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Finnplast Oy Acquires PVC Operations from Dynea Chemicals Oy

Finnplast Oy, a fully owned subsidiary of International Petrochemical Group S.A., Luxembourg, and Dynea Chemicals Oy have signed the Sale and Purchase Agreement regarding Dynea Chemicals Oy's PVC production plant in Porvoo.

The transaction is expected to close by the end of August 2005.

PVC materials have been produced at Porvoo since 1972, first under Pekema name and thereafter by Neste Chemicals and Dynea Chemicals. During the last six years the plant has produced PVC for Shin-Etsu under a toll production agreement. The annual capacity of Porvoo PVC plant is 100 000 tons of PVC resin and 15 000 tons of compounds. The plant employs some 90 persons mainly in production and technical service.

International Petrochemical Group S.A. (IPCG) is a trading and distribution company with head office in Geneva (Switzerland) and representative offices in Helsinki, Amsterdam, Warsaw, Istanbul, Dubai and Moscow. IPCG's turnover in 2004 was 280 million USD and 500 000 Mt of different products. IPCG represents several product groups of LUKOR / LUKoil-Neftekhim in Europe, including VCM from the Kalush (Ukraine) plant.

Dynea is a global provider of superior adhesion and surfacing solutions. In 2004, Dynea had combined revenues of EUR 1.1 billion. With 54 production units in 26 countries in Europe, the Americas and Asia Pacific, Dynea has some 3,200 employees.

