Surfactants Monthly - June 2022
This month we’ll take a look back at the music of Kate Bush, with some enticing nuggets scoured from deep within the bowels of YouTube. We’ll have some surfactants news of course, mostly courtesy of our friends at ICIS.
The big news involves the blog’s favorite activist investor, Nelson Peltz. Last month, I thought I’d get ahead of the game and publish the blog with a day to spare at the end of May. And it was on that day, of course, that Unilever and Peltz chose to announce that they had come to an accommodation on a board seat for Peltz, without any of that expensive proxy fight business that P&G went through before acceding to Peltz’s overtures. Clever timing to avoid the blog’s attention, I suppose, but no matter, we get to indulge ourselves once again this month in all things Peltz.
In addition, Tatler magazine released a sneak peek, at the activist investor’s equally famous daughter’s photo session with the magazine. It’s tasteful with the 27 year old adopting a somewhat retro late 70’s riffing on a 60’s look (in my opinion – kinda like Debbie Harry’s take on Jackie O) along with generally unaffordable clothes. Worth checking out..
The Wall Street Journal first reported on May 31st at 4.40PM (about 12 hours after the May blog first hit reader’s inboxes) that Unilever PLC said it would add Nelson Peltz to its board and disclosed his fund held a 1.5% stake in the company. The investment is worth about $1.6 Billion. To underscore why this is even happening, the WSJ published the following graph :
The WSJ goes on to note that Unilever said Mr. Peltz would be joining the board as a nonexecutive director and member of its compensation committee, with his appointments expected to be effective from July 20. The move to appoint Mr. Peltz came after pressure from at least two other big shareholders to bring him in, according to a person familiar with the matter. Trian’s stake comes a few years after the New York-based firm bought into Unilever rival P&G. In 2017, Mr. Peltz narrowly won a P&G board seat, in what was at the time the most expensive proxy fight in U.S. history. He didn’t push to replace P&G’s chief executive and a turnaround took time, but a year after he became a board member, sales started to improve. In April, the Cincinnati-based owner of Pampers diapers and Tide detergent posted its strongest quarterly sales gain in decades as customers continued to buy its more expensive products despite rising inflation. At P&G, Mr. Peltz set out to dismantle the bureaucracy that he and some executives said was hobbling the company, as well as sought to make executives more accountable.
The WSJ goes on: Unilever has already embarked on a restructuring that it says will allow it to be more responsive to trends and increase accountability. The company is also cutting jobs and says it is committed to improving the performance of its existing brands while rotating its portfolio into higher-growth categories. For instance, Unilever said Monday that it had bought a majority stake in Nutrafol, which makes physician-formulated products designed to address thinning hair and compromised hair health for women and men, at various life stages.
Still, Peltz’s appointment to the Unilever board, as well as confirmation of Trian’s investment, is likely to be welcomed by the consumer-products company’s investors. “We hope Peltz can stimulate positive changes to culture, remuneration and organizational structure like he did at P&G,” said RBC analyst James Edwardes Jones.
Analysts have previously speculated that Unilever could sell or spin off its food businesses, which include brands such as Ben & Jerry’s and Hellmann’s mayonnaise, to boost growth. Several analysts have said that Unilever should cut its profit-margin targets to focus more on investing in innovation and driving overall sales growth.
Bernstein analyst Bruno Monteyne said Mr. Peltz brings “a huge amount of credibility” and that breaking up Unilever could make sense if it allows the company’s various divisions to be better run. Mr. Monteyne has previously said he isn’t aware of any company the size of Unilever that is operating successfully while being spread so broadly. Unilever sells products in around 190 countries to 3.4 billion people, and while the U.S. is the company’s biggest market by sales, it has greater exposure to emerging markets such as India and Brazil than most of its peers.
The company has long been known for its sustainability agenda with its previous CEO, Paul Polman, scrapping quarterly profit reports and investing in areas such as sustainable palm oil, paying living wages to suppliers and cutting carbon emissions. Under Mr. Jope’s leadership, Unilever has gone further, seeking to give each of its 400 brands a social or environmental purpose.
