Surfactants Monthly – March 2021

Surfactants Monthly - March 2021

Happy Easter and Passover. A time of deliverance and re-birth for many of our readers and perhaps my favourite time of year. By the way, I can't help noting that this month is chock full of news - kinda-like those Easter egss full of Cadbury's buttons..

Before I muse further (scroll to the end), commercial needs dictate that I mention our upcoming online surfactants conference on 25^th – 27^th of May. Visit the link and check it out and register to attend. It’s not free, this time,  but it’s worth the price of admission.

As a foretaste, if you like, or indeed a sort of literary foreshadowing of what we’ll be dealing with at the event, there is an interview of me by the great Rochelle Ross of ICIS, that you can access at this link. You’ll have to give your contact info to ICIS to see it but don't worry, they are GDPR, strict constructionists and will not abuse your data – at all.

You might have noticed that in our Linkedin group (you’re not a member?!?! Join now, please.) a bit of activity with polls. Here are some interesting results – much of which we will further dig into at our upcoming conference.

 

 

OK - Blog news is super-heavy with EO and derivatives as pricing moves up -  by a lot, keeping things interesting.

Price movements dominated the early part of the month. Right at the beginning of  March, Dow, in a customer letter, nominated price increases for March on the following downstream surfactants products (in cents/lb):

Ethoxylates	5
EO/PO copolymers	15

Also in a customer letter dated 1 March, Indorama nominated a 5 cent/lb price increase for its ethanolamines, effective 15 March or as contracts allow. In a separate customer letter also dated 1 March, Indorama nominated prices 3-15 cents/lb higher for its EO derivatives, including polyethylene glycols, alcohol ethoxylates, surfactant blends, and EO/PO block copolymers. "These increases are necessitated by continuing increases in key raw materials and feedstocks as well as market demand / supply dynamics," the letter said.  Indorama shut its site at Port Neches, Texas, and declared force majeure on surfactants in mid-February amid unusually frigid temperatures. In late January and early February, feedstock ethylene spot prices eased down from historical highs but then climbed even higher following the winter storm that caused production issues for nearly 75% of US ethylene capacity.

A few days after these letters, ICIS reported that US February ethylene oxide (EO) contracts rose to their highest level since December 2014, following the same-month feedstock ethylene settlement.  ICIS assesses February EO contracts higher by 0.2 cents/lb ($4/tonne), at 59.4-68.9 cents/lb FOB (free on board).  US February ethylene contracts settled at an increase of 0.25 cents/lb from January, amid higher cash costs and lower spot prices.

Toward the end of the month, the trend was consolidated. ICIS reported that US March ethylene oxide (EO) contracts settled higher by more than 10%, following same-month feedstock contracts.  ICIS assesses US March EO higher by 7.2 cents/lb ($159/tonne), at 66.6-76.1 cents/lb FOB (free on board).  US EO contracts have increased by a cumulative 62% since November 2020, amid strong demand and production issues following the mid-February polar storm in the Gulf Coast. Feedstock ethylene contracts settled for March at a 9 cent/lb increase, the biggest month-on-month jump since October 2005, when contracts also jumped by 9 cents/lb, according to ICIS records.

Meanwhile in China, a similar story for different reasons:  China’s ethylene oxide (EO) list prices increased 20.6% following the Lunar New Year holidays (11-17 February).  The latest increase saw EO prices at Chinese yuan (CNY) 8,200/tonne in east China on 3 March, according to market sources. Prices stood at CNY6,800/tonne on 17 February.  Sinopec, one of the largest EO producers in China, announced the increase early March.

Since Christmas, EO prices have risen six times, mainly due to strong upstream ethylene values and main downstream derivative monoethylene glycol (MEG).  Although MEG prices fell 5% on Tuesday, snapping eight consecutive days of gains, upstream EO suppliers seek to recover gains made by recent firm MEG values.  Meanwhile, other EO derivatives including ethanolamines, butyl glycol and fatty alcohol ethoxylates (FAE) are under increasing pressure from strong EO values.

