Kemira closes Blankophor GmbH & Co. KG (German Catec GmbH)

Kemira Oyj has on September 30, 2010, closed Blankophor GmbH & Co. KG (German Catec GmbH) following the deal announced on June 23, 2010.

Kemira sold its global Fluorescent Whitening Agents (FWAs) business to Blankophor. The parties have agreed not to disclose the transaction price.

The traditional European, high-cost manufacturers of optical brightening agents (OBA) or FWAs continue to struggle as these commodities are easy to source form Indian and Chinese producers at similar quality but much lower price.

Kemira sells its global FWA business

Reported in the press this morning:

Kemira Oyj and German Catec GmbH financially supported by Fengler Beteiligungs GmbH have signed a contract, according to which Kemira sells its global Fluorescent Whitening Agents (FWAs) business to Catec. FWAs improve the whiteness and brightness of paper. The deal covers a production plant in Leverkusen, Germany, the global FWA sales network and the associated support functions. The FWA business and its staff of about 100 persons will be transferred to the new owner once the companies have closed the transaction in August 2010.

The transaction does not have any significant impact on Kemira's financial figures, and the parties have agreed not to disclose the transaction price.

"Kemira is focusing according to its strategy on products and services that enhance the water quality and quantity management in the water intensive industries such as pulp and paper industry. Exiting FWA business is in line with our strategy to enhance the product lines which are common for all our segments and on which we are building our competitiveness", states Petri Helsky, head of Paper segment.

FWAs or OBAs are widely used in the paper industry for producing white paper. A low-margin, commodity business where the major companies, BASF (Ciba), Clariant and Kemira have struggled to compete against quality market entrants from China and India.

Demand for print & graphic paper to decline sharply by 2010 - New market report

In  printweek.com article, it has been reported that a Stationers' and Newsprint Makers' Company Report, entitled, 'Future of Paper and Print in Europe 2008-2020', that there will be a dramatic drop in demand for print and graphic grades of paper in Europe.  Some highlights are:

• Total demand to drop by 32.5% by 2020
• Newsprint demand to decline by 56% between 2008 and 2020 
  
• Business papers and print to decline by 45.5%
• Magazine paper demand to decline by 32%
• Advertising and commercial print sector to decline by 14.5%

It doesn't take a rocket scientist to conclude that digital media and online publishing is the prime reason for the predicted decline in use of these papers.

For paper chemical producers this is a significant market for process chemicals and functional chemicals aimed at this market (eg OBAs, internal sizing, surface treatment).  To compound the agony, it is well know that imports of OBA (and other paper chemicals) from China and India into Europe have increased significantly in the last year or so.  The market report will also not make good reading for the suppliers of fillers and pigments (eg calcium carbonate, kaolin).

The market report was prepared by NLK Associates.

White clouds gather over London - Specialist OBA conference to address key issues

This week sees a gathering of some European paper optical brightening agent specialists in London to discuss the current state of affairs.   In the midst of a continuing, very tough market environment and under threat from a number of key environmental issues, particularly the unsustainability of making paper whiter, whiter and whiter, dark clouds are gathering over this sector of the paper chemicals industry.  

It will therefore be inetresting to see if strategies can be developed for improving the sustainability and the environmental impact of using high levels of OBA to produce white papers. It is disappointing not to see any papers which specifically address the environmental impact, but perhaps the titles given by the speakers do not divulge everything which will be presented. It also would have strengthened the programme to have had contributions from the paper and board producers (users of OBAs).

The detailed programme for the conference, Optical Brighteners & Paper Whiteness, is available from the organiser Makowhiteness Project, and the following is a list of contributions:

OBA Market Conditions

Alec Tindal, Makowhiteness Ltd, UK (Consultant)

Factors Affecting OBA Performance

Martinez & Schoenenberger, IGCAR, Spain (Producer)

Lightfastness of OBAs

Olli Jokinen, Ciba SC, Finland (Producer)

Reaching the Highest Whites

David Puddiphatt, Clariant, Switzerland (Producer)

Paper Whiteness v’s Reproduction of Colour

Ole Norberg, Voxvil AB, Sweden (Whiteness Measurement)

White Paper Tinting (Shading Colours Technical)

Michael Kraemer, Kemira, Germany (Producer)

Optical Characterization of Paper as Basis for Printing & as Aesthetic Media

Claudio Puebla, Axiphos, Germany (Whiteness Measurement)

Shade Comparison in High White Papers

Alec Tindal, Makowhiteness Ltd, UK (Consultant)

Clariant, Kemira and Ciba (now BASF) are the leading producers of OBAs in Europe.

Paper whiteness - Clariant's OBA crisis!

Clariant has tried to make a case for the current situation in the global OBA (optical brighteneing agent) business (see the recent RISI article) referring to it as an 'OBA Crisis'. It is well worth reading the views expressed in the article but we would leave it to you to make a judgement on the position taken.

