastern
Singapore
Ethylene Glycols Singapore
Singapore
Petrochemical Corp. of Singapore
Singapore
Polyolefin Co.
Singapore
Saudi Petrochemical Co. Saudi Arabia Seraya Chemicals
Singapore
Shell Chemicals Japan
Japan
PRODUCTS Styrene and propylene oxide Japanese consortium Ethylene glycol and headed by Mitsubishi ethylene oxide Chemical, 30% Japanese consortium Olefins headed by Sumitomo Chemical, 50% Sumitomo Chemical, Polyolefins 70% Sabic, 50% Olefins, ethylene dichloride, caustic soda, ethanol, and styrene Styrene, propylene oxide, and polyol Showa Oil, 25% Wide range of basic
VENTURE PARTNER BASF, 50%
industrial chemicals
C & E N / FEBRUARY k, 2002
17
BUSINESS heavily in petrochemicals. "We have rough- any sign of blossoming soon," he says. "Chi- polyolefins units planned for Nanhai. ly a 6 to 7% global market share in petro- na is the engine of growth; it is inconceiv- Basell maybe further involved, but talks are chemicals," Willem says. "If we want to able that with this huge market you can still ongoing, he says. grow with the market, we have to, within depend on facilities from abroad." Elsewhere inAsia, Willems says, Shell will the next 10 years, build maybe three [maCustomers often demand specific prod- announce within a few months whether it jor] facilities: one in 2005, one in 2007, uct grades that are easier for producers to will build another petrochemical complex in and maybe one in 2009, ideally" He adds deliverfromlocal plants, he says. According Singapore with Sumitomo Chemical. The that the priorities of joint-venture part- to Willems, it makes sense to supply only pair already operate two crackers through ners can affect the timing of construction. bulk grades of polymers from the Middle their joint venture Petrochemical Corp. of Willems emphasizes that Shell's limit- East, where raw material costs are lowest, Singapore (PCS). "We think that we have ed resources force it to concentrate on the and ship them into China. But, he adds, a reasonable chance ofgetting to an agreemost promising projects. But the compa- "even with WTO there are still going to be ment," he says. However, Shell is not sure some tariffs in Chi- whether building a significantly stronger ny will likely face little difficulty in fina." China joined position in Singapore is high on its list of nancing three major complexes in the the World Trade things to do. "We at Shell have to make coming decade. "Look at our profitability in the pastfiveyears, and look at what kind of money we can afford to spend," he says. "We have come to the conclusion that we can spend $700 million to $800 million per year on capital expenditures." World-scale petrochemical complexes typically cost billions of dollars. But only a portion of the funding is diOrganization in clear as to whether this is the priority that rectly provided by the companies buildDecember and com- we want to have," Willems says. ing the facilities. Petrochemical projects Willems mitted to aprogram In line with Willems' focus on minimizbuilt in the past decade in Asia were typof gradual reduc- ing feedstock sourcing costs, the addition of icallyfinanced70% by bank loans. Willem tions of its import tariffs. a condensate splitter last year has already notes that Shell is likely to be less reliant Another justification for the China proj- improved the competitiveness ofPCS. The than other companies on bank loans. ect is that Shell has a strong partner in Chi- condensate splitter allows PCS to source its na National Offshore Oil Corp., Willems feedstock from Shell's Bukum refinery in FOR NOW, it's "all systems go" in southern says. 'There is a mutual recognition ofwhat Singapore. Willems began working on this China. Construction has yet to start, but the parties can bring to the table," he notes. project three years ago, when he was in Lonpeople living on the site of the project are "They are an offshore oil company; they are don managing Shell's lower olefins business. being relocated as geotechnical surveys take not in petrochemicals. They bring us into Minimizing costs need not be an unplace. Investing in a petrochemical plant in China, help us get approvals, and we bring pleasant experience in one's life. Last year, China makes more sense than not doing so, the know-how to manage and build and de- because of the exorbitant price of car liaccording to Willems. "The biggest econ- velop a petrochemical project." censes in Singapore, Willems bought himomy in Asia—Japan—has been stagnant Shell has chosen to use processes from self a motorcycle instead. "I'd always wantfor the past 10 years and does not show Basell, its joint venture with BASF, for the ed a Harley," he says. •
"China is the engine of growth; it is inconceivable that with this huge market you can depend on facilities from abroad/'
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D Y N A M I C S Y N T H E S I S . THE C U S T O M SYNTHESIS D I V I S I O N OF D Y N A M I T NOBEL. 18
C&EN
/
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U,
2002
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