At the other end of the surfactants molecule, ICIS reported that US Q2 fatty alcohol contract discussions began in earnest around the beginning of March. Volatile but overall bullish feedstock costs across the oil palm complex - against the backdrop of ongoing supply chain concerns both from southeast Asia and in the US - are likely to underpin the negotiations, against the backdrop of short supply and strong demand for surfactants amid ongoing disruptions in the US market.

Shell and Sasol remained on force majeure for alcohols and ethoxylates products produced at their Louisiana plants, following extreme weather-related disruptions in the US Gulf in February. Sasol confirmed it is restarting its Lake Charles, Louisiana, site. Multiple downstream producers remained on force majeure as well, including Clariant, Oxiteno and Indorama.  Strong demand in Asia and the US against the backdrop of volatile feedstock costs and ongoing supply chain disruptions in the US are likely to put pressure on Q2 contracts.

US spot prices for mid-cut alcohols continue to be heard above $1/lb DEL USG.  Spot prices for C16-18 continue to be heard above mid-90 cents/lb ex-tank range.  Spot prices for C16 continue to be heard above $1/lb DEL MW, as C16 supply is tighter than C18.  Tight supply and higher prices for C16 alcohol are in turn favouring higher C18 blended material, in turn putting pressure on C16-18 blended alcohols as well.  Mass balance premiums have been heard in a range of 5-7 cents/lb or higher over non-certified material.

And in Asia, ICIS noted that Asia’s fatty alcohols market remained relatively subdued the second week in Marchn, as players stayed on the sidelines and adopted a cautious stance.  With the rally in the upstream palm kernel oil (PKO) and competing feedstocks soybean and corn oil prices fizzling out, buyers have retreated to the sidelines to adopt a cautious stance, market players said.  Although demand from India and China is still strong, buying interest has declined, with buyers staying on the sidelines to wait for a clearer picture, market sources said.

“The buyers are adopting a wait-and-see stance and asking for a price discount for the fatty alcohols 12-14 blend, but it is not possible to sell at lower prices due to the margins erosion,” a supplier said.  On 3 March, fatty alcohols 12-14 blend fell by $25/tonne week-on-week to $2,000-2,100/tonne FOB SE Asia, ICIS data showed.

Mid-month, the great Lucas Hall further analysed the alcohols supply chain as follows: Q2 fatty alcohol contract negotiations were ongoing, with settlements largely emerging higher from Q1 on the back of bullish feedstock markets and ongoing shipping logistics constraints globally. Feedstock markets across the oil palm complex continue to face upward pressure from tighter production, lower inventories and bullish costs in other fats and oils markets like soybean oil (SBO).

Product	Delivery	15 March	9 March
CPO	DEL, south Malaysia	M$4,200.00	M$4,070.00
PKO	DEL, south Malaysia	$1,391.29	$1,325.98
Palm Olein	FOB, Malaysia	$1,070.00	$1,040.00
Palm Stearin	FOB, Malaysia	$1,045.00	$1,025.00
PFAD	FOB, Malaysia	$980.00	$960.00

All prices are on a per tonne basis.

Source: Matthes & Porton

Supply chain disruptions persist following extreme weather-related disruptions in Texas and the US Gulf last month.  Synthetic alcohols producers Shell and Sasol remain on force majeure on production from their Geismar and Lake Charles, Louisiana, sites. Sasol confirmed all plants are running and heading towards their operating target.  Multiple buyers in Texas remained shut and on force majeure amid weather-related disruptions, including to key ethylene oxide (EO) supply. V Tighter surfactants supply because of the supply chain disruptions are creating a bottleneck in demand ahead of the Q2 and Q3 high seasons.  Demand in the oil and gas sector is also increasing as crude oil prices rebound.

Prices

Freely negotiated settlements for C12-C15 alcohols were heard in the $1.00-1.08/lb DEL (delivered) USG (US Gulf) range.

C16 settlements were heard in the $1.00-1.07/lb range.

C18 settlements were heard in the mid-90 cents/lb range.

