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BASF Financials Down, Akzo to Sell Stake in ICI Pakistan, Biofilms Meet their Match

Hello and welcome to your late week international coatings industry update, brought to you by SpecialChem. Financial results are about in for the past quarter, and they are a mixed bag. In general, specialty manufactures in the chemical space are up, commodity producers are down. Also, as we see in this issue, the joint venture is still the preferred mechanism to market share growth. Let's get started.

Germany's BASF SE warned on growing global economic risks and a slowdown in China as it reported a 15.5% drop in second-quarter net earnings. BASF said Thursday that it earned €1.23 billion n the April-June quarter, down from €1.45 billion a year earlier. Revenue, however, climbed 5.5% to €19.48 billion from €18.46 billion.

The company held on to its outlook for the year, but scrapped its estimates for global growth and worldwide chemical and industrial production. In particular, it said that growth was easing in China, which has powered the global economy recently while Europe has struggled and the U.S. experiences an uncertain recovery. The company said that "the Chinese growth engine has started to stall" and that it saw a fall its sales revenues in the Asia region, as it did in the first quarter.

AkzoNobel has reached an agreement to sell its 75.81 percent shareholding in ICI Pakistan Limited to the Yunus Brothers Group for €124.4 million. The price represents a premium of 30 percent on the market price when the local stock exchange closed on Friday, July 27. The price is subject to adjustments for cash/debt as at the date competition clearance is obtained and for interest from that date until closing.

The transaction is expected to be completed towards the end of this year, once regulatory approvals have been obtained and the purchaser has completed a legally required tender offer for at least 50 percent of the shares in ICI Pakistan held by the other shareholders.

In research news, biofilms may no longer have any solid ground upon which to stand. A team of Harvard scientists has developed a slick way to prevent the troublesome bacterial communities from ever forming on a surface. Biofilms stick to just about everything, from copper pipes to steel ship hulls to glass catheters. The slimy coatings are more than just a nuisance, resulting in decreased energy efficiency, contamination of water and food supplies, and - especially in medical settings - persistent infections. Even cavities in teeth are the unwelcome result of bacterial colonies.

In a study published in the Proceedings of the National Academy of Sciences, lead coauthors Joanna Aizenberg, Alexander Epstein, and Tak-Sing Wong coated solid surfaces with an immobilized liquid film to trick the bacteria into thinking they had nowhere to attach and grow.

In business news, Eastman Chemical posted quarterly profit on Monday that beat forecasts, as lower supply costs helped offset a drop in demand for specialty plastics. For the second quarter, the company said net income fell to $179 million, or $1.26 per share, from $220 million, or $1.51 per share, in the year-ago quarter.

Eastman this month completed its $3.4 billion buyout of specialty chemical maker Solutia Inc, part of a strategy to boost margins by growing in niche markets. During the second quarter, demand dipped for acetate tow, a key fiber used to make cigarette filters and felt-tipped pens. In the company's largest segment, a drop in demand for coatings was offset by cheaper raw material supply costs.

In other company news, Eastman Chemical Co and Sinopec Yangzi Petrochemical Co said on Tuesday they will build a hydrogenated hydrocarbon resin plant in Nanjing, China.

The facility will produce 50,000 metric tons of hydrocarbon resin when completed in 2014 and will make Eastman the world's largest producer of the material, which is used to make plastics and diapers.

In other JV news, China Petroleum and Chemical Corp (Sinopec), and German chemicals producer BASF SE said on Tuesday that they are looking at setting up a second chemicals joint venture in China to tap the country's growing market for plastics.

Under a memorandum of understanding signed in the southern Chinese city of Shenzhen, the companies will explore building an iso-nonanol (INA) plant in Guangdong, the companies said in a joint statement.

INA is used as feedstock for making plastics used in automotive, flooring and construction industries, and in wires and cables. Plastics demand in China has been increasing, with consumption expected to grow 7% this year on the back of the country's annual economic growth of 7.5%.

A final investment decision on the 50/50 joint venture would be made at the end of this year, after the companies completed their feasibility study, the statement said. Investment in the project would be substantial, said BASF official Frances Luk, declining to give a figure. She added that the amount invested in the project would be determined by the results of the feasibility study.

State-controlled Sinopec and BASF already have a 50/50 petrochemical joint venture in the eastern Chinese city of Nanjing. Total investment in the venture has reached $4.5 billion, Luk said.

