Surfactants Monthly Review – September 2019
September Monthly Surfactants Review
Last month’s blog attracted a lot of very positive feedback. Thanks for that. The story of Tony Service certainly seems to have inspired many people and that makes me feel very good, for obvious reasons. Now, Tony was in the commercial field. There are clearly Tonys or Tonyas or Rishis out there who are in manufacturing, finance, R&D, whatever. Have you ever known one? If you’d like to share the story, I and the blog readers would love to hear it, I’m sure. Please get in touch. Let’s see if we can make this a periodic feature. What would you be like if you worked to become the Tony Service of your field / industry / hobby?
[caption id="attachment_1502" align="aligncenter" width="450"]What would you be like?[/caption]
Now the news; provided largely by the good folks at ICIS. If you like this information, you should subscribe to their service, like I do.
The month started with news of the Q4 fatty alcohol contract negotiations from ICIS’s Judith Taylor as she reported that US mid-cut fatty alcohols were mixed as contract negotiations were slowly emerging for Q4 business. Judith noted that several producers were looking at potential rollover from Q3 prices. A few buyers considered this a possibility, but more input suggested a slight edging down from Q3 levels for the mid-cuts. Third-quarter contract prices were assessed down on high feedstock inventories for the natural alcohol sector and overall ready supply of both natural and synthetic alcohols in the US market.
ICIS assessed the mid-cut C12-15 alcohol Q3 contracts at 63-72 cents/lb ($1,389-1,587/tonne), a 5 cent/lb drop on both sides of the spread from the Q2 assessment. The following graph shows price trends for the C12-15 mid-cuts alongside the C12-14 natural alcohol spot prices in southeast Asia. The US C12-15 carbon spread seeks to include synthetic alcohols by showing the extra carbon unit.
[caption id="attachment_1503" align="aligncenter" width="668"]The trend is there..[/caption]
In the US, synthetic (petrochemical) alcohol production is another supply route for mid-cut alcohols. Following several quarters of short supply, mid-cut synthetic alcohol production improved during the third quarter. This gave ready supply into the US domestic market as well as offering material into Europe to sustain requirements following the closure of alcohol production at the Stanlow refinery in the United Kingdom. Entering the Q4 contract negotiations on the mid-cuts, buyers commented about being approached by synthetic producers for the first time in a number of quarters.
These early actions on Q4 volumes caused several buyers to say that sharper competitive activity could develop between the natural alcohol importers/sellers and the synthetic alcohol producers. Some sources speculated that more synthetic alcohol is in the market because less volume is going to Europe. Other sources said synthetic producer expansions are becoming active, bringing more alcohol into the market. Judith ends the article by noting that “Synthetic producers do not comment on market activity or on alcohol production output.” [That’s because they are smart..]
[caption id="attachment_1504" align="aligncenter" width="1024"]Shell's Spokesman..Strong, Silent.. and Smart[/caption]
It’s rare that we read about patent battles in the surfactants industry, so it is with great interest that I read the following as reported by ICIS. PCC Exol said late on Thursday that it will fight a lawsuit filed by US company HH Technology Corpthat alleges the violation of an alkoxylates production patent. In a note to investors, PCC Exol said that it had received a notice from Wroclaw District Court in southern Poland stating that HH Technology Corp has requested an order that demands Exol cease violating the terms of a patent on a “method for producing alkoxylates and a device for carrying out this method.”
The plaintiff, added Exol, in particular wants to “prohibit PCC Exol from offering and marketing alkoxylates based on fatty alcohols and order PCC Exol to withdraw from the market alkoxylates or products derived from the use of these alkoxylates”. HH Technology also wants the Polish company to pay a sum corresponding to the amount of damage HH Technology has suffered as a result of the infringement of the patent, the note added. PCC Exol, headquartered in Brzeg Dolny, southwestern Poland, said it would fully dispute the claims made by HH Technology. The Duisburg, Germany-based PCC conglomerate, which has operations in 17 countries, owns PCC Exol.
Now, I don’t have any other details beyond what is reported but as we know, HHT is a process technology company providing key equipment and engineering to companies in the alkoxylation and other areas. PCC is a diversified Polish / German company, involved in chemicals, logistics and of course, surfactants. Process technology patent breaches are tough to prove, unless you are dealing with unique products unable to be produced without that particular technology. Ethoxylates, I don’t think are that type of product. So HHT, I’m speculating, must have had some inside knowledge of some sort. A spy? A whistleblower (aren't they like the same thing?) Maybe a former business relationship gone sour? In any event it is a tough decision for a company to sue a customer or potential customer. We’ll only know the full story if this dispute actually goes to court, so stay tuned I guess.
[caption id="attachment_1505" align="aligncenter" width="780"]Mmm.. so tell me more about that spray nozzle[/caption]
In early September, ICIS reported that August ethylene contracts have not fully settled and will likely be part of a two-month settlement in early October, amid mixed views about production costs. Feedstock ethane prices have risen on strong demand and higher ethylene spot prices. Demand for downstream monoethylene glycol (MEG) from the antifreeze sector is beginning to pick up ahead of the colder winter months, while the derivative polyethylene terephthalate (PET) peak bottled drink season is tailing off. Downstream diethylene glycol (DEG) demand is slightly lower than expected in downstream surfactants, including ethoxylates, and polyols.