First, Clariant has struggled in this market, and made a strategic mistake of relying entirely on the Chinese (or any other supplier were they to be available) for their raw materials.  They were then unable to raise prices to cover their escalating raw material costs.  The Chinese are now uniquely positioned to move upstream and market OBAs, more cost-effectively,  to the world.  The move by the Chinese government to abolish the VAT refund on Chemical exports and the squeeze on production from the 'Beijing Olympic Effect' has only hightened the weakness in the strategy - if you do not control your raw materials do not expect to control the market (see earlier blog).

Second, is there really a need to use so much OBA in papermaking?  As the industry strives to find sustainable solutions, is the move by North America (and perhaps Japan) to match the rediculously high whiteness levels found in Europe really necessary?  It is also questionable whether OBAs are, 'The most cost-effective means of raising the whiteness of paper,'  especially when one takes a cradle to cradle assessment.

Furthermore, just how white do we need our paper to be and just how many thousands of tons of OBA do we need to pour into our environment to get a few points more in whiteness?  In time, when 'cradle to cradle' approaches to product development (chemicals and paper) are more widely adopted, the whiteness folly will be exposed for what it is.  In 2006 Clariant boasted in an advert that it had sold over 1 million tonnes of OBA for papermaking - is this a sutainable soultion?

Keywords - OBA, FWA, Clariant, Environment, Sustainability, C2C, whiteness, papermaking, paper, pulp, chemicals.

Clariant to shut Horsforth/Leeds UK Production site - paper chemicals to be affected

As anticipated, Clariant has announced that it will shut its site in Horsforth/Leeds, UK. Over a number of years the site has not received investment from Switzerland despite a long track record of innovation and being at the core of supplying paper chemicals. In discussions with those affected, it is not clear where the production will be shifted but much is expected to go to shore up the (more expensive) Swiss operation in Muttenz. When decisions such as these are made, it is often more cost-effective to close sites in the UK where labour laws are liberal, compensation is lower and it is easier to carry out a closure. Moving production to a higher cost site in Switzerland to fill capacity does not appear to be a long-term recipe for success in paper chemicals.

The site at Horsforth was the main driver for the research, development, production and marketing of Optical Brightening Agents (OBAs, FWAs) world-wide. In a first move, Clariant closed its world-class OBA research and marketing team in the UK (see earlier blog). It has now decided to close the entire site, affecting OBA production and some other paper chemicals (eg products for strength, dye fixation, and the control of interfering substances).

The site in Leeds/Horsforth is designated a Textile, Leather and Paper site, although products from other businesses are manufactured there. Since Clariant's unsuccessful acquisition of BTP (British Tar Products) it has held onto a production site in Selby, UK, although this site has also been caught up in a cost-cutting closure announcement.

Clariant's first-half results were reported today and will be the subject of a separate blog.

What others are saying - See Yorkshire Post article; Clariant UK web site (nothing!).

FWA raw materials become tight - Opportunity for Chinese and Indian Producers

Not only are paper FWA (OBA) producers having to deal with the escalating price of raw materials linked to commodity price increases, there is now a growing shortage of raw materials used to make stilbene-based optical brightening (whitening) agents. One rumour has based the reason on the reduced output of the bigger Chinese producers.

The result is:

• Companies which are not back-integrated (eg Clariant) will struggle to get sufficient raw material to manufacture FWAs and will probably have to pay a premium
  
• Chinese producers (eg Transfar Whyyon Chemical) will further increase their prices on any material they have available after they have taken care of their own needs
  
• Indian producers will see this as an opportunity to develop their raw material business, which over the last few years has been eclipsed by the Chinese

The key raw materials are diamino stilbene (4,4'-diaminostilbene-2,2'-disulphonic acid), aniline disulphonic acid, cyanuric chloride and sulphanilic acid. One only has to look at the surge in p-nitrotoluene prices to surmise on the future impact of the recent market changes. It will also be interesting to watch how the major 4 suppliers (Ciba, Kemira, Clariant, Transfar) of paper OBAs (FWAs) manage their product supply and how market price increases are implemented. The need for access to supply from China and India has been emphasised before and now it may be difficult to secure supply and possibly too late.

The future looks bright for the Indian and Chinese producers.

PS: Some paper dyes are also based on stilbene chemistry

Keywords:
Paper Chemicals
Optical Brightening Agents
Fluorescent Whitening Agents

Higher whiteness multi-purpose papers in the USA drives growth in FWA market

Nalco's Chris Smith has written about the recent move by International Paper to increase the brightness of North American office paper (copier paper) and set a new industry standard for the USA. There is a disparity between the brightness (whiteness) of standard office papers supplied to the markets in Europe (and Asia) and those in the USA and Japan - the European and Asian markets demand significantly higher whiteness. Therefore, there was scope for International Paper to increase whiteness in the USA and to produce papers which could be competitively exported to Europe and Asia.

