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October 21, 2002
Volume 80, Number 42
CENEAR 80 42 p. 25
ISSN 0009-2347


INTERNATIONAL

BASELL MOVES AHEAD ON POLYPROPYLENE
Joint venture's official launch of new technology reflects faith in market upturn

PATRICIA SHORT

The polypropylene industry has been in a deep trough for the past several years, but indications are that growth is coming back, according to executives at Basell Polyolefins, the Dutch-based joint venture between Shell and BASF.

And to reinforce its faith in the upturn of the business, Basell has just launched its newest technology, Spherizone, at a conference at the company's Giulio Natta Research Center in Ferrara, Italy.

Basell has been working on the technology for several years, Anton de Vries, president of research and development, told conference attendees. This August, Basell brought onstream a commercial unit at the company's Brindisi, Italy, site, after a $20 million retrofit of a polypropylene plant that used Basell's Spheripol process. Capacity is nominally the same as before--160,000 metric tons per year--but the output will be of higher value grades than those produced by the Spheripol technology.

De Vries described the difference between the two technologies: The Spheripol process features a continuous circulating loop encompassing one polymerization zone, and the new Spherizone technology employs a multizone circulating reactor that applies catalytic cracker technology.

The new process will allow expansion of polypropylene into nontraditional markets, he said.

Even more important, the technology can improve products that serve existing market applications, such as biaxially oriented polypropylene (BOPP) film, the largest single application for polypropylene. More than 3.5 million metric tons per year of BOPP film is used worldwide in general packaging, fibers, consumer goods, and the automotive industry, de Vries said.

THE ECONOMICS of Basell's new technology, he noted, will be about the same as those for its traditional Spheripol technology in the areas of utilities and investment costs. However, he added, grade-change costs will be significantly less: A given amount of polypropylene will be able to go further, with more capabilities, than before.

The launch of the new technology is a feather in the cap of Basell, which has shown a financial turnaround in the two years since it was founded, noted Chief Financial Officer Wolfgang Mende at the conference. "In the midst of one of the most severe downturns ever for the polyolefins industry, Basell has made strong progress."

Among its accomplishments is achieving joint-venture synergies of roughly $120 million in 2001, significantly higher than the $65 million the company had estimated for its first full year of operation.

For Basell, Mende added, the fourth quarter of 2001 "was an extremely difficult period. It was truly a terribly stormy time, and the poor fourth-quarter results weighed heavily on our first full-year performance." However, he said, growth levels are rebounding to the industry's historic trend line, to the point that "we are confident that the fundamental growth patterns of our industry are still intact. This gives some cause for cautious optimism."

Moreover, he pointed out, "the flood of capacity additions is clearly slowing, and this is easing the overcapacity situation that was very serious in 2000 and 2001."

As Basell President and Chief Executive Officer Volker Trautz pointed out at the conference, "We think polypropylene will continue growing at 5 to 10% per year. Therefore, every year, the industry will need two new world-scale polypropylene plants, on a worldwide basis." Basell will decide within the next year, he added, whether the company will use the Spherizone technology in new plants, in joint ventures, or to replace existing older-technology plants.



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