Review of 2nd ICIS World Surfactant Conference

NYC – April 25th and 26th, 2012

I was again very pleased to be able to co-produce and chair the third surfactant conference in our series with ICIS. This time, we upgraded and expanded our venue – at the Grand Hyatt, Jersey City, with a stunning view across the Hudson River of the Manhattan skyline.

200 friends and colleagues from all parts of the surfactant value chain spent one and a half days listening to outstanding speakers and networking with each other in the breaks and drinks reception. The proceedings were reported in ICIS Chemical Business and, of course, in Doris De Guzman’s outstanding Green Blog, which live-tweeted essentially the entire conference. A special mention should also go to our friend Sarah Gorback at Elsevier, who tweeted extensively and was instrumental in supporting our partnership with “Focus on Surfactants” newsletter to which all delegates received a free subscription.

Here, I make a point or two regarding each of the speakers and hopefully give you a flavor of the type of event that we will produce coming up in Budapest, September 13th and 14th at the First ICIS European Surfactants Conference. Some of the links in my notes below may require a subscription to ICIS in order to view.

Keynote speaker, Mark Miller of BASF, gave a wide-ranging overview of that company’s challenges and opportunities in the field, pointing out that a balanced portfolio of renewable and petrochemical feedstocks is essential to the BASF’s success. He noted that refined EO is tight in the USA and speculated on who would take the plunge to invest accordingly.

Our M&A Speaker this time was the well known investment banker, Peter Young of Young and Partners. M&A activity is slowing according to Peter. The shaping of our industry, however, by M&A is likely to continue as opportunities for M&A abound in the surfactant value chain.

Martin Herrington of IP Specialties gave a stimulating and thought provoking overview of the fatty alcohol market, pointing out that “natural ” products’ growth may be hard to sustain in the face of cheap shale gas and ethylene in North America.

Next up was the widely known expert on EO, Doug Rightler, who proceeded to give a beginner’s crash course and advanced level seminar on EO economics – all compressed into 40 minutes. A highly rated speaker and sought after consultant, we were fortunate to have him speak at our event.

In the tradition of breaking some news at our conferences, Harish Davey of Reliance came to the podium and announced Reliance’s entry into the surfactants market in India – in order to support their growing consumer products and retail business. This is a huge piece of news and we were honored that Reliance chose our conference to announce it first.

After lunch, Victor Zubb of WheatOleo (a Soliance company) reviewed some interesting new developments in I&I cleaning ingredients. Biomass from wheat used in sophorolipid surfactants for I&I.

Rhodia’s speaker, Chris Houston (new to the company and a veteran of the industry) delivered some novel insights the oil and gas field and its importance for surfactants. Overall the oilfield chemicals market is worth $53Billion (!)

L’Oreal’s Jeanne Chang gave us a look inside the raw material innovations at the major global personal care company. She referenced the company’s adoption of the 12 principles of green chemistry and the outstanding work in glycoside chemistry in the Proxylane range of anti-aging products.

Heliana Kola of the Battelle Memorial Institute generated substantial discussion and debate around her presentation on the ingredients in laundry detergents in North and South America. Quite astounding, the impact of enzymes on the level of surfactants used in detergents.

Our focus on Latin America was kicked off by Todd Nelmark of Oxiteno. His survey of the surfactants markets in Mexico and Latin America was simply unique for a market heretofore little analyzed deeper than the macro level.

Colombia’a emerging palm industry was the focus of our next presentation. Colombia is the fourth largest palm producing country in the world, behind Malaysia and Indonesia (natch) and Thailand. Monica Perez was a stand-in speaker at the last minute and really opened our delegates eyes to the potential right here in the Americas for palm derivatives. Colombia is clearly in the running to be the “next Malaysia” just a few hours flight from Houston.

Wrapping up the first day, was Jim Heaney of Colgate, who gave us an encouraging but realistic assessment of the political challenges in South America, especially in Argentina and Venezuela and the cost pressures of doing business in the region where customers appreciate renewability but will not pay extra for it.