On Tuesday, the joint statement from Mr. Peltz and Unilever indicated that the company’s work on sustainability will continue, with the investor saying he wanted to “help drive Unilever’s strategy, operations, sustainability, and shareholder value for the benefit of all stakeholders.”
End of Peltz section. Beginning of the rest of the news.:
Solvay takes a significant leap into biosurfactants, as reported in the great Cosmetics & Toiletries magazine.: Solvay has introduced Mirasoft SL L60 and Mirasoft SL A60 (INCIs: Not Provided), two glycolipid biosurfactants. Based on rapeseed oil and sugar with a low environmental and carbon footprint, these ingredients are suitable for a range of applications in beauty care such as shampoos, conditioners, shower gels and face washes and creams. Mirasoft SL L60 and Mirasoft SL A60 are 100% biobased and biodegradable surfactants manufactured through a fermentation process.
“This product launch underlines both our commitment to surfactants technology and our long-term vision for the future,” commented Jean-Guy Le Helloco, global vice president, home and personal care at Solvay. “We focus on future technology shifts to enable our customers to reach their sustainability goals.” “With the potential of a net neutral carbon footprint in the near future, biosurfactants represent a step-change technology in the eco-design of next-generation beauty care products," said Galder Cristobal, research and innovation director of home and personal care at Solvay. "The eco-profile of Mirasoft SL L60 and Mirasoft SL A60 is truly a breakthrough compared to conventional, fossil fuel-based surfactants." Cool. Good luck to Solvay in this modest step into the field.
Here’s something which didn't make it onto my radar screen until just now and it’s the revival of a mid 90’s tax law that seems to directly impact surfactants. ICIS reports that the US will revive Superfund taxes on 42 building-block chemicals as well as imports of several substances made from those chemicals. The two Superfund taxes were allowed to end in the mid-1990s. The US is reviving them as part of the $1trn Infrastructure Investment and Jobs Act that President Joe Biden signed into law in November. The proceeds raised by the taxes will help replenish the government's Superfund programme, which pays for the clean-up of waste sites. The US is reviving two different Superfund taxes. The first one is levied on the sale or use of 42 chemicals. These taxes are imposed on companies that make or import the 42 chemicals. The full list is in the ICIS article here https://subscriber.icis.com/news/petchem/news-article-00110781114 but halfway down the list is ethylene at 0.487 cents per lb tax. But there’s more!
A second tax covers substances sold or used by importers. The government has published three lists of substances that could fall under the tax. The most recent list was published earlier in June, and it includes 121 substances and their tax rates. Again the ICIS article has the full list but I can confirm that it includes Ethylene Glycol at 0.20 cents per lb, Ethylene Oxide at 0.28 cents per lb, synthetic linear fatty alcohol ethoxylates [whatever those are] at 0.32 cents per lb and synthetic linear fatty alcohols at 0.42 cents per lb. There’s apparently another 2 lists published by the IRS that suggest that linear alpha olefins, among other things will be subject to a tax. The IRS has published a FAQ page to help here https://www.irs.gov/newsroom/irs-issues-superfund-chemical-excise-taxes-faqs
In further evidence of an incipient slowdown, ICIS reported that the linear alkylbenzene (LAB) markets in east and south Asia remain unchanged despite suppliers’ attempts to achieve higher values, as margins remain thin. The availability of competitively priced Chinese lots continued to weigh on the market.
