Surfactans Monthy Review – July 2014
Our usual tip of the hat to ICIS who provided most of the newsfeed for this review. As usual, some links below require an ICIS subscription; something I do recommend but on which I receive no commission – if you care about such things.
Something else which I recommend and in which I do have a financial interest, is our next surfactant conference, which this time we are running in partnership with CEFIC affiliate, Bio-TIC in September ( in Berlin, September 3 – 5th); a 3- day event featuring our regular conference preceded by a bio-surfactant workshop, free of charge to conference attendees. Both these in turn preceded by our Surfactant Business Essentials Training Course on Sept 2nd. So if you like reading these blog updates, you can come out to Berlin and steep yourself in the industry for 4 days if you feel up to it.
The big news of the month was of course that Stepan has finally taken the plunge and sought out a site in the US Gulf Coast area. The company announced discussions about a site to make “surfactants intermediates” in Ascension Parish, Louisiana. Of course the other famous occupant of this Parish in Louisiana is Shell’s Geismar site where, among other things, ethylene oxide (EO) and various Neodol alcohols are made. Stepan is a large user of both. Stepan has been, for a while, one of the largest ethoxylators not located next door to an EO source in North America. This move, would no doubt remedy that situation. Such a move, of course, is tough to make as the payback is not necessarily as good as some other investments. However, this is something the company had to do, especially after Solvay made their ethoxylation move next to Lyondell as we reported last year. In my view, and knowing the conservative nature of the Stepan management, this investment is timed about right, certainly not too late, and will not only support growth in areas like oilfield chemicals, but also start to mitigate some of the risks associated with being a “remote” consumer of EO – which is made in TX or LA and transported to sites throughout North America.
EO news continues with China adding 1.3m tonnes of EO capacity by the end of the first quarter next year, taking the country’s total EO capacity to 3.5m tonnes. The new capacity, stemming from plant expansions and newly built ones, will be largely from the southern and eastern coastal areas. Even so, at present in China, according to ICIS “There is a supply deluge and demand is weak,” for EO. Somewhat typical of many commodity products in China today.
By the way, in an excellent analysis of the ethylene value chain in the ICIS magazine, Will Beacham listed a number EO capacity expansions due to come on-stream globally in the next few years. You’ll notice the preponderance of Chinese capacity in his table below:
|Dynamic Int’l||China||100||Q2 2014|
Q3 Fatty Alcohol prices in the USA settled in July with Mid-cut C12-15 alcohols, which includes natural and synthetic, assessed at a third-quarter contract range of 92-110 cents/lb, losing 4 cents/lb off the low end and gaining 1 cent/lb on the top of the range from the 96-109 cents/lb second quarter assessment. Buyers and sellers also said that synthetic alcohol prices are up in the third quarter, adding strength to the high end of the overall mid-cut range. In Asia, Spot C12-14 fatty alcohols prices fell at the lower-end by $20/tonne, to $1,580-1,630/tonne FOB (freight on board) SE (southeast) Asia in the week ended 9 July.
According to some southeast Asian end-users, offers from producers dropped by around $60-70/tonne from a few weeks ago to $1,600-1,650/tonne FOB SE Asia, amid softer feedstock trends and buying resistance from buyers. Feedstock palm kernel oil (PKO) prices were softer over the past two weeks, fuelling the bearish sentiment for mid-cut, C12-14 fatty alcohols.
US ethylene oxide (EO) contract prices for June were assessed 0.6 cents/lb ($13/tonne) higher from May on the back of a firmer June ethylene contract price, as assessed by ICIS on Thursday. June EO contract prices moved up to 67.20-76.70 cents/lb free on board (FOB) from 66.60-76.10 cents/lb FOB in May. The June contract price for US ethylene was fully settled at 47.75 cents/lb delivered (DEL), up 0.75 cents/lb from 47.00 cents/lb DEL in May, ethylene sources confirmed on Thursday.
In news with a knock-on eventual effect on surfactants, Sasol continues to focus big money and attention on GTL with the announcement of a study for a GTL project in Mozambique .
In India, duty news continues to develop and no doubt our more involved readers affected by these measures will comment. I can only report that India is reducing basic customs duty on a range of feedstock for soap and oleochemical products that would likely increase the import volumes of the raw materials and reduce the cost of local production of finished products. Under the federal budget announced by India’s Bharatiya Janata Party (BJP) led government basic customs duty (BCD) on fatty acids, crude palm stearin, RBD and other palm stearin, specified industrial grade crude oils has been reduced to zero from 7.5%. Customs duty on crude glycerine has been cut to 7.5% from existing 12.5% and BCD on crude glycerine which is used in the manufacture of soaps has been brought down to zero from 12.5%, Finance Minister, Arun Jaitley said in a statement on the India budget
Our good friends Elevance finally made public their intention to invest with Genting in a biorefinery in Sabah, Malaysia. The agreement proposes the sale of Genting Plantations‘ 25% stake in Genting Integrated Biorefinery to Elevance Revewable Sciences Singapore, a wholly-owned subsidiary of Elevance Renewable Sciences, for Malaysian ringgit (M$) 72m ($22.6m). Genting Integrated Biorefinery currently operates a 200,000 tonne/year biodiesel plant at Lahad Datu in Sabah.
The existing biodiesel plant will be transformed using Elevance’s proprietary metathesis technology, to produce 240,000 tonnes/year of renewable, high-performance olefins and specialty chemicals that can be used in multiple end-product applications, including lubricants, surfactants and detergents. The transformed metathesis biorefinery is expected to commence operation and production of these high-value palm oil derivatives by year 2017, according to Genting Plantations. As part of the collaboration agreement, Genting Integrated Biorefinery has agreed to pay Elevance license and design fees, and Elevance will provide the technology, and technical and consulting services. Elevance will also be exclusively responsible for the sale of all specialty chemicals that are produced at the biorefinery.
In other big Stepan news, the company has agreed to buy Procter & Gamble’s sulphonation plant in Bahia state in Brazil. The plant has a capacity of 30,000 tonnes/year, and the deal should close in the third or fourth quarter, pending regulatory approval. Stepan’s move will come as no surprise to attendees at our World Surfactant Conference in May in NYC, where Quinn Stepan identified Latin America as a core growth area for the company. And one, in my view, that lacks the competition inherent in the other markets like Asia and Europe, where Stepan manufactures. The company also owns a plant in Vespasiano, Minas Gerais.
Toward the end of the month, Stepan also announced that second-quarter net income jumped 7% year on year to $24.35m on the back of polyols volume growth and acquisitions, despite weaker profits for its surfactants and specialties businesses. Net sales for the quarter increased by 6% year on year to $504.1m as a result of higher prices for its surfactants division and polymers volume growth, the company added. Volumes were down year on year for surfactants and specialty products. Polymers division gross profit jumped 26% year on year to $25.2m, as an 18% annual jump in polyols volumes on the back of home insulation demand in Europe and North America contributed $2.6m additional profit compared to the second quarter of 2013. Earnings from the polyester resins business it acquired from Bayer for $64m in mid-2013 also contributed $1.7m to the profit figure. Surfactants division gross profit dropped 15% year on year during the quarter to $40.8m, primarily on the back of a decline in North American volumes, and higher maintenance and depreciation expenses. Agricultural sales in the region were depressed due to the carryover impact from the harsh North American winter, which also weighed on Stepan’s first-quarter results.
In the sort of news that one would not expect from (say) Shell in Geismar, China’s Dynamic (Nanjing) Chemical Industry has postponed the start-up of its new 100,000 tonne/year ethylene oxide (EO) unit in Nanjing to late September from August,. Dynamic is postponing the start-up of its new EO unit in accordance with a government’s directive that petrochemical plants must halt or reduce operations in the lead up to the Youth Olympic Games that will take place in Nanjing on 16-28 August, the source said. The company’s current EO unit has a capacity of 60,000 tonnes/year.
In a further sign of the China slow-down / supply glut, Teck Guan has moved forward its scheduled catalyst change at its 100K tonne /yr fatty alcohol plant from end-July to mid-July because of lacklustre performance in the downstream surfactant sector. The shutdown is expected to counter-balance the current slower uptakes in mid-cut C12-14 fatty alcohol in the Chinese domestic market, according to some local producers. Over the past few months, high domestic inventories and costly feedstock palm kernel oil (PKO) have resulted in weak demand in the Chinese fatty alcohol market, according to ICIS.
Finally, our other favorite new technology company, Solazyme, announced a deal with AkzoNobel which includes joint product development and principal terms of a multi-year supply agreement for algal oil. The parties expect that the algal oil under the joint development agreement would be able to replace both petroleum and palm oil-derived chemicals. The agreement is for a supply of up to 10,000 tonnes/year of algal oil for surfactant production. Product development is expected to begin immediately. Both companies are anticipating entering into a definitive supply deal as they near the completion of the product-development process.
That’s it for July: Looking forward to seeing many of you at our next surfactant conference in September in Berlin.
Surfactants Monthy Review – June 2014
Welcome again to our monthly surfactant news update. As usual, most items are sourced courtesy of my friends at ICIS and some of the links may require a subscription. Nonetheless, the responsibility for any errors or omissions is entirely mine. Also the opinions expressed are entirely my own. I hope you enjoy reading. For the latest information, analysis and unequalled networking around the surfactant value chain, please attend our 3-day surfactant event in Berlin, September 3 – 5th. We have partnered with the BIO-TIC group of CEFIC who are running a biosurfactants conference alongside our 3rd European Surfactants Conference. I hope to see many of you there.
The month got underway with the welcome announcement that Lonza appointed our old friend, Sven Abend as a member of its executive committee, effective from 1 July this year. Sven, currently the CEO of Swiss nonionic surfactants and process chemicals maker Kolb, will have primary responsibility for corporate strategy, business development as well as consumer care and industrial solutions. Much success to Sven in this new position.
The round of Summer surfactant maintenance shutdowns continued with Taiwan’s Oriental Union Chemical Corp (OUCC) shutting its fatty alcohol ethoxylates (FAE) unit at Nanjing in China for planned maintenance around June 1. The turnaround was expected to last for about three weeks. The FAE unit produces 60,000 tonnes of surfactants, including alcohol ethoxylates, every month.
Elsehwere in the EO value chain, the European June ethylene oxide (EO) contract price moved up by around €8/tonne from May, following an increase in the value of upstream ethylene. EO prices are now at €1,303-1,470/tonne FD (free delivered) NWE (northwest Europe), and €1,358-1,515/tonne FD Mediterranean, according to ICIS calculations.
Meanwhile Force majeure (FM) remaind in place on EO out of the Shell. Both the 305,000 tonne/year EO and 160,000 tonne/year ethylene glycol (EG) units are down now as planned for maintenance until the second half of June. Toward the end of the month Shell reported that it is in the process of restarting its ethylene oxide (EO) and ethylene glycol (EG) site in Moerdijk, The Netherlands, after planned maintenance, but EO remains on force majeure (FM)
In other Shell surfactant related news, Shell Chemicals continues project planning regarding building a new linear alpha olefins (LAO) and a new crude ethylene oxide (EO) unit in Geismar, Lousiana. The 350,000 tonnes/year LAO plant would be Shell’s fourth alpha olefins unit in Geismar. Current LAO capacity is 920,000 tonnes/year at the Geismar facility, according to ICIS Plants and Projects database.
Shells’s current EO facility has a capacity of 420,000 tonnes/year, according to ICIS Plants & Projects. Neither the front-end engineering and design (FEED) nor a final investment decision on either project has been made. Shell also may investigate debottlenecking its US crackers in the near future to further take advantage of the country’s low-cost natural gas liquid (NGL) feedstocks. Shell has two crackers in Norco, Louisiana with a combined capacity of 1.6m tonnes/year and two crackers in Deer Park, Texas with a combined capacity of 835,000 tonnes/year.
Back in Asia, the glut of EO and ethoxylates continued to have an effect on the market as Indonesia’s PT Polychem reduced the run rates at its fatty alcohol ethoxylates (FAE) unit at Merak, Indonesia to 60-65%. The reduction took place in end-May because of weak economics. PT Polychem’s surfactant plant produces 60,000 tonnes of surfactants, including FAE, every month. Prices of FAE-7 and FAE-9 grades have dropped by $50/tonne to $1,630-1,750/tonne CIF China over the past two weeks to 4 June, according to ICIS data.
