Custom Search

Huntsman Chemical Corporation Australia

Huntsman on the Web

CLOSED. This business was closed down in December 2009 with the polyester business sold to Nuplex

.

In January 2007, Huntsman Corporation announced that Huntsman Chemical Company Australia Pty Ltd, a part of the Huntsman's Base Chemicals and Polymers division, has completed the previously announced sale of its Polyester Resins (composites) business assets to Nuplex Industries Ltd (Nuplex) for A$9.6 million (approx. U.S.$7.5 million) in cash plus the value of inventory and other stock in trade at the completion date, for a total transaction value of A$20.3 million. 

The transaction further includes additional consideration payable over a three year period upon achieving certain associated earnings targets. The assets sold include HCCA's polyesters, vinylesters and gelcoats manufacturing assets. Annual sales from the business total approximately A$53 million.

Summary

Huntsman Chemical Corporation Australia, is based at West Footscray, Victoria. The company manufactures styrene and styrene polymers including unsaturated polyester resins, and some phenol, acetone and phenolic resins from largely imported benzene. The plant imports more than 80 per cent its benzene (and BTX) raw materials. The company was previously known as Monsanto Australia and later as Chemplex. It is a related company to Huntsman Corporation Australia that has assumed some of the chemical (eg. ethoxylates) manufacturing operations of Orica.

Monsanto Australia began in the 1928 as a manufacturer of pharmaceutical chemicals and progressively diversified into chemicals made from phenol and later from benzene supplied by Australia's steel plants. Over the next two decades, production shifted from phenol to styrene-derived chemicals. Strategic alliances and its linkage helped Monsanto gain advantage over the former operations of the Australian companies Timbrol and CSR Chemicals in styrene chemicals.

After purchase by the Consolidated Press Holdings (Kerry Packer group of companies) and trading as Chemplex, it could claim to be the largest Australian-owned chemical manufacturing company. In 1993, doubts were identified about the benzene-using industry in Australia when Shell Australia was quoted in European Chemical News (17 May, page 18) as having considered a benzene extraction plant at one of its refineries but is "uncertain whether a local and dependent market can be found". Also in 1993, one-half of Chemplex was sold to the Huntsman Chemical Corporation of the USA (with sales of US$5bn in 1998) for A$70 million. In 1993 as well, Consolidated Press and Huntsman Chemical Corp purchased the USA-based Texaco Chemical.

In December 1998, Huntsman Corporation  operation , purchased the surfactants business of Orica at Botany, New South Wales for A$155m. The surfactants are ethylene oxide based and includes the ethylene oxide plant (30 000 tpa capacity).

Principal Products

1. Styrene-based

Styrene monomer produced in an average scale plant (100 000 tonnes per year) built 1977. The plant alkylates largely imported benzene with ethylene manufactured on site. The styrene is believed to be applied as follows;
bullet15 000 tonnes (declining from over 40 0000 tpa) exported (as raw material for overseas styrene plants);
bullet50 000 tonnes polymerised to polystyrene (at maximum plant capacity);
bullet30 000 tonnes reacted into a range of styrene polymer derivatives (including ABS, SAN and polyester resins); and
bullet5 000 tonnes sold to other manufacturers.
In 1996 it sold its latex emulsion business to BASF.

2. Phenol-based

Phenol is produced in a 20 000 tonne plant built 1963 largely sold to the Australian market of about 15 000 tonnes with exports of 5 000 tonnes. About 12 000 tonnes of acetone is co-produced of which about one-quarter is exported. The cumene process is used starting with benzene and propylene.

Description

bulletStyrene Monomer - Basic raw material for plastics and chemicals.
bulletHetron®' ArOPOITM and Crystic®
Unsaturated polyester resins - used for fibreglass reinforced plastics in applications such as boat hulls, car bodies, swimming pools, bathroom furniture, leisure equipment and industrial components.
bulletAustrex ® Polystyrene - used for single serve food containers (plates, cutlery cups), food packaging (including supermarket meat trays, yoghurt containers), refrigerator liners, ball point pens etc.
bulletHuntsman ABS and Austran® SAN -Thermoplastics for making household appliances, refrigerator liners, food packaging.
bulletSpacel® Expanded Polystyrene (EPS) - used in thermal insulation, drink cups, commercial refrigeration, decorative sculptures, produce boxes (for transport of fresh vegetables, chilled fish to overseas markets).
bulletPhenol - Basic raw material for producing resins, moulding compounds, tanning materials, rubber chemicals, pharmaceutical's, etc.
bulletAcetone - Chemical intermediate and solvent for paints and chemicals.
bulletResinox® and Lauxite® Phenolic Resins - binders for bonding reconstituted wood products (e.g. plywood, particleboard, LVL), foundry sands, glass for insulation, friction materials.
bulletVitafilmTM polyethylene film manufactured by Huntsman Films for food and product wrapping.
bulletRMAX ® EPS produce boxes, insulation for coolstores, concrete void-form.