C16-18 settlements were heard in the high 80-upper 90 cents/lb range.

50/50 C16-18 blend was heard in the 90-upper 90 cents/lb range, as C16 is tight relative to C18.

Higher volumes of C18 being pushed into blended cuts is also tightening the C18 market.

Mass balance premiums were heard in the 5.5-7.0 cents/lb range.

Overall availability is constrained amid ongoing shipping logistics constraints from southeast Asia and supply chain disruptions in the US.

Completing the picture, ICIS profiled the Asia ethoxylates market, which is expected to see further upward pressure in the near term, tracking the Chinese domestic market.  Chinese domestic feedstock ethylene oxide (EO) prices have continued to trend up in China, lending support to rising Chinese demand for April shipments of FAE imports, market sources said.

Chinese domestic feedstock EO prices have risen following the Lunar New Year holiday, to Chinese yuan (CNY) 8,400/tonne ex-tank east China on 10 March compared with CNY6,800/tonne ex-tank east China on 19 February, market sources said.  The Chinese market was shut for the Lunar New Year holidays on 11-17 February.  “In light of feedstock costs pressures and demand, spot offers for April shipments of FAE are likely to rise further,” a regional producer said.  On 11 March, FAE spot prices were up $40/tonne week on week at $1,640-1,680/tonne CIF (cost, freight and insurance) China, ICIS data showed.

By the 19^th of March, however, Asia FAE momentum had slowed according to ICIS, as players adopted a wait-and-see stance amid falling upstream crude oil prices.  Players retreated to the sidelines to wait for a clearer picture as market sentiment was dampened by the retreat in crude oil market.  The build in the crude oil inventories in the US had dampened market sentiment.  On 18 March, crude futures tumbled by more than $4/bbl, with US crude futures for April delivery on its fifth consecutive session of decline, closing at $60.00/bbl.

The oil market has been factoring in the fourth consecutive weekly build in US crude oil inventories, based on data from the US Energy Information Administration (EIA), following disruptions caused by February’s winter storm.  However, demand for FAE is expected to remain firm, given that the end-use surfactants industry is recession-proof, and usually grows as the population increases, market sources said.  “We expect demand for surfactants to grow at least 5% this year in Indonesia as people need to wash and clean and all the more so in light of the coronavirus pandemic,” a regional FAE producer in Indonesia said.

In the week ended 18 March, FAE (drummed moles 7, 9) edged $10/tonne lower to $1,650/tonne CIF (cost, insurance and freight) China and $1,680/tonne CIF southeast (SE) Asia, ICIS data showed.  “Although the upstream ethylene or feedstock ethylene oxide may have dropped, this is countered by the rise in the other fatty alcohols feedstock,” another producer said. On 17 March, feedstock fatty alcohols C12-14 blend rose by $50/tonne week on week to $2,100/tonne FOB (free on board) SE Asia, ICIS data showed.

More biosurfactants news as reported by ICIS: BASF has signed two partnership agreements to expand its position in the global bio-based surfactants and actives market, the German-based company said on March 10th.  One partnership is with Japan's Allied Carbon Solutions (ACS), a commercial provider of surfactants from biomass.  It involves an exclusive technology cooperation, commercial agreement and product development for sophorolipids, one class of glycolipids, to address the needs of consumers for sustainable, natural and bio-degradable ingredients and actives.  As part of the partnership, BASF took an equity stake in ACS, making it ACS' single largest shareholder.

The second partnership, with UK-based start-up company Holiferm, is focused on developing and manufacturing sustainable, non-fossil based, fermentation-derived ingredients for other classes of glycolipids, with potential for application in home care, industrial formulators and personal care products.  “While BASF already has solid innovation and production capabilities for surfactants, we are always scouting for opportunities to work with partners well-rooted in technologies which add to our strength in order to expand our product portfolio with additional biobased products,” said Ralph Schweens, president, Care Chemicals, at BASF.

We’ll learn a lot more at our conference coming up in May.