Asian trade data reported in ICIS backed up the capacity surplus. ICIS reported that Fatty alcohol ethoxylates’ May trading volumes in Asia declined by 30% from April on weak demand for downstream cleaning products. Demand for downstream cleaning products such as shampoo, shower foam and detergents, has been subdued in the key China market in the first half of 2014 amid an economic slowdown. China’s purchasing managers index (PMI) for May registered a five-month high reading of 50.8, up from 50.4 in April, but still barely higher than the 50 threshold, which indicates expansion. The FAE market outlook remains bearish, despite the stronger reading.
The Asian EO slowdown was reflected in a report from Eurostat that EU ethylene oxide (EO) exports to the rest of the world decreased 22% year on year in April, while imports were up 4%.
The big surfactant news of the month related to severe storms that incapacitated the railway system around Germany. “It is not possible to move any railtank cars (RTCs) by rail these days… all our customers affected. We can’t ship any material out,” said one EO producer affected by the damage caused. A lot of customers have been impacted and are facing shutdowns, another source said. The problems are not exclusive to EO, as companies including Sasol, Henkel, INEOS, Tanatex, Oxea and Evonik have reportedly been affected in the area. However, EO was already tight due to a force majeure at Shell’s site in the Netherlands and a series of maintenance shutdowns.
Over the LAS, India’s Fogla Group is reportedly on track to start up its new 40,000 tonne/year 96% purity linear alkylbenzene sulphonate (LAS) plant in Kolkata by the end of this June. Output from the new unit will be available for export from early July. Fogla Group currently has 125,000 tonnes/year of LAS capacity through its units in Kolkata and Mumbai.
Also in India, New India Detergents is on track to begin operations at its new 36,000 tonne/year linear alkylbenzene sulphonate (LAS) plant in Kandla, Gujarat, by the end of June. The company is expecting to export 90% purity LAS to southeast Asia from early July. The firm has three other plants in India; each plant has 36,000 tonnes/year LAS capacity.
It was good to read that our friends, PCC Rokita raised €24m in an IPO
Most of the proceeds will be invested in polyols production. Apart from polyols and PU systems, PCC Rokita produces chlorobenzene, chlor-alkali, surfactants, phosphorous derivatives and napthalene derivatives.
On the 25th June, Wilmar Europe announced that it has completed the acquisition of Huntsman’s European commodity surfactants business for an undisclosed sum. The sale, first announced in April, includes an ethoxylation facility in Lavera, France, and also a multi-year arrangement for Wilmar to buy sulphated surfactant products from Huntsman’s facilities in St. Mihiel, France and Castiglione delle Stiviere, Italy.
In October last year, Huntsman announced plans to boost its yearly earnings before interest, tax, depreciation and amortisation (EBITDA) by $20m by exiting a number of commodity surfactant product lines in Europe and to focus on developing its remaining differentiated surfactants businesses. It is also planning to cease production at its commodity surfactants facility in Patrica, Italy, by October this year.
As you can see there is a lot going on in even this short monthly update. To meet old friends and new to discuss these trends and more, I encourage you to joint me at our 3rd European Surfactants Conference in Berlin, September 3 – 5th. We have partnered also with CEFIC around their Bio-Surfactant event, free to attendees of our conference. I hope to see you there.
Thanks again to our friends at ICIS who provided most of the newsfeed for this review. As usual, some links below require an ICIS subscription; something I recommend but on which I receive no recompense.
May was a big month, not least because we held our largest ever surfactants conference in NYC; May 15 – 16th, preceded by our business essentials training course. For a review of conference see our blog entry here.
Looking forward our next surfactant conference, we are running in partnership with CEFIC affiliate, Bio-TIC in September ( in Berlin, September 3 – 5th); a 3- day event featuring our regular conference preceded by a bio-surfactant workshop, free of charge to conference attendees.
The month kicked off with some bittersweet news. Stepan’s John Venegoni will retire from his position of vice president and general manager of its surfactants business effective 5 September. John has been with Stepan for more than 30 years and led the growth of the surfactants business from $478m to $1.3bn in sales since his appointment as general manager in 1999. Scott Behrens will succeed John. Behrens currently is the vice president of business management. He joined the company in 1993 as a chemist and has held several positions since, including global business manager for agricultural products and director of functional sales. Best wishes to John and Scott.
In Asia, Prices of linear alkylbenzene sulphonate (LAS) remained stable, according to ICIS. A northeast Asian seller said it was not offering any material this week, but would express selling ideas at $1,550/tonne CFR (cost & freight) SE (southeast) Asia if it had material for May shipment. A buyer said it was not involved in firm discussions this week because several sellers were absent, but added that the latest LAS price for South Korea-origin material, for May shipment, was at $1,520/tonne CIF (cost, insurance & freight) SE Asia.
In other LAS news, India’s Fogla Group is expecting to start up its new 40,000 tonne/year 96% purity linear alkylbenzene sulphonate (LAS) plant in Kolkata on 15 June, a company source said on Tuesday. Output from the new unit will be available for export a week following the start-up, the source added. The company had earlier delayed the start-up of the plant because of technical issues. Fogla Group currently has 125,000 tonnes/year of LAS capacity through units based in Kolkata and Mumbai. The producer is also involved in the manufacturing of other products, such as detergents and fertilizers.
New technology always is of interest to the blog and a new name, Rivertop Renewables noted that they are planning to use a sugar-based chemical platform for production of various additive chemicals aimed at surfactant applications. The company is using a catalytic approach that rearranges the sugar molecule to an acid form, which apparently have some utility in surfactants. Rivertop Renewables is a Montana-based producer of novel chemicals derived from natural plant sugars. The company recently announced achieving $26m in investments for its work, partnering with Cargill and First Green Partners along with other investors.
The debate over Indian import duties on fatty alcohols continued to rage. The Indian Specialty Chemical Manufacturers’ Association (ISCMA) along with major southeast Asian fatty alcohols producers asked India to terminate an ongoing investigation on imports under Safeguard measures of the World Trade Order (WTO). On 19 February 2014, India notified the WTO’s Committee on Safeguards that it had initiated a safeguard investigation on all imports of saturated fatty alcohols into the country. A total of 13 exporters that include all the major southeast Asian fatty alcohols producers, and a host of multinational and local consumer companies in India have expressed their concerns and have asked the government to terminate the investigation, sources said. According to ISCMA, currently there is 0% import duty under the ASEAN FTA for imports of fatty alcohols based surfactants and if any provisional duty is imposed manufacturers would import surfactants instead of making it in India.
This will damage the current $1.55bn market size of Indian downstream industry, and would not benefit the Indian fatty alcohols and Indian surfactant industry, it explains. India’s major chemical and consumer product company VVF, supported by Godrej Industries, submitted a petition on 13 February before the Directorate General (DG) of Safeguards in India, requesting for the imposition of Safeguard duty on the imports of fatty alcohols into India.
The petition sought Safeguard duty on imports from several countries including Malaysia, Thailand and Indonesia, covering all saturated fatty alcohols from C8-18 including pure-cut and blends for the period between 2010-2013.
VVF claimed that a surge of fatty alcohols import to India over the past three years has caused serious damage to the domestic fatty alcohols industry and reduced competitiveness levels of the Indian industry. Based on the petition, an investigation was initiated starting from 13 February, seeking responses from all interested parties within 30 days. Safeguard measures are defined as “emergency” actions with respect to increased imports of particular products, where such imports have caused or threaten to cause serious injury to the importing Member’s domestic industry, according to WTO website. “Such measures, which in broad terms take the form of suspension of concessions or obligations, can consist of quantitative import restrictions or of duty increases to higher than bound rates,” the WTO website adds.
A healthy slug of EO news this month:
Early in the month, according to ICIS, ethylene oxide (EO) reached a double-month contract settlement for March and April on the back of a double-month settlement in the feedstock ethylene contract. March contract prices were assessed down 4.4-5.0% to 65.20-74.70 cents/lb ($1,437-1,647/tonne) free on board (FOB) from 68.60-78.10 cents/lb FOB in February. April contract prices were assessed up 2% to 66.40-75.90 cents/lb FOB from March values. The double-month settlement in feedstock ethylene showed a 4.25 cent/lb decrease to 45.25 cents/lb delivered (DEL) for March contracts and a 1.5 cent/lb increase to 46.75 cents/lb DEL for April contracts. The February ethylene contract price was 49.50 cents/lb DEL. EO supply is expected to remain tight through the second quarter (Q2) following a recent plant turnaround and several cracker outages that are expected to limit ethylene availability.
In further EO news, Shell Chemical Europe declared force majeure mid-month on pure ethylene oxide (EO) out of its plant in Moerdijk, the Netherlands.
Shell was due to start a planned month-long outage from mid-May at its 305,000 tonne/year EO and 160,000 tonne/year EG plant.
In EO news from China; Dynamic (Nanjing) Chemical Industry is expected to start up its 100,000 tonne/year ethylene oxide (EO) unit in Nanjing in August.
Its current EO unit has a capacity of 60,000 tonnes/year. Dynamic (Nanjing) Chemical Industry is a subsidiary of Dynamic International Enterprises, which specialises in producing glycol ethers.
Toward the end of the month, BASF announced it is building a new polyalkylene glycol (PAG)-based lubricants plant at its Ludwigshafen.
The facility will start operations by the start of 2016 and produce PAG lubricant base stocks and formulated blends, the company said in a statement. The new production unit will have full backward integration into all key raw materials including ethylene oxide (EO) and propylene oxide (PO).
Indorama Ventures the new owners of the Old World glycol and EO plant in TX reported Q1 net profit fell 12.6% year on year to Thai baht (Bt) 444m ($13.6m). The company’s feedstock segment saw core EBITDA at $55m, up from $36m, on the back of improved production volumes of ethylene oxide (EO) and ethylene glycol (EG), as well as strong sales of purified ethylene oxide (PEO).
In other news from Indorama, they are reportedly in talks with potential partners for a new US cracker to secure ethylene supply. “We are in principle interested in a US cracker and in discussion with potential partners. We produce EO/EG (ethylene oxide/ethylene glycol) in the US and can be a good partner for a new cracker as we are looking for offtake,” said Aloke Lohia, CEO of IVL. Indorama purchases around 350,000 tonnes/year of ethylene in the US, noted Lohia. “Along with the cracker, we would build a 750,000 tonne/year MEG (monoethylene glycol) plant, adding another 400,000 tonnes/year of ethylene feedstock requirement. This would bring our ethylene needs to about 750,000 tonnes/year, or half a world-scale cracker,” said Lohia. “We will only partner – not build on our own,” he added. However, there are growing challenges associated with building a new cracker in the US, the CEO noted. “The capital costs are rising with so many crackers, derivative plants and fertilizer plants, so the final costs are unknown,” said Lohia. “Even the cost of ethane is unclear – whether it will remain low cost in the years ahead. So with rising capital costs, uncertain ethane and potential oversupply, it could be challenging,” he added. With demand growing slowly in mature markets such as the US and companies planning to build several new crackers and derivative facilities, much of the product will be exported, said the CEO. “Demand is where it is in mature markets. The US will have to export. Years ago people were talking about the China price [being the cheapest]. But if all this capacity is built, one day we may be talking about the US Gulf Coast export price,” Lohia said. “So producers could be squeezed, and the returns may not be as amazing as once thought,” he added.
Owner of EO monopoly supplier in Brazil, conglomerate Ultrapar posted on May 15th, a first quarter net income of Brazilian reais (R) 249m ($113m), up by 1% compared with an income of R247m in the year-earlier period. Oxiteno, posted sales volumes of 191,000 tonnes in the quarter, down by 4% year on year. Specialty chemicals volumes rose slightly to 164,000 tonnes, while glycols fell by 25% to 26,000 tonnes. Despite lower volumes, Oxiteno’s EBITDA increased by around 35% to R109m amid an 18% weaker real.
Ultrapar also owns core businesses in fuel distribution, Ipiranga and Ultragaz, liquid bulk storage firm Ultracargo and the recently acquired drugstore chain Extrafarma.
That’s it for May: Looking forward to seeing many of you at our next surfactant conference in September in Berlin.
Review of 4th ICIS World Surfactant Conference
Nw York November May 15th and 16th , 2014
I was again honored to co-produce and chair the ninth surfactant conference in our series with ICIS. This time – the fourth World conference, held in New York at the Jersey City Hyatt hotel. The venue was packed with over 200 participants in the surfactant value chain. You will get a sense of the agenda here.
