The Urethane Blog

Hahahahahaha!

American taste for soft toilet roll 'worse than driving Hummers'

Extra-soft, quilted and multi-ply toilet roll made from virgin forest causes more damage than gas-guzzlers, fast food or McMansions, say campaigners

• Suzanne Goldenberg, US environment correspondent
• guardian.co.uk, Thursday 26 February 2009 18.29 GMT
• Article history

The tenderness of the delicate American buttock is causing more environmental devastation than the country's love of gas-guzzling cars, fast food or McMansions, according to green campaigners. At fault, they say, is the US public's insistence on extra-soft, quilted and multi-ply products when they use the bathroom.

"This is a product that we use for less than three seconds and the ecological consequences of manufacturing it from trees is enormous," said Allen Hershkowitz, a senior scientist at the Natural Resources Defence Council.

"Future generations are going to look at the way we make toilet paper as one of the greatest excesses of our age. Making toilet paper from virgin wood is a lot worse than driving Hummers in terms of global warming pollution." Making toilet paper has a significant impact because of chemicals used in pulp manufacture and cutting down forests.

A campaign by Greenpeace seeks to raise consciousness among Americans about the environmental costs of their toilet habits and counter an aggressive new push by the paper industry giants to market so-called luxury brands.

More than 98% of the toilet roll sold in America comes from virgin forests, said Hershkowitz. In Europe and Latin America, up to 40% of toilet paper comes from recycled products. Greenpeace this week launched a cut-out-and-keep ecological ranking of toilet paper products.

"We have this myth in the US that recycled is just so low quality, it's like cardboard and is impossible to use," said Lindsey Allen, the forestry campaigner of Greenpeace.

The campaigning group says it produced the guide to counter an aggressive marketing push by the big paper product makers in which celebrities talk about the comforts of luxury brands of toilet paper and tissue.

Those brands, which put quilting and pockets of air between several layers of paper, are especially damaging to the environment.

Paper manufacturers such as Kimberly-Clark have identified luxury brands such as three-ply tissues or tissues infused with hand lotion as the fastest-growing market share in a highly competitive industry. Its latest television advertisements show a woman caressing tissue infused with hand lotion.

The New York Times reported a 40% rise in sales of luxury brands of toilet paper in 2008. Paper companies are anxious to keep those percentages up, even as the recession bites. And Reuters reported that Kimberly-Clark spent $25m in its third quarter on advertising to persuade Americans against trusting their bottoms to cheaper brands.

But Kimberly-Clark, which touts its green credentials on its website, rejects the idea that it is pushing destructive products on an unwitting American public.

Dave Dixon, a company spokesman, said toilet paper and tissue from recycled fibre had been on the market for years. If Americans wanted to buy them, they could.

"For bath tissue Americans in particular like the softness and strength that virgin fibres provides," Dixon said. "It's the quality and softness the consumers in America have come to expect."

Longer fibres in virgin wood are easier to lay out and fluff up for a softer tissue. Dixon said the company used products from sustainbly farmed forests in Canada.

Americans already consume vastly more paper than any other country — about three times more per person than the average European, and 100 times more than the average person in China.

Barely a third of the paper products sold in America are from recycled sources — most of it comes from virgin forests.

"I really do think it is overwhelmingly an American phenomenom," said Hershkowitz. "People just don't understand that softness equals ecological destruction."

http://www.guardian.co.uk/environment/2009/feb/26/toilet-roll-america

And I thought global warming was a pain in the . . . .

Electronic Cigarettes?

Okay, not much to do with urethane other than they use propylene glycol, the second largest derivative of propylene oxide after polyol.  But imagine sitting in a closed conference room full of electronic cigarette smokers--I guess they don't need ashtrays!

	Photo 1 of 4
Miao Nan, executive director of Ruyan Group Ltd., puffs an electronic smoke while he shows other design during an interview at his office in Beijing, China, Tuesday, Feb. 17, 2009. Ruyan Group Ltd, Beijing-based company was the first to develop electronic cigarettes and says its patented atomizer technology allows users to get an immediate nicotine fix without being harmed by the hazardous chemicals produced when tobacco is burned.(AP Photo/Andy Wong)

©2009 Google - Map data ©2009 AND, NFGIS, Europa Technologies - Terms of Use

Chinese e-cigs gain ground amid safety concerns

By AUDRA ANG – 31 minutes ago

BEIJING (AP) — With its slim white body and glowing amber tip, it can easily pass as a regular cigarette. It even emits what look like curlicues of white smoke.

The Ruyan V8, which produces a nicotine-infused mist absorbed directly into the lungs, is just one of a rapidly growing array of electronic cigarettes attracting attention in China, the U.S. and elsewhere — and the scrutiny of world health officials.

Marketed as a healthier alternative to smoking and a potential way to kick the habit, the smokeless smokes have been distributed in swag bags at the British film awards and hawked at an international trade show.

Because no burning is involved, makers say there's no hazardous cocktail of cancer-causing chemicals and gases like those produced by a regular cigarette. There's no secondhand smoke, so they can be used in places where cigarettes are banned, the makers say.

Health authorities are questioning those claims.

The World Health Organization issued a statement in September warning there was no evidence to back up contentions that e-cigarettes are a safe substitute for smoking or a way to help smokers quit.

It also said companies should stop marketing them that way, especially since the product may undermine smoking prevention efforts because they look like the real thing and may lure nonsmokers, including children.

