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South Korea currently is the biggest threat to pricing in Asia's petrochemical market, says a report by Salomon Brothers Global Equity Research team, Hong Kong. The firm estimates that South Korean large business groups, the chaebols, are burdened by a debt-to-equity ratio of 3.5. Austerity measures that the government is likely to implement to stabilize the economy will dry up liquidity. Thus, "as Korean chemical companies attempt to generate enough U.S.-dollar cash flow to pay off their overseas debt," Salomon Brothers says, "they would be hardpressed to produce as much volume as possible and export their products at or near break-even cost." South Korea could join a price war, says Bill Hunsaker, a Seoul-based regional chemical analyst at ING Barings. But Thai companies, he says, are in survival mode, "just trying to meet their interest payments," adding that this is "what makes them dangerous." Compared with South Korean firms, Thai chemical producers are small. "But although their size Although it's still too early for a definitive is small, they can tumble the big guys," assessment, Asia's economic woes sug- Hunsaker says. In an unstable chemical gest that prices for petrochemicals in the market, price cuts by Thai producers region will come under intense down- could force larger producers, such as the ward pressure. Analysts paint a picture South Koreans, to cut their prices as of Thailand, desperate for cash to pay off well. So far, South Korea's chemical indusdebt, setting prices extremely low. Meanwhile, although South Korea is not in the try does not appear to be too affected by same dire straits as Thailand, lower than the lower currencies. One reason is that expected domestic demand and larger South Korea's money unit, the won, has production capacities than Thailand has dropped only about 12% since July, commean that South Korea will turn into a pared with the Thai baht's drop of 40%. give-no-quarter competitor. Lower de- Second, Hunsaker says, Koreans have mand from China will exacerbate the borrowed less from overseas than the Thais. Finally, high prices for naphtha situation. feedstock have prevented —•••—•— producers from seriously lowering prices. Value of South Korean won But things could go drops about 12% since July wrong very quickly. South Korean petrochemical pro$ per won ducers depend heavily on 0.00125 exports, 60% of which go 0.00120 to China, Hunsaker says. For a number of reasons, 0.00115 he believes that chemical inventories in China have 0.00110 been building lately, so that Chinese buying could slow 0.00105 down. 0.00100 Although Salomon Brothers places South Korea at 0.00095 the center of an upcoming 0 11 -t.i. • I n 111 h 1 n 11 hi 11 u 11111111 ii 11111 n n li.fj 1 i: storm, and Hunsaker exD J F M A M J J A S O N pects trouble to come main1 1997 199 6 1 ly from lower Chinese demand, Taipei-based regional
too fast, too intensive, then we will have a depletion of the primary ion at the membrane surface, which would bias our measurement in the opposite direction," says Pretsch. "That is now the topic of our most recent investigationshow to make a system robust enough not to lead to a bias in either the positive or negative direction. I think it will require careful research to develop robust systems for practical measurements." Bakker agrees. "This is only the beginning," he says. "We are now working in collaboration with Pretsch's group to make the system stable and robust and to understand all the effects that are responsible for the problem. This is going to take a lot of work, but it's a very exciting time." Stu Borman
Asian chemical prices riding for a fall
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chemical analyst Samuel S. Webster, with securitiesfirmCS First Boston,findsanother reason to worry about chemical pricing. Pointing out that midterm economic growth in Asia will be much lower than expected and that demand for petrochemicals is closely tied to economic growth, Webster forecasts oversupply in Asia. The problem will be compounded by the start-up of additional capacity in the coming year, notably a 450,000-metricton-per-year ethylene cracker at Hyundai Petrochemical in South Korea; and the massive petrochemical complex Formosa Plastics will start up in Taiwan. Webster says one reason chemical companies are not experiencing much pain yet is that their customers have up to three months to settle their invoices. The currency crisis began in midsummer, and only now are companies finding out which customers won't be paying their bills. Jean-Frangois Tremblay
Six journals in Europe to merge into two In an age when scientific journals are proliferating, European chemists are doing their part to reverse the trend. By Jan. 1, 1998, six venerable journals published by five national chemical societies in Europe will be replaced by just two pan-European journals. The move is "aimed at increasing the profile of European [chemical] publications throughout the world," according to chemistry professor Jean-Marie Lehn of Louis Pasteur University in Strasbourg, France, who is a prominent driving force behind the consolidation. And, by design, it is in step with the current trend toward a unified Europe. Representatives from several national chemical societies in Europe began meeting in the late 1980s to discuss how journal publishing could respond to the growing movement toward European integration. A few years ago, the German Chemical Society (GDCh) and its Weinheim, Germany-based publisher VCH (now Wiley-VCH) started the ball rolling with the launch of Chemistry—A European Journal It began publishing in 1995, physically bound to Angewandte Chemie, but split off as a stand-alone journal the following year. "It soon became clear that Chemistry constituted a nucleus around which a whole new [publishing] structure could
