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VOLUME XXI

September 14, 2023

Everchem’s Closers Only Club

Everchem’s exclusive Closers Only Club is reserved for only the highest caliber brass-baller salesmen in the chemical industry. Watch the hype video and be introduced to the top of the league: — read more

October 17, 2018

Propylene Flat for October

US October propylene contracts roll over

16 October 2018 16:51 Source:ICIS News

HOUSTON (ICIS)–US October propylene contracts settled at a rollover for the majority of the market, sources confirmed, amid supply and demand fundamentals that remained balanced despite some production issues.

Image by Eye Ubiquitous/REX/Shutterstock

The October settlement keeps contract prices for polymer-grade propylene (PGP) at 60.0 cents/lb ($1,323/tonne) and for chemical-grade propylene (CGP) at 58.5 cents/lb, flat from September values.

US propylene contract prices

Propylene supply has become tighter in recent weeks. Most propylene is made in refineries, followed by crackers, then propane dehydrogenation (PDH) units and other sources.

Refinery operating rates began declining in recent weeks and fell below 90% in the week ended 5 October for the first time since early March amid maintenance outages. Refineries typically conduct short turnarounds in the autumn as they transition to produce winter fuels.

Production from crackers has been limited due to the increased usage of ethane as a feedstock. Ethane makes the least amount of propylene co-product when cracked. But as the most economical feedstock for ethylene, it has been favoured amid low ethylene prices and tight cracker margins.

Production from PDH units has been volatile, with the most recent outage resolved late last week.

The inventory picture is unclear, with the market brushing off a late September steep decline in reported levels, with many suspecting that it reflected a change in reporting rather than a change in stocks. Propylene inventories at 2.038m bbl on 5 October are 14% above four weeks prior, but 33% below the same week in the prior year.

Despite the production headwinds, supply remains available.

“People who need spot can find spot and don’t have to pay a premium for it,” a market source said.

Front-month PGP has traded in a narrow range of 56.50-57.75 cents/lb during the first half of October despite an active market. Spot prices were in a similarly narrow range during September, which is in contrast to the steep swings seen during much of the rest of 2018.

US PGP spot prices

A drop in demand may have helped offset some of the recent production issues, amid lower downstream polypropylene (PP) operating rates in September. PP is the largest consumer of US propylene.

US propylene prices for several months have been well above those in Asia and Europe, causing domestic derivatives to be less competitive against low-cost imports.

There had been little propylene demand drop-off over the last several months, due to strong demand or tight markets in downstream sectors. But the continued disparity in costs could be taking a toll on US derivatives.

“Maybe PP will see some demand destruction from sustained high prices,” a market source said.

US propylene contracts are typically settled during the month for the current month.

Major US propylene producers include Chevron Phillips Chemical, ExxonMobil, Flint Hills Resources and Shell Chemical.

Major buyers include Arkema, Ascend Performance Materials, Braskem, Dow Chemical, INEOS, Oxea and Total.

Image above shows bottle caps, which are often made of PP, the main use of propylene. Photo by Eye Ubiquitous/REX/Shutterstock

Focus article by Jessie Waldheim

https://www.icis.com/resources/news/2018/10/16/10266125/us-october-propylene-contracts-roll-over/?cmpid=SOC%7CRSS%7Ctwitter%7CFreeChemNewsFeed

October 17, 2018

First Tranche Comments

Filers submit first round of 301 exclusion requests

The Office of the U.S. Trade Representative collected nearly 10,000 comments related to a first tranche of China tariffs affecting $34 million worth of goods.