Friends and colleagues from across the globe spent one and a half days engrossed as we heard from some of the leading companies in the world share their knowledge and experience in what has become a unique forum.
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, September 4th and 5th 2013 in Berlin, at the Third ICIS European Surfactants Conference.
Also, you know my philosophy is “you gotta be there” to get the benefit from these conferences, so this is not intended to be a write up / substitute for being there. !
My opening remarks featured a review of the just how critically important surfactants are in our world economy. We looked at applications in food, farming, mining, oiffield and of course hygiene, health and cleaning. Our video to make this point was again a monty python clip (below). Can you spot the connection? (as I said, you have to be there..)
Day 1 kicked off with what I have to say was the best keynote address I have seen delivered at any event I’ve ever attended. Quinn Stepan, CEO of Stepan Co (NYSE: SCL) delivered a crisp analysis of the industry and Stepan’s commanding role in it. Stepan is all about surfactants and has a finger on the pulse of what is happening in every single sector. Quinn highlighted the potential large upsides in the oil and gas sector and also the challenges they have had to deal with in the laundry sector as formulation trends have impacted surfactant loading. The Q&A, for me, was even more enlightening than the talk. Our friendly and engaged audience, lived up to their reputation and asked some great questions, which Quinn fielded by drawing on a lifetime of experience and over 80 years of company history. Best trivia item: Quinn’s grandfather, Al, started the company in 1932 with a $500 loan from his mother – which he paid back. Throughout the whole rest of the conference, at least half of the speakers strayed from their presentation to react or add to something that Quinn had said. For me, this was the perfect keynote to start our largest and, it turns out, most highly rated conference ever.
Next up, Dr. Leslie Low from the Malaysian Palm Oil Board (MPOB), dazzled the audience with a layman’s guide to groundbreaking genomic research which is poised to alter the nature and productivity of the world’s (and surfactant industry’s) most important oil crop. This piece in the UK’s Grauniad newspaper summarizes what the impact of this work could be. Dr. Low went further into the impact on the surfactant value chain – which can clearly be enormous.
After the break, Doug Rightler of EO&D Consulting delivered his eagerly anticipated annual review of the EO (ethylene oxide) markets. Compressing a Master’s level course into 45 minutes, Doug’s overall point this year seemed to be that “it’s all about the MEG” and if you use purified EO for surfactants, right now, you are not as interesting to the EO producer as a million MT bulk MEG customer.
Doug’s a tough act to follow, but Yuree Whang of UOP, more than met that challenge with an objective and interesting take on the global LAB market. Interestingly, 80% of the world’s LAB production capacity uses UOP technology, so she knows the subject matter and arguably has a unique perspective.
Shale gas is the topic of the moment, so we wanted to address it in a way that got close to the gas field but also linked directly to the multiple impacts on the surfactant value chain. Mike McKibben of the Marcellus Shale Coalition did just that. Interesting number: Between now and 2020, half a trillion dollars worth of capital expenditure is planned just on mid-stream infrastructure to handle shale gas output!
Looking far out to the end of the detergent supply chain, Philip Malpass of the UKCPI delivered a fascinating analysis of the impact of laundry detergent monodose (i.e. pods, tablets etc..) on consumer behavior in Europe and its effects on the entire supply chain. An interesting perspective from the supermarket aisle and through the lens of a TV camera.
Continuing the theme of looking at our industry’s through the eyes of the shopper, Croda’s Jennifer Donahue talked through some groundbreaking work done on quantifying the effects of various surfactant ingredients on the perceptions of leading skin care products, by the user.
Our sustainability paper this year was a detailed and thought provoking analysis of oleochemical alcohols vs petrochemical alcohols from and LCA perspective. The data and ensuing debate brought to mind the old Henkel / Vista debates of the early 90’s around LAB and oleochemical alcohols. Julie O’Brien of Air Products did a masterful job weaving a story from a rich data pool. The discussion arising from this paper was one of the best I have seen at any of our conferences.
Surfactants and Enzymes; friends or foes? An interesting title for a insightful talk by Danielle Rhine-Showmaker of Novozymes. This talk was the third in a trio of presentations give by Novozymes in our series; first in Europe last year then Singapore and now New York. Attendees now know and appreciate the symbiotic relationship between these two key ingredients.
A long-time supporter of our conferences, Richard Smith, CEO of Surfachem, the European chemicals distributor, gave us a thoughtful analysis of the role of distribution in surfactants. He illustrated how distributors can also be innovators in serving the middle market of small to mid-sized customers. Something to think about for both manufacturers and users of surfactants.
Wrapping up Day 1, Hernan Cavarra of Frost & Sullivan gave a tour de force presentation chock full of data, information, insights and opinion relating to the Latin American surfactant market. I always like to say about our conferences, that you “just can’t get this anywhere else” and Hernan again proved this true. “Argentinian Shale Oil?” You learned about it at our conference first.
As is customary at our conferences, we played some thematic music as people walked in and got breakfast on the second day. Our Surfactants Playlist
for the conference has an easy to spot theme, with some Rush music interspersed for good measure. I trust you can see the connection of most of the songs with our overall theme for the conference (click on the link above)
Day 2 saw a packed room again as the air-conditioning labored to keep up with the volume of people. First up Dr. Charles Hammond of Flotek, Inc. addressed the question “Surfactant EOR – When?”. This is a question that pretty much everyone in our industry has asked at some time in their careers. Charles gave us a useful framework for developing an answer. What is it? You gotta be there.
Staying in the Oil & Gas field. Scott Gale of Solvay, a relative surfactant newcomer but a veteran of the oil-patch, delivered a data-rich analysis of where the opportunities are for a committed player in this field. “Committed” is not just showing up with a product list, however. The supply chain and who captures the margin and wields the economic power in this sector, need careful study and lots of investment.
Moving above ground again, Susan Ferenc, President of the Council of Producers and Distributors of Agrotechnology, gave us a remarkably in-depth look at the role of surfactants as adjuvants in agricultural formulations. A high-touch, specialized and high stakes business.
Staying with the food supply chain, Paul Peeble of our sponsor Lambent then outlined his thoughts on “Surfactants and Food – A Supplier’s Perspective”. This talk gave further solid perspective to the question “what have surfactants done for us?” A lot, in the area of food. Another high touch and highly regulated industry, with potential for reward to companies who know what they are doing.
No conference would be complete without a look at innovation in the field of sustainabllity. Long-time conference supporter, Zschimmer & Schwarz covered the field and introduced two fascinating multi-functional innovations which we are sure to learn more about in the coming months: Monoethanolamine Lauryl Sulfate and Zinc Coceth Sulfate.
Rounding out the conference, Elevance continues to impress with a solid review of the revolution taking place in chemicals and surfactants and their role in it. Nove, specialty and large scale in one packet. Plants in Indonesia and the US and a partnership with our kick-off speaker, Stepan. Great stuff on which to end a tremendous 30 hours spent together.
Our next event is in Berlin on September 4th and 5th. It will sell out, so I hope you will book now if you want to attend. For this conference we have put together a partnership with CEFIC affiliate Bio-TIC to bring you a three day event (for the price of two). A pre-conference on bio-surfactants followed by our Third ICIS European Surfactants Conference. Until then, keep revisiting this blog for our monthly market updates.
Surfactant Monthy Review – April 2014
The month of April saw quite a bit of activity in ethylene oxide, ethoxylation and fatty alcohols. Also, of course, the Wilmar acquisition of major parts of the Huntsman European surfactant business contributed to the continuing restructuring of the industry.
In just a couple of weeks from now, I will be chairing the 4th ICIS World Surfactant Conference. This will be our biggest yet, with registrations running 30% ahead of last year. As usual, we will take a detailed look into the entire surfactant value chain with a group of outstanding speakers, all packed into a day and a half, May 15 – 16th. Quinn Stepan, CEO of Stepan Company is our keynote speaker this year. In addition we have our review of the EO business given by Doug RIghtler of PCI. We’ll go in depth into the agrochemicals market for surfactants with Susan Ferenc, president of the CPDA. Food and Oil & Gas will also be explored by Lambent, Solvay and Flotek. With ~200 of colleagues and friends attending as well as some companies you will not have met before, I really do encourage you to register before the last few places sell out. http://www.icis.com/worldsurfactants
Until then, here are the surfactant news highlights for April. Thanks again to my friends at ICIS News, who provided most of this material. The links are mostly to ICIS resources and subscriptions may be needed for some.
In EO (ethylene oxide) news: Spanish group Cristian Lay planned to acquire two plants formerly owned by bankrupt polyethylene terephthalate (PET) producer La Seda de Barcelona (LSB), the company said. LSB entered liquidation process on 3 January and since then its assets have been up for sale. Under Spanish insolvency laws, the corresponding Court managing the bankruptcy process is entitled to mandate who among different bidders is entitled to keep the assets, taking into account social and economic impacts of the decision. Cristian Lay had its eyes on 1 April as the date for the Court to confirm it can go ahead with its €15m acquisition of the two plants, but the decision has been delayed according to a spokesperson from the company.
The two plants are a 170,000 tonne/year polyethylene terephthalate (PET) unit in El Prat de Llobregat, Barcelona, and a 135,000 tonne/year ethylene oxide (EO) and 100,000 tonne/year ethylene glycol (EG) plant belonging to LSB subsidiary Industrias Químicas Asociadas (IQA) in Tarragona, Spain.
In further EO news, European contract prices for April fell €12/tonne from March, in line with weaker upstream ethylene market. ICIS calculated the April EO prices to be €1,299-1,466/tonne FD (free delivered) NWE (northwest Europe), and €1,354-1,511/tonne FD Mediterranean. Ethylene dropped by €15/tonne to €1,165/tonne FD NWE. Demand for EO is improving, particularly as warmer weather spurs the construction industry into action.
Availability is curtailed due to the shutdown season, which is impacting on customers’ quest for product.
INEOS Oxide‘s 290,000 tonne/year EO plant in Cologne, Germany, was shut until the second week of April. Its site in Antwerp, Belgium that can produce 420,000 tonnes/year of EO and 290,000 tonnes/year of ethylene glycol (EG) plant went down from end-April until mid-June for a catalyst change and mandatory maintenance. BASF’s 500,000 tonne/year EO unit and 350,000 tonne/year EG plant in Antwerp, Belgium will be down for three weeks of catalyst change and maintenance in May. Shell will have a longer outage around the same time at its 305,000 tonne/year EO and EG plant in Moerdijk, the Netherlands. In September and October, BASF will have a similar shutdown at its 345,000 tonne/year EO unit and 25,000 tonne/year EG unit in Ludwigshafen, Germany. Polski Koncern Naftowy Orlen SA (PKN) in Plock, Poland, will have a shutdown from 9-30 September at its 115,000 tonne/year EO and 84,000 tonne/year EG plants in Plock, Poland. Clariant’s site in Gendorf, Germany, is scheduled to have a minor outage on a reactor in May that will not affect market conditions. A longer shutdown is expected to take place in September, however.
A small blip in the EO market in the US: Indorama Ventures’s ethylene oxide (EO)/ethylene glycol (EG) unit at its Clear Lake, Texas plant was shut down on April 6 because of mechanical issues, according to a filing with the Texas Commission on Environmental Quality (TCEQ) on Tuesday. The unit went down for 4.5 hours as another site partner where Indorama sends its carbon dioxide (CO2) tripped, forcing the shutdown. The Clear Lake plant has a capacity of 960m lb/year (435,000 tonnes/year) of crude EO and 790m lb/year (358,000 tonnes/year) of monoethylene glycol (MEG).
Shell’s construction of ethoxylation facilities at Jurong Island, Singapore are set to be completed in the first quarter of 2015, according to the company, earlier in the month. Shell launched the official groundbreaking in April 2013 for two ethoxylation units with a combined capacity of 140,000 tonnes/year. These will add to Shell’s existing capacities for alcohol ethoxylates at 40,000 tonnes/year from its acquisition of its partner’s shares in Ethylene Glycols (Singapore) in 2010
The month started off with some concerns in the fatty acid market regarding a tight supply of bleachable fancy tallow (BFT) and surging spot prices. Buyers were looking for BFT with bids around 41.50-42.50 cents/lb ($915-937/MT), but lack of supply likely due to lower slaughter volumes could push tallow pricing higher in coming weeks. Cattle slaughter in February this year reached 2.24m head, down by 5% from February 2013, the US Department of Agriculture (USDA) said in its most recent monthly livestock slaughter report by the National Agricultural Statistics Service (NASS). The average live weight was up 10 lb (4 kg) from the previous year, at 1,330 lb.