More supply updates: LyondellBasell revised its sales allocation for purified ethylene oxide (EO) for March, according to a customer letter obtained by ICIS on 25^th March.  The letter, dated 23 March, revised the allocation amount, which previously was 30%. All other products remained at the same allocation levels.

Product	Allocation %
EO - pure	55
monoethylene glycol (MEG)	30
diethylene glycol (DEG)	contact account manager
triethylene glycol (TEG)	50
heavy ethylene glycol (HEG)	contact account manager

The allocations apply to all production sites and terminals throughout the US, according to the letter.  The company declared force majeure on 16 February as a result of a winter storm that paralysed much of the chemical production on the US Gulf Coast.

Meanwhile in Europe, ICIS published a handy EO turnaround graphic which you should be able to see below. If not – try fiddling with your ad-blocker or try another browser.

 

In a related and tremendously insightful focus article, star ICIS reporter, Melissa Hurley reported that European ethylene oxide (EO) April contracts have risen (as of March 31) by double-digits on the back of upstream ethylene moves. EO supply is expected to be snug-to-balanced in the second quarter due to planned maintenances.  The European ethylene contract reference price for April has been set at €1,045/tonne, up by €40/tonne from March.

The vast majority of EO contracts are formula-based, with the price movement representing 80-85% of the change in the monthly ethylene contract price. ICIS uses an average of 82% for the ethylene contract price in its calculations.  Prices were assessed at an increase of €33/tonne on both ends of the ranges, bringing prices to €1,216-1,384/tonne free delivered (FD) northwest Europe (NWE).  This marks the fifth consecutive monthly price increase.

March EO contracts firmed due to double-digit pricing gains in the ethylene contract market.

Feedstock spread - Ethylene and EO Europe

PLANNED TURNAROUNDS KEEP SUPPLY SNUG

There are several EO maintenance due to take place in the second quarter: PKN Orlen is due to conduct a planned maintenance at the EO and EG facility in Plock, Poland, in the second quarter of 2021. The exact dates are unknown. This has not been confirmed by the company.  There is a planned maintenance expected at BASF's EO facility in Ludwigshafen, Germany, at the end of the second quarter. The exact dates are unknown.  There is a planned EO/EG maintenance expected in June at INEOS Antwerp in Belgium, according to market sources.  Beyond the second quarter, there is a turnaround A planned expected at Dow's EO facility in the Netherlands during September, according to market sources. The exact dates are unknown.

EO DERIVATIVE DEMAND STRENGTH VARIES

The strength of EO derivative demand has been quite varied. Integrated suppliers can tweak output among derivatives, to optimize on better performing products. Glycol ether prices soared in the first quarter due to supply constraints. EO is used to make glycol ethers which can be used in solvents and fuels.  European monoethanolamines (MEA) and triethanolamines (TEA) 99% prices skyrocketed last week on the back of tight supply and healthy demand. Ethanolamines are used in surfactants and personal care products,  Derivative demand was healthy for ethoxylate markets in the first quarter. The second largest EO derivative use is in ethoxylates which is used in applications such as shampoo and kitchen cleaners. \ Meanwhile, monoethylene glycol (MEG) demand softened this month due to downstream polyethylene terephthalate (PET) production issues.

It seems we can’t get away from EO this month. The great Indian Chemical News (ICN) (which I read every morning and so should you), reported that Clariant and India Glycols Limited (IGL) announced a strategic partnership to establish a 51-49% joint venture (JV) in renewable ethylene oxide (EO) derivatives. By combining production and distribution capacity, the JV is expected to become a leading supplier of renewable materials to the rapidly growing consumer care market in India and neighboring countries, while providing Clariant the ability to leverage the EO derivatives globally across the home care, personal care and industrial applications segments of its Industrial and Consumer Specialties business. The partnership is subject to customary regulatory approvals. Under the terms of the proposed agreement, India Glycols will contribute its renewable Bio-EO Derivative business to the joint venture, which includes a multipurpose production facility including an alkoxylation plant located in Kashipur, Uttarakhand (India).

