Surfactants Monthly - August 2024
August 2024 Surfactants Monthly
Promos:
10th Asian Surfactants: Look we have all the biggest and most important companies in the Asian surfactant value chain in the room – including huge names and some you may not have heard of. Consider Unilever, L’Oreal, Spherelose and Cidols. Get the picture? And, for Malaysian attendees, the event is HRDF approved (!). Kuala Lumpur November 19 – 21 (Course on the 19th. Conference following) Book now. We will sell out.
Register here: https://events.icis.com/website/14105/home/
The conference will be more exciting than this - but you can still do this also..
The News
Macroeconomics:
This month’s macro update comes courtesy of Nomura Greentech. BTW for chemicals and materials I-Banking, they’re worth a discussion. Ping me if you want a warm intro.
Key Points :
· In July 2024, the S&P Chemicals Index was up 6%, the S&P Commodity Chemicals Index was up 5%, and the S&P Specialty Chemicals Index was up 7% on the month - this compares to the overall S&P 500 which was up 1% on the month.
· On a 2024E TEV / EBITDA multiples basis, in July 2024, the S&P Chemicals Index was up 0.2x from 12.1x to 12.3x, the S&P Commodity Chemicals Index was up 0.3x from 7.4x to 7.7x, and the S&P Specialty Chemicals Index was up 0.2x from 13.7x to 13.9x
· YTD 2024 versus YTD 2023, M&A volumes in the advanced materials & chemicals sector were off (24%) on a number of transactions basis and off (22%) on a transaction size basis
Nomura reports M&A news relevant to our industry as follows:
On July 2, Brenntag, a chemicals and ingredients distributor, acquired the assets and operations of Industrial Chemicals Corporation, a commodity chemicals distributor.
On July 8, Syensqo, a spin-off of Solvay's specialty chemicals and materials business units, acquired a controlling stake in Azerys, a producer of rosemary extract that can replace chemical food additives.
Syensqo, also signed an MoU with Allozymes, a developer of microfluidic technology that supports the testing of enzymes, to collaborate on biotechnology solutions for the home and personal care markets.
Debut, a biotechnology beauty ingredient producer, signed an agreement with L'Oréal, a multinational personal care company, to develop several bio-identical ingredients for usage in L'Oréal’s global beauty and personal care brands. [Neil’s note: For those companies that ask me is it worth talking to big consumer product companies about JDA’s to develop new ingredients. The answer is yes – at least in the case of L’Oreal.
In Feedstocks, these two graphs continue to underline just how cheap, historically natural gas is. God continues to bless the USA with abundant, cheap energy and chemical raw materials.
Love that Nat. Gas
Top and bottom 20 stocks: I like to visit this one occasionally and here’s a couple of comments on the chart below.
· Croda – what’s the deal here? Off 52%. Croda people – our anonymous tip-line is open. You know how to reach me.
· Danimer, Gingko and Origin. Off 98%, 96% and 85% respectively. All have 2 things in common – sustainability and they went public via SPACs (Remember them? Or rather not?)
Lot to think about here.
Here’s another graph I like showing the one year change in trading multiple (of Enterprise Value to Next Twelve Month projected EBITDA) for certain chemical related stocks. Two things strike you right?
· 3 out of the top 10 are F&F companies
· 4 out of the bottom 10 are paint companies.
What does this mean? And then there’s Azelis and Stepan. Could it be differential assessments of growth by the market?
What's the deal with paint? Poor construction outlook / autos ? what?
Other News:
As we’ve written here before, there is a battle around ethylene oxide that is being waged largely out of the spotlight. The implications for surfactants, however, could be very big. I point you to a recent article in The Hill magazine that talks about “Cancer Alley” a term they give to an 80 mile stretch of the Mississippi from New Orleans to Baton Rouge. In the article, they note that “Researchers from Johns Hopkins University measured for a chemical called ethylene oxide (EtO), which increases risks of cancers including breast cancer, in a Louisiana industrial corridor. The researchers found concentrations of the gas at significantly higher levels than modeling from the Environmental Protection Agency (EPA) shows, said senior study author Peter DeCarlo.