The steady increase in fatty alcohols capacity continued as Taiwan-based Ho Tung Chemical Group started commissioning one line at its new 80,000 tonne/year fatty alcohol plant in Jiangsu, China in early April. The line has a 40,000 tonne/year capacity. Mid-cut C12-14 fatty alcohols output from the plant will be for captive consumption of its downstream production of fatty alcohol ethoxylate and sodium alcohol ether sulphate. Ho Tung has yet to firm up the plant’s actual start-up schedule, partly on uncertainties in feedstock availability, the company source said. But some sources close to the company said the plant in China was initially expected to start up in April. The company is one of the biggest detergent surfactant makers in northeast Asia.
Feedstock issues also affected the fatty alcohols markets. US fatty alcohol Q2 contracts settled higher on cost and volatility in upstream feedstock palm kernel (PKO) and coconut oil (CNO. Mid-cut detergent range alcohol Q2 contracts were assessed at 96.00-109.00 cents/lb ($2,116-2,403/tonne), gaining 7 cents/lb on the low end of the range and 10 cents/lb on the upper end over Q1 prices for bulk delivered material.
PKO and CNO prices skyrocketed during the first quarter, driven up by weather damage to key coconut producing regions in Asia.
Just when you thought there was enough alcohol capacity, Philippines’ United Coconut Chemicals, Inc (Cocochem) will be restarting its idled plant in Batangas by end-2014 or early next year, sources close to the company said.
The plant, with nameplate capacity of 36,000 tonnes/year has been shut since August 2012 because of weak margins. The facility was leased for 10 years to Polish chemical firm PCC Rokita, with effect on 16 March 2014. The Polish company announced the deal on 27 February this year. The Philippine plant is one of the first few in Asia to produce fatty alcohols via the fatty acid route, using the German-based Lurgi-designed process, according to market participants. Around half of Cocochem’s fatty alcohols output is expected to be traded in Asia, while the other half will be shipped to Europe. Besides fatty alcohols, the facility can also produce 55,000 tonnes/year of fatty acid, 12,000 MT of glycerine and 7,200 tonnes/year of soap noodles. It is unclear if productions other than fatty alcohols will be restarted at Cocochem’s Batangas complex.
Excellent work by the ACI (American Cleaning Institute): Fatty alcohols are an environmentally safe component in surfactants, according to research by the American Cleaning Institute (ACI). The ACI conducted a 50-year body of research investigating potential harms to the environment that might come from the use of surfactants, therein engaging research on fatty alcohols, ethoxylated alcohols, linear alkyl sulphates (LAS) and other surfactant-related chemicals. The research continues to support that the fatty alcohols do not pose threat to the environment. “The body of research done by the industry shows that residues of fatty alcohols found in the environment are from naturally occurring processes and not from the fatty alcohol-based surfactant,” says Paul DeLeo, Associate Vice President, ACI. The ACI research can be found at http://www.aciscience.org/
More Asian LAS capacity on the way as India’s Fogla Group is planning to start its new 40,000 tonne/year 96% purity linear alkylbenzene sulphonate (LAS) plant in Kolkata at the end of April or in early May. The Fogla Group has already been producing 90% purity LAS, which it sells domestically but also in other part of Asia. However, it will open the new plant to export more material to SE (southeast) Asia. Sources have described the current market sentiment in Asia to be bearish. According to ICIS data LAS prices across Asia have fallen by $20-30/tonne during the week ending 2 April. India export prices were at $1500 -1510 /tonne FOB (free on board) India. Northeast Asia LAS prices were at $1,500 -1,520 /tonne FOB NE Asia. Whereas import prices in SE Asia softened by $30/tonne to $1,520 -1,540 /tonne CFR (cost and freight) SE Asia.
Sellers unanimously agreed that they had to lower their offers for April cargoes because of recent prices decrease in feedstock linear alkylbenze (LAB) and raw material costs. According to Fogla Group currently it collectively produces 125,000 tonne/year LAS, with units based in Kolkata and Mumbai. The producer is also involved in the manufacturing of other products, such as detergents and fertilizers.
In other Indian LAS news: India’s New India Detergents is expected to begin operations at its new 36,000 tonne/year linear alkylbenzene sulphonate (LAS) plant in Kandla, Gujarat, by early June this year. The company has not been able to start up the completed unit as it has not received approval from the authorities because of the general elections that are taking place from 7 April to 12 May. Output from the new unit in Kandla, which will produce 90% purity LAS, will mainly be exported to other overseas markets. The company has three other plants in India which have 36,000 tonnes/year of LAS capacity each.
An update on the Thai LAB project came during the month as Thai Oil and Japan’s Mitsui & Co indicated they are on track to begin commercial operations at their new 100,000 tonne/year linear alkyl benzene (LAB) facility at Sri Racha, Thailand, in the fourth quarter of next year. Thai Oil, via its wholly owned subsidiary Thai Paraxylene Co, and Mitsui & Co earlier last year formed a joint venture, Labix, to build the LAB facility. Labix is owned 75% by Thai Paraxylene Co and 25% by Mitsui. Output from the LAB facility, which is now under construction, is aimed at both domestic and overseas markets.
As expected, Wilmar, through its wholly-owned subsidiary Wilmar Europe, has agreed to acquire Huntsman’s European commodity surfactants business for an undisclosed sum. The completion of the transaction remains subject to customary closing conditions, including regulatory procedures in France, Huntsman said in a statement. Under the terms of agreement, Huntsman plans to sell to Wilmar its ethoxylation facility in Lavera, France. Wilmar will also enter into a multi-year arrangement to buy sulphated surfactant products from Huntsman’s facilities in St. Mihiel, France and Castiglione delle Stiviere, Italy. Separately, Huntsman said it is also planning to cease production at its commodity surfactants facility in Patrica, Italy, by October this year. Huntsman in October last year announced plans to boost its yearly earnings before interest, tax, depreciation and amortisation (EBITDA) by $20m by exiting a number of commodity surfactant product lines in Europe and to focus on developing and growing the remaining differentiated surfactants businesses.
In related news, Wilmar’s fatty alcohols plant at Huntsman’s chemical site in Rotterdam, the Netherlands, has now started up and will have material available for May delivery. The plant was previously expected to be running by the beginning of the fourth quarter of 2013, but was hit by unforeseen delays in its completion. The 120,000 tonne/year plant is owned by Wilmar and is in Huntsman’s 85 hectare chemical site in Rozenburg, Rotterdam.
Of relevance to amphoteric surfactant producers and users: Private equity firm Permira is to buy Germany’s specialty chemicals firm CABB International from fellow private equity firm Bridgepoint. The transaction will be completed in June 2014. Financial details of the operation were not disclosed. CABB is a supplier of ingredients and intermediates for the agrochemical sector, and also of monochloroacetic acid (MCA), used in agrochemicals, pharmaceuticals, cosmetics, flavours, fragrances, vitamins and surfactants.
A rare announcement from Stepan : Their net income for the first quarter of the year fell by 32% year on year to $13m as severe weather in North America during the period weighed on earnings. The bitter weather that affected large areas of North America during the first three months of the year led to higher maintenance, energy and freight costs for Stepan, as well as lower demand for products from the company’s core surfactants business.
Net sales during the period increased 5% year on year to $477.4m, and operating income fell 20% to $22.5m. First-quarter gross profit fell 13% year on year to $63m. “We mentioned in our fourth-quarter earnings conference call on 19 February that we were experiencing a slow start to the year with severe weather impacting customer locations, transportation and logistics, and some of our own facilities in North America,” said company CEO Quinn Stepan. “Unfortunately, the weather did not improve until mid-March,” he added. Surfactants division sales fell by 1% year on year to $335.7m as a result of the harsh North American winter. Division volumes fell 6%, driven primarily by a 12% decline in North American surfactants volumes.
“Surfactants volumes were challenged in the first quarter which more than offset higher selling prices. March was much better than January and February and April should be another good month,” Polymers and specialty products division sales helped to offset surfactants division weakness, growing 24% and 10% year on year to $119.1m and $22.6m respectively. Despite describing the first-quarter results as “disappointing”, the CEO predicted earnings to improve year on year for the remaining nine months of the year. “Recent investments in Brazil, Singapore and Europe Polymers, along with our 2013 polyester resin acquisition in Columbus [Georgia], all delivered growth,” he said. “Our balance sheet remains solid, and we continue our pursuit of further investments and opportunities to improve efficiency, accelerate our earnings growth, and deliver greater returns to our shareholders,” he added.
Meet Quinn Stepan in person at the 4th World ICIS Surfactant Conference May 15 – 16th in New York. www.icis.com/worldsurfactants
Surfactants Review – January & February 2014
Our first review of the surfactants markets in 2014 will cover January and February. Thereafter, we will try to get these out on a Monthly basis for easier and more timely reading. As usual, many of the news items come courtesy of my friends at ICIS. Many of the links are to ICIS articles and some need a subscription. As regular readers know, the best way to stay current in the surfactants markets is to attend one of our conferences produced in partnership with ICIS. We will have three in 2014. The next one comes up on New York, The 4th ICIS World Surfactant Conference on May 15 – 16th in NYC, features Quinn Stepan Jr. as our keynote speaker. I look forward to seeing many readers there.
The year kicked off with more ethoylation capacity expansion news. Clariant announced on 10 January it has started the expansion of its ethoxylation plant in Daya Bay, Huizhou, China in early 2014. As the first ethoxylation production site under Clariant Business Unit Industrial and Consumer Specialty (BUICS) in Asia, the Daya Bay plant was put into operation in 2011 with the initial capacity of 50,000 MT/year. After completion of the expansion, the total capacity of the plant will reach 100,000 MT/year.
The year in fatty alcohols started off with a bit of stalemate between buyers and sellers. In Europe, prices hovered around €1,450-1,500/tonne FD (free delivered) NWE (northwest Europe).
Elsewhere upstream from surfactants, the oleochemicals industry is optimistic in the medium to longer term, despite several new capacities and expansion, said industry participants during the 2nd Asian Oleochemicals conference in Kuala Lumpur, Malaysia. In the next three years, oleochemicals production capacities are expected to grow by 30%, according to Tan Kean Hua, executive director of IOI Oleochemicals. The expansion in Indonesia, mostly driven by the government’s lower export tax in refined palm oil products as compared with Malaysia in 2011, resulted in a flurry of downstream investments, industry participants added. Market players were optimistic that higher demand from China, India and Indonesia is expected to absorb the increments in supply, driven by higher population, GDP and disposable income growth. Key trends for oleochemicals market drivers would be in homecare, industrial, institutional and oilfield and biodiesel applications, Dr Pek added.
The year in LAB started with indications of a slowdown in demand. Qatar’s Seef Limited is running its 100,000 MT/year linear alkyl benzene (LAB) plant at 90% of capacity because of lower demand for LAB, a company source said on 21 January. Buyers in southeast Asia are said to hold sufficient inventory or can choose from a variety of sources locally and from other Middle Eastern and south/southeast Asian suppliers. According to ICIS data, by 2013, demand for LAB in Asia was at 1.4m tonnes/year versus a capacity of 1.68m tonnes/year.
SEEF is JV between Qatar Petroleum [80%] and local company UDC [20%].
The American Cleaning Institute (ACI) held its annual meeting as usual the last week in January in Orlando. Overall the mood was upbeat and lot of information can be gleaned about the industry via meetings, conversations, sessions and just old-fashioned. networking. I personally learned a whole lot over the course of about 6 days. But you’ll read none of it here. This is definitely one of those events where you “gotta be there”. The ACI puts together an outstanding meeting every year. Membership is open to anyone involved directly or indirectly in the cleaning industry. There is little excuse for not joining and getting involved.
At the end of January, Dow reported some solid Q4 2013 results, aided by a good surfactant business persformance. Dow’s net income for the fourth quarter of 2013 jumped to $963m compared to a $716m net loss during the same period the previous year, buoyed by gains from almost every operating segment. Adjusted earnings before interest, taxes, debt and amortisation (EBITDA) for the quarter increased 31% year on year to $2.1bn, while sales were up 3% year on year at $14.4bn, with sales increasing in all divisions aside from feedstocks and energy. Adjusted EBITDA for Dow’s performance materials division was $421m compared to $267m during the fourth quarter of 2012, with the polyols, surfactants and fluids business marking double-digit sales growth. Propylene oxide and propylene glycol sales also improved on healthy demand in home and personal care products, and additional production capacity in the Asia Pacific region. Despite, or perhaps because of this performance, so-called “activist investor, Daniel Loeb is lobbying Dow to spin off the whole of its petrochemicals business. Loeb, whose hedge fund Third Point acquired a $1.3bn stake in the company last week, has argued a standalone petrochemicals operation could generate significantly higher EBITDA, and would also be beneficial for the specialty-focused parent.