Raw Materials

bulletBenzene and BTX about 85 per cent imported (having increased with closure of the the BHP steelworks in 1999 that supplied BTX from coal coking operations.
bulletEthylene has been supplied by Kemcor at Altona but is more recently produced on site from Bass Strait ethane with exports from surplus production capacity.
bulletPropylene (for phenol production) is supplied from other plants (Shell, Kemcor or ICI).

Outlook

Its raw materials are largely imported (85 per cent of aromatic feedstock). It has exported surplus styrene and ethylene to avoid capacity underutilisation. Huntsman has said it has plans for increasing its styrene production by 40 to 50 per cent by debottlenecking and declared plans for an expansion of polyester production - both plans have been deferred. Its favourable purchase price by Huntsman Chemical Corporation of the USA will extend its prospects especially as its new half owner is a major world supplier of styrene polymers that will help overseas sales.

Changes in gasoline formulation or demand for BTX could promote the extraction of benzene from local gasoline at local refineries that could help the company. In the interim, Huntman has to compete against lower cost overseas plants located near raw material supplies. The 5 per cent import tariff and anti-dumping legislation will remain important for the company.

The phenol (and acetone) production has a weak outlook given the small scale of production, the limited local market and again dependence on imported raw materials. The import tariff and anti-dumping legislation will be important influences.  

horizontal rule

Origins of Monsanto Australia

The US based Monsanto company established in Australia in 1928 by purchasing the Australian Southern Cross Chemical company located in Melbourne, Victoria. It manufactured pharmaceutical chemicals derived from phenol. In 1939, Monsanto Chemicals (Aust.) Ltd began to manufacture pharmaceutical chemicals (active ingredients) at West Footscray, Victoria. Most of the pharmaceuticals were made from phenol that was in abundant supply from Australia's coal-based gas producers.

The World War two stimulated demand for many pharmaceuticals especially for newly developed antibiotics. In 1942, the West Footscray site began to manufacture a range of sulpha antibiotic drugs such as sulphanilamide and sulphaguanidine.

Although small on an international comparison, during the 1940s, the Monsanto plant became the most elaborate chemical manufacturing plant in Australia. The site used benzene (from BHP steelworks), sodium hydroxide (from ICI Yarraville), sulphuric acid (from Commonwealth Fertilizers at Yarraville), aniline (from Timbrol at Rhodes) and carbon dioxide (from Australian Oxygen Company) to manufacture complex pharmaceutical chemicals. The pharmaceutical chemicals produced included salicylates (aspirin), phenacetin and acetanilide that required phenol as the starting chemical. Phenol was also chlorinated (eg. to pentachlorophenol) for use in antiseptics and modified, as agricultural chemicals (including 2,4-D). Comment
Phenol was also used to manufacture phenol formaldehyde plastic resins in competition with the ICI (Deer Park, Victoria).

Phenol, initially required for the synthesis of pharmaceuticals, formed the nucleus for the development of the West Footscray site as a major chemical manufacturing centre. From the 1940s, phenol was used to produce phenol formaldehyde, urea formaldehyde and melamine formaldehyde synthetic resins, bisphenol A, rubber chemicals (antioxidants and stabilisers), chlorophenol antiseptics, 2,4-D and 2,4,5-T herbicides.

For two decades phenol was produced using the sulphonation route. Comment
This involves sulphonation of benzene followed by the hydrolysis to phenol. Although a comparatively inefficient process, it is still used in some countries for small scale production.  

Facing increasing demand, Monsanto sought a more cost efficient larger scale process. Due to inadequate demand for the co-produced acetone, the later to be adopted cumene process using benzene (available from coking plants at BHP steel plants) was rejected in favour of a newly developed but complex route involving cyclohexanol. The cyclohexanolbased plant was commissioned in 1963 but five years later in 1968, it was replaced by the previously rejected cumene process. This quarter-century old small phenol plant is still used at West Footscray.

Comment
The cumene process alkylates benzene with propylene to produce cumene as an intermediate. The cumene is oxidised to phenol with acetone as the co-product.

Phenol production is about 20 000 tonnes per year of which about 5 000 tonnes (25 per cent) is exported. Previously forming the nucleus for a broad range of chemicals at the site, phenol is now confined to the manufacture of phenol formaldehyde moulding compounds, and is sold to other industry (eg. to Nufarm to produce 2,4-D and 2,5-T herbicides previously manufactured by Monsanto).

