Surfactants Monthly Review – November 2019
November 2019 – Surfactants Monthly
We’re delayed this week due to a last minute trip to Europe. In-flight wi-fi just wasn’t co-operating to get this done on the plane. And a cold and a board meeting and the dog ate my homework! November itself was marked by a trip to Singapore and then Malaysia, where PIPOC made it’s biannual appearance in KL. This time, P2 Science did a PIPOC takeover with a triple header appearance by Paul Anastas, Patrick Foley (the two scientific co-founders of the company) and me. More later on this interesting few days.
I want to talk about Keira Knightley, because she has something to teach us.
[caption id="attachment_1571" align="aligncenter" width="1024"]Watch and Learn[/caption]
First some context setting. This month in surfactants, federal and state governments loom large and that is not a good thing. As readers know, my view is that governments looming large in any commercial field is generally not such a good thing. Here’s one of my favorite video clips on that:
ICIS reported that a new bipartisan [uh oh – watch out!] congressional task force will address the safety of ethylene oxide (EO) emissions. Representatives from the US states of Illinois and Georgia have formed the group to urge the US Environmental Protection Agency (EPA) to act [just act darn it, doesn't matter how].
The website for Brad Schneider, a Democratic representative from Illinois, said: "The task force supports legislative efforts ... which would require EPA to issue new, strict EO emissions standards for medical sterilization and chemical facilities and require the EPA to notify the public no more than 30 days after it learns that the new standards have been violated." [actually that sounds reasonable] The American Chemistry Council (ACC) released a statement on the new group, saying: "Ethylene oxide is a versatile and valuable compound that’s used to help make countless everyday products. We use it to make household cleaners and personal care items, create fabrics, and manufacture raw materials into more useful forms. A small but critical use of ethylene oxide is the sterilization of medical equipment. It’s estimated that more than 50 percent of all medical devices that families rely on are sterilized with ethylene oxide. “There has been much confusion about the health risk of ethylene oxide, and we look forward to clarifying these issues as we work with this new task force and continue to protect the safety of our communities, our environment and our workers.” [That also sounds reasonable]
And there ends the story. But of course there’s more to it. Congressman Brad Schneider clearly has the EO bit between his teeth. His website notes the bill that he and the IL delegation introduced to force the EPA to be more diligent in its monitoring of EO. It also links to a letter from the EPA, about which the congressmen have expressed some skepticism. While most of the discussion centers around the use of EO in medical sterilization, there is at least one user of EO in surfactants in the Schneider’s district and that is Vantage in Gurnee. Vantage’s website covers the matter quite well in a September 2019 letter here. It includes some useful links to additional resources at the bottom of the page.
New York State government is also lending a hand in another EO related area – that is dioxane. As reported in numerous outlets, including C&E News, A NY State bill (S4389B) would effectively ban 1,4-dioxane in cleaning and personal care products sold in the state. Apparently, high levels of 1,4-dioxane have been found in the groundwater in Long Island, New York, from former industrial and military facilities in the area. The legislation would limit 1,4-dioxane in household cleaning products to a level of 1 ppm by the end of 2023, in an effort to protect water quality. The chemical is an impurity in ethoxylated compounds used in some household detergents and personal care products. “Unfortunately, this bill will have no measurable impact on groundwater and it will not have the intended effect for Long Island’s residents,” a coalition of cleaning products trade groups [ including ACI] said in a statement.
[caption id="attachment_1558" align="aligncenter" width="1024"]The Pre-Dioxane Era[/caption]
I’m often asked, if such and such a chemical (LAB, ethoxylates, PKO based alcohols, etc..) will be banned. My answer is usually something along the lines of .. “it’s hard to imagine”. Of course, things that are hard to imagine often happen. You know, tipping point and all that stuff.
[caption id="attachment_1559" align="aligncenter" width="1024"]Once Hard to Imagine[/caption]
So, you have to think in terms of what could happen and what can you do about it. I think the ACI and fellow groups are doing a great job but the challenge may be at a more fundamental societal level. For example, how many of our blog’s readers understand the difference between hazard and risk. I’m guessing many. How about college students, high school kids, grade schoolers, soccer moms, millennials, hipsters, union members, see what I’m saying? One thing you should know. That bill passed unanimously. No dissent. No abstentions. 62 for and none (0) against. Interesting.
So what’s an industry to do? I don’t know but we will learn and discuss more in May when this story will have advanced further.