Our good friends and regular surfactant conference participants, Elevance announced the selection of URS to provide engineering, procurement and construction services for its planned biorefinery in Natchez, Mississippi, which is scheduled to be online in 2016. The scope of work under the URS contract will be converting Elevance’s existing biodiesel plant into a new biorefinery. This will be the second biorefinery for Elevance, and will also be based on the company’s metathesis technology. The 280,000 MT/year commercial-scale manufacturing facility in Natchez will produce new specialty chemicals, including multifunctional esters such as 9-decenoic methyl ester; bio-based alpha and internal olefins, including decene; and a mixture of oleochemicals. Accoding to Elevance, the specialty chemicals, olefins and oleochemicals produced at the company’s biorefineries will be used in personal care products, detergents and cleaners, lubricants and additives, engineered polymers, and other specialty chemicals markets.
Echoing comments that I made at the ICIS 3rd Asian Surfactant Conference in Singapore in November, Korea’s Miwon Commercial noted that it has been producing 20% less LAS at its 70,000 MT/year plant since the second half of 2013. Slim margins and lower demand were blamed. Recent increases in costs of feedstock LAB and precursor jet kerosene have been weighing down on margins of LAS producers, with some of them wary of incurring losses.
In news that did not exactly make headlines, but was no doubt picked up by anyone running an ethoxylation plant, the European Chemicals Agency (ECHA) proposed five substances of very high concern (SVHCs) for authorization.
ECHA added that the substances - which include those used in the rubber and plastics and paints and coatings industries – have been prioritised because “they are used in high volumes and have widespread applications which may pose a threat to human health or the environment.” The materials under discussion include N,N-dimethylformamide (DMF), used for production of coated textiles and synthetic fibres, diazene-1,2-dicarboxamide (C,C’-azodi (formamide)) (ADCA), an agent in the plastics and rubber industry, and Aluminosilicate Refractory Ceramic Fibres (Al-RCF), a ceramic-metal composite reinforcement used as insulation for high-temperature industries. Another insulator, Zirconia Aluminosilicate Refractory Ceramic Fibres (Zr-RCF), and 4-(1,1,3,3-tetramethylbutyl) phenol, ethoxylated (4-tert-Octylphenol ethoxylates) (4-tert-OPnEO), used in paints and coating products, emulsion and polymerisation, are also under discussion.
ECHA added that it took into consideration comments from its public consultation on the materials, launched last year, and the view of the member states committee from December 2013. The final decision on the inclusion of the materials in Annex XIV – the authorisation list – will be taken by the European Commission in cooperation with member state representatives.
Huntsman’s net income for the fourth quarter of 2013 swung to a $41m gain, compared to a $40m loss during the same quarter the previous year. With revenues up across most divisions year on year and for the group as a whole, at $2.71bn compared to $2.62bn in the fourth quarter of 2012, the company attributed a strong quarter to restructuring efforts concentrating focus on key markets. EBITDA more than doubled year on year to $225m, while adjusted EBITDA of $313m represented a record for fourth-quarter earnings. Brights spots were many, but surfactants wasn’t one of them. Performance products division revenues were also up year on year due to higher sales volumes for all products except European home care surfactants. This of course, is a business slated for restructuring by Huntsman in Europe; the nature of which will likely be seen sometime later this first half of the year.
Stepan announced a rare decrease in net income or Q4, 2013 which fell 31% year over year to $10.7m, mainly because of higher raw material, maintenance and transportation costs in the company’s core North American surfactants business. Results included $700,000 in restructuring charges for shutting down sulfonation capacity in Canada. Stepan’s gross profit for the three months ended 31 December was $61m, down from $70m in the same period a year ago. However, fourth-quarter sales rose 11% year over year to $474m on higher volumes in each of the company’s three businesses, and because of a polyester resin acquisition. For the full 12 months of 2013, Stepan’s net income was $72.8m, down from $79.4m in 2012. Full-year sales were up 4% to $1.9bn. ”Despite the challenges faced in 2013, we recorded the second best year in our 82-year history and we remain optimistic about our future and our ability to deliver growth,” said CEO Quinn Stepan in an earnings call. ”Recent large investments in both surfactants and polymers contributed to our profitability in 2013 and should deliver income gains in 2014,” he said. ”Our balance sheet remains strong and we intend to make further investments that will improve our efficiency, accelerate our earnings growth, and deliver value to our shareholders,” Stepan added.
Oxiteno’s EBITDA in Q4 2103, just announced, was Brazilian reais (R) 107m ($45m), up by about 47% from R73m in the prior-year quarter, mainly due to the depreciation of the real and a more favourable sales mix. Despite a 4% year-on-year drop in consolidated quarterly sales volumes, mainly due to lower sales of glycols, parent Ultrapar said that sales of specialty chemicals increased by 6% – or 10,000 MT – as a result of recent investments in capacity expansion. Ultrapar said that in 2013 it invested R139m in Oxiteno, mainly directed to the expansion of ethoxylation production capacity at the company’s plants in Pasadena, Texas in the US and in Coatzacoalcos, Mexico. The conglomerate plans to invest some R244m in its chemical division in 2014, with R161m earmarked for the conclusion of capacity expansion in Coatzacoalcos and potential capacity expansion in Pasadena. The expansion in Mexico is expected to be operational this year, Ultrapar said, and will add 30,000 MT/year of production capacity.
Thanks again for reading and I look forward to seeing you at the 4th ICIS World Surfactants Conference in NYC, May 15 – 16th, 2014. Remember, Quinn Stepan, CEO of Stepan Co. Ltd. is keynote speaker!
Surfactants Outlook – 2014
For the first time, we have been persuaded to put forward an “Outlook” for surfactants in the coming year. All projections and predictions are, by definition, wrong as soon as they are made. What I provide here are some ideas about what could happen that I recommend you bear in mind as you plan and execute your business in the next 12 months. In some cases, I have been vague about the identity of companies that are mentioned. If you read closely enough and you are in the business already, you will likely guess who I am talking about. This post contains absolutely no confidential or inside information; just reading the tea-leaves, joining the dots and admittedly adding 2 and 2 to get 5. If you’d like to call me out in person for something I say here, I will see you at our 4th ICIS World Surfactants Conference in NYC, May 15 – 16th, 2014. You will also have an opportunity there to spend time face-to- face with practitioners far more expert than I am in their surfactants fields.
First the easy one: Huntsman will sell its European surfactant business, comprising sulfonation and ethoxylation plants. This has been announced and that is why it is an easy prediction. They will take the money and invest it in something that makes them a better return than what a non-integrated converter makes in an over-supplied commodity market when they are not a low cost producer. Who will buy the business? Clearly the opposite of Huntsman; that is a vertically integrated manufacturer that has a credible claim on being a low cost producer. There are a handful of them around and most are HQ’d in Southeast Asia. I won’t name the company I favor, but you know them already. Furthermore, the next steps for this company are further downstream and further West. Companies like Huntsman will therefore play to their strengths, which are to be found, in the case of Huntsman, on the US Gulf Coast, plugged firmly into an advantaged ethylene supply.
Here’s another easy one: The last of the major non-pipeline supplied ethoxylators in North America will set up a pipeline integrated EO supply. Not Solvay; that has already been announced. The completion of this move will set the clock ticking on the other stragglers, although there remains money to be made on high value specialty ethoxylation even when you are slap in the middle of the country and served by a railroad that would much rather be hauling cabbage or livestock or anything other than a highly explosive gas.
One more easy one: Oil and gas Chemicals will continue to be hot. Following Ecolab’s announcement of the acquisition of Nalco in July 2011 (followed by the acquisition of Champion), their stock shot up to outperform the Dow by 3X since then. Expect additional M&A in this field (pun intended) by companies like Sealed Air (new owners of Diversey) and surfactant companies looking to de-emphasize detergents and personal; Huntsman, Stepan, Sasol and BASF spring to mind.
Other non-detergent surfactant businesses will attract surfactant companies. These markets include, food, agriculture, emulsion polymerization and industrial lubricants. Small to mid-sized companies with a strong position in these markets may find it an opportune time to sell to their larger competitors. M&A will be a key factor here as getting into these markets, is easier said than done and, regardless, takes time.
We expect at least one merger between two of the Southeast Asian plantation based companies; one of whom has a significant and growing downstream presence in surfactants. The resulting giant will be active in investment in North America, particularly in ethoxylation and maybe also sulfonation. New projects are favored, although an acquisition in the US is not out of the question.
Europe continues to attract surfactant investment and something has to give. So we will see some significant surfactant and feedstock capacity being take off-stream by at least one of the old-line surfactant manufacturers in the field. This action will at least support a somewhat improved asset utilization rate in the industry as a whole. However, gross margins will at best hold level for the year.
Big chemical companies will continue to be flush with cash and therefore keen to do deals. Much of this money will be spent in areas relating to surfactants. We expect at least 2 or 3 private companies to be acquired in each of North America and Europe. Most by companies from Asia and a large Middle-Eastern acquirer who continues to move downstream into specialties where possible.
Thanks again for indulging these speculations. One final “prediction” I can make and that is we will have an outstanding time meeting, talking and networking at the 4th ICIS World Surfactants Conference in NYC, May 15 – 16th, 2014. I’ll see you there.
Surfactants Quarterly Review Q4 – 2013
For the last quarter of 2013, I have summarized key news from the surfactants market, aided as usual by the capable global news team at ICIS. A few of the links in the review point to ICIS articles (most of these need a subscription). As always, your inputs and critiques are welcome. For more exclusive surfactant information and networking, I will see you at our 4th ICIS World Surfactants Conference in NYC, May 15 – 16th, 2014.
Just as the quarter got underway, a little snippet caught our attention. Apparently, Bolivia’s state-owned EBIH is considering to build an ethylene oxide and glycol plant as part of a larger complex costing over $2.7 Billion to be built over the next 4 years. Interesting to hear how this develops and how it may shake up the cozy EO oligopoly in Latin America.
After teasing us with the prospect of, finally, another Latin American EO supplier, Bolivia revealed details for the GTL, polyolefin and methanol complex later in the month (download the report here). Bolivia’s ministry of hydrocarbons and energy released a report detailing an ambitious petrochemical construction programme that seeks to kick-start a new era through the industrialisation of the nation’s huge natural gas reserves. Industrialisation of natural gas became a reality in May this year following the inauguration of the Rio Grande liquids separation plant in the eastern Bolivian department of Santa Cruz. The plant will process around 5.m cubic metres (mcm)/day of natural gas and produce 361 tonnes/day of liquefied petroleum gas (LPG) and 195 bbl/day of isopentane. The LPG and isopentane will be used as feedstocks to supply the petrochemical chain. A second liquids separation plant in the Gran Chaco province of Tarija department in southern Bolivia is due to come on line in the second half of 2014. The plant will process natural gas to produce ethane, propane, butane among other products. The ethane and propane will serve as feedstock for the nearby Gran Chaco petrochemical complex. The projects in the report are divided into “current” and “future”, and will be developed by state-run energy company Yacimientos Petroliferos Fiscales Bolivianos (YPFB) and Empresa Boliviana de Industrialisation de Hidrocarburos (EBIH), a subsidiary of YPFB created by the Bolivian government in 2008 to develop domestic gas-fuelled heavy industry. As noted aboce, the possibility of building an ethylene oxide (EO) and ethylene glycol (EG) plant close to the Gran Chaco liquids separation plant, with capacities of 260,000 MT/yr of monoethylene glycol (MEG), 26,000 MT/yr of diethylene glycol (DEG) and 3,000 MT/yr of triethylene glycol (TEG), is currently being studied. The plant would use ethane and LPG feedstock, and require an investment of $580m.