Opening up day two of the conference, I set the stage for the “What it Takes” mini-conference which took its name from a book by Richard Ben Cramer about the 1988 US presidential race. The book looks at the then candidates, Bush Sr., Dole, Dukakis, Hart, Gephardt and Biden and tracks the campaign through the lens of who really has what it takes to become president of the USA. In the same way, on our second day, we focused in on the leading new technologies in the surfactant supply chain and invited the delegates to consider who, if any, among them really has what it takes to impact our industry and become the “third leg” of the supply chain stool alongside petrochemical and oleochemical feedstocks. To tee up the discussion, we invited P&G and Seventh Generation to relate from their perspective what it takes to get an ingredient into their consumer products and onto the supermarket shelf.

After the challenge was laid down by P&G and 7th Generation, first into the lion’s den was Tim Dummer of Solazyme, a favorite of prior conferences, who reported on the continued solid progress of the company in commercializing engineered oil derived from sugars via the action of heterotrophic algae. THe company’s first plant in Brazil is slated for start-up in the second half of 2013.

Next up, Wei Huang of LS-9 described the company’s one-step conversion of sugars directly into oleochemicals, via enzymatic routes. A different approach to that of Solazme and very interesting to our delegates.

Another ICIS conference, regular, Elevance, then took the stage to update the group on their progress with their two announced bio-refineries, 180KMT/yr in Indonesia and 270 KMT/yr in the US. Ambiitious goals for their blend of commodity olefins and specialty building blocks derived via metathesis of vegetable oils.

BIll Rothwell of Codexis, a newcomer the ICIS conference speaker circuit, but with deep experience in the global surfactant supply chain, spoke next. They are entering the market for fatty alcohols with their Codexol brand product made from sugars via a microbial route.

My colleague, Patrick Foley, was next with a change of pace, getting in-depth with some novel, patented chemistry that has formed the basis of a brand new 6 month old company, P2 Science. P2 is commercializing a range of specialty ingredients, both novel and drop-in, for consumer products.

Last to enter the arena to convince the crowd that they had what it takes, was Amyris, ably represented by Frederik Ngatung. Amyris synthetic biology platform seeks to employ the versatile farnesene intermediate to enter the fatty alcohols market in the near future.

In summary, I can say that I have never enjoyed myself more at an industry event. It was again and honor to chair a meeting as content-rich and important as this and I hope the delegates got as much out of it as I did. Registration for Budapest , September 13 & 14th is open now. I am told the venue is outstanding and that we will sell it out. I hope to see more friends and colleagues there.

ACI 2012 Report

This year’s ACI meeting had a number of differences compared to that of 2011, the most noticeable being the level of optimism, especially as espoused by the surfactant manufacturing group. Last year, the entire market, it seemed, was obsessed with a single number, that was the price of palm kernel oil. The talk was around how high could it go and when would it peak. That question was answered in the first week of March of last year and since then the market has started to to focus on other things.

Why the optimism, given the substantial indicators of gloom in the economies; record levels of unemployment in the USA, debt crises in Europe and uncertainty over whether China can continue its bull run in production and consumption of consumer products? In summary, companies are finding reason for optimism in emerging markets, especially Latin America (and not just Brazil), Southeast Asia, India and the United States (that’s right.. of America), renewable chemical innovations and, of course, the widely held belief that in the US at least, an election year cannot see an economic slowdown.

First though, why characterize the USA as an emerging market? The emergence of shale gas as a significant factor in the industrial and political scene has changed the outlook for chemicals manufacturing in the US in a very positive direction. Low priced natural gas (relative to crude oil, or indeed palm oil, it’s closely correlated cousin) will continue to ripple through the chemical value chain as both a raw material and a source of energy for chemical plants. Already benefitting from decades of consolidation and restructuring, the chemical business in the US now looks set to reap the benefits of low cost ethylene. The prospect of an ethylene cracker in the Marcellus shale gas area – either West Virginia, Ohio or Pennsylvania is already baked into the future scenario for the industry. This ethylene is sure to find its way into ethylene oxide and a range of ethoxylated surfactants for domestic consumption and exports from the US.