I guess, one thing is – I like simple communication. Remember this one?
First off, I don’t carry this clip around in my head, in case you wondered, although the movie is one of my favourites. I looked it up after Boris’s ad hit the airwaves – this one:
Am I saying that Keira Knightley is like “the public” ? In this movie yes and in Bend it Like Beckham for sure; albeit a kind of flawless version of the girl next door. But hey it’s the movies, so that’s OK. The lady in the Boris ad is much more like the voter next door.
So that’s one thing – simple, heartfelt communication; no nonsense. “The other guy might win”. “Let’s get Brexit done”. Think of your message as going to Boris’s voter, or Keira (if that helps). There’s something else. I’ve noticed recently that there is a tendency to dismiss groups of folks who disagree with you as being foolish people, manipulated by clever liars. And this is a very tempting conclusion because of course both parts of the assertion carry a lot of truth. We all know some foolish people and also some clever liars. How convenient to group them together, give them a label (tree hugger, nationalist, etc.) and there you are. It’s not your fault. You’re not foolish and you don’t listen to liars. Were all 62 state senators who voted for this bill, foolish people who were manipulated by liars at the EWG and MSNBC? Probably not right? As scientists or at least folks working in a science heavy industry, it’s sometimes too easy to label people as ignorant and then throw your hands up and walk away. Think of them as your mam or aunty or brother-in-law (yeah that one. The one who’s a practicing psychologist who still believes everything he reads in the New York Times. Like journalists aren’t humans who have biases and perspectives?)
OK that’s it on this topic. That’s not the whole story of course but I’ve got more news to get to.
In an interesting ICIS piece, Oxiteno is noted to be targeting operating improvements and a tripling of production at its alkoxylates plant in Pasadena, Texas, US by 2022. “The plan is to produce around 50 different products [ that’s a lot] which is different from running a commodity plant [ for sure] , so we are gradually increasing the complexity of products there,” said Joao Parolin, CEO of Oxiteno. “We faced some technical issues that are normal in the first phase of operations but we are on an upward trend in terms of reliability and service to customers,” he added.
When the US plant comprising two reactors started in late 2018, there were high inventories from the pre-marketing of surfactants made in Brazil and Mexico. However, Oxiteno has been running down those inventories and is now selling US-produced products, he. Oxiteno is targeting surfactants production from the plant of 120,000 to 125,000 tonnes by 2022, up significantly from expected production of around 40,000 tonnes in 2019, said the CEO. The plant’s nameplate capacity is 170,000 tonnes/year. [ some ambitious numbers, especially given the number of products]
“It will take time to certify some surfactants in areas such as food ingredients, agricultural chemicals and consumer products”, Parolin noted. Key end markets for the surfactants produced at the plant are agricultural chemicals, food additives, health and personal care, and oil and gas..
Oxiteno’s business in the US is under relatively new management with Alberto Slikta appointed as chief operating officer of Oxiteno USA in April 2019, replacing Timothy Madden who is now CEO of Jiahua Chemicals, Inc – the US arm of Chinese surfactants company, Jiahua.
Parolin went on to comment on the Brazilian economy: “With Brazil GDP shrinking by about 8% in 2015 and 2016, and GDP expected to grow just 0.9% in 2019, we are still well below 2011 and 2012 levels. It’s been a lost decade for Brazil,”. However, the agricultural sector is Brazil is a bright spot and Oxiteno is benefiting from the production of surfactants going into ag chemicals, he noted. Brazil is benefiting from greater Chinese demand for grains, soybeans and meat as China buys less from the US because of tariffs. While the consumer goods market has been “very resilient”, growth in the home and personal care sector has been challenging as customers there have been reducing the use of active ingredients in their formulations to be more cost competitive, he said. [we’ve seen that here also]Projections are for Brazil GDP to recover to about 2% in 2020, he noted.
[caption id="attachment_1560" align="aligncenter" width="800"]Brazilian Agricultural Bright Spot[/caption]
The new reporter on the ICIS Detergent Alcohols beat, Lucas Hall, has written that Contract negotiations for US first quarter mid-cut fatty alcohols are likely to continue to face downward pressure from increased competition in the domestic market at a time when demand typically begins to slow. A southeast Asian player not known to traditionally compete in the US [ no prizes for guessing who] is heard to be penetrating the US mid-cut alcohols market, with at least one large volume buyer heard to have settled a full year contract with the company well below the average ICIS 2019 contract price. N Competition is also increasing as synthetic alcohols producers vie to increase their market share ahead of the startup of Sasol's fatty alcohols and ethoxylates expansion in Lake Charles, Louisiana, which is slated for early 2020 according the company's most recent press release. At the same time, demand for the C12-C14 detergent range mid-cut alcohols primarily sought by US buyers in the main end-use surfactant market is softening as does typically occur this time of year.