Not purely surfactant related but fatty acid related and interesting: A technical fellow [notice how that title depends on where you place the emphasis. You put it on the first word “technical” and it sounds like any one of thousands of folks in the lab. On the second word, and suddenly we’re talking about a superstar] at Chemours has received an award for his work in developing a durable water repellent that is nonfluorinated and made with renewable feedstock. John Sworen received the SCI Gordon E Moore Medal from the Society of Chemical Industry (SCI), America Group. Sworen led the team that developed the repellents. Chemours's new water repellent, called Teflon EcoElite, stands out because it is non-fluorinated and made with renewable materials. Chemours would not provide much details about the chemistry of Teflon EcoElite. It did say that the raw material is plant based and would be classified as a fatty acid polyester. Altogether, Teflon EcoElite has 63% renewably sourced content, the company said. It is already being used by Colmar, an Italian company that makes ski-wear and other sports apparel.
[caption id="attachment_1506" align="aligncenter" width="555"]..And 63% natural[/caption]
In the latest on the tariff wars, China will exclude 16 products from a 25% additional tariff on US goods for a year starting from 17 September 2019 to 16 September 2020, ICIS reported. The listed products are mostly covered in China’s tariffs on $16bn of US goods enacted on 24 August last year. Under the arrangement, importers can get paid tariffs refunded for a number of products, one of which is HS code 34021300 – nonionic organic surfactants, because clearly they are needed and US production is very competitive. So – what are you waiting for..?
[caption id="attachment_1507" align="aligncenter" width="720"]You want your money back?[/caption]
Mid-month, Evonik announced that they expanded production capacity for the C13 alcohol isotridecanol (ITDA) at the Marl site in Germany. Evonik said the expansion driven by higher market demand and represents a strengthening of its production verbund at the Marl chemical park - from raw materials to niche specialty products. The company did not comment on the scale of the expansion or the size of the investment involved [because they, also, are smart].
And in somewhat embarrassing news, Sasol has delayed the release of its fiscal 2019 results again because of an investigation into cost overruns at its new Lake Charles cracker and olefins project, stating that the results will be out no later than 31 October, according to an announcement by the company. The company said in mid-August that it was delaying the release of fiscal results because it needed more time to assess the situation at its Lake Charles, Louisiana, cracker and petrochemicals complex.
ICIS’s Nigel Davis wrote an excellent article on Huntsman’s strategy after the disposition of their surfactants business to Indorama recently. Here’s a couple of snippets:
Peter Huntsman noted that “If Huntsman can go further downstream, it can capitalise on ingenuity, creativity and speed to market”.. The competition downstream for Huntsman is not with big suppliers of polyurethane intermediates, for instance, but with polyurethanes systems houses around the world who themselves are smaller, more nimble entities.
Huntsman will become an Indorama customer and a manufacturing partner with long-term supply arrangements of intermediates including propylene oxide. The move is seen by Huntsman as part of its strategy to focus downstream and on specialties where it expects to generate more stable margins and consistent free cash flow. Peter Huntsman is not really a fan of organic capital investment [Well at least he’s honest!] given the potential returns. That having been said, the company is investing $125m in its Geismar facilities in Louisiana on a new MDI (methyl di-phenylene di-isocyanate) splitter. It will increase the company’s flexibility for producing higher margin MDI for the Americas market and a similar split ratio to existing facilities in Europe and China. The internal rate of return on the project is said by the company to be substantially higher than 20%.
Later in the article, Peter notes that innovation seems to be rewarded more in Europe than other places, particularly China [I do know what he means]. He also noted that a big strategic acquisition is not on the cards as they might need they need the money to weather a 2008 style recession [You’ve been warned!].
[caption id="attachment_1508" align="aligncenter" width="1024"]It's better downstream[/caption]
In contrast, right at the end of the month, BASF told ICIS that they are significantly expanding ethylene oxide (EO) and derivatives complex at the Verbund site in Antwerp, Belgium. The investment is expected to exceed €500m and will increase production capacity for EO and downstream products by 400,000 tonnes/year. BASF is the largest EO producer in Europe, with combined output of 845,000 tonnes/year from sites at Antwerp and Ludwigshafen, Germany. The expansion will entail a second world-scale ethylene oxide line, with capacity for purified EO, as well as several EO derivative plants including a non-ionic surfactants, glycol ethers for automotive applications and other downstream alkoxylates. Sequential start-up of new capacities at the site is expected to begin in 2022.
In news from the feedstocks front, ExxonMobil has begun construction on its 350,000 tonne/year linear alpha olefin (LAO) unit in Baytown. The new unit is expected to start-up in 2022, the company said.
Finally, Colonial Chemical, a blog favourite, has opened an office in Shanghai, China. It will help sell and distribute the company’s products in mainland China and work with local raw material suppliers.