Filers submit first round of 301 exclusion requestsPhoto:yurchello108 / Shutterstock.com

 

By Brian Bradley |Wednesday, October 10, 2018
   The Office of the U.S. Trade Representative collected exclusion requests through Tuesday for the first $34 billion in Section 301 tariffs on products on China.
USTR on July 6 imposed 25 percent tariffs on $34 billion worth of goods (in 2017 import value) originating in China, another round of 25 percent tariffs on $16 billion worth of goods from China on Aug. 23 and a third tranche of tariffs — assessed at 10 percent across $200 billion worth of goods from China — on Sept. 24.
Regulations.gov indicated that USTR had received 9,610 comments and posted 2,869 comments, including product exclusion requests, as of 10:44 a.m. EDT.
Several filers requested bearings be excluded from the tariffs.
Ann Arbor, Mich.-based NSK Corp., which manufactures bearings, steering columns and precision products, said certain single row radial ball bearings classified under Harmonized Tariff Schedule Subheading 8482.10.5048 aren’t currently available domestically.
“These bearings are specifically designed and made for applications in the production of our U.S.-produced steering columns, which are a safety critical application of a vehicle,” NSK said.
The company has passed on a portion of its tariff costs to its customers, which will eventually hurt consumers, NSK said.
Cost competition and high customer demand spurred NSK to source from China, which has facilities to meet unique production requirements in a “highly competitive” business segment.
Irvine, Calif.-based CW Bearing USA requested that certain wheel hub bearings for use in the automotive industry under HTS Subheading 8482.10.5016 be excluded from tariffs, as the bearings used by the company aren’t available outside China and CW Bearing sources the goods from the facilities of its parent company, Cixi Group, which is located in China, the firm said.
CW Bearing and CW Manufacturing employ 54 people at offices in Tustin, Calif., and St. Louis and at a manufacturing center in Northville, Mich., and the company expects to employ about 150 people by 2022, the firm said.
“Our parent company does not provide us with the option of switching suppliers and doing so is simply not an option for our company,” CW Bearing said. “Even if changing suppliers was an option for our business, the GCrl 5 class bearing steel used to manufacture bearings is not available in the United States.”
Further, this raw material is also subject to a 25 percent Section 232 global tariff on steel, so importing the product for domestic use is “also not feasible,” the company said.
CW’s bearings also are used in safety-related applications like steering and braking, and the subject products must undergo extensive qualification, testing and validation processes that are “mandated” by customers and a “prerequisite to purchase in all cases,” the company said.
West Nyack, N.Y.-based General Bearing Corp., which has 90 employees, requested that tapered roller bearings under HTS Subheading 8482.20.0090 be excluded.
The subject products are available outside of China, but qualification of new sources for automotive and other customers is lengthy, involving site visits, design approvals, production of samples and rigorous testing, “often taking in excess of a year to complete,” the company said.
General Bearing has existing contracts with downstream customers and distributors that require products to have undergone the qualification process, so alternative sourcing isn’t a viable option to meet obligations set forth in existing contracts.
Crowell and Moring, filing on behalf of Siemens Medical Solutions, requested that certain 1.5-Tesla MRI devices classified under HTS Subheading 9018.13.0000 be excluded from the tariffs as such products are not covered by the scope of Beijing’s “Made in China 2025” plan to achieve primacy of cutting-edge manufacturing on the world stage, the filing states.
The manufacturing plan covers the more advanced 3-Tesla MRIs, the filing states. The technology of the MRIs with a 1.5-Tesla magnetic field was developed in Germany prior to 2003, with China-based manufacturing starting that year, the filing says.
USTR also already posted several rebuttals to and letters of support of exclusion requests.
Whirlpool Corp. opposed the exclusion request submitted on behalf of Culligan International Company for water filtration goods classified under HTS 8421.99.0040.
Whirlpool’s main contention was against any potential exclusion of water filters used in refrigerators and refrigeration products as those Chinese products interfere with the intellectual property (IP) of U.S. home appliance manufacturers.
A “significant portion” of the $145 million worth of products imported under the applicable HTS code last year either infringe on IP rights or are “outright counterfeit products” of filters sold by Whirlpool and other U.S. companies, Whirlpool said.
“Whirlpool has taken legal action against Chinese manufacturers that import patent-infringing and counterfeit filters as well as those companies and online platforms that resell the imports from China,” the firm stated. “Unfortunately, jurisdictional hurdles limit the effectiveness of these actions.”
Rep. Jeff Duncan, R-S.C., wrote to USTR in support of an exclusion request submitted by Electrolux Home Products for compressors used in refrigeration equipment, classified under HTS subheadings 8414.30.4000 and 8414.30.8050.
No U.S. manufacturer makes the subject compressors, but Electrolux is transitioning to a newer technology compressor, and once it completes its new investment in South Carolina in 2019, the company will be able to switch completely to non-Chinese suppliers for compressors, Duncan said.
“I support the [Trump] administration’s efforts to combat China’s unfair trade policies, but I also believe the administration should take steps to avoid harming U.S. manufacturers in the process,” Duncan wrote. “Electrolux is actively taking steps to transition away from Chinese suppliers of compressors. However, they need time to complete this transition.”
Granted exclusions will apply to all imports of a given product, and will not be company-specific, a USTR spokesperson said in an email.
https://www.americanshipper.com/main/full/filers-submit-first-round-of-301-exclusion-requests-72680.aspx?source=Big4

