Huntsman Chemical Continues Strong Investment Plans Even as Ownership Changes Move Forward

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Researched by Industrial Info Resources (Sugar Land, Texas). Huntsman Chemical Company (NYSE:HUN ) (Salt Lake, Utah) has consistently planned and executed several large capital projects over the last year aimed at its core markets. That focus on core products and markets undoubtedly increased Huntsman’s value in the market and ultimately lead to its appeal as an acquisition target which Hexion Specialty Chemicals, Incorporated (Columbus, Ohio) has committed $28 per share to acquire the company. Even as this acquisition moves forward Huntsman is in the middle of several major construction projects including the $110 million rebuild and restart of its Port Arthur, Texas ethylene plant damaged by fire in April of 2006.

Based on active projects identified by Industrial Info as part of its North American Projects Database, another $68 million or more in capital and maintenance projects are currently being planned for construction starts between August 2007 and May 2009. Among the most significant include the potential for a major tank farm addition at the Port Neches, Texas plant to store methyl tert-butyl ether (MTBE) eliminating current offsite storage by a third party. Plans for this project greatly depend on the potential retrofit or conversion of the current MTBE unit to produce alternate fuel oxygenates such as iso-octane. The change in ownership could greatly influence the future of this project depending on a new owner’s desire to pursue this market. Plans to convert the existing MTBE unit have been under study for some time and the next opportunity to execute this could be during a planned maintenance turnaround of the unit in early 2009.

The Port Neches plant is obviously part of the company’s long-term growth plan as evidenced by their recent commitment to provide a site for the planned biodiesel plant of RBF Port Neches LLC (Houston, Texas). Huntsman will be the site host for this new $100 million plant while also providing operations and maintenance support for the plant. The 180 million gallons per year plant will also produce a crude glycerin by-product of interest to Huntsman for its own plans to commercial technology for the production of propylene glycol from glycerin.

Huntsman like many savvy chemical companies has divested or closed non-core assets in recent years to focus on core activities while also maintaining a strong appetite for growth through acquisition. Huntsman has demonstrated this desire by recently announcing its agreement to acquire DuPont's global fluorochemical business for the nonwovens industry. Only a month ago Huntsman’s textiles effects business unit announced plans to acquire the Baroda division of Metrochem Industries Ltd. These acquisitions among other planned investments combined with the businesses of Hexion will ensure Huntsman’s place as a leading player in the domestic and international chemical markets.

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