Although palm oil and PKO prices have sharply increased since the second-half of October amid expectations of increased consumption in Indonesia and Malaysia ahead of increased biodiesel blending mandates slated to be implemented in 2020, southeast Asian inventories are at their highest levels since 2015. Higher PKO prices normally put upward pressure on US alcohols prices since the US imports its alcohols from southeast Asia. However, the high inventory levels [ of PKO] suggest production is exceeding consumption and exports. Some market participants think prices could face a downward correction as exports begin to slow in December and in China in January, with a drop in feedstock costs likely to limit any upward pressure currently being exerted on US first quarter contract negotiations. [ whoever said purchasing wasn't interesting and exciting?]
[caption id="attachment_1561" align="aligncenter" width="1024"]Downward Correction in Palm?[/caption]
I don’t normally report on exactly what goes on in my conferences. However ICIS has already reported these insights from our speaker, Yu Jing of the CICCC, so here goes: The consumption of surfactants in China is expected to grow at an annual average rate of 4.1% over the next five years after reaching 3.35m tonnes in 2018, mostly driven by demand from household and industrial cleaning applications, an industry executive said on Thursday. This rate of growth is lower than the 9.7% rate seen in 2013-2018 as China’s economy is slowing down and transforming into an era of “high-quality development”, said Yu Jing, deputy chief engineer at China International Chemical Consulting Corporation (CICCC). China’s consumption of surfactants will be spurred by the rapid increase in population, urbanisation, wages and “increased awareness of health and hygiene”, she told delegates at the 9th ICIS Asian Surfactants Conference in Singapore. The country’s surfactant industry is more involved in the production of commodity-type surfactants and will continue to be a net importer of consumer nonionic surfactants in the future, according to Jing. The largest surfactant-consuming application area in China is the detergent industry, with liquid detergents making up 61% of the market last year, she said. Liquid detergents will continue to take a greater share of power detergent in the future, while surfactants based on oil and fat also showing good growth opportunities in China, according to Jing. China produced 3.2m tonnes of surfactants in 2018, which means 10% of overall demand needed to be imported, she added.
Also in China Ethylene oxide (EO) prices fell for the first time in ten weeks, breaking under downward pressure from bearish downstream markets. EO prices are usually decided by one of the largest EO producers in China - China Petroleum & Chemical Corporation, or Sinopec Corp, as it is more widely known. Prices have been at Chinese yuan (CNY) 8,000/tonne ex-tank since 21 August. On 6 November, finally yielding to weak downstream markets, Sinopec Corp announced a CNY400/tonne drop to CNY7,600/tonne ex-tank.
In the US, according to AFPM data, production of ethylene oxide (EO) in the third quarter fell year on year. The seasonal pickup for downstream derivatives such as polyethylene terephthalate (PET), the biggest end-use for monoethylene glycol (MEG), for bottled drinks was limited amid economic headwinds and a delay to summer weather. Q3 production increased quarter on quarter amid new capacity and as planned turnarounds came to an end. No data was reported by Lotte Chemical, Nan Ya Plastics or Sasol. Both Lotte and Sasol started up new EO/EG (ethylene glycol) units in Lake Charles, Louisiana, this year.
More from our Asian conference as reported by ICIS. French beauty products maker L’Oreal is on track to meet its 2020 target of not using ingredients and raw materials for its products that could be linked in any way to deforestation, a senior company executive said at the conference. However, the company still faces challenges to meet its targets, which includes the “lack of traceability to palm oil plantations”, human rights issues and having to deal with non-compliant practices of indirect suppliers, said Philippe Provost, raw materials category director at L’Oreal. “Despite increasing NDPE [no deforestation, no peat, no exploitation] commitments in the industry, palm-driven deforestation continues its progress,” Provost said.