- Supply length prompt buyers to be unhurried
- Competitively priced Chinese lots weighs
- Monsoon kick off in India could dampen demand
Suppliers in Asia and the Middle East continued to target higher numbers, in a bid to improve thin margins. However, some conceded that buyers are slow to respond, given the availability of cheaper Chinese material circulating in the system. “Most suppliers need prices to rise in order to reflect elevated costs, but buyers are lobbying for lower prices pegged to Chinese material,” said a producer in NE Asia. A strike at a key producer in NE Asia over the past two weeks appears to have had limited impact on the Asian sector as well, as supply remains adequate to meet demand. Suppliers to India also faced a similar challenge of competitively priced Chinese material. Sellers in the Middle East and Asia tried to increase prices to Indian customers, but continue to face an uphill challenge. “With Chinese material cheaper, buyers are continuing to ask for these prices,” said a trader in India. Hence, sales remained mired in tough negotiations as the buy-sell gap remained. Consequently, fixtures for spot cargoes have been slow in recent weeks. “We are still in negotiations for sales into India and Pakistan as buyers are slow to increase bids,” said a supplier in the Middle East.
Meanwhile, domestic producers in India have plans for another price increase for July local material. Some traders anticipate that offers could jump to rupees (Rs) 185/kg for July, up from the current spot level of Rs175/kg ex-tank. A key producer remains in protracted shutdown since May and might restart only sometime in August. Consequently, supply in the domestic market remains snug. However, with the onset of the monsoon season, which is a typically slower season for LAB and related products, the tight supply could be countered by waning demand.
The great Lucas Hall of ICIS reported a similar trend in fatty alcohols at the end of the month. HOUSTON (ICIS)--US Q3 fatty alcohols contract negotiations are diverging against the backdrop of competing feedstock and supply/demand fundamentals.
- Freely negotiated Q3 mid-cut alcohols heard at sharp decline with PKO drop
- Mid-cut supply long, demand slowing during summer low season
- Freely negotiated Q3 long-chain alcohols largely heard flat to sharply higher on C18 tightness
- Downtrend in PKO supports increased PKO consumption in near-to-medium term
In mid-cut alcohol markets, freely negotiated Q3 contracts have largely been heard at a sharp decline from Q2, tracking a major downtrend in feedstock palm kernel (PKO) costs in recent weeks against the backdrop of long supply and slowing demand during the summer low season.
Source: CME Group, Matthes & Porton, WSJ Cash Markets
Freely negotiated US Q3 mid-cut alcohol contracts have been heard in the upper $1.20 to low $1.40/lb DEL range. Some players hedged against bullish PKO markets earlier in the year, creating carryover volume as the market entered Q3 negotiations.
Players are also running their plants hard as they look to catch up to critically tight supply in the C18 market, in turn increasing mid-cut alcohol production in the same time.
In long-chain alcohol markets, freely negotiated Q3 contracts have largely been heard flat to sharply higher, tracking tight C18 supply. Single-cut C16 markets supply constraints are easing as players prioritise C18 production, but C18 and C16-18 blends remain critically tight. Freely negotiated Q3 contracts for C16 alcohols have been heard slightly lower to a rollover from Q2. C18 alcohols have been heard at a sharp increase from Q2. Blended C16-18 alcohols have also been heard at a sharp increase from Q2.
Now that PKO costs are once again at a discount to competitive feedstock coconut oil (CNO), producers are likely to slowly increase their consumption of PKO in the feedslate, in turn producing more C18 alcohol in the process.
As of early June, Sasol remained on sales control for C12 and C18 alcohols and derivatives as it builds inventory ahead of a turnaround at its alcohol and ethoxylates plants in Lake Charles, Louisiana, this fall.
Q2 contract ranges*
| Product | Price (cents/lb) | INCO | Location |
| C12-C15 | 160-170 | DEL | USG |
| C16 | largely above 200 | DEL | USG |
| C18 | largely above 200 | DEL | USG |
| C16-18 | 195-215 | DEL | USG |
*The prices in the table represent a range of settlements for standard balance material heard throughout the quarter for the majority of market participants. Prices above and below those listed in the table were heard throughout the quarter but excluded as they were not viewed as representative of the wider market.
Further down the value chain, Helen Yan reports some huge declines as Asia’s fatty alcohol ethoxylates (FAE) market is likely to face more downward price pressure in July on lower feedstock fatty alcohol C12-14 costs amid declining upstream crude palm oil (CPO) and palm kernel oil (PKO) prices.