The other emerging markets were well represented at ACI including some of the not so obvious countries. The Latin American powerhouse, Brazil, is well recognized. Not as often discussed is the smaller economy, Colombia which is now the fourth largest producer of Palm oil in the world and is actively developing downstream markets. Southeast Asia continues to be very well represented at the conference as many of the major plantation companies move downstream.

For the first time in this correspondent’s recollection, the innovative renewables sector has made its presence felt at the conference. In addition to  new ACI member, Solazyme, a number of other companies targeting various parts of the global surfactant and consumer products markets value chain were also in evidence, including Amyris and Codexis.

The meetings in the halls and bars of the ACI, while important, are not the only objective of the conference or of the association. The ACI itself has a huge influence in the daily affairs of the industry and has big job ahead of it in 2012. At the industry briefing session, ACI outlined the key issues that it will be dealing with on behalf of the industry. First among these is TSCA (US Toxic Substances Control Act) modernization. ACI participates in the TSCA project as part of an industry-wide coalition of over 80 chemicals related entities.

Another area of intense involvement of the ACI is with a number of EPR (Exented Producer Responsibility) initiatives at the state level. The essence of EPR is that the cost of final product and packaging disposition should be shifted to the manufacturers from the local governments and municipalities. The ACI estimates the potential cost of such a shift  to be in the multiple billions of dollars to the CPG manufacturers.

Various ingredient disclosure initiatives are emerging at state and federal level and the ACI legal committee is working to help balance the publics right to know with the protection of confidential business information for American companies.

The ACI’s oleochemical committee continues to mount a robust “tallow defense” on behalf the of the approximately 70% of ACI members who use oleochemicals. The renewable fuel standard (RFS-2) and the biodiesel tax credit, both enshrined into federal law by well-meaning legislators impact both the availability and pricing of tallow for use as an oleochemical feedstock.

The ACI’s international committee outlined a series of global initiatives along with their participation in the INCPA (International Network of Cleaning Product Associations). The Sustainability Committee discussed the ACI’s first sustainability report along with the development of sustainability metrics with the input of member companies. Finally the Communications committee logged 1,240 mentions of the ACI in press articles in 2011.

Underscoring the incredibly hard work put forth by the ACI, its volunteers and full time staff was an encounter at approximately 10 to midnight at the closing party on the final day of the conference. Having put in a very full week, consisting of many long days, Ernie Rosenberg, ACI’s president and CEO, still managed to find time to come over to your correspondent and his wife to thank us for attending and for supporting the ACI. He then proceeded to outline the legislative challenges for the coming year, in particular with the patchwork quilt of state regulations that the ACI will have to navigate despite the federal gridlock of an election year. Ernie also pointed out that they then have to gear up to address TSCA in 2013, tailoring their approach to align with whichever party ends up controlling which branches of government. “Not bad”, I thought, for the end of an 18 hour day, capping a 7 day week, as the DJ announced midnight and the ACI staff turned in before Saturday morning’s convention committee meeting got started in a few short hours.

Zero Waste Refining for Specialty Chemicals Production

What do J-Lo, Manchester United and Biomaterials have in common? They are all connected to our CM&E Lunch at the Penn Club, Mid-town NYC, Thursday September 8^th.

Our September 8^th panel discussion features speakers from Coty, makers of the latest Jennifer Lopez Fragrance, AON, risk management specialists and sponsors of Manchester United Football Club and Blue Marble Biomaterials, whose proprietary processes for the conversion of biomass into chemicals was recently commercialized in a new facility in Missoula, Montana.

Still wondering how we can pull this disparate grouping together into a compelling and coherent whole? Check out the program here – or better yet, just sign up and we will see you on the 8^th September.