The big, but perhaps not surprising, news of the quarter was that Huntsman plans to restructure its surfactant business in Europe. As anyone in the market knows (or if you’ve been to one of our training courses), it is tough to make money in surfactants in Europe, especially in detergents and personal care. Huntsman, accordingly plans to get out of assets that are focused on commodities in the region and focus on specialties. The process could take until the end of this year, said Stu Monteith, president of Huntsman’s performance products division which the surfactants business falls under. Around 250 employees in its European performance products division could be affected by the changes. If the restructuring takes the form of a sale (a logical objective) then there is no shortage of candidates to buy this business, including companies with a more vertically integrated position in the supply chain than Huntsman.
Shortly after the announcement of what sounds like a “retreat” in Europe, Huntsman announced a big advance with the addition of ethylene and EO capacity in North America. Huntsman is debottlenecking its Port Neches, Texas, ethane cracker and adding about 10% more ethylene capacity to take advantage of the shale gas boom. The company also is continuing in its plans to add 25% more capacity to its ethylene oxide (EO) plant in Port Neches. According to ICIS Plants & Projects database, Huntsman’s ethane cracker has a nameplate capacity of 193,000 tonnes/year, while its EO plant has a capacity of 460,000 tonnes/year. Huntsman is a major buyer of ethylene for its EO and ethylene glycol (EG) production, and the company is still weighing whether it makes economic sense to build a new cracker for its own ethylene consumption or wait and see if the ethylene market grows long as a result of the other planned projects and thus keeps it cheap. If Huntsman decided it wanted to get in on the new cracker rush, it likely would be as a partner in a project, according to the company.
In an interesting twist to the Huntsman EO expansion plan for North America, 5 years after Hurricane Ike tore a path of destruction through southeast Texas, a structure that fell victim to the storm was officially tasked in October with helping its current owner, Huntsman, grow its EO capacity. The unit in question was originally an ethylene glycol (EG) facility in Beaumont owned by DuPont-Lyondell joint venture PD Glycol. But the plant ceased operations after Ike made landfall in September 2008, soon followed by the severe economic recession of 2009. PD Glycol decided to put the facility up for sale, and Huntsman saw an opportunity, so they purchased the EG unit, took it apart and moved it by barge a few miles down the Neches River to the company’s Port Neches facility, where the company is retooling it for EO production and integrating it into the site, which currently has two EO reactors. When the former PD Glycol unit is fully up and running by the second quarter of 2015, the facility will become the largest single-site producer of EO in North America, Huntsman said, with capacity increased by 265m lbs/year, or about 25%. Currently, about 1bn lbs/year (453,600 tonnes/year) is produced at the facility, according to the company. All of that EO will be consumed by the US-based producer to make a variety of ethylene-based derivatives such as glycols, surfactants and amines, with more than 90% of the EO used at the Port Neches facility. Huntsman is investing up to $150m (€110m) in the expansion.
At a groundbreaking ceremony for the expansion, Peter Huntsman took the opportunity to lay out his company’s vision for the EO value chain in North America in this way: According to Huntsman, transportation safety issues will lead to further expansion of Huntsman’s ethylene oxide (EO) facilities in Texas. “I would imagine 5 or 10 years from now you’re going to see a totally different EO derivatives facility being built and expanded here, I think just for transportation safety issues and so forth,” said Peter Huntsman at the site. As more EO is produced as a result of the influx of ethylene production soon to come as part of the shale gas/ethane cracker boom, more integrated facilities will be necessary to handle and move EO safely. “Ten years from now we’re going to be hard pressed to move EO out of a plant, and so you have got to have singular locations that have ethylene oxide,” Huntsman added.
In keeping with Huntsman’s integrated ethoxylation theme, in November, Solvay announced a new alkoxylation facility project for North America. Solvay will build and operate a large-scale alkoxylation unit in Pasadena, Texas, at an integrated industrial facility of LyondellBasell’s Equistar Chemicals affiliate.
Solvay will invest nearly €40m ($54m) into the unit, which is expected to be operational in 2015. Equistar will supply the ethylene oxide via pipeline. The investment follows Solvay’s announcement in April this year that it will build an on-pipe alkoxylation facility in Singapore.
In the fatty alcohol market, prices settled up by a few cents per lb at the beginning of the quarter due to expectations of tight supply. Little did the market realize what was to come as a result of the Philippines typhoon which had a later outsized effect on the lauric value chain, including detergent range alcohols.
Thus at the end of November, Asia mid-cut fatty alcohols hit one-year high due to firm PKO prices. On 27 November, C12-14 fatty alcohols were assessed at $1,650-1,880/MT (€1,221-1,391/tonne) FOB SE Asia for December loading, up by $100-180/tonne from the previous week, according to ICIS data. On 27 November, PKO prices stood at $1,057.80/MT, up by $37.56/MT from the previous week.
Another big move for Solvay was announced early in the Quarter – the acquisition of Chemlogics (an oilfield chemicals company) at a prices of $1.35bn (€999m). Chemlogics, whose US assets include three production sites with annual capacity exceeding 300,000 MT/yr, offers products and technologies which enable oilfield service players worldwide to extract oil and gas. Chemlogics previously reported last-twelve-month sales of around $500m and has 277 employees. Pricing of the deal, therefore looks quite nice for selling shareholders, including Bill Frost who came to prominence by starting Chemron and selling it to Lubrizol. Solvay said that Chemlogics’s expertise in friction reducers, non-emulsifiers and extraction technologies perfectly fit with Solvay Novecare’s know-how in surfactants, natural polymers and eco-friendly solvents
Solvay’s Novecare continued on a roll with an announcement of an acquisition of the Brazil specialty chemical assets of ERCA Quimica. The acquisition will allow Solvaty to more than double its (admittedly small) production capacity in surfactants in Brazil. The deal includes ERCA‘s Brazilian specialty chemical assets and its portfolio of agrochemicals and home and personal care products.
Sasol announced some personnel changes involving names familiar to the surfactant industry. However these are unlikely to result in any significant strategy changes in surfactants due to the very strong bench in this area at the company. Andre de Ruyter, senior group executive for global chemicals and North American operations, resigned to join South Africa-based Nampak, according to a filing by the packaging and plastics producer on the JSE. He is to serve as executive director and CEO-designate from 1 January 2014, and will take over as CEO on 1 April 2014, following the resignation of current CEO Andrew Marshall, Nampak said. De Ruyter will stepped down from Sasol as of 30 November this year. He will be succeeded by Fleetwood Grobler, current manager of Sasol’s olefins and surfactants business.
In more big news from Sasol, the company appears to be making good progress on its significant investment plans in the US, and in proving that its gas to liquids (GTL) technology works effectively. An investment decision on the Westlake, Louisiana ethane cracker is expected in the middle of next year, the company said in a late November release. The go-ahead for the first planned GTL plant at the same location is likely to be given 18 to 24 months later.
Sasol’s ORYX GTL joint venture in Qatar produced 1.5m bbls of product in the three months to the end of September. That is an average 101% of design capacity. The plant is expected to operate at 90% on average in the current Sasol 2014 financial year. Sasol wants to invest more than $21bn in Louisiana in the US on chemicals and GTL plants, taking advantage of the increased availability of natural gas and ethane from shale. This is a huge bet on shale and the US market for the world’s largest synthetic fuels producer. The investments represent around 73% of Sasol’s current market capitalisation. Sasol is fracking in Canada but production is constrained because of low natural gas prices. It is making fastest progress on the 1.5m tonne/year, $5bn-7bn ethane cracker and downstream projects. Downstream from the cracker, Sasol will make LLDPE, low density polyethylene (LDPE), ethylene oxide (EO), mono-ethylene glycol (MEG) and Ziegler and Guerbet detergent alcohols. Contracts for basic engineering packages and services and for various technologies on the cracker and the planned downstream production units have been agreed. Front-end engineering (FEED) is underway for both the cracker and the GTL plant in the US. Fluor is the main FEED contractor for the cracker. Worley Parsons will manage the project alongside Sasol’s own people. Separately, a 100,000 MT/yr ethylene tetramerisation unit at its production site in Lake Charles, Louisiana is being commissioned. The project in on budget and schedule, Sasol said. This is the world’s first commercial unit using proprietary Sasol technology to convert ethylene to 1-octene and 1-hexene, both important co-monomers for linear low density polyethylene (LLDPE). The plant will be part of the company’s olefins & surfactants (O&S) reporting group. The US investments have the potential to underpin profitability in olefins & surfactants and in polymers for the group. Sasol’s US operations currently are the company’s cost leaders in chemicals benefitting from low US ethane prices. This is certainly true in Olefins & Surfactants (O&S) where the European businesses are under pressure from reduced volumes and lower margins.
Stepan continued its steady march forward with Q3 net income announced up slightly on higher polymers profits. Stepan said that its net profit for the third quarter of 2013 had increased by 1% year on year, to $20.4m (€14.9m). Net sales for the period increased by 8% year on year to $475.5m as a result of improved sales volumes, particularly in North America, where volumes increased by 2% compared to the same period a year earlier. Demand for agricultural products continued to increase globally, while sales of functional surfactants used in oilfields declined, the company added. “Despite the challenging operating environment, we delivered improved earnings,” said CEO Quinn Stepan. “Our businesses delivered volume growth and we continue to invest strategically for future global growth,” he added. Gross profit grew by $3m year on year to $74.3m, as lower surfactants profits were offset by a 30% increase in performance of the polymers division, driven by sales growth in Europe and a $3.7m business interruption insurance recovery related to a 2011 fire at a plant in Germany. Total third-quarter gross profit for the polymers division was $26.6m, while surfactant division gross profit fell by 2% year on year to $45m, and specialty products gross profit dropped 33% to $3.8m due to lower margins, the company added. Quinn Stepan said that the slow start to the year made achieving its planned full-year earnings growth “difficult”, adding that the realisation of acquisitions and capacity expansions are expected to buoy 2014 performance. He said: “We delivered slightly improved results in the third quarter, and we remain optimistic about our long-term growth. “The slow start to the year has made achieving full year earnings growth difficult, but we continue to pursue investments that will accelerate our growth. In 2014 we will realise the benefits of our recent acquisition and other capacity expansions,” he added.
With respect to investments: “We will look to make additional investments in Latin America to support the projected growth that we see in that market,” said Quinn Stepan during the same earnings call. Stepan did not elaborate on what those investments could be.
Earlier this year, Stepan said his company was looking to further expand its surfactants production capacity in Brazil, adding that the producer might build a second plant there or expand its existing facility at Vespasiano, near Belo Horizonte. The CEO also said it is not just the surfactant market that continues to grow but also the agricultural and oil field markets for which Stepan produces chemicals.
As follow-up to a prior announcement Evonik started up their 80,000 MT/yr surfactants facility in China at the end of October. The facility is located in the Shanghai Chemical Industry Park (SCIP) and its investment volume was in the “upper two-digit million Euro range”, the company said in a statement but did not specify the exact amount.
Over to China where the EO tidal wave just keeps coming as Oxiranchem announced that it looks to its Yangzhou EO plant start-up in July 2014. The plant has 200,000 MT/yr ethylene oxide (EO) capacity. The company is also looking at building another line with a similar capacity at the same site but this has yet to be confirmed, the source said. Oxiranchem is expected to import the bulk of its ethylene requirements next year although the company is looking to source the raw material domestically as well, the source said, without providing details.
In more China EO tidal wave news: China’s Fujian Refining & Petrochemical (FREP) has started construction of an ethylene oxide (EO)/ethylene glycol (EG) plant at Quanzhou in Fujian province in late October. The unit will have an EO capacity of 180,000 MT/yrand an EG capacity of 400,000 MT/yr, Sinopec said in an online newsletter.The plant, located at Quangang Petrochemical Industrial Park, will be operational in November 2014. FREP is a joint venture between Sinopec, Saudi Aramco and Exxon Mobil.
More from China, this time in oil-soluble surfactants, Chemtura started commercial operation at the Nantong facility for the production of lubricant additives including sulfonate grease. The building of a high-performing lubricant production plant, the second phase of the facility, will be completed in the middle of 2014, and the third phase which can produce urethanes is expected to be completed in 2015. Chemtura began construction of the Nantong facility in March 2012. Total investments for the three phases were $100m (€73m).