"There is not sufficient evidence that (they) are safe products for human consumption," Timothy O'Leary, a communications officer at the WHO's Tobacco Free Initiative in Geneva, said this week.

The laundry list of WHO's concerns includes the lack of conclusive studies and information about e-cigarette contents and their long-term health effects, he said.

Unlike other nicotine-replacement therapies such as patches for slow delivery through the skin, gum or candy for absorption in the mouth, or inhalers and nasal sprays, e-cigarettes have not gone through rigorous testing, O'Leary said.

Nicotine is highly addictive and causes the release of the "feel good" chemical dopamine when it goes to the brain. It also increases heart rate and blood pressure and restricts blood to the heart muscle.

Ruyan — which means "like smoking" — introduced the world's first electronic cigarette in 2004. It has patented its ultrasonic atomizing technology, in which nicotine is dissolved in a cartridge containing propylene glycol, the liquid that is vaporized in smoke machines in nightclubs or theaters and is commonly used as a solvent in food.

When a person takes a drag on the battery-powered cigarette, the solution is pumped through the atomizer and comes out as an ultrafine spray that resembles smoke.

Hong Kong-based Ruyan contends the technology has been illegally copied by Chinese and foreign companies and is embroiled in several lawsuits. It's also battling questions about the safety of its products.

Most sales take place over the Internet, where hundreds of retailers tout their products. Their easy availability, O'Leary warns, "has elevated this to a pressing issue given its unknown safety and efficacy."

Prices range from about $60 to $240. Kits include battery chargers and cartridges that range in flavors (from fruit to menthol) and nicotine levels (from zero — basically a flavored mist — to 16 milligrams, higher than a regular cigarette.) The National Institutes of Health says regular cigarettes contain about 10 milligrams of nicotine.

On its Web site, Gamucci, a London-based manufacturer, features a woman provocatively displaying one of its e-cigs. "They look like, feel like and taste like traditional tobacco, yet they aren't," the blurb reads. "They are a truly healthier and satisfying alternative. Join the revolution today!"

Smoking Everywhere, a Florida-based company, proclaims it "a much better way to smoke!" while a clip on YouTube features an employee of the NJoy brand promoting its e-cigarettes at CES, the international consumer technology trade show.

Online sales make it even more difficult to regulate the industry, which still falls in a gray area in many countries.

In the U.S., the Food and Drug Administration has "detained and refused" several brands of electronic cigarettes because they were considered unapproved new drugs and could not be legally marketed in the country, said press officer Christopher Kelly.

He did not give more details, but said the determination of whether an e-cig is a drug is made on a case-by-case basis after the agency considers its intended use, labeling and advertising.

In Australia, the sale of electronic cigarettes containing nicotine is banned. In Britain, the products appear to be unregulated and are sold in pubs.

Smoking is tightly woven into the fabric of daily life in Ruyan's home turf of China, the world's largest tobacco market where about 2 trillion cigarettes are sold every year.

Tobacco sales, the biggest source of government revenue, brought in $61 billion in the first 11 months of last year, up 18 percent from 2007, the Communist Party's People's Daily newspaper said.

In a country where the cheapest brands of cigarettes cost about 20 cents a pack, the e-cig is far pricier. Ruyan's V8 costs $240 and includes batteries and 20 cartridges of nicotine solution, roughly the same number of puffs as 20 packs of tobacco cigarettes. The line has expanded to include cigars and pipes crafted from agate and rosewood.

Ruyan is suing a Beijing newspaper for questioning its safety and for claiming in 2006 that its products have more nicotine than regular cigarettes.

Miu Nam, Ruyan's executive director, blames the newspaper for a hit in sales and profits but declined to give details.

"We have to restore consumers' confidence, we have to clean up people's doubts," Miu said.

An operator at the Beijing Times refused to transfer calls seeking comment Friday to managers at the newspaper. A reporter said she had heard of the case but would not give any details.

Some international experts back Ruyan's claims its product is safe.

David Sweanor, an adjunct law professor at Ottawa University and former legal counsel of the Non Smokers Rights Association in Canada, said e-cigs have the potential to save lives.

With smoking, "it's the delivery system that's killing people," Sweanor said. "Anytime you suck smoke into your lungs you're going to do yourself a great deal of damage. Nicotine has some slight risks but they are minor compared to the risk of smoke in cigarettes."

Dr. Murray Laugesen, a New Zealand physician involved in tobacco control for 25 years who was commissioned by Ruyan to test its e-cigs, said he found "very little wrong" with them.

"It looks more like a cigarette and feels more like a cigarette than any other device so far and yet it does not cause the harm," he said. "It's the best substitute so far invented for tobacco cigarettes."

In the U.S, both Philip Morris USA and RJ Reynolds have introduced cigarettes that did not burn tobacco, but the technologies were very different from the e-cigarette. Neither has been successful.

In 2006, Philip Morris USA, test-marketed the Accord, which used a heating unit activated by puffing. RJ Reynolds introduced its cigarette, the Premier, in 1987 and still sells the Eclipse, which heats the tobacco rather than burning it. Sales are "not great," said spokesman David Howard.

Li Honglei, a fast-talking 28-year-old public relations manager in Beijing, has been smoking since he was in his teens and desperately wants to quit. He thinks he may have found his answer in Ruyan.

"I was intrigued by this new technology," said the pudgy, bespectacled Li as he surveyed products displayed in glass cases at Ruyan's brightly-lit shop in the capital. "I heard acupuncture is effective as well, but this method sounds more painless."