The Penn Club is a beautiful location with outstanding lunch service; but space is limited and this event will sell out. I therefore encourage all those interested in attending to register now. We cannot promise appearances by Ms. Lopez or Wayne Rooney but the compelling program will be accompanied by the usual superb networking with chemicals executives, investment bankers, venture capitalists, analysts and many others.

ICIS / Neil A Burns LLC – Surfactant Conferences Venture

I was very happy to see our company release the following news item late on Friday. This new venture comes out of the success of our surfactant conference produced with ICIS in New York in May. I am looking forward to seeing many friends and colleagues at future events, including the First ICIS Asian Surfactant Conference in Singapore, November 10th. I also encourage your feedback regarding content, format and location of these events going forward.

NEWS RELEASE: Neil A Burns LLC
For More Information Contact:                                                      FOR IMMEDIATE RELEASE
Neil Burns: Tel +1 (732) 303 -7164
Managing Partner
Freehold, NJ
07728, USA
www.neilaburns.com
neil@neilaburns.com

July 20, 2011

Location: Freehold, NJ

REED BUSINESS INFORMATION LTD. (RBI) OF THE UK AND NEIL A. BURNS LLC OF THE USA HAVE ENTERED INTO A LONG-TERM AGREEMENT TO CO-PRODUCE CONFERENCES AND SEMINARS IN THE FIELD OF SURFACTANTS.

The conferences and seminars will be held globally in North America, South America, Europe, the Middle East, and Asia. The first event as part of this agreement will be the First ICIS Asian Surfactant Conference to be held at the Intercontinental Hotel, Singapore on November 10^th and 11th 2011. Further information and registration is available at www.icis.com/asiansurfactants

The agreement follows the two companies’ successful collaboration on the First ICIS World Surfactant Conference in New York in May 2011. The conference attracted over 150 senior managers from the surfactant industry with attendees and speakers representing companies such as AKZO, BASF, Church & Dwight, Colgate, Croda, Dow, Ecolab, Johnson &Johnson, Kao, LG, PQ, P&G, Reckitt Benckiser, Rhodia, SC Johnson, Stepan, and many others.

RBI, via their ICIS subsidiary, has an existing successful business holding conferences and training courses globally in many chemical areas including petrochemicals, oleochemicals, and base-oils. The company notes that the agreement with Neil A. Burns LLC enables them to expand their conference activities into a new key market with significant global potential.

Neil Burns, whose company Neil A Burns LLC has an existing business providing advisory and investment services in specialty chemicals with a particular focus on the surfactant value chain, will play a key role at the surfactant events as chair and/or speaker. Regarding the upcoming Asian conference, he states, “Due to the success of the first ICIS World Surfactant Conference in New York, earlier this year, we have been asked by many industry players to bring the conference to Asia. We are excited to be holding this event in the middle of the fastest growing, most dynamic surfactant market in the world today.”

North American Ethylene –the Impact on Surfactants

(April 15^th Racemics Meeting)

I was fortunate enough to be invited to a meeting of the Racemics club in NJ recently and was further fortunate to hear an outstanding talk by TIson Keele of CMAI on the future of North American manufacturing in the ethylene value chain. The talk was fascinating and, true to form for Tison, gave concise insights into what really matters for the chemical industry. Overall, shale gas in North America is going to help ensure that we have an advantaged feedstock position here for ethylene derivatives for the next few decades.