In return, Clariant will contribute its local Industrial and Consumer Specialties business in India, Sri Lanka, Bangladesh and Nepal, held by Clariant India, as well as a net cash payment to attain a 51% stake and thus majority ownership. Clariant International Ltd. will be the sole Clariant shareholder in the JV. U.S. Bhartia would be the designated chairman of the joint venture. The JV will market Clariant’s entire range of Industrial and Consumer Specialties products in the previously mentioned countries, while all other global markets shall be served by Clariant. To support production, India Glycols has agreed to a long-term supply agreement for ethylene oxide made from bio-ethanol as well as further utilities. At its inception, the JV will have approximately 200 employees. Very interesting news. I have to say that, as soon as travelling re-starts, two of the first places I plan to visit are Switzerland and India. Two great, fascinating, different countries. And check out this picture below. This is a real projected image by a Swiss artist,  of the Indian flag on the Matterhorn mountain, a place I have skied many times. How cool is that ? It was done in April of last year.

Here's a cool 1 minute video of the same thing..

We missed this last month but here it is: Galaxy Surfactants' Shekhar talking about their Capex plans – again, courtesy of ICN.

And finally, again from the great ICN, the starved Indian LAB market is finally getting some relief with TamilNadu Petrochemical investing a total of Rs. 435 crore in a  Linear Alkyl Benzene Plant, HCD Plant and a Propylene Recovery Unit. The Board of Directors of Tamilnadu Petroproducts Ltd (TPL) has approved three proposals - augmentation of capacity of Linear Alkyl Benzene (LAB) plant, modernization of HCD plant and setting up a Propylene Recovery Unit. The capacity of Linear Alkyl Benzene plant would be increased from the existing 120 KTA of which about 90% is utilized at present to 145 KTA at an estimated cost of Rs. 240 crore. Post regulatory approvals, the project  is expected to be completed in about 24 months. Attendees at prior surfactants conferences of ours will know that India is chronically underserved by domestic LAB capacity and so this addition is long overdue.

This is gratuitous but - hey I'll take it where I can get it on this fact and data rich blog...

That’s for the news – Wow -  a lot right?

So – Easter: I first experienced Passover in the US in the mid 80's and have done so regularly ever since. It's a necessary complement to Easter for obvious reasons with its message of deliverance and freedom. My earliest memories of Easter do honestly involve those buttons eggs pictured at the top of the blog. As time passed, I got to appreciate the transcendent nature of the holiday as it focuses every single year on rebirth. But it was only through the Passover story that the whole sense of Easter came into sharp focus - as I think it probably did for a handful of folks a couple of thousand years ago, when they attended that, now famous, Passover seder in the upper room.

Hmm.. serious, albeit optimistic, stuff. So let's end on a lighter note. Many of you  contacted me after last month's Ritchie Blackmore references, asking if there might be another Ritchie riff that I thought worthy of note. Actually that's not strictly, or even partially true. However,  here's a tremendous blues song from the same Rainbow live album as last month, with a lush opening and a heart-stopping vocal performance from Ronnie James Dio. Please enjoy this as irresponsibly as you like.  The fun starts at 1:00 with a Blackmore pallette cleanser before the riff is served up for our delectation at 1:37. But still, after almost 50 years, you still can't help noticing those vocals. I know Dio sometimes sounds like the typical American rock singer who shows up one day in a quintessential English rock band. But in this song, man, he has found his home - or made it his home. In my humble opinion of course. What do you think?

OK well, now we're on the subject of riffs that will stand the test of time: Remember this one, from the same era. Kiss - Detroit Rock City.? Say what you like about these dudes in tights and makeup, this is a heck of a show-opener from 1977.

Another meaty riff from a 1981 live version of a 1972 song by BOC.

BOC - Supposedly the American Black Sabbath? Nah..

Did you  know that The Wizard showed up in a recent episode of Peaky Blinders on Netflix? The connection? Birmingham.

That's it for March, guys. Sign up for the conference !! Here.