Producing paper at higher whiteness requires the use of more fluorescent whitening agent (FWA or OBA) and/or higher levels of bleaching, changes which can also impact on process efficiency. So, initially there were significant increases in costs, only some of which could be reduced by changes to raw materials and processes.

The effects of this move by International Paper have been:

• To set a new standard for whiteness in the USA for standard office papers (white, copier paper)
  
• To increase the consumption (market) of FWAs (OBAs) in the USA

The article gives a good account of the change to higher whiteness and case studies highlight the key issues.

Clariant closes world-class OBA team in the UK

In continuing its cost-cutting programme, Clariant has closed its world-class, global optical brightener (OBA) activities in Horsforth, Leeds, England. The activities have been moved to Switzerland but the key people have decided not to go. The head of the global business and the UK team has now left Clariant to establish his own company, Makowhiteness, and will continue to offer expertise to the industry. Despite efforts to justify the move, it is clear that it will be many years before the team and its expertise will be re-produced and re-established in Switzerland.

OBA is one of the two key areas of paper chemical business for Clariant, the other being paper dyes. Optical brightening agents or fluorescent whitening agens as they are otherwise known are used to improve the whiteness of paper, especially the high-whiteness fine papers used in offices (eg copier paper). The main users of OBAs are International Paper, StoraEnso, UPM Kymmene, New Page, Domtar, Sappi, m-real etc.

Kemira opens 'new' technology and business centre in Leverkusen

On the back of the acquisition of the LanXess paper business, Kemira has opened a 'new' business and technology centre at the Leverkusen base of the former LanXess.

The centre has 98 employees and will primarily concentrate on the traditional business of LanXess which is colourants (dyes and pigments) and optical brightening agents for papermaking. In addition to this core business and dedicated research focus for paper chemicals, there will also be some activities in wet-end and recycling chemicals.

LanXess (now Kemira) is a leading supplier of optical brightening agents (top 3) for papermaking and Kemira is the leader in the supply of chemicals to the global pulp and paper industry. For details of their financial results please see a recent post.

Ciba announce paper chemical price increases

Ciba announced it will initiate price increases for its paper chemicals ranging from 5-20%. The ranges affected are Pergasol dyes, Irgalite pigments, Tinopal optical brightening agents (fluorescent whiteneing agents). The target is to increase prices on 1st August, 2007 or as contracts allow. The price increases are justified on the, '...... significant cost increases in select raw materials coupled with recent changes in duties associated with Chinese exports.'

Again, it will be interesting to see whether the posturing feeds through to actual price increases in the face of significant competition from dollar-based or lower-cost suppliers; particularly those producing OBAs and dyes.

Clariant announce price increases for paper chemicals.

Clariant joins the crowd in announcing price increases in paper chemicals. The reasons given are:

• continuing high price of crude oil
• high energy costs
• increased raw material prices - particularly from China

The price increases affect dyes (10-30%); optical brightening agents - OBAs or FWAs - to increase by 10-15%; and polymer emulsions.

As with the other announcements, it remains to be seen whether they are realised and start to show through in the balance sheet.

Where is all the optical brightener (OBA) going?

In March, after completing the merger with Weyerhauser, Domtar became the second largest producer of uncoated wood-free sheet (UFS) in the world with 4.3 million tons/yr of capacity. This is behind International Paper with 5.7 million tons/yr. Thousands of tons a year of optical brightener are used in UFS, making these two paper companies coveted customers for the big OBA producers such as Ciba, Kemira, Clariant and 3V Sigma.

Despite these paper chemical companies dominating the paper OBA market, there is increasing competition from quality, non-traditional manufacturers based in India, China and other emerging producing-countries.

The new Domtar is called Domtar Corp and all of its UFS capacity is in North America.

Reduce cost of whiteness - Nalco invention

Nalco has developed a new approach to reducing the cost of whiteness - using ExtraWhite, a 1-2 point ISO Brightness gain or an incredulous 50% reduction in OBA consumption could be achieved (Nalco announcement). The benefits are claimed for coated and uncoated woodfree (freesheet) grades, wood-containing (mechanical) paper grades and in certain pulp applications.

The patent is pending and could not yet be found in the US or European patent databases. From information gleaned from various sources, it would appear to be a mixture of a bleaching chemical and an additive to stabilise the OBA. The product cost is therefore likley to be low and the price set at an attractive level for papermakers.

With the seemingly endless drive to increase and harmonise global paper whiteness levels at a higher whiteness (eg, in the USA where whiteness is typically lower than Europe) this technology will certainly raise interest. Achieving whiteness gains with OBA or by bleaching/brightening is expensive and a target for cost reduction in the paper industry. This is particularly the case at the high-whiteness end of the market where large amounts of OBA are used.

If anyone has any more detail they would like to add, please comment.