ACI 2012 Report
This year’s ACI meeting had a number of differences compared to that of 2011, the most noticeable being the level of optimism, especially as espoused by the surfactant manufacturing group. Last year, the entire market, it seemed, was obsessed with a single number, that was the price of palm kernel oil. The talk was around how high could it go and when would it peak. That question was answered in the first week of March of last year and since then the market has started to to focus on other things.
Why the optimism, given the substantial indicators of gloom in the economies; record levels of unemployment in the USA, debt crises in Europe and uncertainty over whether China can continue its bull run in production and consumption of consumer products? In summary, companies are finding reason for optimism in emerging markets, especially Latin America (and not just Brazil), Southeast Asia, India and the United States (that’s right.. of America), renewable chemical innovations and, of course, the widely held belief that in the US at least, an election year cannot see an economic slowdown.
First though, why characterize the USA as an emerging market? The emergence of shale gas as a significant factor in the industrial and political scene has changed the outlook for chemicals manufacturing in the US in a very positive direction. Low priced natural gas (relative to crude oil, or indeed palm oil, it’s closely correlated cousin) will continue to ripple through the chemical value chain as both a raw material and a source of energy for chemical plants. Already benefitting from decades of consolidation and restructuring, the chemical business in the US now looks set to reap the benefits of low cost ethylene. The prospect of an ethylene cracker in the Marcellus shale gas area – either West Virginia, Ohio or Pennsylvania is already baked into the future scenario for the industry. This ethylene is sure to find its way into ethylene oxide and a range of ethoxylated surfactants for domestic consumption and exports from the US.
The other emerging markets were well represented at ACI including some of the not so obvious countries. The Latin American powerhouse, Brazil, is well recognized. Not as often discussed is the smaller economy, Colombia which is now the fourth largest producer of Palm oil in the world and is actively developing downstream markets. Southeast Asia continues to be very well represented at the conference as many of the major plantation companies move downstream.
For the first time in this correspondent’s recollection, the innovative renewables sector has made its presence felt at the conference. In addition to new ACI member, Solazyme, a number of other companies targeting various parts of the global surfactant and consumer products markets value chain were also in evidence, including Amyris and Codexis.
The meetings in the halls and bars of the ACI, while important, are not the only objective of the conference or of the association. The ACI itself has a huge influence in the daily affairs of the industry and has big job ahead of it in 2012. At the industry briefing session, ACI outlined the key issues that it will be dealing with on behalf of the industry. First among these is TSCA (US Toxic Substances Control Act) modernization. ACI participates in the TSCA project as part of an industry-wide coalition of over 80 chemicals related entities.
Another area of intense involvement of the ACI is with a number of EPR (Exented Producer Responsibility) initiatives at the state level. The essence of EPR is that the cost of final product and packaging disposition should be shifted to the manufacturers from the local governments and municipalities. The ACI estimates the potential cost of such a shift to be in the multiple billions of dollars to the CPG manufacturers.
Various ingredient disclosure initiatives are emerging at state and federal level and the ACI legal committee is working to help balance the publics right to know with the protection of confidential business information for American companies.
The ACI’s oleochemical committee continues to mount a robust “tallow defense” on behalf the of the approximately 70% of ACI members who use oleochemicals. The renewable fuel standard (RFS-2) and the biodiesel tax credit, both enshrined into federal law by well-meaning legislators impact both the availability and pricing of tallow for use as an oleochemical feedstock.
The ACI’s international committee outlined a series of global initiatives along with their participation in the INCPA (International Network of Cleaning Product Associations). The Sustainability Committee discussed the ACI’s first sustainability report along with the development of sustainability metrics with the input of member companies. Finally the Communications committee logged 1,240 mentions of the ACI in press articles in 2011.
Underscoring the incredibly hard work put forth by the ACI, its volunteers and full time staff was an encounter at approximately 10 to midnight at the closing party on the final day of the conference. Having put in a very full week, consisting of many long days, Ernie Rosenberg, ACI’s president and CEO, still managed to find time to come over to your correspondent and his wife to thank us for attending and for supporting the ACI. He then proceeded to outline the legislative challenges for the coming year, in particular with the patchwork quilt of state regulations that the ACI will have to navigate despite the federal gridlock of an election year. Ernie also pointed out that they then have to gear up to address TSCA in 2013, tailoring their approach to align with whichever party ends up controlling which branches of government. “Not bad”, I thought, for the end of an 18 hour day, capping a 7 day week, as the DJ announced midnight and the ACI staff turned in before Saturday morning’s convention committee meeting got started in a few short hours.