In Latin America, Brazil’s Ultrapar Q3 net income was announced up 13% year on year. Ultrapar posted a Q3 net income of Brazilian reais (R) 328m ($144m, €107m), up about 13% compared with R291m in the prior-year quarter. Sales and services revenue for the quarter reached R15.9bn, up by about 13% from R14.1bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) totalled R765m, up almost 18% from R651m, the company said. Ultrapar attributed the growth to higher sales volumes in the company’s fuel distribution subsidiaries Ipiranga and Ultragaz and an increase in operating scale due to recent investments. The company’s surfactants and solvents subsidiary, Oxiteno, saw a 6% drop in sales volumes due to lower sales of glycols in the domestic and overseas markets
In more North American investment news with relevance to surfactants, US-based Chevron Phillips Chemical (CP Chem) has completed a study to expand its capacity for normal alpha olefin (NAO) at Baytown, Texas, US by at least 20% and it plans to seek final project approval in the first quarter of 2014. Construction could begin in the first quarter, and the project could be completed in the second quarter of 2015.
In a rare display of market initiative from Pemex, the Mexican government owned petrochemical company announced late November that it is seeking a joint venture for ethylene glycol, EO and aromatics. The putative project also involves expanding cracker capacity in Mexico to align ethylene supply for EO. Pemex has two ethane crackers in Cangrejera and Morelos, Mexico, each with a capacity of 600,000 MT/yr. The company would like to expand these existing crackers to get another 200,000-300,000 MT/yr of ethylene. The project, including the construction of EO/EG and aromatics facilities, could take two to three years to complete. In September 2013, Pemex completed its first ever joint venture – a partnership with the dynamic private company, Mexichem to double vinyl chloride monomer (VCM) production to 400,000 MT/yr by 2015. Apparently this JV opened Pemex’s eyes to the benefits of operating more like a real company than as a ward of the state. There is talk of an amendment to the Mexican constitution to allow Pemex to move more into the North American commercial mainstream with the sort of operational independence enjoyed by its peers in the industry.
Clariant continue to maintain a solid profile in ethoxylation with an early December announcement that it will further expand US ethoxylation capacity at Clear Lake, TX. This second-phase expansion will include new reactors and additional storage facilities, bringing the overall ethoxylation capacity to more than 125,000 MT/yr from the current 95,000 MT/yr. The new project is scheduled to go on line in mid-2015. The second expansion brings Clariant’s total investment over the last five years to Swiss francs (Swfr) 65m ($72m), according to the firm. Products manufactured at the US site includes high molecular weight polyethylene glycols (PEGs), alcohol ethoxylates, sodium isethionates and ethoxylated specialties.
In a rare piece of growth-oriented news from Europe, Germany’s PCC announced a 42,000 MT/yr Mono-Chloro Acetic Acid plant in Poland The unit, PCC P4, will build the plant at a cost of zloty (Zl) 272m ($89.2m, €64.9m) on the grounds of another group subsidiary, surfactants producer PCC Exol, creating around 100 jobs in the Walbrzyska special economic zone near the border with Germany. Poland’s economy ministry is subsiding the construction of the MCAA plant with a grant of Zl 67m. In October PCC Exol said it would invest in constructing a new production line for high-margin amphoteric surfactants in the Walbrzyska special economic zone at an investment cost of Zl 10.75m
Just before Christmas, we heard that Thailand’s PTT Global Chemical (PTTGC) is proceeding with capacity expansion at its home production base in Map Ta Phut. This includes a plan to boost its ethylene oxide (EO) output by 2015.
Thanks again for reading and I look forward to seeing you at the 4th ICIS World Surfactants Conference in NYC, May 15 – 16th, 2014. Quinn Stepan, CEO of Stepan Co. Ltd. is keynote speaker!
3rd ICIS Asian Surfactants Conference
As we do periodically, I am happy to bring you a summary of what I think were the key points from the 3rd ICIS Asian Surfactants Conference in Singapore, November 14th and 15th. As you know, for the full benefit of these events, you just have to be there and I encourage you to join us at future surfactant conferences in Asia, Europe and the USA.
In my opening remarks, we discussed the global surfactant supply chain and how different companies pursue strategies which depend on the specific part of the value chain that they occupy. We studied the latest update of the surfactant vertical integration grid and located a number of company groupings focused on very different sections of the business. We also discussed some recent company investments that highlighted their approach to vertical integration.
Next up, Sarah Yarger Kienzle, managing partner of Linden Tree Partners gave a global updated of the surfactant market. One fascinating piece of data (for me) centered on the per capita consumption of surfactants for different regions of the world. The mature market consumption is dropping on a per capita basis, while emerging market are growing. The North American per capita consumption still leads the world, 60% of the number two Western European market.
A highly interesting talk from VVF came next. S. Harihasumbramanian gave an in-dept study the different technologies and markets for soap bars and surfactant based cleaners and ended up delivering a robust defense of the value and environmentally friendliness of soaps. Quite a unique and thought provoking perspective.
First-time speaker and long-time attendees, Exxon Mobil Chemical came up next with an in-depth look at their line of Exxal detergent range, petrochemical surfactants. An often overlooked class of compounds; it was interesting to see the focus being put by Exxon on the surfactant value chain.
The “sleeper” paper of the whole series came up next. After reading in the Wall Street Journal, about the mapping of the oil palm genome, I was determined to talk to one of the researchers to get an idea of what this work meant for the surfactant industry. Dr. Rajindra Singh of the MPOB gave an outstanding explanation of this 10 year program and its likely impact on our industry. If you missed this one, we are considering having a review of this work also at the World surfactant conference.
A perennially popular subject at our conference is EO (ethylene oxide). EO is the basis of most nonionics and a large portion of anionic surfactants. Michelle Yang of Tecnon Orbichem took us deep into the World and Chinese markets for EO and EOD’s (EO derivatives). In one of the most in-depth market surveys we have seen at one of these conferences. More than one reference was made to an oncoming tidal wave of EO – both in China and North America.
After lunch, Galder Cristobal of Solvay Novecare, really opened up the eyes of many of the attendees by providing an in-depth look into the world of enhanced oil recovery. Some interesting data on the high-throughput screening of four thousand formulations at a time really engaged the audience.
A surprising highlight of our entire series of conferences (at least for me) came during Reckitt Benckiser’s presentation, delivered by Samrat Sehgal, head of supply chain in India. As part of the Q&A, we were treated to a live case-study relating to surfactant importation strategy as one of Reckitt’s suppliers posed a real-time problem and Samrat addressed it as he would in a meeting with a supplier. As we like to say these conferences are “bigger on the inside” and you just have to be there in order to get the full benefit.
Once again, Icilio Adami of Desmet Ballestra delivered an outstanding paper with an incredible amount of information relating to the markets and technology relating to sulfonation. One day, Icilio may write a book. Until then, you have to come to our conferences.
Starting up the second day, I was very pleased to partner with our friends from ICIS Pricing to deliver a paper covering pricing of key surfactants and feedstocks in the Asia Pacific Region overlaid with a deep dive into the current economics of sulfonation and fatty alcohol manufacture in the region. I hope the audience enjoyed it as much as I did delivering it.
Novozymes returned to our speaker’s roster and as a sponsor again with the paper, entitled “Surfactants and Enzymes, Friends or Foes”. It was an informative and provactive look at the growing role of enzymes alongside surfactants in many application areas.
Martha Tilaar Group, a first time speaker and new name for our attendees, outlined their strategy for growth in the region. In fact, the presence of a Martha Tilaar shop in the mall next to the hotel provided an interesting back-drop to the proceedings.
Rounding out the entire proceedings was an outstanding paper from Dean Lao of Chemrez Technologies. Dean covered the Philippines as an oleochemicals investment opportunity and offered a robust analysis of the advantages of coconut as a crop. He also analysed the recent effects of the Typhoon on the Philipines coconut industry.
Overall; an enjoyable and informative conference which cements its place on the calendar as a can’t miss surfactant gathering for Asia. Thanks again for reading and I look forward to seeing you at the 4th ICIS World Surfactants Conference in New York, May 15th and 16th, 2014.
Surfactants Quarterly Review Q3 – 2013
As we do on a quarterly basis, I have summarized key news from the surfactants market, aided substantially by the news team at ICIS. A number of links in the article point to ICIS articles (most need a subscription). As always, your inputs and critiques are welcome. For more up to the minute surfactant information and networking, I will see you at the 3rd ICIS Asian Surfactants Conference in Singapore, November 14th and 15th.
Early in the Quarter, in July; Kao Indonesia Chemicals announced completed construction of its new yen (Y) 4bn ($40m) plus surfactants plant in Karawang, Indonesia. The new plant with an undisclosed capacity is expected to start operation in August 2013. The plant will produce surfactants and industrial chemicals and help lift Kao Indonesia Chemicals’ surfactants capacity, which includes facilities located in Tambun, Indonesia, 1.5 times, Kao said. All of the Tambun facilities will eventually be transferred to the Karawang site by the end of December 2014. With this relatively small but still significant investment, Kao underlines its commitment to a vertically integrated strategy in consumer goods and their key ingredients.
Also in July, Stepan named Scott Beamer as chief financial officer. Beamer succeeds James Hurlbutt, who is retiring after 31 years with Stepan. Beamer is joining Stepan after spending 16 years at PPG Industries, where he was assistant corporate controller. Welcome to the industry, Scott, and to one of its leading players.
As the 3rd Quarter got underway, fatty alcohol prices edged upward . Mid-cut alcohols were assessed at 83.50-96.00 cents/lb ($1,841-2,116/MT, €1,436-1,650/MT) for the Q3 contracts, rising 0.50-1.00 cents/lb over the previous range. In other alcohol news, the US fatty alcohol market was mulling potential effects of issues involving the Roundtable on Sustainable Palm Oil (RSPO). RSPO was formally established in 2004 in response to growing global demand for vegetable oils and concerns about increasing expansions of palm oil plantations and the potential impact of these upon forests, wildlife and communities. Its RSPO Certification System was adopted and launched in 2007, with the first certification issued in 2008. “RSPO is an ongoing consideration for US buyers trying to understand if initiatives will affect price structures,” a large detergent-range alcohol buyer said. “Sustainability issues derived from RSPO may need to be taken into account,” a seller commented. US fatty alcohol buyers engaged in industrial applications are discussing potential premiums on vegetable, or natural, based alcohols that could develop because of additional costs involved in participating in the RSPO initiatives. Fatty alcohol buyers with end-uses in cosmetics and personal care sectors are weighing the possible benefits being certified by the RSPO versus the potential costs, as consumers of these products can differ widely from those in the industrial surfactant models. Darrel Weber, the head of the RSPO was a featured speaker at the 3rd ICIS World Surfactant Conference in NY in May.
In other alcohol news: Pilipinas Kao Inc (PKI) noted in mid September that it is running its fatty alcohol plant at Jasaan at around 70% of capacity, following the completion of an expansion project at the unit. The plant has been shut since June this year for the expansion project which increased its capacity by 40,000 MTs/year to 150,000 MTs/year, according to sources. The company in a statement on 13 September said that it has completed the construction of the expansion project, which was aimed at meeting the “growing demand for fatty alcohols centering on the Asian region”. The plant operations will be fine-tuned before its production rate is ramped up to full capacity, said a source close to the company.
Looking ahead in alcohols to Q4, uncertainty over fatty alcohol pricing continues to hinder fourth-quarter negotiations in Europe. A shortage of mid-cut fatty alcohols in Europe has led to increased prices of late, with some suppliers now quoting in excess of €1,400/MT ($1,867/MT) free delivered (FD) northwest Europe (NWE). Suppliers maintain that the shortage of mid-cut material will continue to dictate their pricing ideas in the coming weeks. However, buyers remain confident that the restart of fatty alcohol plants in southeast Asia could help to alleviate some of the shortage being felt in Europe, and therefore bring down prices. It is thought that participants had been awaiting the ICIS European Surfactants conference in Brussels, Belgium, mid September, where discussions over pricing were to take place, before commencing their fourth-quarter negotiations
A firm favorite of ours, Elevance, started their JV biorefinery with Wilmar in Gresik Indonesia in July making one group of chemicals available for the first time in commercial quantities. The 180,000 MT/yr biorefinery will consume palm oil to produce C10-C15 unsaturated esters, C16-C18 oleochemicals and long-chained olefins. The unsaturated esters stand out because they are difunctional, in that each molecule has both an olefin and an ester group. According to Elevance, Until now, this group of difunctional products has been available only in lab-sized quantities priced at thousands of dollars per Kg. Already, Elevance is producing these chemicals in commercial quantities and profitably selling them at dollars per kilogram. Elevance has been working with Arkema and Stepan, among others, to develop new products using the Elevance building blocks. Companies are thus developing surfactants with better solvency and cold-temperature cleaning, as well as synthetic lubricants that deliver improved stability and fuel economy, according to Elevance. Other uses for the difunctional molecules include monomers for engineered polymers, coatings, long-chained polyamides, polyurethanes and polyesters. The biorefinery’s other products, however, should also meet existing market needs. The long-chained olefins range from C10 to C20. Decene, for example, is a feedstock for polyalphaolefins. Polyalphaolefins, in turn, are a key ingredient in synthetic lubricants. Demand for synthetic lubricants is rising because of stricter emission and mileage standards for automobiles. These stricter rules require smaller and better-performing engines, and these rely on synthetic lubricants.