October 17, 2018

First Tranche Comments

Filers submit first round of 301 exclusion requests

The Office of the U.S. Trade Representative collected nearly 10,000 comments related to a first tranche of China tariffs affecting $34 million worth of goods.

Filers submit first round of 301 exclusion requestsPhoto:yurchello108 / Shutterstock.com

 

By Brian Bradley |Wednesday, October 10, 2018
   The Office of the U.S. Trade Representative collected exclusion requests through Tuesday for the first $34 billion in Section 301 tariffs on products on China.
USTR on July 6 imposed 25 percent tariffs on $34 billion worth of goods (in 2017 import value) originating in China, another round of 25 percent tariffs on $16 billion worth of goods from China on Aug. 23 and a third tranche of tariffs — assessed at 10 percent across $200 billion worth of goods from China — on Sept. 24.
Regulations.gov indicated that USTR had received 9,610 comments and posted 2,869 comments, including product exclusion requests, as of 10:44 a.m. EDT.
Several filers requested bearings be excluded from the tariffs.
Ann Arbor, Mich.-based NSK Corp., which manufactures bearings, steering columns and precision products, said certain single row radial ball bearings classified under Harmonized Tariff Schedule Subheading 8482.10.5048 aren’t currently available domestically.
“These bearings are specifically designed and made for applications in the production of our U.S.-produced steering columns, which are a safety critical application of a vehicle,” NSK said.
The company has passed on a portion of its tariff costs to its customers, which will eventually hurt consumers, NSK said.
Cost competition and high customer demand spurred NSK to source from China, which has facilities to meet unique production requirements in a “highly competitive” business segment.
Irvine, Calif.-based CW Bearing USA requested that certain wheel hub bearings for use in the automotive industry under HTS Subheading 8482.10.5016 be excluded from tariffs, as the bearings used by the company aren’t available outside China and CW Bearing sources the goods from the facilities of its parent company, Cixi Group, which is located in China, the firm said.
CW Bearing and CW Manufacturing employ 54 people at offices in Tustin, Calif., and St. Louis and at a manufacturing center in Northville, Mich., and the company expects to employ about 150 people by 2022, the firm said.
“Our parent company does not provide us with the option of switching suppliers and doing so is simply not an option for our company,” CW Bearing said. “Even if changing suppliers was an option for our business, the GCrl 5 class bearing steel used to manufacture bearings is not available in the United States.”
Further, this raw material is also subject to a 25 percent Section 232 global tariff on steel, so importing the product for domestic use is “also not feasible,” the company said.
CW’s bearings also are used in safety-related applications like steering and braking, and the subject products must undergo extensive qualification, testing and validation processes that are “mandated” by customers and a “prerequisite to purchase in all cases,” the company said.
West Nyack, N.Y.-based General Bearing Corp., which has 90 employees, requested that tapered roller bearings under HTS Subheading 8482.20.0090 be excluded.
The subject products are available outside of China, but qualification of new sources for automotive and other customers is lengthy, involving site visits, design approvals, production of samples and rigorous testing, “often taking in excess of a year to complete,” the company said.
General Bearing has existing contracts with downstream customers and distributors that require products to have undergone the qualification process, so alternative sourcing isn’t a viable option to meet obligations set forth in existing contracts.