crystallize," says Lehn in a Chemistry editorial published earlier this year. The next key step in this structure's growth occurred when GDCh, the Royal Netherlands Chemical Society (KNCV), and VCH agreed to the merger of the GDCh journals Chemische Berichte and Liebigs Annalen with the KNCV journal Recueil des Travaux Chimiques des Pays-Bas. The merger, Lehn notes, created "a second tier" of two European journals— Chemische Berichte/Recueil and Liebigs Annalen/Recueil—specializing in inorganic/organometallic and organic/ bioorganic chemistry, respectively. The first issues of these hybrid journals appeared in January 1997. For 1998, the Belgian, French, and Italian chemical societies have agreed to fold their national journals into Chemische Berichte/Recueil and Liebigs Annalen/Recueil To reflect the newly panEuropean nature of these two hybrid journals, their titles will be changed to the European Journal of Inorganic Chemistry (EurJIC) and the European Journal of Organic Chemistry (EurJOQ, respectively. In the process, the former national journals, the Bulletin des Societes Chimiques Beiges, the Bulletin de la Societe Chimique de France, and the Gazzetta Chimica Italiana, which have existed for more than 125 years, will cease publishing. The consolidation will benefit authors because "the unified European family of journals will be able to reach a considerably larger audience than was previously the case," Lehn writes. And "readers will benefit from the concentration of highquality information in fewer journals." English will be the language of the two new European journals, as it is for Berichte and Annalen, which switched from German to English in 1995. Robert Temme, managing editor of both EurJIC and EurJOC, says full-text versions of the two journals (both monthlies) probably will be available on the World Wide
Web before the end of this year, when the name change occurs. Temme expects that other European chemical societies will join the journal partnership, although the British chemical society, a major publishing force, has declined to participate. In a recent editorial in their journals, the editors of Berichte/Recueil and Annalen/Recueil explain that the consolidation cannot be ascribed to "nebulous feelings such as a euphoria for all things European. The hard facts are that authors and readers are increasingly turning to specialized journals and the powerful journals, especially those of the American Chemical Society. We should meet these challenges!" Ron Dagani
Qatar: Magnet for chemical ventures Amid the ongoing turmoil in the Middle East, developments involving two petrochemical projects in Qatar—costing a combined $1.75 billion—were announced early last week. The project disclosures were revealed during the 4th Middle East & North Africa Economic Conference in Doha, Qatar, which took place despite a boycott by the larger Arab nations. Government and company representatives from the U.S. and Israel did attend. Canada's Methanex and Qatar General Petroleum Corp. (QGPC) signed a memorandum of understanding to form a joint venture to build a multiplant methanol production facility at the Ras Laffan industrial complex in north Qatar. QGPC will hold a 51% ownership share in the venture; Methanex will own the remainder. The project proposal calls for up to three methanol plants with a combined yearly capacity of 3 million metric tons to be built at Ras Laffan. The total cost of the project is estimated at about $1 billion, with production expected to begin in 2002. "Access to low-cost, plentiful gas and infrastructure will be available through QGPC," says Pierre Choquette, Methanex president and chief executive officer. "Established operating know-how and market positioning are offered through Methanex." Methanex will "man-
age the marketing" of the methanol produced by the venture. "QGPC has been very successful in attracting many major oil, gas, and petrochemical companies to establish jointventure operations in Qatar," adds Choquette. In May 1996, QGPC announced another venture, with Qatar Petrochemical Co., Norway's Norsk Hydro, and France's Elf Atochem, to produce ethylene dichloride, vinyl chloride, and caustic soda (C&EN, May 20, 1996, page 19). In the other petrochemical development announced last week, Phillips Petroleum and QGPC reached final agreement on a joint venture to build a 1.1 billion-lbper-year ethylene plant, a 1 billion-lb-peryear polyethylene plant, and a 100 million-lb-per-year plant for hexene-1, which is used as a polymer modifier. The venture's plants, to be built at the petrochemical complex in the Mesaieed Industrial Area in Qatar, were first proposed in May (C&EN, May 26, page 13). QGPC will own a 51% share in the venture; Phillips will own the rest. Construction, to cost about $750 million, is now expected to start in 1999, and production is expected to begin in mid2001. When the project was first announced, construction was slated to start in 1998 and production to begin in late 2000. George Peajf
EPA restricts emissions for pulp, paper mills The Environmental Protection Agency last week released itsfirst-everregulation controlling both water and air pollution from a single industry. The "pulp and paper cluster rule" applies to air emissions from 155 of the 565 pulp, paper, and paperboard mills in the U.S. and water discharges from 96 of those 155 mills. Specifically, EPA is requiring these mills to capture and treat air pollutant emissions during the cooking, washing, and bleaching stages of the pulp manufacturing process. And the agency is setting effluent limits for toxic pollutantsincluding dioxins and furans—in the wastewater discharged in the pulp bleaching process from mills that chemically pulp wood fiber. The water effluent limitation standards call for substituting chlorine dioxide for chlorine in the bleaching process, a conversion that the pulp and paper industry has been making for the past eight years anyway. NOVEMBER 24, 1997 C&EN 15
