"Either to report the whole translation loss­es/gains to their [1997] income statement, or amortize their translation losses or gains for the period of the specific debt [when the foreign-exchange loss was incurred]."

Thus, if a company incurred a foreign-exchange loss on a three-year debt last year, it can stretch the loss over three years. "My own personal view is just get rid of [the losses], mark [them] all off, and just get back on with life," comments Bill Hunsak-er, a Seoul-based regional oil and chemical analyst at securities firm ING Barings.

The extent to which firms took advan­tage of the changes varies. For instance, Honam Petrochemical stands out for hav­ing reported all of its foreign-exchange loss immediately. At the other extreme, Hanwha Chemical chose not only to spread out its foreign-exchange losses, but also to extend its depreciation charges over a longer period. Says Shin: "Seventy billion [won] in net profit [at Hanwha] has been increased from the extending of the depreciation." Hanwha reported a profit of 11 billion won.

Some Korean chemical producers have told C&EN that the weaker Korean won is helping them to book higher profit in lo­cal currency terms. But it's not that sim­ple. It depends on a company's foreign debt obligations and the extent to which a firm needs to source U.S.-dollar-denomi-nated raw materials, says Kim Dong-Wan, a senior analyst of the chemical industry at SBC Warburg Dillon Read in Seoul.

W. I. Carr's Shin believes that, current­ly, producers are hurting because they are using raw materials that they purchased in December and January. At that time, the Korean won was, on average, trading at 1,700 per U.S. dollar. The won has since gone back to about 1,200 per U.S. dollar. The rapid recovery in the value of the won is wiping out profit margins.

Jean-François Tremblay

Nylon feeds get new attention The two big U.S. producers of nylon 6,6 fi­ber and resin are stepping up investment to maintain and even increase their integra­tion in key petrochemical intermediates.

DuPont's nylon business has announced plans to expand North American capacity for adipic acid, one of two key intermedi­ates for nylon 6,6, and is moving ahead with a big project in China that will make hexa-methylenediamine (HMD), the other main nylon 6,6 precursor.

And Solutia, the former Monsanto chemical business, is involved in two projects that will further integrate pro­duction of both adipic acid and HMD.

The DuPont adipic acid project will add more than 150,000 metric tons of an­nual capacity over the next five years at plants in Orange and Victoria, Texas, and Maitland, Ontario. DuPont's current North American capacity is about 650,000 met­ric tons.

Kenneth W. Wall, DuPont's global business director for nylon intermedi­ates, says the biggest addition will take place at the Canadian plant, with the bal­ance divided about equally between the two Texas facilities. He notes that the project is part of an overall DuPont effort to add capacity for nylon intermediates, which are in tight supply globally.

One reason for the adipic acid tight­ness, he concedes, is the delayed start-up of a new DuPont plant in Singapore. That plant, which experienced problems that arose from new technology it incor­porates, finally started at the beginning of 1998 after several years of delay. Wall says the plant is operating at about 50% of its 100,000-metric-ton-per-year capaci­ty and should approach full capacity by the end of the year.

DuPont's other ongoing project is a 25% expansion of its Wilton, England, adipic acid facility, to roughly 225,000 metric tons per year. That project, Wall says, also involves the installation of ni­trous oxide abatement technology that is already in place in North America and Singapore.

Although adipic acid is considered to be the tightest of the nylon 6,6 intermediates, the tenuousness of HMD supply became apparent last summer when DuPont had a fire at its HMD plant in Orange (C&EN, May 19, 1997, page 17). The company was forced to declare force majeure and warn customers to expect nylon shortages.

With the incident now well behind it, Wall says DuPont is looking at process im­provement projects in Victoria and Orange that would add about 50,000 metric tons of HMD capacity over the next three years.

Longer term, 150,000 metric tons of HMD will be added when DuPont and BASF start up a $900 million facility that will make HMD and caprolactam via new codeveloped technology that makes the two products from adiponitrile. The part­ners recently announced that the project would be located on China's Hainan Is­land (C&EN, April 6, page 17). When it starts in 2002, it will complement the Singapore adipic acid plant and provide

feedstock for DuPont's Asian nylon 6,6 business as well as merchant customers.

New technology is key to Solutia's ef­forts to back integrate into feedstocks for its nylon 6,6 business. "When you are in the nylon business against DuPont, your cost position is crucial," says Charles Weidhas, director of Solutia's intermedi­ates operations, noting DuPont's signifi­cant integration in nylon intermediates.

To that end, Solutia recently announced that it is proceeding with construction of a 135,000-metric-ton-per-year plant in Pen-sacola, Fla., to produce phenol that will be hydrogenated to KA oil (cyclohexanol-cyclohexanone mixture), which is used in adipic acid production.

Like DuPont, Solutia currently oxidiz­es purchased cyclohexane to make KA oil, but phenol can be hydrogenated into KA oil as well, and Weidhas claims Solu­tia's new direct-from-benzene route to phenol will yield feedstock flexibility and overall lower adipic acid costs. Solutia also will build a new KA oil plant as part of the phenol project.

Solutia declines to disclose its adipic acid capacity, but Weidhas says it's well above the 300,000-metric-ton-per-year figure published two years ago by SRI Consulting. He attributes this to a series of process improvements, the last of which was completed last year.

Weidhas acknowledges that the adi­pic acid market is tight and notes that another adipic acid expansion is in the works in Pensacola. It will support Solu­tia's internal needs as well as merchant customers who use adipic acid in appli­cations such as polyester polyols, plasti-cizers, and wet-strength paper resins.

Solutia's other big project—a 230,000-metric-ton-per-year acrylonitrile plant in Chocolate Bayou, Texas, that is also backed by Bayer, Novus, and Asahi—will further integrate its HMD business. Solutia employs a novel electrolytic technology by which it produces HMD from acryloni­trile via the intermediate adiponitrile. Solu­tia is currently a net acrylonitrile buyer, and Weidhas says the firm's share in the new plant will provide additional feed­stock for both HMD and acrylic fiber.

Weidhas says Solutia follows the same strategy in HMD as it does in adipic acid: Try to keep the intermediates in balance with nylon through continuous small ex­pansions rather than big grassroots proj­ects. "It's a balancing act," he says, "but through a combination of luck and skill, we've been able to work with the plants we have."

Michael McCoy

34 APRIL 13, 1998 C&EN

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