Associated Press writers Chi-Chi Zhang and Yu Bing in Beijing and Vinnee Tong and Carley Petesch in New York contributed to this report.

http://www.google.com/hostednews/ap/article/ALeqM5jwETll8rB7gQPC1Xh516-0DSrdzwD96K6TT80

Bayer Actually Increases Their Dividend

Bayer proposes dividend of 1.40 eur per share

Fri Feb 27, 2009 7:47am EST

 

FRANKFURT, Feb 27 (Reuters) - Bayer (BAYG.DE) on Friday proposed to pay a dividend of 1.40 euros per share on its 2008 earnings, up from 1.35 euros a year earlier, but slightly less than expected.

Analysts had on average forecast a payout of 1.44 euros per share, a Reuters poll showed.

The German company has a policy of paying out 30 to 40 percent of core earnings per share, which it defines as net income from continuing operations, excluding one-off items.

Bayer, one of the few remaining listed European companies that combine chemicals and drugs production, has stressed its reliance on its medicines units -- so far unscathed by the unfolding economic crisis -- while its plastics unit is drawn into the maelstrom that has also gripped major chemicals peers.

Chemicals giant BASF (BASF.DE), which competes with Bayer in the market for padding and insulation foams among others, on Thursday proposed to keep its dividend unchanged even though it saw no signs of recovery in its key markets and said it was bracing for unprecedented challenges.

The shares pared some of its earlier losses after the announcement and were down 2.6 percent at 37.59 as per 1246 GMT, outperforming Germany's benchmark DAX index, which was down 3 percent. (Reporting by Ludwig Burger)

http://www.reuters.com/article/rbssHealthcareNews/idUSWEA971620090227

mnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn

Another Interesting Polyurethane Application

Foam May Save Taxpayers Money

 

Published Date: 2009/2/26 16:00:00

Article ID : 6245

Version 1.00.02

Contractors and public works employees from around the central Island prepared to watch a demonstration of Prime Flex Resins in Tofino Thursday afternoon. Click here to view more photos. (Keven Drews Photo)

By Keven Drews

TOFINO — Taxpayers around the Alberni-Clayoquot could save money on sewer operating and maintenance costs thanks to a polyurethane foam that stops rainwater infiltration.

Almost 20 contractors and public works employees from Tofino, Ucluelet, Port Alberni and Nanaimo attended a two day-conference in Tofino this week to learn how to use Prime Flex Resins.

At one point Thursday afternoon, workers watched Tyler Huebner, of Clayoquot Sound Excavating, apply the product down a manhole on the Pacific Rim Highway near Industrial Way. 

Don MacKinnon, Tofino’s public works superintendent, recently told the Westcoaster.ca that rainwater infiltration into the sewer system is a big local problem because it puts additional pressure on pumps and infrastructure and draws more power from BC Hydro.

“If we reduce the volume [of infiltration] it reduces the pump hours,” he added Thursday. “We pay roughly $1,500 to $2,000 a year in power for [sewer] lift stations. It’s all going to reduce the power.”

Using the product is simple.

With the help of a hose and nozzle, workers spray the resin into holes or cracks. The resin reacts with water, creating an expansive foam that fills the void and stops leaks and rainwater infiltration.

MacKinnon said crews have already used the product on several of the district’s manholes this week.

According to literature provided by MARTECH, the company supplying the product, two gallons of water can enter a one-quarter-inch hole every minute, costing an additional $3,500 a year to treat.

The district already has plans for a waste-water treatment plant.

Glenn Votkin, a MARTECH trainer, said the product costs less than the bill to treat water.

“This stuff is environmentally friendly, safe,” he added.

When it reacts with water, he added, it is virtually inert.

“There is no concern of risk to the environment.”

He said the product can reduce sewer flows, reduce the stress on sewers and allow additional development.

The product has already won over several contractors and public works employees.

Ryan Ward, of Nanaimo’s Windley Contracting, said the product pays for itself right away, and uses are not limited to sewers.

He said workers can use the product on cracked pipes, too.

Russell Gibson, of Gibson Brothers Contracting Ltd., said he likes the product.

“You can do it [the work] from outside and you don’t have to go into the manhole.”

“I think it should have been here a long time ago,” added Gerry Gionette, of Ucluelet’s AG Project Management Inc.

He said it is easy and simple to use.

“We’re going to reduce our groundwater infiltration problem by 60 per cent, which will probably reduce our outfall volume by about five per cent,” said MacKinnon.

He said the district will track the impact and reduce it to dollars and cents.


Keven.drews@westcoaster.ca

http://www.westcoaster.ca/modules/AMS/article.php?storyid=6245

Huntsman Quarterly and Year End Results and Discussion

Peter Huntsman

Kurt, thank you very much and thank you to all of you who have taken the time to join us this morning. I would like to draw your attention to slide number four in discussions with our Polyurethanes division.

Our Polyurethanes business fourth quarter earnings were impacted broadly by four main factors. First, volumes were down as a result of the overall economic slowdown and customer destocking. Second, prices decreased primarily due to the strength of the US dollar against the euro, sharply lower Asian pricing and price pressure from the rapid declining raw material costs.

Third, although raw material prices have fallen and lowered our cost of production, we still see higher valued raw material costs coming through our supply chain due to the lag time it takes to move costs through the inventory. Fourth, we incurred some nonrecurring items that were included in earnings, such as the lingering effects of Hurricanes Gustav and Ike in the US of $6 million and an inventory valuation charge related primarily to the decline in Asia pricing of $16 million.