DeCarlo said that specifically the results suggest that polluters are underreporting how much EtO they emit — by a factor of between two and 10.” The article references the study in the Journal of Environmental Science and Technology (JEST – an unfortunate acronym) but they don’t link to it, presumably for the fear that people will leave their site and not come back. We have no such fear here. We know you’ll be back. Here’s the link to the JEST article. It’s not that long an article and it has 23 authors. Perplexity tells me that is not an unusually large number but greater than a recent average of 6.25 found in a study of biomedical journal articles. I’m not sure why you need to know this, but you do.
Funny right? Think about it.
At the same time, up in Chicago, the Chicago Tribune has reported some controversy at a public meeting on June 26th about EO levels near Medline Industries, near Route 41in Waukegan, IL, and Vantage Specialty Chemicals at 3938 Porett Drive in Gurnee, IL.
Similar story in West Virginia involving Union Carbide and Covestro.
And in Southern California.
And the DC Court of Appeals, the EPA defeated a challenge to its cancer risk assessment of EO.
And in the insurance markets, broker Lockton has noted that “Insurers are also monitoring litigation related to ethylene oxide, which is used in the production of antifreeze, as a medical sterilizing agent, and as a pesticide. Exposure to ethylene oxide has been linked to lymphoma, leukemia, and other forms of cancer. A 2023 settlement to resolve nearly 900 ethylene oxide claims against a medical sterilization company — which followed a 2022 jury verdict of $363 million against the same company — is indicative of the potential financial ramifications for businesses with ethylene oxide exposures.”
Even the Cardiology Advisor is getting involved, reporting that investigators found that 27 environmental toxicants in 6 categories were positively associated with depressive symptoms. The toxicants included acrylamide and glycidamide, ethylene oxide, metals (2 types), nicotine metabolites (3 types), PAH (6 types), and VOC metabolites (14 types).
There’s more ( and I’m only looking at August news), but you get the point, and the matters mainly involve the widespread use of EO in medical equipment sterilization. However, EO manufacturing and ethoxylation facilities are very much in the spotlight now.
Interestingly, Stepan has a paragraph on ethylene oxide in their 2023 10-K in the “Legal and Regulatory Risk” section. It reads in part “In addition, increasingly stringent regulation of human exposure to ethylene oxide by regulatory authorities in the United States could require material expenditures or changes in our manufacturing operations. The Company uses ethylene oxide at its Winder, Georgia and Elwood, Illinois
(Millsdale) facilities and expects to use ethylene oxide at its Pasadena, Texas facility…” You can read the whole thing here.
I took a quick look at the most recent annual reports from Ineos, Dow, Indorama, BASF and Croda and could find no similar statement. If anyone has other information re these or other companies, I’m keen to see it.
Think about it. This EO story seems likely to have more chapters to it.
Yep...
Meanwhile as reported in C&E News, Indorama says it will close its ethylene oxide and derivatives facilities in Botany Bay, Australia, by the end of this month. Indorama says it is closing the facilities because Qenos Olefins, Australia’s only supplier of ethylene—the key feedstock for the facility—has ceased production. The plants have an annual capacity to produce 40,000 metric tons (t) of ethylene oxide, 35,000 t of surfactants, 5,000 t of glycol ethers, and 16,000 t of glycols.
Here’s a new company and product on my radar. Bionema has a patented surfactant for golf-course and similar places. Check it out. I expect they’re looking for salespeople. Tough job.
Yes, it is.. sorry but..
Our friends at Galaxy Surfactants were recently voted in the top 5 places to work in the Indian chemical industry. No surprise there. They also reported decent Q1 results as noted in Indian Chemical News: Q1 FY25 revenue reached Rs. 979.5 crore [$117.54 million] compared to Rs. 944.3 crore [$113.32 million] in Q1 FY 24, reflecting an increase of 3.7%. The company's operating profit margins stood at 13.2%, while profit after tax was Rs. 79.7 crore [$9.56 million] in Q1 FY25 compared to Rs. 75.2 crore [$9.02 million], representing a 6% margin in Q1FY25. Performance Surfactant revenue stood at Rs. 580 crore [$69.60 million] whereas Specialty Care reached Rs. 399 crore [$47.88 million].