So that ends the news. Music-wise, I’ve been spending a lot of time this month digging into the back-catalogue of Deep Purple and, thereby, Rainbow and, yes even Whitesnake. I feel like we need a whole separate blog on this rich vein. So maybe the year end. In the meantime, I just want you to listen to this guitar solo that is often hidden in the shadow of the vocal histrionics for which the song is known. We pick it up right where Richie Blackmore comes in..
I've always found this solo really upbeat and almost jaunty in contrast to the rather deep and foreboding song itself. Notice how theres's a hint of the intro to Lazy in there as well some classical riffs. In fact we could do a whole blog on this guitar solo, if we wanted. OK, so year end we'll do this.
What else? Well, in Amsterdam this month we had a packed house for the 8th European surfactants conference and I encouraged our group to stay authentic, by aligning what they think, say and do, oh and to er.. read People Magazine.
Yes that’s right. I read People Magazine. There, I’ve said it. It’s out there on the internet now. Carve it into the blockchain if you like. I don’t care. I read it every single week. It comes to our house, on paper, and I study it like scripture, from the 100 most beautiful people, to the latest red carpet looks to how I lost 80 lbs and found the bachelorette of my dreams. Do I read it because.. I like it? (not really), it’s entertaining? (meh) it’s interesting? (kinda), informative? (yes!). People informs you about the (mainly American) culture. Now wait a sec, let me stop there. This is sounding like an "I only read Playboy for the articles" type of argument. If I only read People because it's informative, then I must like it because, presumably, I like to be informed. Therfore I read People, becasue I like it. OK - glad that's off my chest, Now, You may not like what People says (“Meghan Markle’s cute nickname for Archie”) or how they say it (“Kylie Jenner- I’m sick!”) but this paper is read by 98.5 million people a week[1]. That beats your precious Economist ( 1.7 ), New Yorker (1.2), even Time ( 17.2) and Newsweek (Apparently it still exists).
[caption id="attachment_1509" align="aligncenter" width="768"]The Big Voice of the Culture[/caption]
Something with that deep a reach, reflects the culture and the culture reflects it. You may not like it, but – it does. I’m not saying it’s the comprehensive profile of American culture. I’m saying it reflects and shapes a huge chunk of the culture – and it’s a chunk I bet you really don't know or care much about – because, you know, it’s kinda low-brow right?. You’re above that sort of thing. What J-lo wore on the red carpet or what Princess Kate wore on back to school day. What Kim is saying about criminal justice reform (wait what? – don’t pretend you don’t know who Kim is. If you even occasionally read this blog, you know who Kim is).
[caption id="attachment_1510" align="aligncenter" width="992"]You may not like it but...[/caption]
In fact you probably pride yourself in not knowing this stuff. I remember when a large consumer goods company signed Kendall Jenner to shill for them. I called my contacts there to congratulate them on what I thought was a shrewd move by the company in signing the highest paid model on the planet[2] (blog favourite, Gisele, is #5 by the way). To a man (and woman) they claimed to have no knowledge of who in fact, this Kendall Jenner is. They had to google her – “isn’t it a bloke’s name?..”. I’m still skeptical and I think they knew but it was not cool to know in their circle…so.. have you ever done that? Acted dumb when all around you are dumb? In this case, though it was acting dumb to appear smart, or something like that. I guess it’s better than acting smart when you’re not particularly. That never ends well (in my brief career of trying it). Best to do neither. Relax. If you are reading this blog, you are really, really smart. Really.
[caption id="attachment_1511" align="aligncenter" width="1024"]Highly Paid, Really Smart and Wearing Versace[/caption]
Anyway, back to People magazine, - you should know and care about this large slice of the culture. Why should you care? If you work at L’Oreal you already know what I’m talking about. They, along with others at the front end of our value chain, spend boatloads of money advertising in People and like-minded outlets. Let’s take a look at just this current, October 7th, issue of People.:
[caption id="attachment_1520" align="aligncenter" width="765"]Felicity, George, Renee, Meghan, Procter and Gamble[/caption]
Page 5 L’Oreal (and p. 109 and the back cover)
Page 13 J&J
Page 17 Boots, Skincare
Page 26 Church and Dwight (and p. 38)
Page 40 Colgate
Page 57 P&G (Sulfate Free Shampoos!)
Page 58 Meghan Markle (there’s no People without Meghan it seems)
Page 107 Pfizer Consumer
Yep, there’s sulfate free (P&G p.57) and alcohol and fragrance free (L’oreal, back cover) and that is just the ads from our industry colleagues. The EWG (Environmental Working Group) is in there – also on Page 57 in the P&G ad. There’s nothing wrong with this. Consumer products companies have to meet consumers where they hang out and talk to them in the language they understand. People is a huge part of that scene. That’s why you should read it. And you gotta know how the other half thinks anyway, because, first, it’s probably more than half and you live and work with them. You’re in this culture. And again, you may not like it but ..may as well learn some of the local customs.
Another thing you should do. Come to our conferences in India and Singapore where we dig into the matters noted in this blog and many more besides. Perhaps I will see you there?
Neil
[1] https://www.statista.com/topics/1265/magazines/
[2] Forbes Magazine, December 13, 2018