On a regional basis, we saw the largest decline in the Americas due in large part to further slowing in construction, which affected our composite wood products and insulation businesses, as well as a sharp drop in our sales to automotive suppliers. In Europe, which is our largest market for polyurethanes and represents nearly half of our volumes, the decrease in demand was driven by extended idling of automotive plants, construction activity in appliance-related customers slowing production in reaction to their reduced demand.

Asia posted stable volumes as compared to a seasonally low fourth quarter last year and volume was negatively affected by a decrease of exports in the appliance and footwear markets, as well as a slowdown in domestic construction. We are confident that MDI and other polyurethane products will continue to have stronger growth than the underlying GDP as these products continue to replace materials that are less efficient, more expensive and not as environmentally acceptable.

For example, we expect MDI products to continue to post growth in insulation higher than GDP and overall construction growth rates. MDI products used in insulation applications have the highest insulation efficiency and are the most cost-efficient products on the market.

One of the key objectives of the recent stimulus package in the US and another package in China is to address the need for increased energy conservation and efficiency. We are convinced that MDI insulation will be a major factor in delivering on these objectives. Insulation spending growth has been four times the rate of general construction and MDI-based insulation growth has been double the overall rate of insulation growth.

In furniture, we expect MDI-based formulations to continue to replace TDI and other bedding applications, both on lower cost and improved performance, while MDI used as an adhesive in wood binders and other building materials will continue to grow and displace formaldehyde-based resins for performance and environmental factors.

Our propylene oxide and co-product MTBE business margins contracted during the quarter due to lingering effects of the third quarter 2008 US hurricanes and low inventory, as well as slower export sales and related additional costs in shipping products to Europe and South American customers.

Turning to slide five, in February of this year, we announced a restructuring of our Materials and Effects divisions. Both the advanced materials and textile effects divisions were of the size and scope that merited a divisional president for each. André Genton has been appointed President of our Advanced Materials division, while Paul Hulme will continue to serve as President of our Textile Effects division. In the future, these businesses will be identified as separate and unique segments within our financial reporting.

Our advanced materials adjusted EBITDA decreased from $35 million to $22 million and our textile effects adjusted EBITDA decreased from $12 million to negative $20 million in the fourth quarter 2008. Lower earnings were primarily attributed to lower sales resulting from the overall economic slowdown, customer destocking and higher valued raw material costs progressing through our supply chain.

For textile effects, the slowing in sales really started early in 2008 as major retail chains such as JCPenney, The GAP, Limited Brands and Abercrombie & Fitch showed significant declines in same-store sales throughout the year. Average selling prices were flat in advanced materials, but increased 3% in our Textile Effects business.

Within our advanced materials businesses, we expect continued strong demand in our energy and aerospace segments as governments and utilities modernize their power grids and Boeing and Airbus increase production on their latest model, whereas automotive, electronics, construction and coating markets will be more sensitive to the overall economic conditions.

Our textile effects business will be a good barometer of economic recovery as we look at demand for apparel and home textiles. We also expect to see the benefits of our restructuring efforts. Year-to-date, we have reduced headcount in textile effects by over 600 employees and plan to reduce headcount by another 400 by the end of this year or nearly 25% of the original workforce.

Unfortunately, nearly all of the $35 million in fixed cost restructuring benefits we have delivered through 2008 are masked by stronger European currencies. We continue to address the fixed cost base in this technology-driven business that carries the highest contribution margin to sales of any business we have in our portfolio and will deliver a consistent double-digit EBITDA to sales performance. Throughout 2009, between site closures and headcount reductions, this division will achieve $60 million in annual savings.

Turning to slide six to discuss our Performance Products division, in our last two quarters, we posted back to back, all-time record earnings in this division. Although not immune to the overall economic slowdown and customer destocking evidenced by the decline in year-over-year volume, our prices held up well relative to the fall in the cost of raw materials.

Average selling prices were 22% higher compared to the prior year. Our core performance specialties business performed strongly in the fourth quarter of 2008 primarily due to higher margins as reductions in the cost of raw materials outpaced the pressure on average selling prices.

The sales of volumes in the agrochemicals sector increased by 11% compared to the prior year. A significant portion of our performance intermediates business volume is priced on a cost plus basis. This business also enjoys a very tight supply chain in North America since we are integrated with our own ethylene and ethylene oxide production, two major raw materials.

During the fourth quarter, we saw solid demand for our products selling into personal care, household and industrial applications for detergents. We expect demand for our intermediates business to remain strong relative to the overall economy as consumer demand for detergents and personal care items remains fairly stable.

To the extent that consumers may downgrade from more expensive brands, the demand for our products does not change dramatically. As we continue to strategically position this business for long-term prosperity, we have a number of projects underway.

Our new 100 million pounds maleic anhydride facility in Geismar, Louisiana is expected to be completed in the second quarter of 2009. We intend to operate this plant at full capacity to take advantage of its lower variable cost. This facility will be among the lowest cost and most efficient maleic anhydride facilities in the world.

We are proceeding with the expansion of our existing maleic anhydride facility located in Moers, Germany where we have a 50/50 joint venture with Sasol that has been sold out for a number of years. The financing for this project will be non-recourse to Huntsman and will not add any debt to our balance sheet.