	Finnplast Oy Acquires PVC Operations from Dynea Chemicals Oy Finnplast Oy, a fully owned subsidiary of International Petrochemical Group S.A., Luxembourg, and Dynea Chemicals Oy have signed the Sale and Purchase Agreement regarding Dynea Chemicals Oy's PVC production plant in Porvoo. The transaction is expected to close by the end of August 2005. PVC materials have been produced at Porvoo since 1972, first under Pekema name and thereafter by Neste Chemicals and Dynea Chemicals. During the last six years the plant has produced PVC for Shin-Etsu under a toll production agreement. The annual capacity of Porvoo PVC plant is 100 000 tons of PVC resin and 15 000 tons of compounds. The plant employs some 90 persons mainly in production and technical service. International Petrochemical Group S.A. (IPCG) is a trading and distribution company with head office in Geneva (Switzerland) and representative offices in Helsinki, Amsterdam, Warsaw, Istanbul, Dubai and Moscow. IPCG's turnover in 2004 was 280 million USD and 500 000 Mt of different products. IPCG represents several product groups of LUKOR / LUKoil-Neftekhim in Europe, including VCM from the Kalush (Ukraine) plant. Dynea is a global provider of superior adhesion and surfacing solutions. In 2004, Dynea had combined revenues of EUR 1.1 billion. With 54 production units in 26 countries in Europe, the Americas and Asia Pacific, Dynea has some 3,200 employees.
	Republic Financial Corp. buys Lynn-based PVC compounder Lynn Plastics Lynn-based PVC compounder Lynn Plastics Co. has been sold to Republic Financial Corp., a private equity firm in Aurora, Colo., and will be closed later this year. Bruce Petersen, who bought Lynn Plastics from the Goldstein family in 2002, declined to comment on the situation. Sources close to the company said Lynn had defaulted on a loan from Key Bank of Cleveland sometime last year. In early July, Republic bought Lynn’s debt from Key Bank and decided to liquidate the 37-year-old compounding firm, sources said. Lynn’s total debt had reached about $8 million, while its 2004 sales were around $20 million. The 75-employee firm lost more than $1 million in 2004 and the first quarter of 2005, sources said. Company sources cited high costs for resins and other raw materials as one reason for the company’s financial problems. Republic officials referred all calls to Dave Lionetti, an executive with the firm who could not be reached for comment. Management firm Newmarket Partners of Cleveland has been operating Lynn for Republic since the acquisition. Newmarket executive Tom Moore also could not be reached. Lynn operates three Banbury mixers and two dry-blending lines in a 250,000-square-foot location about 10 miles north of Boston. Most of the firm’s sales are of PVC compounds for the automotive industry. Sources said Lynn has a number of exclusive color matches for PVC compounds used in instrument panels by General Motors Corp. and DaimlerChrysler AG. Contracts for some of that work will be sold to another PVC compounder, sources said. After buying the firm, Petersen — a compounding veteran with more than 25 years of experience at A. Schulman Inc. and Diamond Polymers Inc. — helped Lynn introduce a line of thermoplastic vulcanizate products. He also struck a deal under which German compounder Rowa Group would produce specialty compounds at the Lynn site as Rowa Group USA Inc., a 50-50 joint venture with Lynn. Lynn was founded in 1968 by brothers Sidney and Saul Goldstein. The firm survived a 1981 fire that destroyed its original manufacturing site. Lynn stayed together via tolling and contract manufacturing until opening its new facility in 1985. New Energy Bill Won't Help Rising Resin Prices Washington’s first major rewrite of U.S. energy policy in more than a decade will help stabilize sky-high natural gas prices, plastics industry lobbyists say, but they caution that it won’t do very much in the short term to lower resin prices. Four years after President Bush first unveiled detailed plans for a new energy policy, lawmakers in Congress reached agreement July 26 on a compromise that is expected to be approved by both chambers and signed into law by the president. The bill contains a number of provisions favored by plastics lobbyists, including incentives for more natural gas drilling in limited areas, requirements for improved energy efficiency in appliances and tax incentives to boost so-called clean coal and nuclear power, which are seen as taking the pressure off natural gas demand. But the legislation does not include what has been one of the industry’s biggest priorities, opening up vast sections of ocean waters in the Outer Continental Shelf to drilling. Natural gas is the main feedstock for much of the North American plastics industry, and in recent years, prices have soared from $2.50 per million Btu to between $7 and $8 currently, well above other parts of the world. Industry argues that the increases have contributed to 100,000 lost jobs in U.S. chemical plants since 2000. The legislation includes other provisions industry officials like, such as giving the Federal Energy Regulatory Commission exclusive authority over approving new terminals to import liquefied natural gas, rather than states, and allowing coastal states to share in revenues from gas drilling off their shores. “Not one politician in Washington, from the president on down, believes this bill makes any serious difference in foreign oil imports, gasoline prices or the use of renewable energy technologies,” said Phillip Clapp, president of the National Environmental Trust. “But they’ll all puff themselves up and tell the American public the big lie: We finally have a new energy policy!”
	Asian PVC market plagued by oversupply Despite the approaching peak demand season in China, Asian PVC prices remain soft because of a massive oversupply of Chinese material and plunging feedstock costs. The glut of PVC in China had caused Chinese producers to look to India as a possible export destination. Carbide-based PVC offers from major Chinese producers were at $750 per metric ton, c.f.r., South Asia. NEA players are facing tough competition from Chinese carbide-based PVC producers, and a few NEA PVC producers are cutting operating rates because of lower export volumes to China. Major NEA producers sold June material at $800 to $820 per metric ton, c.f.r., China, $20 to $50 lower than their initial offerings. July material was offered at $750 to $780 per metric ton, c.f.r., China by major NEA producers. One NEA producer says it is trying to maintain prices at the $800 c.f.r. China level, but feels oversupply in the Chinese market will be a challenge. "The demand growth for PVC is still strong at 9% for 2005. The strongest growth comes from the floorboard and flexible film sectors. Supply is estimated to be increasing by almost 15% to 20% per year. One producer says it has reduced its export volume to China drastically since February, when exports amounted to 12,000 metric tons. Exports to China in June are projected to plunge to between 5,000 and 6,000 metric tons. China still building carbide-based PVC The slew of calcium carbide-based PVC project announcements in China continue to roll out despite signs of narrowing margins. Earlier this month, Sinochem International became the latest investor to announce plans for a carbide-based PVC facility in Inner Mongolia. Shanghai Chlor-Alkali Chemical (SCAC), which currently produces PVC via the ethylene route, has also decided to produce PVC using the carbide route. The company is pursuing two projects, one in inner Mongolia and the other in Ningxia. However, margins of carbide-based PVC producers have been shrinking as a result of increased costs and falling PVC prices. Carbide-based PVC offers continue to fall. Carbide-based PVC usually leads the market price in China, which also produces PVC via the ethylene route. Carbide-based PVC producers were enjoying hefty margins up to November 2004, now are being forced to accept much lower margins. PVC prices have been falling since last December owing to increased domestic capacities and resistance from downstream sectors. The cost of producing a metric ton of carbide-based PVC varies among producers, depending on their ease of access to feedstocks, such as power, salt and calcium carbide.