2012 – The Year In Surfactants
2012 was a very eventful year in surfactants globally and 2013 looks set to see even more change and opportunity for this most essential of industries. This short reviews hits some of the highlights from last year and provides some clues to what we might expect in 2013. Thanks and acknowledgements to ICIS in particular for many of the news articles on which I draw here and also for surfactant conference proceedings which themselves broke a lot of news this year.
MES: Is this the next big thing – the next workhorse surfactant? Some companies seemed to think so and not just Sun Products Corp who has been plugging away with MES since the mid 90’s (as predecessor company, Huish). In late December 2011, Jiangsu Haiqing Biotechnology announced 100 KMT/yr of MES capacity with plans to double; all directed at the Chinese detergent market. This project comes on top of those already started or announced by Wilmar, KLK, Lion, DERSA and of course the existing business of Sun.
New Technology: Also in January, Codexis launched their fatty alcohol derived from sugar under the tradename Codexol. This comes from their pilot plant in Redwood City, CA. A demonstration plant is planned for 2013. According to Codexis, it will take about 3.7 MT of cellulosic sugar derived from 7.4 MT of biomass to produce one MT of detergent alcohol. Most fatty alcohols end up as surfactants after being sulfonated or ethoxylated.
China continued to attract investment in surfactants as the country’s demand outstripped domestic supply. Jiangsu Zhongdan, Noble Apex, Wuhan SFH Chemical Industry and Taiwan’s Ho Tung Chemical are planning to start up a non-ionic surfactant joint venture project at Taixing city in Jiangsu province in 2013. The project will consist of a first phase, 80 KMT/yr fatty alcohol plant followed by a 120 KMT/yr ethoxylation plant. Ho Tung, themselves started work on a 120 KMT/yr surfactant unit at Huizhou in Guangdong province, building company’s n-paraffin, LAB and LAS business. China’s state-owned refining company, Sinopec and BASF, in January started the $1.4bn second phase of their integrated petrochemical site in Nanjing at Jiangsu province. This phase includes increased ethylene capacity of 740 K MT/yr, up by 23% from 600 KMT/yr . The second phase of the project also includes the expansion of an existing ethylene oxide (EO) plant to 330 KMT/yr along with the construction of a new 150 KMT/yr EO purification unit. And 60 KMT/yr ethoylation plant.
Another BASF JV, with Malaysia’s Petronas, is investing in a specialty chemicals project in Johor Malaysia, including ethoxylation. In India, BASF is building a new chemicals facility in Dahej in the Gujarat province, expected to produce, among other things, ethoxylates for the Care chemicals business.
Evonik will be active in specialty chemicals with a surfactant project in China and a 25 KMT/yr oleochmicals plant in Brazil. Both projects were announced late 2011 and should be completed in 2014.
The sorting and rationalization of the oleocheimcals industry continued in January with the sale of Sasol’s Witten Germany oleochemicals plant and business to Cremer Oleo. Also toward the beginning the year, the sale of Vantage Oleochemical by HIG Capital to another private equity fund, the Jordan Company was announced. This was not expected to lead to any significant change in strategy and the later in the year, Vantage announce the acquisition of the specialty oils company, Desert Whale Jojoba.
Surfactant feedstock costs started off the year by dropping substantially in price, led by palm oil and fatty alcohols and rippling through the rest of the value chain.
Of relevance to the specialty surfactant segment, Akzo Nobel announced increased capacity for monochloroacetic acid (MCAA), which is a key intermediate for the production of betaines. Akzo said its MCAA facility at Delfzijl in the Netherlands now has a capacity over 100 KMT/yr. The company increased MCAA production capacity at its Taixing site in China to 100 KMT/yr to meet the continued strong market growth in the country and Asia-Pacific. The global MCAA market is about 650 KMT/yr.
Oilfield chemicals and surfactants in particular, most likely first hit the public radar screen in 2010 with the 2010 Deepwater Horizon oilspill and the much publicized use of Nalco’s Corexit dispersant to help clean up the mess. Corexit was a miture of fatty acid esters and ethoxylated esters. In 2012, the use of chemicals in the fracking process for the extraction of shale gas in US fields, gave a boost to the surfactant business, with Freedonia projecting a growth rate of 8+% in this sector. In further recognition of the growing importance of the oilfield chemicals business, BASF prised the HQ for its oilfiled business out of Ludwigshafen and put it closer to the customer in Houston, TX.
Ethylene Oxide (EO) a key surfactant feedstock, started the year tight in the US market and continued that way. EO manufacturers made, and continued to make, good margins. The private owners of Old World, Tom Hurvis and Riaz Wairach, finally sold the company to Thailand’s Indorama. Oxiteno, rumored also to be in the running to purchase Old World, lost out at the last hurdle and gained, as a consolation prize a small multipurpose facility in Pasadena, TX next to the main Old World glycol and EO plant. (elsewhere, Oxiteno made other small acquisitons in Uruguay (American Chemical) and Suzano, Brazil (assets from Cytec for production of esters and related products). In response to a tight market, Huntsman, in April announced a 113KMT/yr EO expansion at Port Neches, TX making a total capacity 575 KMT/yr. The company is looking to take advantage of low natural gas and natural gas liquids costs in North America, Huntsman said. Much of the EO is used internally in surfactant manufacture.