We intend on expanding capacity by 100 million pounds. This facility will be one of the largest maleic anhydride facilities in Europe. We expect to complete this expansion in the first part of 2011.

The construction of our ethylene manufacturing joint venture in Jubail, Saudi Arabia with the Al-Zamil Group as our 50% partner continues on schedule. The plant is expected to come online in early 2010 with an annual capacity of 60 million pounds.

We have also completed two initiatives to expand our intermediates market, a supply agreement with a Russian surfactant producer to meet Eastern European demand and a sulfonation expansion in France to enable us to further derivatize our LAB product for lubricant application.

Kimo Esplin

Thanks, Peter. Let's go to slide eight. We tried to provide a bit more transparency to our sales here. As you can see, revenue was down across all regions and across all segments as total company volume was down 21%, partially offset by a 3% increase in average selling price compared to the previous year.

We have a very balanced global portfolio where our revenues are roughly a third US, a third Europe and a third rest of the world, Asia Pacific making up approximately 19% of the total. Asia was down farthest of all regions, as raw materials fell quicker and farther than other regions and destocking began really early November.

Most of our businesses grow as a function of GDP. Global GDP was likely not down 20% in the fourth quarter, so, clearly, we have seen some industry destocking. This destocking impacted our company as it did the entire industry. No doubt our fourth quarter numbers reflect both the impact of a slowdown of GDP and this industry-wide destocking of inventory.

Turning to slide nine, we feel that Huntsman is well positioned right now relative to our depth structure and liquidity. We currently enjoy low borrowing costs. Our weighted average borrowing rate is currently approximately 6.4% and our $1.5 billion term loan is priced at LIBOR plus 175.

Our credit facility has covenant light features with the only financial covenant a senior secured leverage test of 3.75 times for the revolver that is only tested if drawn or letters of credit are issued and outstanding. At yearend, the revolver was undrawn with approximately $30 million of letters of credit outstanding. In addition to $629 million of unused borrowing capacity, we had $662 million of cash on the balance sheet at yearend.

As you look at the maturity profile of our debt, we have no significant near-term maturities until 2010 when our revolving credit facility expires in August 2010 and our senior secured notes mature in October 2010. We expect to begin the dialogue with our banks to renew our revolver in the first half of this year. We also have a 364-day accounts receivables securitization that is off balance sheet that we expect to roll forward another year prior to its maturity in November.

Turning to slide 10, during the month of December, we received the full $1 billion cash settlement proceeds from Hexion and Apollo. At the end of 2008, we had $662 million of cash and $629 million of unused borrowing capacity, summing to a total $1.3 billion of liquidity on hand as of yearend.

In addition, we are pursuing a multibillion dollar tortious interference, fraud and unjust enrichment claims against Credit Suisse and Deutsche Bank. A Texas court recently ordered mediation to begin on May 11, 2009, and if necessary, trial to begin on June 8, 2009.

Separately, we remain in mediation and arbitration for our outstanding insurance claims related to the fire at our previously owned Port Arthur, Texas facility. As of yearend, our outstanding claims were $235 million. We expect to have this resolved in 2009.

Turning to slide 11, as previously mentioned by Peter during his review of our business, we incurred $34 million of inventory lower of cost or market valuation charges for inventory on the balance sheet at 12/31/08 in a number of our divisions, most notably $16 million in Polyurethanes and $4 million dollars in Pigments. The $12 million charge in corporate and other is from our Australian styrenics business.

Further to our discussion regarding the impact of higher valued raw material costs progressing through cost of sales, we have laid out the inventory costing methods used within our business. For the most part, we employ weighted average costing for our inventory valuation. As volumes slow down, it takes a bit longer to work inventory values through the P&L.

As the end of the quarter, we had roughly 70 days of inventory, which is roughly a week or so higher than we would consider normal levels at that time of year. The relative build was caused by higher finished goods volumes built in the fourth quarter on lower than expected sales. We estimate that inventories were as much as $60 million more than what they would have been if valued on a LIFO basis. These higher valued inventories will flow through the P&L primarily during the first quarter.

In the fourth quarter 2008, working capital improved by approximately $100 million driven by lower accounts receivable. In the future, we would expect lower inventories as a result of lower raw material costs. Further, we are aggressively managing those inventory levels.

Turning to slide 12, over the last seven years from 2002 to 2008, raw material costs steadily increased as crude rose from $26 a barrel to $110 a barrel on average in 2008. In that time period, raw materials outpaced top-line increases, compressing contribution margins, and of course, increasing raw material costs as a percentage of total costs.

In the fourth quarter with raw materials falling dramatically on a sequential basis, direct costs actually increased over $150 million when you include hurricane and lower cost or market charges compared to the prior year quarter. In 2008, raw materials represented 71% of our total cash costs. Fixed costs for both SG&A and plant indirect costs comprised approximately 22% of total cash costs.

Looking at slide 13, management has taken aggressive action to control costs during this challenging operating environment. We are reducing our headcount by nearly 10%. Including actions started in 2008, we expect to take approximately $150 million of costs out of the business at a cash cost of approximately $125 million in 2009.

We have announced the closure of our Grimsby, UK pigments facility and are studying other facility shutdowns. These important decisions are made weighing cash payback relative to potential upside when more normalized demand levels return.

We expect to take a first quarter 2009 charge of approximately $55 million in the P&L. We will reduce capital expenditures dramatically from approximately $418 million in 2008 to approximately $230 million in 2009.

