Surfactants Monthly – January 2017
January is always ACI month in the surfactants calendar. This year’s ACI was distinguished by the return of Burns and Muir (this time with Blackmon and Campbell) to the winner’s (2nd place) podium at the P&G golf outing. The rich prize money was, on this occasion, dwarfed by the prestigious Tide trophy which will receive pride of place on our mantelpiece (once the detergent inside has been used).
If you’re looking for a summary of ACI proceedings here or some Page Six style ACI gossip, stop reading now (and by the way, get a life, if it was the gossip you were after). We don’t do that here because, as regular readers know, “you gotta be there” is our attitude to industry events. If you did miss the ACI, I suppose your only recourse (in addition possibly to going to Confession) is to make sure you absolutely do not miss our 7th ICIS Surfactants Conference, May 17 – 19th in Jersey City, NJ.
The blog is being written while the superbowl pre-game chunters on in the background. For our industry, a superbowl of sorts has already been playing out all of last year and is set to continue during game night tonight. I am talking about, of course, about the world-series, heavyweight, cage-match between Henkel and P&G in your laundry room.
Here’s Henkel, enlisting the endorsing service of the Science guy for Persil:
Tide – however, won this contest according to an informal poll of Freehold, NJ residents, who watched the game.
The pre-game was actually a tee-up of the concept in which Terry Bradshaw was an "ambiguous" participant. This is explained here by the P&G team on the ad - very cool:
Here’s the main event: We are all clued in now..
Here's the post-game.. still quite amusing..
Sorry Henkel, but P&G crushed this one. Does it matter, though that that sleepy Cincinnati giant is awakening at least in the 30 sec spot world of superbowl ads? Henkel is a renewed force to be reckoned with since their acquisition of Sun Products last year. As we noted back then, this move puts Henkel directly into the backyard of the market leader in a solid number 2 spot. Earlier in the year, as we also the reported, the two companies are already tussling in court over P&G’s shot across Henkel’s bow with the use of the “Pur”name and branding for a new product. More fireworks to come, I’m sure both in and out of the TV studio. What this means for surfactants suppliers is more pressure and more consolidations, trends they are already quite used to.
Looking ahead at the year’s start, ICIS published some outstanding 2017 Outlook articles, which I will link to here. Some may require a subscription to read, which if you do not have yet, you really should. What are you waiting for?
Several new crackers are scheduled to begin operations in 2017, but tight supply could push up US ethylene prices before new capacity comes online. The start-up of four new crackers, as well as the restart of an idled unit, will expand existing US ethylene capacity by more than 5.4m tonnes/year.
US ethane prices have doubled since the beginning of 2016, mostly owing to much stronger natural gas and crude oil values. Demand was limited and supplies were strong when the year began. Export terminals were still under construction, and ethylene plants were starting the first wave of a heavy turnaround season that lasted most of the year.
The desire for deals is strong and conditions ripe for a high level of chemical mergers and acquisitions (M&A) activity in 2017. A number of mega mergers – the highest profile being Dow/DuPont – are pending regulatory approvals, while other major and mid-market deal activity chugs along. One striking aspect of today’s chemical M&A market, and one of considerable debate, is the persistently high valuations – the result of an abundance of money chasing a limited number of deals.
Feedstock pressures will continue to push on US mid-cut detergent range fatty alcohols moving into the first quarter of 2017. Benchmark lows marked the first quarter of 2016 as C12-14 natural fatty alcohols were broadly oversupplied and at least one new importer entered the US market with aggressive pricing.
Meanwhile in the world of ethoxylates, ICIS reported at the beginning of the month that spot fatty alcohol ethoxylate (AE) import prices in China jumped amid higher feedstock costs. January-lifting offers were heard at $1,670/tonne CIF China and above, up by about $100/tonne month on month. Upstream fatty alcohol (C12-14) and ethylene oxide (EO) prices were on a steady uptrend according to ICIS. In fact their data shows that AE prices have been trending higher since July last year, amid climbing C12-14 prices and stable downstream demand. Spot AE prices in China rose to an average of $1,560/tonne CIF (cost, insurance and freight) China in end-December, gaining around 18% in the second half of 2016, according to ICIS data. Elsewhere, prices in southeast Asia rose to an average of $1,575/tonne CIF Southeast Asia in end-December, gaining around 18% over the same period, the ICIS data showed.
ICIS also reported that US ethylene oxide (EO) contract prices for December rose by 2.8% on the back of a 6.6% increase in feedstock ethylene contracts for December. December EO contract prices were assessed at 54.80-64.30 cents/lb ($1,208-1,418/tonne) FOB from 53.20-62.70 cents/lb FOB in November. The increase in EO contracts is based on the settlement in December ethylene contracts. US ethylene contracts settled at 32.25 cents/lb DEL (delivered), a 2.00 cent/lb increase from 30.25 cents/lb in November.
We haven’t much talked about Baerlocher in our blog, but as they are users of fatty acid derivatives, they are worth a mention. The company will add a third reactor for the production of calcium, zinc, sodium and other metal soaps at its US facility, according to reporting by ICIS. Metal soaps are compounds of metals mixed with fatty acids used as lubricants and components of heat stabilisers in the manufacture of polyvinyl chloride (PVC) products and other plastics. The company assumes its investment will increase capacity by 50%
Detergent range alcohols continue their upward wild ride as ICIS reports that in Asia C12-14 alcohol suppliers have raised their offers further on the back of short supply and as a result of higher palm kernel oil (PKO) prices but are facing resistance from cautious buyers. PKO prices in Malaysia closed at $1,851.99/tonne on 17 January, compared to $1,768.13 on 11 January and $1,636.18/tonne on 4 January. Some offers for C12-14 alcohols were heard at $2,550-2,600/tonne FOB (free on board) SE Asia. Supply remained short with some producers operating based on confirmed orders to mitigate the risks of volatility in raw material prices. However, some buyers remained cautious due to the uncertain short-term outlook for feedstock prices.
Right at the end of the month, some unfortunate news from India as reported by ICIS. A fire broke out at Sterling Auxiliaries’ chemical manufacturing facility at Dahej in India’s Gujarat state. The fire started at a warehouse belonging to the facility at around 04:00 hours local time Jan 31 (10:30 GMT). Two villages adjacent to the facility have been evacuated, according to one local TV station. The incident was well covered in the press at the time but no further details have become available. Hope everyone is OK and that the company and neighbourhood get back to normal soon.
To round out today, I love stories about the life-saving properties of surfactants. Here is one about the life and times of the, now, 93 year old professor, John Clements, who developed the use of surfactants rescue premature babies from an almost certain death by improving their ability to breathe.
Surfactants – saving lives. That’s a great note to end on right? From an epic battle in the laundry room to saving lives in the ICU, this calls to mind the video I really wanted to include in last month's 2016 retrospective. One neat thing about the ACI was the amount of positive feedback we got about the blog's music choice, so here's one more. It's about the Battle of Britain where so much was owed by "so many to so few"; with a great recorded intro taken from an epic speech. See you in May - if not before!