Crowell and Moring, filing on behalf of Siemens Medical Solutions, requested that certain 1.5-Tesla MRI devices classified under HTS Subheading 9018.13.0000 be excluded from the tariffs as such products are not covered by the scope of Beijing’s “Made in China 2025” plan to achieve primacy of cutting-edge manufacturing on the world stage, the filing states.
The manufacturing plan covers the more advanced 3-Tesla MRIs, the filing states. The technology of the MRIs with a 1.5-Tesla magnetic field was developed in Germany prior to 2003, with China-based manufacturing starting that year, the filing says.
USTR also already posted several rebuttals to and letters of support of exclusion requests.
Whirlpool Corp. opposed the exclusion request submitted on behalf of Culligan International Company for water filtration goods classified under HTS 8421.99.0040.
Whirlpool’s main contention was against any potential exclusion of water filters used in refrigerators and refrigeration products as those Chinese products interfere with the intellectual property (IP) of U.S. home appliance manufacturers.
A “significant portion” of the $145 million worth of products imported under the applicable HTS code last year either infringe on IP rights or are “outright counterfeit products” of filters sold by Whirlpool and other U.S. companies, Whirlpool said.
“Whirlpool has taken legal action against Chinese manufacturers that import patent-infringing and counterfeit filters as well as those companies and online platforms that resell the imports from China,” the firm stated. “Unfortunately, jurisdictional hurdles limit the effectiveness of these actions.”
Rep. Jeff Duncan, R-S.C., wrote to USTR in support of an exclusion request submitted by Electrolux Home Products for compressors used in refrigeration equipment, classified under HTS subheadings 8414.30.4000 and 8414.30.8050.
No U.S. manufacturer makes the subject compressors, but Electrolux is transitioning to a newer technology compressor, and once it completes its new investment in South Carolina in 2019, the company will be able to switch completely to non-Chinese suppliers for compressors, Duncan said.
“I support the [Trump] administration’s efforts to combat China’s unfair trade policies, but I also believe the administration should take steps to avoid harming U.S. manufacturers in the process,” Duncan wrote. “Electrolux is actively taking steps to transition away from Chinese suppliers of compressors. However, they need time to complete this transition.”
Granted exclusions will apply to all imports of a given product, and will not be company-specific, a USTR spokesperson said in an email.
https://www.americanshipper.com/main/full/filers-submit-first-round-of-301-exclusion-requests-72680.aspx?source=Big4

October 15, 2018

M&A Activity

Palo Duro Capital forms CCR Specialty Chemicals

Palo Duro Capital LLC has formed CCR Specialty Chemicals LLC, a provider of formulated specialty chemical products. No financial terms were disclosed for the transaction that was done in partnership with a chemical sector special-purpose vehicle controlled by Mario Toukan. 

PRESS RELEASE

DALLAS, Sept. 13, 2018 /PRNewswire/ — Palo Duro Capital, LLC (“Palo Duro Capital”), an industrial-focused private equity firm, in partnership with a dedicated chemical sector SPV controlled by Mario Toukan (together the “Sponsor”), announced today that it has formed CCR Specialty Chemicals, LLC (“CCR” or the “Company”) in connection with the acquisition of Crowley Chemicals, Inc. (“Crowley”) and Rusmar, Inc (“Rusmar”). CCR is a specialty formulator of performance chemicals serving a diverse range of end markets. Crowley produces a line of specialty aromatic oil blends used by compounders to extend aromatic polyurethanes, epoxy resins, aromatic based rubbers, PVC plastisols and unsaturated polyester resins which lower formulation costs and improve overall performance. Rusmar has developed a series of water-based and latex-based aqueous foam solutions that have a variety of health, safety and environmental applications in the landfill, environmental remediation and mining markets.