As a reminder, our maintenance capital expenditure requirements, including environmental, health and safety requirement, run approximately $150 million a year. There are a few large carryover projects in 2009, including our new maleic anhydride facility in Geismar, Louisiana to keep us from reducing capital expenditures to the maintenance levels this year.

I will turn the call back over to Peter who will provide a brief summary.

Peter Huntsman

Thank you, Kino. In conclusion, the fourth quarter of 2008 was perhaps the most challenging in the history of our industry. However, we have taken decisive action to ensure the long-term prosperity of our business. We negotiated one the largest out of court settlements and collected $1 billion in cash from Apollo and Hexion to settle out a litigation against them and are pursuing a multibillion dollar lawsuit against Credit Suisse and Deutsche Bank.

We recently announced the closure of our Grimsby, UK Ti02 facility, while at the same time temporarily suspending operations at a number of our other facilities to effectively manage the drop in demand we experienced during the quarter. We also announced the elimination of 1,250 positions, nearly 10% of our workforce whereby we expect to save approximately $150 million annually.

All of our business divisions have seen an increase in demand since December of 2008. As we look at our sales volumes in January and February, I believe that the worst of industry destocking is now behind us and we will begin to see a more normalized recession level demand environment. With strong liquidity, lower costs and unfettered control of our business, we believe that we are in a unique position to focus on our company and prosper during these challenging global conditions.

http://seekingalpha.com/article/123000-huntsman-corp-q4-2008-earnings-call-transcript?page=5

GM Burns $6.2 Billion of (Our) Cash (Infusion)

GM posts $9.6B 4Q loss, burns through $6.2B cash

By TOM KRISHER and KIMBERLY S. JOHNSON, AP Auto Writers Tom Krisher And Kimberly S. Johnson, Ap Auto Writers – 1 hr 9 mins ago

Play Video CNBC  – General Motors CFO: A Tough Year

AP – Unsold 2009 models sit under a General Motors sign at a Chevrolet dealership in Englewood, Colo., on …

DETROIT – General Motors Corp. posted a $9.6 billion fourth-quarter loss and said it burned through $6.2 billion of cash in the last three months of 2008 as it fought the worst U.S. auto sales climate since 1982 and sought government loans to keep the century-old company running.

The nation's biggest domestic automaker said Thursday it lost $30.9 billion for the full year and expects to state in its upcoming annual report whether its auditors believe the company remains a "going concern." GM and its auditors must determine whether there is substantial doubt about the automaker's ability to continue it operations.

Chief Financial Officer Ray Young said the determination will depend a lot on whether GM gets further government loans and whether it can accomplish its restructuring goals.

Young said that auditors are studying the future of the company because "there's uncertainty with how the Treasury will view our viability plan," and "uncertainty on whether we're going to be able to execute the terms of our loan agreement."

The company has received $13.4 billion in federal loans since Dec. 31 and says it needs up to $30 billion to stay out of Chapter 11 bankruptcy protection. Top GM executives were in Washington, D.C., Thursday to meet with the Obama administration's auto task force to talk about restructuring and additional loans.

"2008 was an extremely difficult year for the U.S. and global auto markets, especially the second half," Chairman and CEO Rick Wagoner said in a statement. "These conditions created a very challenging environment for GM and other automakers and led us to take further aggressive and difficult measures to restructure our business."

Young said GM would reduce its structural costs by another $4.5 billion in 2009, from $30.8 billion to $26.3 billion.

GM's adjusted cash burn for the year in 2008 was $19.2 billion, but Young expects that to fall to $14 billion in 2009 as the company cuts structural costs.

The company still will need more government help, he said, because GM expects the entire auto industry to sell a dismal 10.5 million vehicles in the U.S. this year.

Most of the cash burn this year can be attributed to the temporary shutdown of many GM plants during the month of January, he said.

"We're not pleased with a negative $14 billion cash flow burn, that's still a very, very sizeable amount," he said, "but at the same time we recognize that the industry conditions in '09 are going to remain fairly challenging."

GM reported a net loss of $15.71 per share for the fourth quarter, compared with a loss of $722 million, or $1.28 per share in the year-ago period.

Quarterly revenue fell 39 percent to $30.8 billion from $46.8 billion, as credit availability froze across the globe, and a lack of consumer confidence and fears of job losses kept people from buying vehicles.

GM's fourth-quarter loss included $3.7 billion in special items, including a $1.1 billion charge for a drop in value of machinery for the Hummer and Saab brands, which are up for sale. Other charges included $900 million for restructuring, including worker buyout and early retirement payments, and $660 million to increase reserves for former parts arm Delphi Corp.'s future pension obligations.

The charges were offset by a $533 million net gain from a bond exchange at GM's financial arm, GMAC Financial Services.

Excluding special items, GM's fourth-quarter adjusted loss was $5.9 billion, or $9.65 per share.

That was worse than Wall Street expected. Analysts surveyed by Thomson Reuters predicted a quarterly loss of $7.40 per share on sales of $35.1 billion.

For the full year, GM's net loss was $53.32 per share, the second-worst annual result in the company's history. The worst loss occurred in 2007, when the Detroit-based company lost $38.7 billion, or $68.45 per share, in 2007, due largely to charges for unused tax credits.

GM's $6.2 billion cash burn for the quarter is the difference between the company's actual cash balances at the start and end of the quarter, including $4 billion in government loans received Dec. 31.