What I found particularly interesting was the expected impact on the surfactant industry – which I think will be significant. Consider the following:

• While oil is an important part of the supply chain, only 7% at best of crude oil ends up in chemicals (most of that polymers). 93% is used in fuel
• Natural gas is now the feedstock of choice to make ethylene in North America, the Middle East and Southeast Asia. Europe and Asia/Pacific still tend to rely on crude oil/ naphtha feeds. This is now putting these regions at a serious cost disadvantage to North America in particular due to the historical low cost natural gas in North America. Historically, there has been a 6 – 7:1 energy equivalency multiple of crude oil to gas. Today it is around 20:1.
• This cost advantage is fairly recent and the industry has not caught up. The newest ethylene cracker in North America as built 12 years ago. With an average 30 year cracker life, there seems to be pent up “demand “ for new cracking capcity in North America.
• Recent announcements by Chevron and, just today, most specifically from Dow plus discussion around Westlake and Formosa Plastics, suggests at least one (Dow), if not all four will add ethylene capacity in the US in the next few years. Notwithstanding new plants, many existing plants are debottlenecking to take advantage of their newfound competitive position.
• Given the expected improvement in North American ethylene cost and availability, there is an accompanying renewal of interest in expanded and even, new ethylene oxide (EO) capacity. Ineos recently has publicly mused about putting EO capacity in North America, to complement its olefins and ethanolamines capacity in the US and its leading position in Europe in EO. Such a move would add a significant new EO player in North America. Dow of course is already in EO in the US and recently re-directed significant capacity in Taft from MEG to EO.
• Approximately 77% of EO goes into making glycols (MEG, DEG and TEG) for PU, textiles and other applications. The other 23% is purified to ethoxylation grade and used in the production of surfactants.
• Therefore the outlook for purified EO costing and availability to support ethoxylation in North America is positive. It looks likely that the work around EO expansion is to be accompanied by work around expanding ethoxylation capacity in North America.
• The prospects therefore for the surfactant industry look robust in North America with much of the potential expanded ethoxylation capacity being directed at ethoxylates and ether sulfates for export markets.

Kudos and congratulations again to Tison for an outstanding talk.  It will be interesting to see how these supply chain related themes are addressed at the First ICIS World Surfactant Conference on May 12 / 13^th in NJ. Many of the companies there are operating in this and related areas throughout the world.

Chemical Industry -  Economic Outlook 2011

(per the American Chemistry Council)

Dr. Kevin Swift, Chief Economist at the American Chemistry Council gave a riveting presentation to a packed house at yesterday’s lunch meeting of the CM&E group. A crowd of 80 chemicals executives, bankers, investors, lawyers, consultants and other service providers heard data-packed and highly useful analysis of where we are in the chemicals cycle and where we go next. The lunch audience, including senior members of BASF, Rhodia, Lonza, Helm, Mitsui, Lonza, Huber and DSM was joined by webcast attendees from across North America, Europe and Asia. Hard data and concise opinion was served up with grace and humor and everyone went away with something they would use in their chemicals activities in the coming year.

And  before you ask, no I cannot send you the slides and yep – I have to say again– you really do “gotta be there”. However, in this case, I am told you will soon be able to purchase access to a recording of the webcast, with the slides, here. In coming months I urge you to come to some of these meetings as we have BASF speaking in February, a Green Chemistry panel in March and in May, the long awaited Latin American event, sponsored by CM&E’s own cachaça distiller, Sagatiba of Brazil (yes, that is free caipirinhas for all attendees  – and we haven’t yet figured out how to deliver those via the webcast).

Some bullets from Kevin’s talk to give you a flavor of what we enjoyed:

• We are about 25% of the way up between last year’s trough and the next peak for our industry.
• Car manufacturing recovery and growth particularly in China pulls along a lot of chemicals – about $2,400 worth of chemicals per car.
• Housing is an issue. We have a double dip here in the US and that is a concern as each new house is worth about $17K in chemicals. In addition, household debt is climbing at a rate that suggests a reckoning has to come due and the risk for the US economy cannot be ignored.
• Shale gas featured very prominently in the talk and Kevin’s view of this as a game changer for North American Chemicals was very well received. A number of off-line discussions I had at the event, confirmed that serious investment decisions will be made with the shale gas economic effect on the chemical value chain – a huge factor.  By the way, I have to add that the networking, pre and post the talk –  at this event was outstanding.