In other news, the U.S. House of Representatives Committee on Oversight and Government Reform recently released an interesting report on regulatory impediments to job creation. Among the items discussed is the U.S. Environmental Protection Agency standard related to remodeling homes that contain lead-based paint. The standard requires contractors to test pre-1978-built homes for lead paint and then apply certain safety practices if they find it. It also requires contractors to take classes and gain certifications to work in homes with lead paint.

A provision originally allowed homeowners with no children or pregnant women in the home to opt-out of testing, etc., but the EPA eliminated that provision even though lead reportedly only poses risks to children under six who are exposed to relatively high amounts over a period of time.

There are many problems with the standard, but the most glaring is that it encourages people to either break the law by hiring non-certified contractors or to avoid using professionals altogether. Accordingly, rather than improve safety, it simply harms small businesses that are working hard to be good citizens by complying with the law. The Committee report explains: "The National Federation of Independent Business (NFIB) adds that the removal of the opt-out provision "has led homeowners to explore using 'underground' contractors that do not comply with the EPA's requirements at all." Indeed, a survey conducted by the National Association of the Remodeling Industry shows that 77 percent of homeowners are avoiding the rule by doing remodeling work on their own, or hiring a non-certified contractor to perform the work. Therefore, the rule may be increasing the risk of exposure to lead paint, as well as negatively affecting certified contractors' ability to compete."

In additional financial results, paint manufacturer Kansai Nerolac Paints this week posted a 3.43% growth in net profit at Rs 63.3 crore for the quarter ended June 30 as against Rs 61.2 crore in the year-ago period.

The company's total revenues for the period grew 10.96% growth to Rs 723.5 crore from Rs 652 crore in the corresponding quarter last year.

"Demand for the paint has been moderate during the quarter which is reflected in the numbers. The inflationary pressures witnessed in earlier quarters have reduced, however, the fall in the rupee has ensured that input costs have not come down," Kansai Nerolac Managing Director HM Bharuka said in a statement.

He said the company has been able to partly pass on this increase to the market.

"Going forward uncertainty in the economy, concern on the monsoon, depreciation of the rupee keeping input costs high, all make the immediate future very challenging both in terms of top-line and profitability," he said.

Though positive about the growth prospects of the domestic paint industry which stands at Rs 29,100 crore, Bharuka said, the company will adopt a wait and watch strategy.

"We will have to wait and watch as to how the challenging factors will play out and hence the outlook for the short term remains cautious. Overall, however, the picture of paint demand remains very positive in the long term," he added. For decades American Airlines has flown unpainted, polished silver airplanes. But that will soon change.

American Chief Executive Tom Horton hinted at a meeting of corporate travel managers that a new logo and new paint scheme for jets are coming, likely as the company emerges from bankruptcy-court reorganization and tries to set a new course.

"This is going to be a new airline," Mr. Horton said at the Global Business Travel Association convention in Boston. He was referring to American's plans to restructure independently, not to ongoing exploration and evaluation of a possible merger with US Airways Group Inc. or other airlines.

"We're working on modernization of the American Airlines brand and we'll unveil something in the future. We're also thinking about the look of our airplanes," Mr. Horton said. "Stay tuned on that."

Besides image, there's a structural reason American is going to have to start painting its planes. The Boeing 787s American has on order don't have aluminum skins, they are constructed with composite materials that are essentially super-strong plastics that must be painted. Large portions of the new Airbus planes American has ordered are also fabricated with composite materials.

A Boeing model of the 787 in American's current livery on display at Boeing's 787 design center in Seattle shows the plane simply painted silver. With metallic paints today, designers could no doubt get something close.

Another possibility might be a white plane with patriotic red, white and blue scheme. Mr. Horton frequently talks about the patriotism he feels at an airline named after the nation.

"Our view is American Airlines is America's flag carrier," he said, even though American, or any other U.S. airlines, doesn't officially have that designation.

Former American Chief Executive Robert Crandall famously decided to keep planes polished and unpainted in order to save fuel. Painting a plane can add a couple hundred pounds of weight, and that means more fuel will be burned with each flight.

In research news, biomimicry is often used as inspiration for new materials and new methods of constructing materials. Now Chinese researchers have created a substance that can repel oil underwater by taking inspiration from water strider insects.