“Crowley and Rusmar are recognized leaders in providing high performance solutions to demanding end markets,” said Palo Duro Capital Partner Matthew Golden. “The management team has done an extraordinary job driving strong operational performance while continuing to extend the Company’s reach into new applications.” Mario Toukan added “The company has an excellent track record driven by a customer centric focus and high quality products, and we look forward to investing additional capital to support both organic growth initiatives and strategic follow-on acquisitions.”

“The management team at CCR is tremendously excited to partner with this team of seasoned specialty chemical investors,” said Bill Callanan, CCR CEO and Chairman. “We have an exceptional opportunity to accelerate growth and make investments in product formulations to provide tailored solutions for our customers. Mario and Matt’s reputation in the chemicals sector and track record for investing in and growing businesses is impressive. This makes them ideal partners for CCR and I am very excited to collaborate with them on this opportunity.”

“The combination of CCR’s best-in-class product portfolio and reputation for unparalleled customer service makes this an exciting platform investment,” added Phil Johnson, CCR President. “We look forward to executing a buy and build strategy to expand the company’s capabilities and accelerate growth.”

About Palo Duro Capital
Palo Duro Capital, LLC is a Dallas, Texas-based, lower middle-market private equity firm which works in partnership with business owners and management teams to acquire market-leading manufacturers of specialty chemicals, industrial products and commercial building products. The Palo Duro Capital operating partners bring decades of management experience in the focus industry segments and work collaboratively with management to facilitate long-term strategic growth. Palo Duro Capital has expertise in sourcing and executing complementary add-on acquisitions to supplement organic growth initiatives. For more information, please visit www.palodurocapital.com.

Mario Toukan Bio
Mario Toukan spent nearly 20 years as a chemical M&A banker and most recently was global head of chemicals, materials and packaging at KeyBanc Capital Markets. Since assuming the leadership role in 2012, Mario built the most active chemicals franchise on Wall Street advising on approximately $13.5 billion in transaction value representing 35 M&A transactions. Prior to KeyBanc, he was with Barclays Capital and affiliates, and Arthur Andersen. Mario graduated summa cum laude from the Fisher College of Business at the Ohio State University. In addition, he is a strategic investor and board member of VersaFlex (an industrial coatings business based in Kansas City, KS) and a board member of the Make A Wish Foundation.

About CCR Specialty Chemicals
CCR Specialty Chemicals, LLC, through its wholly-owned subsidiaries Crowley Chemical Company, LLC and Rusmar, Inc., has been a leading provider of formulated specialty chemical products for over 95 years. Crowley Chemical Company, LLC manufactures and distributes organic chemicals derived from petroleum derivatives and serves as a custom formulator of specialty aromatic oils for coatings adhesive and sealant applications. Rusmar Inc. manufacturers and distributed specialty foams and equipment for customers in solid waste, environmental remediation and mining industries. For more information, please visit www.crowleychemical.com and www.rusmarinc.com.

https://www.pehub.com/2018/09/palo-duro-capital-forms-ccr-specialty-chemicals/#

October 15, 2018

M&A Activity

Palo Duro Capital forms CCR Specialty Chemicals

Palo Duro Capital LLC has formed CCR Specialty Chemicals LLC, a provider of formulated specialty chemical products. No financial terms were disclosed for the transaction that was done in partnership with a chemical sector special-purpose vehicle controlled by Mario Toukan. 