- Inflation woes, recession fears
- Weak consumer confidence, buyers cautious
- Elevated freight costs a major concern
Spot offers for July shipments of FAE have been revised lower, tracking feedstock fatty alcohols C12-14 costs and weighed down by tepid spot appetite. Spot FAE 7,9 mols prices were at $1,840-1,900/tonne CIF (cost, insurance and freight) southeast (SE) Asia on 16 June, down by about 10% since early March, ICIS data showed. “Demand is weak as buyers are cautious due to the decline in the upstream palm oil market, elevated freight costs and macro-economic issues such as inflation, recession and geopolitics,” a FAE supplier said. Feedstock fatty alcohol C12-14 prices have fallen by more than 40% since early March to average $1,815/tonne FOB (free on board) SE (southeast) Asia on 15 June, ICIS data showed.
Malaysian crude palm oil futures have fallen below the Malaysian ringgit (RM) 5,500/tonne level, a level not seen since February, following the announcement by Indonesia to accelerate its exports of at least one million tonnes of crude palm oil and derivatives. “PKO price has dropped to around or below $1,300/tonne, down from March when it was around $2,300/tonne,” a fatty alcohols supplier said. Indonesia, the world's biggest palm oil exporter, has decreased its crude palm oil export levy by almost half, to a maximum $200/tonne. The reduction of the export levy, from its previous level of $375/tonne, was to accelerate the exports of its stockpile of about one million tonnes of crude palm oil and derivatives that had built up due to its temporary export ban.
The export ban was lifted on 23 May, after it was imposed on 28 April to contain soaring domestic cooking oil prices. The new levy is effective 14 June and will be valid until the end of July. The maximum rate will increase to $240/tonne from 1 August.
End of surfactants news and beginning of the music section
Kate Bush is back in a big way – because one of her songs was featured in the latest season of Stranger Things on Netflix. This one:
It’s from the 1985 album Hounds of Love. Pretty nice right?
It was this next quirky masterpiece though that launched her to prominence and earned her photograph a place on my bedroom wall, 1978’s Wuthering Heights which reached number 1 in the UK that January.
That posh hippie-chick vibe coupled with incredible creativity and a little craziness and, let’s be honest, a certain comeliness of appearance – yep that’s it. Check this one out – Babooshka . Crazy, comely, creative AF. That’s Kate.
Yes – and shortly banned from many pub jukeboxes due the glass-breaking sound effects – sad but true.
Why is this next one so emotional? 1985’s Cloudbusting. No idea. But it is – for me anyway.
However, for the emotional tour de force of the 80’s – by any artist. Get a load of this quivering hunk of 100% bathos. An aching tribute to pure love. You may not want to listen this at the office, if tears streaming down your face is not a good corporate look for you – just saying..
Is there any doubt this lady is a genius of the human spirit? Story about this song: I made the mistake of playing the video as part of the music warmup for one of my conferences a few years ago. Of course by it’s conclusion, I was in no condition to appear in public let alone speak. I quickly cued up something by, I think, Deep Purple and then disappeared to the bathroom to compose myself before starting the proceedings. Lesson learned.
Let’s lighten things up a (very little) bit. 1985’s Waking the Witch was a favorite of mine for a while becase at ~31 seconds there’s a Geordie voice “wake up man”, suggesting that yes, it was indeed possible for a lad from the Northeast to get close to the unattainable Kate. The song, of course is another incredibly creative, densely packed – just wow – different thing. Ain’t exactly Bananarama right?
Where to end? Don’t really want to – but here’s the first single off the second album, Hammer Horror.
Incredible right? I’m not sure what else to say. Creativity, originality, passion, emotion – totally un-self-conscious and un-ironic. Is there a lesson there. I dunno – maybe it’s just great music and leave it at that.
Until next month
All the best,
Neil