Likewise, C18 olefins are used to make drilling fluid.
The long-chained olefins are also feedstock for surfactants. C12 olefins can be used to make linear alkyl benzene, providing a bio-based alternative to petroleum-based C12 olefins.
Elevance chose the 2nd ICIS European Surfactant Conference in Brussels in September to highlight their start-up and the new range of products. Look elsewhere on the Neil A Burns LLC blog for an exclusive podcast interview with Andy Corr of Elevance.
Indian Linear Alkylbenzene continued to make news as Indian Oil announced the restart of its LAB plant at Vadodara in the state of Gujarat by 29 July after a month-long turnaround. The shutdown at the 120,000 MT/yr plant severely tightened supply in the Indian market, resulting in virtually no spot export availability in July. Furthermore, the plant near Chennai and Reliance Industries’ 60,000 MT/year plant at Vadodara caused inventory levels of LAB in India to decline to around 5,000 MT in July, down from 8,000 MT in June. The TPL plant restarted on 13th July after a two-month long shutdown but the Reliance unit had yet to restart as of the end of July. India has an installed LAB capacity of 530,000 MT/yr. Indian consumption of LAB totalled 500,000 MT/yr in 2012.
In other LAB news, Iran restricted exports of LAB to ensure supply to the domestic market, in late July. With its imports falling following the sharp depreciation of the rial against the US dollar, Iran needs to ensure domestic production will meet growing domestic consumption. No official ban was implemented, but permission to export these materials is granted by the government on a case-by-case basis, Iranian industry sources said.
The country has an installed LAB capacity of 130,000 MT/yr, with current operating rates at 80-85%, while domestic consumption is around 100,000 MT/yr.
As usual, Stepan (NYSE: SCL) reported solid progress in sales and earnings for the second quarter of 2013. Net income rose by 6% year on year to $22.7m (€17.3m) as sales volumes increased by 4% while selling prices fell by 3%. Stepan’s sales for the three months ended 30 June were $474m, compared with $470m in the 2012 second quarter. Overall gross profit was $73.7m, up slightly from $73.4m in the 2012 second quarter. Second-quarter gross profit in Stepan’s surfactants business fell by 7% to $48.3m. Stepan cited lower North American sales of functional surfactants to the oil field market, reduced profits from biodiesel sales, and lower North American consumer products earnings because of the consumption of higher-cost raw material inventories, in explaining the decline in surfactants gross profit. Furthermore, higher raw material cost inventory built to support Stepan’s Singapore surfactants plant start-up, and the subsequent decline in commodity prices, hurt surfactants margins, it said.
Another solid performer in surfactants and specialty ingredients, Croda reported-quarter operating profit from continuing operations rose by 4.4% year on year to £71.1m ($109.4m, €82.7m) on the back of “improving trends in key markets”. The UK-based specialty chemicals company said gains were reported across each of the company’s three reporting segments – consumer care, performance technologies and industrial chemicals – and sales rose by 2.3% during the period compared to the second quarter of 2012, to £279.6m.
With demand also growing for surfactants in the CIS at than 6%/year, a letter of intent was signed in July between SIBUR and Solvay to establish a surfactants joint venture called RusPav, located in Dzerzhinsk. SIBUR will contribute its raw materials, production and logistics capabilities to the joint venture. RusPav will be located near SIBUR’s petrochemicals operations, 400km east of Moscow, and is tentatively expected to be operational in 2016.
In August, the ACI (American Cleaning Institute) released an important environmental report. “The major disposal route of alcohol ethoxylates [or ethoxylated alcohols] is down-the-drain through sewage systems and municipal wastewater treatment plants into receiving surface waters,” said Kathleen Stanton, director of technical and regulatory affairs for the ACI.
“Because these are down-the-drain disposal routes for the detergents, the fate and effects of the residuals in treated sewage effluent is of interest to industry and regulators alike,” Stanton added. The study concentrated on ethoxylated surfactants with the goal to determine the environmental impact of the fatty alcohol backbone of the detergent. Natural (vegetable-oil based) and synthetic (natural gas/ethylene-based) fatty alcohols were both tested during in the scope of the study.
Another of our firm favorites, Solazyme continued to make news in the second quarter. Solazyme and Sasol finalised commercial terms for the multi-year supply of algal oil in the production of downstream derivatives such as behenyl alcohol, the companies announced. Solazyme is developing the erucic acid-rich algal oil at its Orindiuva facility in Sao Paolo, Brazil, as well as its Clinton site in Iowa, US. Sasol Olefins and Surfactants will use the algal oil for the production of C22 derivatives that are used in industries such as paper, water treatment, personal care, lubricants, oil and gas, as well as paints, inks, coatings and adhesives. Additionally, the companies signed a letter of intent to expand to broad collaboration, including joint manufacturing and marketing of multiple tailored oils. “This agreement with Solazyme is testament to their tailored oil technology platform and the fit for high-performance sustainable oils in our value chain,” said Fleetwood Grobler, managing director at Sasol O&S. “We see a good potential to link Solazyme’s tailored oil platform with our synthetic and natural alcohols portfolio, which will allow us to meet the growing demand that we see in a number of our key markets.”
The LAB and LAS markets in Asia continued to be active. On 14 August, LAB prices increased by an average of $10-30/MT (€8-23/MT) from two weeks prior to $1,850-1,870/MT CFR SE Asia; $1,820-1,850/MT CFR India; and $1,800-1,830/MT FOB Middle East, according to ICIS data. LAS prices, on the other hand, have been holding steady at $1,560-1,580/MT CFR SE Asia and $1,550-1,570/MT FOB India over the past two weeks, according to ICIS.
Market players expect LAS prices to eventually track rising LAB prices. Supply is expected to remain tight in the coming weeks as shortage of feedstock normal-paraffin (n-paraffin) is expected to restrict LAB supply, which in turn will curtail LAS production, market sources said. LAS demand is being revived with the emergence of “one-dose” detergent, which is a combination of washing liquid and softener. The popularity of liquid detergents over powders in the laundry sector had slightly dented demand for LAS in recent months. The proportion of LAS used in liquid detergents is lower compared with washing powders. However, in other applications such as floor cleaners and dish washing liquids, LAS continues to be widely used.
An emerging key player in the surfactant industry, China’s Sanjiang Chemical reported H1 net profit up 78% for 2013 to yuan (CNY) 402m ($66m), because of higher production and sales of ethylene oxide (EO). Its revenue in the first six months of 2013 gained 82.7% year on year to CNY2bn, approximately 86% of which were generated from EO sales, the company said in a statement to the Hong Kong Stock Exchange. The utilisation rate of its ethylene oxide (EO) facilities were at 112% in the first half of this year, compared with 108% in the same period of 2012, it added. In the January-June period, the company produced and sold 176,375 MT of EO, an increase of around 80% year on year. This increase is mainly because its new 100,000 MT/year EO unit started commercial operations on 14 February. The company said it expects total EO production for 2013 to increase to around 370,000 MT from last year’s 216,728 MT. The Zhejiang-based company mainly produces EO and surfactants at 330,000 MT/year and 218,000 MT/year capacity, respectively.
Elsewhere in Asian, Germany’s Evonik completed its expansion project at the Indonesia plant in August. “With this investment, Evonik is increasing its capacity for surfactants and esters used in hair care, skincare, and industrial applications,” the company said in a statement. The investment is aimed at “serving personal and household care industries in southeast Asia, Australia and New Zealand”, it said. Further details of the expansion project and capacity details of the plant were not disclosed in the statement.
In a move with some relevance to surfactants, Innospec acquired US Chemsil Silicones, and distributor Chemtec in August. Chemsil, which develops and markets silicone-based formulations to the personal care industry, will become part of Innospec’s performance chemicals business, which develops and markets surfactants and emollients. Chemtec, which distributes personal care ingredients primarily to the US west coast, will continue to operate as a key distributor in that market. The acquisition was funded through the negotiation of an increase to the Innospec’s existing revolving credit facility agreement of $150m (€114m). The amendment allows the company to request a further amount of up to $50m to be committed by various lenders.
Sasol’s FY 2013 Olefins & surfactants operating profits rose by 12% year on year to R3.58bn with the US operations benefitting from the low ethane price but operations in Europe squeezed by soft demand and high petrochemical feedstock prices. The segment’s operating profit was 23% higher if the prior year’s gain from the sale of operations in Witten, Germany, is excluded, Sasol said. The company is adding 48,000 MTs/year of ethylene capacity in an ethylene purification unit in Sasolburg, South Africa. The unit is to be officially opened later this month, the CEO said. Orders for long lead-time equipment have been placed for the ethane cracker planned for Louisiana and environmental permit applications have been made.
In news reported directly from the 2nd ICIS European Surfactants Conference, John Hodgkinson, business manager, EG, EO and derivatives at Technon OrbiChem, predicted that ethoxylate demand would grow by 1.7% over the next five years. “The [ethoxylate] forecast is 1.7% growth to 2018, which is fairly good for a mature market. For ethanolamines it is about 1.6%, with e-series glycols ethers around 0.7%,” he said. “This is good news for major EO producers, since they are also ethoxylate producers. But the problem in Europe is available capacity and consumption. A good year for ethoxylates and ethanolamines will bring tightness to the [EO] market,” Hodgkinson added.
In other news from ICIS European Surfactants, Martin Harrington of IP Specialties, pointed to the boom in cheap oil and gas in North America while.
With US natural gas production now equivalent to almost half of Saudi Arabia’s, Harrington said that “palm kernel oil is not the only game in town.” “This is cheaper energy for countries that frack, and will reduce the dependence on the Middle East,” he said. Bio-based feedstocks such as sugar, as well as US natural gas are attracting the attention of the industry as alternative feedstocks, owing to the cheaper costs. Harrington, the president of IP Specialties North America operations, also looked at new alternatives to oleochemicals, such as fermentation with E.coli, metathesis and micro algae cell disruption. “The oleochemical landscape is now very different to what it was in the 1980’s,” Harrington said. “Success in sourcing surfactant feedstocks will hinge on an organisation’s ability to be flexible to the alternative feedstocks, as well as an understanding of the feedstock and its by-product implications.”
|Current prices (August 2013, courtesy of IP Specialties)|
|Palm kernel oil (CIF R’dam)||$865/ton|
|US Nat Gas as LNG||$175/ton|
Yet more insights from the same conference: An expanding population and strong economic growth in Turkey means that demand for surfactants for the fabric cleaning sector will continue to grow, said Gulhan Eglimez, global category marketing manager at Turkey-based company Hayat Chemicals, said, “Turkish domestic demand is strong and exports are growing. Particularly to countries like Iraq.” “We have 75 million people living in Turkey and quite a young population, with an average age of 28. We have 19 million average households and 15 million housewives,” she added. According to Egilmez, Turkish GDP growth in the first quarter of 2013 was 9.5 %. In relation to the end user markets and their buying habits, Eglimez said that the number one priority in Turkey was price. She added that while the trend in northwest Europe was more towards liquid detergents, the Turkish market still favoured powder.
To round out the quarter and with news of great significance for the North American surfactants market, Switzerland-based Clariant said late September, it has opened the new global headquarters for its Oil and Mining Services business unit in the Woodlands, TX. The campus, housed in Black Forest Technology Park, broke ground a year ago, and at the time the company said plans included two 32,000-square-foot office buildings at 2730 and 2750 Technology Forest Blvd. The new campus will allow Clariant Oil and Mining Services to double its workforce in the area by 2015, the company said at the time. It will house 100 offices and serve the Oil Services, Refinery Services and Mining Solutions business units, Clariant said Thursday. It will also include two technical centers, one for Oil and Refinery Services and the other for Mining. Clariant’s U.S. headquarters is in Charlotte, N.C
Thanks again for reading and I look forward to seeing you at the 3rd ICIS Asian Surfactants Conference in Singapore, November 14th and 15th.