About 12 000 tonnes of acetone are co-produced and sold of which about one-quarter is exported.

Comment
Phenol is manufactured from benzene (about 17 000 tonnes of which 80 per cent is imported) and propylene (about 9 000 tonnes purchased from Kemcor, Shell or ICI). The production of phenol therefore competes with styrene for the limited and decreasing Australian supplies of benzene feedstock. The phenol plant is comparatively small and operates without any international comparative advantage so that its production may be described as a vestige of Monsanto's previous activities.

Styrene and polystyrene

Monsanto had been purchasing benzene from BHP with access to technology from its US blank so it was an obvious extension for it to diversify to other benzene-derived chemicals for which substantial import tariffs were available. This was a time of rapidly growing demand for polystyrene, with no Australian competition and an import tariff of 40 per cent. In 1953, Monsanto commissioned a plant to polymerise imported styrene monomer to polystyrene synthetic resin. Two years later, CSR-Chemicals, located in New South Wales, began to import styrene for polymerisation to polystyrene.

Monsanto soon established itself in the Australian polystyrene market. Given locally available benzene and substantial tariff assistance, the way was clear for Monsanto to manufacture styrene.

Paccal and Australian Petrochemicals

The manufacture of styrene also requires ethylene that was then scarce, expensive to transport and in Australia expensive as it was made by dehydrating ethyl alcohol. In 1958 the Petroleum and Chemical Corporation (Australia) Ltd (PACCAL) at Silverwater, New South Wales began to manufacture gas from petroleum to supplement Sydney's domestic and industrial gas needs (which until now had been made from coal). About one-sixth of the gas produced was ethylene required to produce styrene. In 1961, eight years after establishing its styrene monomer polymerisation plant in Victoria, Monsanto formed a joint venture with PACCAL, called Australian Petrochemicals Ltd (APL) with a plant at Silverwater to produce styrene monomer. The venture was a major setback for CSR Chemicals .

Comments
The newly formed APL practically ended CSRC's entry into polystyrene production as APL was located less than 5 kilometres from its plant at Rhodes that had been polymerising imported styrene to polystyrene (page 116). CSRC appeared to have failed to convince PACCAL to supply its ethylene by pipeline to its nearby Rhodes plant.

When Monsanto (as APL) began to manufacture styrene monomer, it automatically led to the imposition of a 40 per cent tariff on the styrene. Duty free imports of styrene monomer by CSRC (a concession essential for its viability) could only continue under a discretionary Ministerial Determination.  

With Monsanto moving north to New South Wales in 1961, in the same year CSRC formed a joint venture company with Dow Chemical. The venture was to manufacture styrene and later polystyrene at the Victorian Altona complex (only a few kilometres from Monsanto's West Footscray plant).

APL operated for thirteen years until it became uncompetitive against natural gas (and about the time of the OPEC oil price increases that made oil-based gas plants, such as PACCAL, uncompetitive). In 1974, APL (and PACCAL) were closed down. For the next three years Monsanto again resorted to producing polystyrene from imported styrene (so that for those three years Dow had exclusive but short term access to BHP's benzene). CSRC had by then sold its interest in the joint venture with Dow.

In 1977, Monsanto formed a joint venture with BHP called Hydrocarbon Products Pty Ltd, and commissioned a new styrene manufacturing plant at its West Footscray site. Monsanto's strategic alliance with BHP as its benzene supplier, like the one with PACCAL for the supply of ethylene, again confirmed its strong competitive position in Australia as a polystyrene manufacturer in this instance to Dow's disadvantage.

The raw material feedstock was BTX - an abbreviation for the production mixture of benzene, toluene and xylene produced in the coal coking process. BTX is reformed to benzene and was now only available in Australia from its new venture partner BHP. BHP was Australia's only manufacturer of benzene and BTX supplying Dow for its styrene plant. (Ampol's Matraville plant, which also produced benzene, had closed in 1974.)

In response to Monsanto's second alliance, Dow was now obliged to import its benzene feedstock (from Japan). Monsanto found it to its advantage to form a joint importing arrangement with its competitor Dow as it required more benzene than BHP could supply. The required ethylene was supplied by pipeline from the nearby Altona Petrochemical Company that could complement or replace production from its own ethylene plant (which used ethane and is currently in use).

Comment
A chemical company may maintain production or capacity to produce raw materials to provide competition or threat of competition to negotiate favourable prices with its suppliers especially expensive to transport feedstocks. The West Footscray plant has that capacity and can act as buffer for the Altona complex to absorb surplus (cheaper) ethylene.