In Borneo Island alone, palm oil was the driver for 39% of the deforestation between 2000 and 2018, according to Provost. L’Oreal in 2019 is still expected to purchase about 70,000 tonnes of palm oil derivatives and palm kernel oil derivatives, according to provost. The company has pledged to ensure that 100% of its volumes of its raw materials are physically certified by sustainable palm oil products watchdog Roundtable on Sustainable Palm Oil (RSPO) by 2020.
[caption id="attachment_1562" align="aligncenter" width="730"]I said No Deforestation! (Lipstick by L'Oreal)[/caption]
Meanwhile, the newest member of the North American surfactants industry, Indorama Ventures’ announced that third-quarter earnings fell on the back of weaker spreads for some key products and unplanned shutdowns.
($m)Q3 2019Q3 2018% change Revenue2,8322,920-3Core EBITDA281409-31Core net profit after tax and non-controlling interests92260-65
- Spreads between product and feedstock prices fell for Indorama’s integrated polyethylene terephthalate, monoethylene glycol, isopropanol and fibres chains due to higher inventories along the pipeline and indirect impact from the US-China trade dispute.
- Earnings were also impacted in the quarter and through the year to September by unplanned shutdowns, a catalyst change at its ethylene oxide/ethylene glycol unit in the US and a line conversion from purified terephthalic acid to isopropanol in the country. The acquisition of intermediates and surfactants assets owned by Huntsman for $2.1bn is expected to close by the first quarter of 2020, with Indorama estimated the EBITDA from those assets during the quarter at $122m.
The latest on the Sasol project in Louisiana has them delaying the planned start-up for its low density polyethylene (LDPE), ethoxylates, Ziegler and Guerbert alcohols plants at its Lake Charles, Louisiana, complex, according to a company release on production and sales metrics. The company anticipates reaching beneficial operations at its 420,000 tonne/year LDPE plant by the end of the fourth quarter of 2019. The ethoxylates plant at the Lake Charles Chemicals Project (LCCP) is anticipated to start-up in the first quarter of 2020 while the Ziegler and Guerbet alcohols plants are scheduled to start up in the second quarter of 2020, according to the company.
Our good friends, Galaxy Surfactants (Mumbai, India) reported a 44.6% year-on-year (YOY) increase in net profit for the fiscal second quarter, which ended on 30 September. The company’s net profit reached 670 million Indian rupees ($9.3 million). Higher profit was achieved because of a one-time deferred tax gain of Rs94.3 million. Revenue was down 5.3% YOY to Rs6.6 billion owing to lower prices of fatty alcohol, a major raw material for the company’s performance surfactants. Galaxy states that the price of fatty alcohol declined by 21% YOY. The company’s production volume for the first half increased 7% YOY to 111,834 metric tons. Performance surfactants volume remained flat at 69,990 metric tons, up by 5.7% YOY. Specialty care product volumes increased by 11.5% YOY to 42,144 metric tons, up 10% YOY. Now that Galaxy has shares on the stock exchange, you can look up some very good information here.
As previewed earlier in our blog, BASF has launched a surfactant using Roundtable on Sustainable Palm Oil (RSPO)-certified ingredients that can be used in a range of personal care products. Texapon SFA can be dried into a noodle base to incorporate into solid cleansing bars, tapping into the industry trend to get rid of plastic packaging. It is also very gentle on skin and eyes, making it especially suitable for baby skin and tear-free shampoos. This is the Alpha Sulfo Fatty Acid C12-14 Disodium Salt (INCI name: Disodium 2-Sulfolaurate) that we wrote about in June.
As noted above, I spent a few days at PIPOC in November and it was an outstanding and flawlessly produced event by the Malaysian Palm Oil Board as usual. The Prime Minister of Malasia, Mahathir Mohamad, 94 years (!) old gave the opening address. It was a hearfelt defence of the palm industry against what he thought was a hypocritical assault by the EU, a region more interested in protecting their own oilseed crops that in protecting the environment. Much of what he said made a lot of sense. The country is launching a “Love my Palm Oil” campaign along with a new branding of 5-star Malaysian Palm Oil. There’s passion on both sides for sure. Have fools been manipulated by liars anywhere in this debate? Certainly. It often seems protagonists on each side label themselves either pro or anti-palm oil. After that, facts matter much less. It’s as if, after deciding that you are a Man. Utd. fan (much like your father and his father) you would sit down and carefully consider, given all the stats, whether or not Man. City is truly the better football team. Not gonna happen.
[caption id="attachment_1563" align="aligncenter" width="700"]Not this time[/caption]