Most oil-repelling substances don't work underwater, or even if they just get wet. Developing such materials would be a boon to helping aquatic robots move through water to handle oil and clean up oil spills. It could also be used as a coating to prevent a car's windshield from getting gummed up with dirt and bugs, or as a coating on ship hulls to prevent the growth of barnacles and other sea creatures.

Water-strider insects, which look like big mosquitos, can skate between the surfaces of air and water without sinking because of the chemistry and physics of microprojections on their legs that are lined with nanogrooves. Led by Shutao Wang, of the Chinese Academy of Sciences, researchers have constructed a device that can float between the surfaces of oil and water in a parallel way, without either sinking or getting oily. The 5-cm-long "oil strider" device works like the bug because of the combination of its construction with a super-oleophobic coating on the device's four metal legs that repels oil even underwater.

The researchers made the bug-like device out of copper wires bent into lengths approximating the lengths of the insect's legs. The legs were tied to a copper plate mimicking the insect's body. A rough nanoscale coating that resembles the texture of the insect's legs was created by immersing the wires in aqueous ammonia. This substance reacted with the copper to produce microclusters of copper oxide.

The combination of the legs' oil-repelling, roughened surface and the super-oleophobic coatings' hydrophilic chemical components created a super-oleophobic force at the interface between oil and water. The researchers found that this force consisted of buoyancy force, curvature force, and deformation force.

To test the wires' ability to repel oil, Wang's team placed them in a container of water and added droplets of the oil 1,2-dichloroethane. When the researchers agitated the container, the strider device skated on the surface between oil and water. To measure the interaction between a drop of liquid and the surface of the device's legs, the researchers measured their angle of contact. The closer the angle is to 180 degrees, the more a drop of oil has beaded up into a shape resembling a perfect sphere. A material is considered super-oleophobic when its contact angle is above 150 degrees. The contact angle between the device's wire leg and an underwater droplet of oil was about 164 degrees.

Wang said the coating method the team has developed could work with metals besides copper, as well as with polymers that are coated with a metal oxide. Somewhat larger, lightweight devices could also be built.

Inspired by the water-repellent properties of the lotus leaf, a group of scientists in China has discovered a way to impart a fog-free, self-cleaning finish to glass and other transparent materials.

Also in China, "superhydrophobic" surfaces, such as the lotus leaf, are excellent at repelling water and also boast other "smart" self-cleaning, anti-glare, anti-icing, and anti-corrosion properties. By using hollow silica nanoparticles that resemble raspberries, scientists at the Chinese Academy of Sciences were able to apply a clear, slick, water-repellent surface to glass.

This is significant in material fields because it means that after modifying low-surface-energy materials and creating surface textures on them, surfaces can be made to exhibit completely different wetting characteristics - either repelling or attracting moisture.

As described by the scientists in the American Institute of Physics (AIP) journal Applied Physics Letters, these surfaces show good anti-fogging and light transmittance properties before and after chemical modification, which should help pave the way to a clearer, fog-free performance for windshields, windows, solar cells and panels, LEDs, and even TVs, tablets, and cell phone screens. Smart surface coatings are highly desirable, especially for solar cells and panels, which frequently lose up to 40% of their efficiency to dust and dirt buildup within a year of installation.

The next challenge the scientists face is figuring out how to move the smart surfaces from the lab to industry in a cost-efficient manner.

In other news, EU-funded researchers developed a new class of thin-film coatings with a huge spectrum of mechanical, optical and electrical properties. Tailor-made combinations of properties should make the coatings a winner with the consumer electronics sector. Thin-film coatings are widely used throughout the medical, automotive and machine tools industries... more about this news

China Shen Zhou Mining & Resources, Inc., a Company engaged in the exploration, development, mining and processing of fluorite, barite, zinc, copper, and other non-ferrous metals in China, announced that the Company's subsidiary, Wuchuan Mining, has formed a strategic partnership to supply processed fluorite powder to Ningxia Jinhe... more about this news

SouthWest NanoTechnologies, Inc. has entered into a distribution agreement with Itochu Plastics Inc., part of the Itochu group, to distribute throughout Asia commercially-produced, specialty multi-wall and single-wall carbon nanotubes and carbon nanotube (CNT) inks, pastes and dispersions... more about this news

And finally, Connell Brothers has increased its infrastructure and facility investments over the last several months across the region to support the growth of its supplier and customer base in coatings & inks and other industrial markets, and its regulated businesses in food, pharmaceutical, and personal care ingredients... more about this news

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