Flow chart of development of Monsanto

Monsanto's plant cost $70 million with a current production capacity of about 100 000 tonnes per year of styrene. It is now of modest size so that in contrast to most Australian chemical plants, it incurs only a modest scale-related production cost penalty. Its major disadvantage is high cost raw materials (see next) and the high cost broad spread of applications for its styrene. In 1988 BHP sold its interest to Monsanto reflecting also the reduced supplies of BTX from BHP steelworks.

In 1989, the chemical manufacturing division of Monsanto Australia (including the plant on the Parramatta River at Rozelle, New South Wales that packaged Monsanto's glyphosate herbicide made at West Footscray, Victoria) was purchased by Consolidated Press Holdings (part of the Kerry Packer group of companies).Renamed as Chemplex, it became for a short time the largest Australian-owned chemical company. Borg-Warner Chemicals (operating at Dandenong, Victoria) was also purchased and renamed Marplex. Marplex is a manufacturer of ABS synthetic resins (estimated at around 15 000 tpa) using imported acrylonitrile and butadiene, and styrene purchased from Chemplex). The purchase integrated broadly similar technology using common raw materials.

In 1993, Kerry Packer's Consolidated Press Holdings sold a half share of Chemplex to Huntsman Chemical Corporation of the USA for just $70 million and will trade as Huntsman Chemical Corporation. Huntsman is the largest US manufacturer of polystyrene operating some thirty four plants around the world with 5 000 emloyees with a turnover of US$4bn.

Later in 1993, Consolidated Press Holdings and Huntsman Chemical Corporation (as Huntsman Financial Corp) purchased on a 50:50 basis Texaco Chemical, the chemical division of Texaco Inc for A$1.63 billion (U$1.06 billion, ie. for 70 per cent of annual turnover of U$1.46 billion) to be known as Huntsman Corp and managed by Huntsman. Texaco had been unprofitable marketing chemicals including ethylene, propylene, and ethylene glycol as well as additives for fuels and lubricants.

In 1995, Huntsman Chemical purchased the resins business of the US Ferro Corp (for between $5m and $10m). Ferro manufactures pigment, paste and polyester gel coat and Huntsman had been its major customer.
In 1997 it sold Marbon chemicals a manufacturer of ABS terpolymer plastics located at Dandenong Victoria.

Huntsman Today

Raw Materials

The principal raw materials (with estimates of tonnages) are; Benzene and BTX; about 108 000 tonnes including 17 000 tonnes for phenol synthesis and, converted to styrene, for its Dandenong plant (Marplex). Purchases comprise about 15 000 tonnes as BTX from the BHP steel works, about 70 000 tonnes as BTX from South Korea, and about 25 000 tonnes of benzene from Japan. The benzene is made from BTX using the LITOL technology. (BTX is mixed with hydrogen (from the ethane cracker) and reacted at elevated temperatures.  The methane produced in the reaction (dealkylation) is used as fuel.

Comment
In other words, about four-fifths of the aromatic raw materials used for the manufacture of styrene and phenol is imported. The declining supply from BHP is likely to have been a factor in the dissolution of Hydrocarbon Products Pty Ltd.

Gross company turnover is estimated to be about $400 million.
bulletEthane by pipeline from Bass Strait. Their ethylene plant has a production capacity of about 30 000 tonnes per year and is an alternate source to ethylene supplied by Kemcor Australia (incorporating APC). The LUMMUS technology is used to crack the ethane with steam.
bulletOther feedstocks include, propylene (about 9 000 tonnes) supplied by pipeline from Kemcor or by road from ICI Botany or Shell at Geelong, phthalic anhydride from the ICI plant at Rhodes, and imported butadiene and acrylonitrile.

 

  1. Styrene products

  2. Of the 100 000 tonnes of styrene produced;
      bulletAbout 15 000 tonnes is exported for overseas manufacturers. Until recently the amount exported from this marginal activity was about 40 000 (or 40 per cent of production). This activity helped avoid capacity underutilisation.
      bulletAbout 50 000 tonnes is used to manufacture polystyrene for the Australian market (estimated to be about 48 000 tonnes) in a small plant with a capacity of about 35 000 tonnes.
      bulletAbout 30 000 tonnes is used to manufacture a broad range of chemicals for the Australian market, including;
      bulletAcrylonitrile butadiene styrene (ABS) and styrene acrylonitrile (SAN) (about 12 000 tonnes - imports are about 4 000 tonnes),
      bulletPolystyrene butadiene latex,
      bulletPolyester resins (unsaturated normally used with glass reinforcing as used for boats etc.), and
      bulletPhenoplast resins (phenolic compounds using formaldehyde for electrical fittings).
    1. Up to 10 000 tonnes of styrene is sold to ASR at Altona to manufacture styrene butadiene rubber and to oterh styrene users.
  3. Phenol products
    1. About 20 000 tonnes of phenol (produced from 17 000 tonnes of benzne) of which about 5 000 tonnes (25 per cent) is exported.