In related Huntsman news; the company decided to expand the range of chemistries it produces with Zavod Sintanolov, a member of the Russia headquartered Norchem Group. At present, all local production arising from the cooperation takes place at Norchem’s Lanitex Optima 7 manufacturing site in the St Petersburg area, Russia. Under the new arrangement the two companies will look to increase production to include Norchem’s Dzerzhinsk facility.
In September, Solvay (owner of the Rhodia, Novecare) and Russian petrochemical giant Sibur agreed to form a joint venture for the production of surfactants and oilfield process chemicals in Russia. Ruspav, the joint-held company will be based near Sibur’s petrochemical operations in Dzerzhinsk, 400km (248 miles) east of Moscow, and is expected to come onstream in 2015. Sibur will provide raw materials, particularly ethylene oxide, and production capacity to Ruspav, while Solvay will contribute its experience in the surfactants industry, as well as the customer networks of Novecare – the company’s dedicated surfactants subsidiary.
Late in in the year, Rhodia announced that it had acquired a controlling interest in India’s Sunshield Chemicals, a small ($17 Million Rev) manufacturer of surfactants and anti-oxidants. Rhodia reported the deal multiple at “below 9X EBITDA”, which seems quite high given the size of the target.
SABIC, the Saudi petrochemical giant made huge news in surfactants in June when the company shipped its first consignment of ethanolamines and ethoxylates from its plant in Jubail, making the SABIC the first to make these chemicals in the Middle East. SABIC now joins the ranks of large vertically integrated surfactant companies and is likely to continue on a global expansion track.
One of the highlights of the surfactant calendar came up in April of 2012 and that this the 2nd annual World Surfactant Conference in New York, co-produced by Neil A Burns LLC (so, yes I am biased). Some significant news was broken at the conference, including the planned entry of India’s Reliance into the surfactant market. Reliance is, of course, India’s only significant manufacturer of ethylene oxide.
Later in the year in September, I produced with ICIS the first European Surfactants Conference in Budapest. More insights there included more on the big move by SABIC into surfactants, i.e.: SABIC’s new (~100 KMT/yr) fatty alcohol plant at Al Jubail, Saudi Arabia, will come online towards the end of 2013 to supply feedstock for its ethoxylation plant as well as the increased requirements in the MENA (Middle East and North Africa) region. SABIC’s ethoxylation plant currently has a nameplate capacity of 40 KMT/yr It started operating at the beginning of April 2012 with a basic portfolio, which has since been increasing stepwise towards specialties. The plant’s capacity will be expanded in 2013 and new projects in different locations are under evaluation.
Another highlight of the European surfactant conference was the keynote address by Steve Holland, CEO of Brenntag, a huge distributor of surfactants. In October, Brenntag signed an agreement to acquire Delanta Group - a $24.3m sales specialty chemical distributor in Latin America. In July it completed the acquisition of Australia-based specialty chemical distribution company ISM/Salkat Group. Brenntag also acquired Treat-Em-Rite, a chemical distribution company in Texas, US.
In November, the third Neil A Burns LLC / ICIS Conference of the year was held in Singapore. Among the most noteworthy presentations there was one by Sterling Auxiliaries which plans to start up a facility to produce ethoxylates and methyl di-ethanolamine (MDEA) in Jubail Industrial City, Saudi Arabia, in 2015, the Sterling chairman, Vishal Goenka, said. Feedstocks ethylene oxide (EO) and propylene oxide (PO) would be procured from the Sadara facility, he said. Sadara Chemical, a joint venture between Saudi Aramco and Dow Chemical, plans to set up in 2015 a chemical complex in Jubail Industrial City which will include a world-scale cracker and several downstream units that will produce more than 3m tonnes/year of high value-added chemical products and performance plastics. The complex will use multiple feedstocks, including heavy liquids, natural gas liquids (NGLs) and ethane.
Looking forward, we will be producing three ICIS Surfactant conferences in 2013: New York, May 16th and 17th; Middle East, Mid – September and again in Singapore, November.
In Eastern Europe, Poland’s PCC Exol made surfactant news with the IPO of shares representing about 18% of the company. PCC Exol currently produces around 80 KMT/yr of anionic surfactants and 30 KMT/yr of non-ionic surfactants. A substantial amount of the proceeds raised by the IPO was slated to be invested in boosting overall surfactants capacity by around 15%, with a specific sum of Zl 5m to be invested in upgrading a production line to manufacture amphoteric surfactants.
ISU, a key player in LAB and n-paraffins, made news with investment in China with a JV LAB plant (100 KMT/yr capacity) in Taicang nar Shanghai. The Taicang plant is run by Great Orient Chemical, a joint venture formed by Isu Chemical with Indonesia’s Salim Group. Isu also operates two LAB plants with a total capacity of 180,000 KMT/yr at Ulsan in South Korea. In addition to LAB, Isu also produces branched alkyl benzene, heavy branched alkyl benzene, tertiary alkyl benzene, linear alkyl benzene sulphonate (LAS) and normal paraffin.
Elsewhere in LAB news, Egypt’s largest linear alkylbenzene (LAB) producer, Egypt LAB Co, plans to increase its LAB capacity at Alexandria, Egypt, by 40% to 140 KMT/yr by the end of 2014. Most of the additional capacity would be exported. Total LAB capacity in Egypt is currently 155KMT/yr , with 85 KMT/yr to be exported.