PRESS RELEASE

DALLAS, Sept. 13, 2018 /PRNewswire/ — Palo Duro Capital, LLC (“Palo Duro Capital”), an industrial-focused private equity firm, in partnership with a dedicated chemical sector SPV controlled by Mario Toukan (together the “Sponsor”), announced today that it has formed CCR Specialty Chemicals, LLC (“CCR” or the “Company”) in connection with the acquisition of Crowley Chemicals, Inc. (“Crowley”) and Rusmar, Inc (“Rusmar”). CCR is a specialty formulator of performance chemicals serving a diverse range of end markets. Crowley produces a line of specialty aromatic oil blends used by compounders to extend aromatic polyurethanes, epoxy resins, aromatic based rubbers, PVC plastisols and unsaturated polyester resins which lower formulation costs and improve overall performance. Rusmar has developed a series of water-based and latex-based aqueous foam solutions that have a variety of health, safety and environmental applications in the landfill, environmental remediation and mining markets.

“Crowley and Rusmar are recognized leaders in providing high performance solutions to demanding end markets,” said Palo Duro Capital Partner Matthew Golden. “The management team has done an extraordinary job driving strong operational performance while continuing to extend the Company’s reach into new applications.” Mario Toukan added “The company has an excellent track record driven by a customer centric focus and high quality products, and we look forward to investing additional capital to support both organic growth initiatives and strategic follow-on acquisitions.”

“The management team at CCR is tremendously excited to partner with this team of seasoned specialty chemical investors,” said Bill Callanan, CCR CEO and Chairman. “We have an exceptional opportunity to accelerate growth and make investments in product formulations to provide tailored solutions for our customers. Mario and Matt’s reputation in the chemicals sector and track record for investing in and growing businesses is impressive. This makes them ideal partners for CCR and I am very excited to collaborate with them on this opportunity.”

“The combination of CCR’s best-in-class product portfolio and reputation for unparalleled customer service makes this an exciting platform investment,” added Phil Johnson, CCR President. “We look forward to executing a buy and build strategy to expand the company’s capabilities and accelerate growth.”

About Palo Duro Capital
Palo Duro Capital, LLC is a Dallas, Texas-based, lower middle-market private equity firm which works in partnership with business owners and management teams to acquire market-leading manufacturers of specialty chemicals, industrial products and commercial building products. The Palo Duro Capital operating partners bring decades of management experience in the focus industry segments and work collaboratively with management to facilitate long-term strategic growth. Palo Duro Capital has expertise in sourcing and executing complementary add-on acquisitions to supplement organic growth initiatives. For more information, please visit www.palodurocapital.com.

Mario Toukan Bio
Mario Toukan spent nearly 20 years as a chemical M&A banker and most recently was global head of chemicals, materials and packaging at KeyBanc Capital Markets. Since assuming the leadership role in 2012, Mario built the most active chemicals franchise on Wall Street advising on approximately $13.5 billion in transaction value representing 35 M&A transactions. Prior to KeyBanc, he was with Barclays Capital and affiliates, and Arthur Andersen. Mario graduated summa cum laude from the Fisher College of Business at the Ohio State University. In addition, he is a strategic investor and board member of VersaFlex (an industrial coatings business based in Kansas City, KS) and a board member of the Make A Wish Foundation.

About CCR Specialty Chemicals
CCR Specialty Chemicals, LLC, through its wholly-owned subsidiaries Crowley Chemical Company, LLC and Rusmar, Inc., has been a leading provider of formulated specialty chemical products for over 95 years. Crowley Chemical Company, LLC manufactures and distributes organic chemicals derived from petroleum derivatives and serves as a custom formulator of specialty aromatic oils for coatings adhesive and sealant applications. Rusmar Inc. manufacturers and distributed specialty foams and equipment for customers in solid waste, environmental remediation and mining industries. For more information, please visit www.crowleychemical.com and www.rusmarinc.com.

https://www.pehub.com/2018/09/palo-duro-capital-forms-ccr-specialty-chemicals/#