    2. Formerly the key raw material for a broad range of chemicals at the site, phenol is now only used to manufacture phenol formaldehyde moulding compounds and sold, locally (eg. to Nufarm to manufacture 2,4-D and 2,5-T herbicides) and overseas. The plant was established in 1968.
    3. About 12 000 tonnes of acetone is co-produced for sale of which about one-quarter is exported.
  4. Ethylene

  5. In 1990/91, the company exported ethylene valued at $21 million. With a production capacity of 35 000 tonnes and requiring an estimated 25 000 tonnes to produce styrene, there is excess capacity of about 10 000 tonnes. The marginal cost of producing ethylene would therefore be low, and like ICI Botany, is able to competitively export.
      Comment
      Ethylene exports have added little real value to the ethane. Like their exported styrene, it is sold below the Australian price undervaluing it for potential applications. Ethylene-based expansion at the Altona complex to the limit of Bass Strait ethane supplies would increase the value of ethane and Huntsman's reduce the viability for competitive exports of ethylene. The low (marginal) cost of ethylene would have been a consideration in the proposed styrene production increase to 140 000 tonnes.

Outlook

The West Footscray site has two key production units; a four decade old, small scale phenol and acetone plant that formed the nucleus for the site, and a modest scale more recent styrene unit. About three-quarters of the benzene feedstock (inc. BTX, ie. over one-half of its raw materials) required to produce the styrene is imported and it exports over one-third (expected to decline with closure of Dow's styrene plant) of the resultant low value added styrene as raw material for overseas use. In terms of the whole production chain from benzene to styrene-based products, more value is added overseas where the styrene monomer is manufactured into a range of synthetic resins and forms.

The phenol plant exports about one-quarter of its acetone and phenol (like most other exports of assisted goods, on a marginal price basis). It is a high cost unit and remains in competition through the benefits of tariffs and anti-dumping protection. As it also competes with the styrene plant for expensive imported benzene raw material and uses propylene freighted to the site, the small high cost phenol unit is vulnerable to closure with the progressive further reductions in tariff assistance.

Although it has a weak long term position, its purchase by a large producer of polystyrene will provide access to new markets, reduce marketing costs and perhaps some premium based on recognition of the Huntsman name. These advantages may provide a basis for it to add more value to its styrene, further processing it to polystyrene and other styrenics as complements to its principal's overseas-made products. During 1997, Huntsman formed Polystyrene Australia - a joint venture company with Dow Chemicals to market styrene polymer resins.

Cost saving measures is assist competitiveness as reflected in reducing employment from around 900 to below 700 persons in the last couple of years.

In summary, Huntsman Chemicals in Australia has a future as a manufacturer relying on largely imported raw material to supply a small market. It may be anticipated to remain in production helped by government assistance, a favourable purchase price by Huntsman (needs only modest profits to make a satisfactory return on their investment) and, through its new part owner, a lower cost entry into world markets (and perhaps even a small premium for the Huntsman name on its products). It would obviously be helped by the Australian manufacture of its principal feedstock benzene.

In the US, Reformulated Gasoline with reduced aromatics content, has been promoted by legislation in some States. There is some prospect for the extraction of benzene from petrol in Australia that could easily produce enough production in Australia to satisfy the needs of Huntsman. Such outcome could secure the company's future for some time. In the absence of that development we would agree with the implication of the 1993 article where, Shell Australia was quoted in European Chemical News (17 May, page 18) as having considered a benzene extraction plant at one of its refineries but is "uncertain whether a local and dependent (our emphasis) market can be found". (Though this comment preceded its purchase by Huntsman.)

This report is NOT indicative of our private client reports.

It has been prepared simply to get you started. It is cheaper than you will find on the web for other detailed information and thus we rarely recover the cost of its preparation.

Given the value of your time, if only a small percentage of the information proves useful, then it should have paid for itself. Feel free to discuss the preparation of a confidential custom report.

ACTED Pty Ltd ABN 71 007 034 022. Publications 1997. All contents Copyright © 1997. All rights reserved. Information in this document is subject to change without notice. Products and companies referred to are trademarks or registered trademarks of their respective companies or mark holders. URL: www.chemlink.com.au/