The cash burn rate narrowed from $6.9 billion in the third quarter, reflecting GM's restructuring efforts.

The company last year announced the closure of four assembly plants and a parts stamping factory.

Last week, a plan GM submitted to the Treasury Department to justify more loans said the company would close five more U.S. factories and cut another 47,000 jobs globally. GM also reached a tentative deal with the United Auto Workers on concessions that will reduce labor costs.

Since 2000, GM's U.S. salaried work force has shrunk by 33 percent from its 2000 high of 44,000 people. At the same time, the number of hourly workers has plunged by more than half — to about 63,700 people at the end of last year from 133,000 in 2000.

GM ended last year with about $14 billion in cash, $10.5 billion less that the $24.5 billion it had at the end of 2007. The 2008 figure is close to the minimum amount of cash GM has said it needs to fund its operations.

Young said GM's total debt at the end of 2008, including the first $4 billion in government loans, was $45.3 billion. The company has been negotiating with bondholders to convert most of that debt to equity, which is a requirement of the government's loan terms.

Young told reporters the credit crisis spread from the U.S. to other markets, making the fourth-quarter a challenging one.

But there was some hope, he said. While global sales fell, some emerging markets, such as China, are off to a good start in 2009.

"A lot of the governments in these countries are putting a lot of stimulus into the economy as well as the automotive market," he said, citing lower sales tax rates on cars sold in China and Brazil.

GM shares rose 1 cent to $2.56 in morning trading.

Here's Who's Gonna Pay

Obama Seeks $1 Trillion Tax Increase in Budget Plan

 

By Ryan J. Donmoyer

Feb. 26 (Bloomberg) -- President Barack Obama proposed almost $1 trillion in higher taxes on the 2.6 million highest- earning Americans, Wall Street financiers, U.S.-based multinational corporations, and oil companies to pay for permanent tax breaks for lower earners.

Obama’s 2010 budget proposal, released today, would reinstate the top two Clinton-era tax rates of 36 percent and 39.6 percent in 2011, up from the 33 percent and 35 percent the richest Americans now pay. It would raise taxes on capital gains and dividends to 20 percent for top earners, up from the 15 percent set by former President George W. Bush in 2003.

The tax increases, which Obama vowed to impose as a presidential candidate, would be the first on high-income earners since 1993 and would reverse a course set by Bush of lowering the tax burden on the nation’s wealthiest people.

“It’s a clear repudiation of Bush’s policy,” said Peter Morici, an economist at the University of Maryland in College Park. “It’s more Obama Robin Hood.”

Obama’s budget does keep in place Bush’s tax cuts that benefit lower- and middle-income earners and it preserves a sliver of policy that benefits the more affluent: A preferential tax rate on corporate dividends. Before Bush, dividends were taxed as ordinary income, or at rates as high as 39.6 percent in the 1990s.

‘Hugely Positive’

“It is a hugely positive step to keep that part of the ‘03 changes,” said Pamela Olson, who was the top tax official in Bush’s Treasury Department when the tax rate on dividends was reduced. “It’s good economic policy, good corporate governance policy, and good tax policy.”

Higher-income earners, primarily families with more than $250,000 of income, would face an additional tax burden under a proposal to reinstate limitations on their itemized deductions, which would subject more of their income to tax. In all, top- earning households would pay $636.7 billion in additional taxes over the next decade, Obama’s budget estimates.

Linda Beale, a tax-law professor at Wayne State University Law School in Detroit, said “many will object to reinstituting phase-outs for itemized deductions because of the complications that creates.”

Representative Mike Pence of Indiana, the No. 3 Republican leader in the House, said Obama can expect a wall of opposition to his proposed tax increase on top-earners. Roughly half of Americans earning $250,000 are small-business owners, and the proposed increase will stifle the troubled economy, he said.

‘Overwhelming Opposition’

“There will be overwhelming opposition from the American people and House Republicans to the idea that we should raise taxes during a recession,” Pence said in an interview. “Raising taxes in a recession is not a strategy for recovery.”

Representative Jeb Hensarling, a Texas Republican, said in an e-mail, “You cannot help the job-seeker by punishing the job creator.”

The higher taxes on individuals will largely be used to pay for expanded health coverage for lower-income Americans and to make permanent Obama’s tax breaks such as a payroll tax credit worth up to $1,000 that was adopted on a temporary basis in the $787 billion fiscal stimulus measure earlier this month.

“He’s being so generous at the lower-income level that making $200,000 is going to be like falling off a cliff,” said Dustin Stamper, an analyst in the National Tax Office at Grant Thornton LLP. “Say what you want about the Bush tax cuts favoring the rich, but this is just becoming punitive.”

AMT Lives On

Obama’s budget also assumes Congress will continue to index the alternative minimum tax for inflation. The AMT is a parallel system that can impose higher rates on families earning between $75,000 and $500,000 when their deductions are too high relative to their income.

Executives at private-equity firms, venture-capital firms, some hedge funds and other partnerships that receive a 20 percent “carried interest” in the firm’s profits would see their tax burdens nearly triple under Obama’s budget.

Most of their carried interest currently is taxed at the 15 percent rate for long-term capital gains. Obama is asking Congress to tax the profit share as ordinary income, arguing that it’s a form of wages; under his plan, most executives would pay 39.6 percent.

That proposal will likely reignite a debate that was waged by Congress in 2007 when the House of Representatives approved the change and the Senate never considered it.

