US chemical major Dow Chemical is shifting its petrochemical focus out of the US and Europe with the sale of its polypropylene (PP) business to Brazil’s Braskem and a major joint venture investment in Saudi Arabia.
Dow and Saudi Aramco are investing $20bn to construct the world’s largest chemical complex ever built in one single phase, at the Saudi Arabian port of Jubail. The joint venture, Sadara, will have the capacity of more than 3m t/ year, with sales of chemicals for advanced applications projected to reach $10bn/year within 10 years of full operations.
The complex, comprising 26 manufacturing units, will include a world scale cracker capable of cracking a wide range of feedstocks derived from oil and natural gas. ‘It is designed to capture growth in the rapidly growing sectors of energy, transportation and infrastructure, and consumer products by creating a manufacturing hub that will provide a differentiated product slate and an advantaged cost position,’ said Dow Chemical ceo Andrew Liveris, speaking at a conference to announce the project.
Construction will begin immediately and the first production units will come online in the second half of 2015, with all units expected to be up and running by 2016. The venture will make polyurethanes, propylene oxide, propylene glycol, elastomers and polyethylene. About 45% of sales will be in Asia Pacific, 25% in the Middle East and 10% in Europe, Liveris said.
‘Sadara is uniquely positioned to capture significant growth in Asia Pacific,’ according to Dow, pointing out that ‘Asia Pacific’s global demand share in key end-markets [including automotive, home and personal care, electronics, water and packaging] has grown from <30% to ca 40% since 2005.
‘Many of Sadara’s products will be produced for the very first time in Saudi Arabia,’ added Khalid Al- Falih, president and ceo of Saudi Aramco.
Braskem has paid $323m for the PP business, which includes two plants located in Texas at Freeport and Seadrift with a combined capacity of 545,000t/ year. With this 50% increase in its US PP capacity, Braskem becomes the largest PP producer in the US, the fifth largest thermoplastic polymer producer in the world and the world’s third largest PP producer after Lyondell and Sinopec.
Meanwhile, Dow has unveiled its Q2 financial results, with the company’s second highest sales results, at $16bn. Excluding divestitures, sales increased 28%, compared with Q2 2010. In emerging regions, sales reached $4.9bn, a new quarterly record. Volume growth in these regions was 14%, excluding divestitures. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 24% to $2.3bn, compared with 2010, with gains in every operating segment. This performance contributed to a record half-year EBITDA.
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