Corporate Tax Increase

Obama proposed $353.5 billion in higher taxes on corporations over the next decade, the bulk of which would come from “reforming” rules that allow U.S.-based multinational corporations such as General Electric Co. to defer U.S. tax on profits they earn overseas. GE has about $75 billion offshore on which it has never paid U.S. taxes, according to its regulatory filings.

Obama’s budget estimates such reforms and beefing up Internal Revenue Service enforcement of international tax rules would generate $210 billion in additional revenue over the next decade. He also proposed to limit tax shelters by requiring they serve a business purpose by redefining the tax code’s “economic substance doctrine.”

‘Last-In, First Out’

He also proposed ending a tax-accounting technique called “last-in, first out” or LIFO, that primarily benefited oil and gas companies when oil topped $100 a barrel but is widely used across industries.

Republican senators in April 2006 floated such a tax increase but backed off after Exxon Mobil Corp. Chairman and Chief Executive Officer Rex Tillerson called the proposal a “backdoor windfall-profits tax.”

In addition to oil companies, the repeal of LIFO would hit retailers, automakers and makers of non-automotive heavy equipment, textile makers, consumer products, drug companies, alcohol and tobacco manufacturers and wholesalers when times are good, according to tax experts.

The accounting method has been commonly used since the 1930s and is viewed as the most accurate measure of income for financial statement purposes, according to the congressional Joint Committee on Taxation, a nonpartisan panel.

To contact the reporter on this story: Ryan Donmoyer in Washington at rdonmoyer@bloomberg.net;

Last Updated: February 26, 2009 12:27 EST

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.9fZg9MKKGk&refer=home

 

Read the entire budget document on this pdf file:

 

http://www.whitehouse.gov/omb/assets/fy2010_new_era/A_New_Era_of_Responsibility2.pdf

Our Government at Work

 

Better start emptying your wallets now!

Asian Butanediol and Derivatives Update

2009-02-26 [Source: Pudaily]

Prices maintain firm as the suppliers are determined to continue with the current levels, as they are to take the manufacturing costs into account during the stock disposing. The suppliers will also continue the 50% running rate.

As to the downstream, spandex has started and is maintaining a 30% around running rate. Demand from THF and PTMEG increased slightly, which however is not deemed a promising. PU resins maintain the 60% running rate. GBL (gamma-butyrolactone) remains lukewarm.

In the eastern Chinese trading market, bulk BDO for large accounts are transacted at RMB9600-9800/t and RMB10000-10300/t for smaller clients.

http://www.pu366.com/News_View.asp?NewsID=3199

RMB 9600 Translates to around $0.64/lb.

 

Lyondell Bankruptcy May Take More Than One Year

 

 

Lyondell CFO says bankruptcy may need over a year

Wed Feb 25, 2009 11:23pm GMT

 

 

[-] Tex [+]

By Emily ChasanNEW YORK, Feb 25 (Reuters) - Bankrupt petrochemicals producer Lyondell Chemical Co [ACCELC.UL] would like longer than a year to complete its bankruptcy, despite provisions in its bankruptcy loan that require the case to be mostly finished by the end of the year.

In a hearing in U.S. bankruptcy court in Manhattan on Wednesday, Chief Financial Officer Alan Bigman said the company had asked its lenders to extend the term of its debtor-in-posession loan to two years or eighteen months, but the lenders did not grant that request.

The loan, which is helping the company fund its operations during bankruptcy, is currently set to mature on Dec. 15. If Lyondell is not ready to exit bankruptcy by that date, it may have to refinance the loan to repay its lenders.

"We wanted two years because we have a large and complex organization and wanted flexibility," Bigman said in court, noting that his advisors have told him completing the case in one year would be "challenging but achievable."

Lyondell was in court on Wednesday to ask for approval of its debtor-in-possession (DIP) financing. Its proposed $8 billion bankruptcy loan is the largest in history.

Under the terms of the loan, the company would have to come up with a draft of a bankruptcy plan by Aug. 15, as it is expected to be able to exit bankruptcy when its DIP loan matures. Its plan would also have to be approved by October.

To do that, the company would have to work very quickly to resolve labor issues, intercompany payments between its U.S. units and European units which are not in bankruptcy, and the process of deciding which contracts it wants to keep or reject.

Several creditors have objected to the loan terms, and questioned Bigman and one of the 14 proposed DIP lenders in court on Wednesday.

"The lending group wanted a shorter date in these credit markets to ensure that it would get its DIP loan repaid," John Duggan, a managing director at UBS Investment Bank, a division of UBS AG (UBSN.VX) which is funding part of the loan, said in court in response to questions.

"We thought it would be very difficult to get all 14 parties to agree to an extension... It increases all 14 lenders' risk," Duggan continued.

Lyondell's Bigman said the loan could eventually be extended by mutual agreement of all parties.

U.S. Bankruptcy Judge Robert Gerber, who is hearing the case, extended the court proceedings until Thursday.

Lyondell Chemical Co, part of the U.S. units of LyondellBasell Industries [ACCEIN.UL], filed for Chapter 11 bankruptcy protection last month. LyondellBasell is owned by Russian-born investor Len Blavatnik through New-York based Access Industries and is based in the Netherlands.

The case is: In re Lyondell Chemical Co, U.S. Bankruptcy Court, Southern District of New York, No. 09-10023. (Reporting by Emily Chasan; Editing by Tim Dobbyn)

http://uk.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUKN2551443020090225?sp=true