Commenting on the performance K. Natarajan, Managing Director, Galaxy Surfactants Ltd. said, "In a world destabilized by volatile macros, logistical challenges and elongated lead times, attaining the upper range of guided volume growth was a major positive in this quarter. We strongly believe the volume momentum should be sustained going ahead, driven by growth across all geographies. While volume growth of 8% was in line with our expectations, the EBITDA/MT came in at Rs. 20,197/MT [$242.36/MT], slightly below the guided band of Rs. 20,500-21,500/MT [$245.99-$257.99/MT]."
Some grim news from Sasol, however – and largely driven by the USA chemicals projects, which, as readers will remember, resulted in the departure of the Joint CEOs in 2019. As reported in South Africa’s Business Tech. : Sasol is expecting a massive loss amid a challenging operating environment. In a trading statement for the year ended 30 June 2024, the group said that it was negatively impacted by challenging market conditions, with pressure from depressed chemicals prices and constrained margins.However, it said that stronger rand/oil prices, improved refining margins, and higher sales volumes provided some relief.It added that its more robust operational performance in Q4 contributed to its overall stronger performance in the second half of the financial year.
As such, the group anticipates reporting a basic loss for the year—although headline earnings should remain in the black. Still, its adjusted EBITDA for the year is expected to decline by between 2% and 17% from R66.3 billionn ($3.7 Bn) in the prior year to between R54.7 billion and R64.7 billion ($3 – 3.6 Bn).
The group’s expected earnings drop of over 100% was impacted by the following notable non-cash adjustments:
“Net loss of R55.8 billion after tax ($3.1 Bn) on remeasurement items mainly due to the following impairments*:
o Chemicals America Ethane value chain (Alcohols, Alumina, Ethylene Oxide, Ethylene Glycols and associated shared assets) cash-generating unit (CGU) of R45.5 billion net of tax ($2.5 Bn).
o Additionally, Chemicals Africa’s Polyethylene, Chlor-Alkali & Polyvinyl Chloride and Wax value chain CGUs of R3.9 billion net of tax. The impairments are primarily driven by external conditions, including prolonged softer market pricing and outlook.
o Secunda liquid fuels refinery CGU of R5.7 billion net of tax, which remains fully impaired as of 30 June 2024.
Derecognition of deferred tax asset to the value of R15.3 billion ($858 Million) , mainly relating to assessed loss carry forward on our Chemicals America operations, which are not anticipated to be utilised; and
Unrealised gains of R4.7 billion (before tax) on the translation of monetary assets and liabilities, and valuation of financial instruments and derivative contracts.”
Amid these massive impairments, the group said that it expects to make a basic loss per share between R68.82 and R71.48 ($3.86 - $4.01) for the financial year. This is an over 100% decline from the basic earnings per share in the previous financial year.
From Clariant, we read that the company has agreed a deal to source ethylene with a lower carbon footprint from Austrian petrochemicals firm OMV. This, the company said, comes in response to increasing consumer demand for more sustainable options and will help both it and OMV to meet their sustainability targets. As readers know, Clariant has been offering segregated biobased ethoxylates through its Indian operation since 2022. It now wishes to extend this to the wider ethylene oxide derivatives portfolio while also strengthening the supply chain by producing “in Europe, for Europe” [very nationalistic, I must say]. OMV began renewable and circular production of chemicals and chemical feedstock at its refinery at Burghausen, Germany, in 2021, and more recently at Schwechat, Austria. Its capacity for sustainable products is now about 200,000 tonnes/year and is expected to rise to 1.4 by 2030. The two firms added that they plan to explore and develop new strategies to meet sustainability targets in the ethylene supply chain. As part of this, they will share their research findings, adopt a lifecycle assessment methodology for unified approaches and define detailed CO2 reduction roadmaps. This will include joint analysis of collaboration potential for the ethanol-to-ethylene technology.
In related news as reported in India Chemical News: GAIL (India) Limited and Petron Scientech Inc (Petron) have inked a Memorandum of Understanding (MoU) to jointly explore setting up of a 500 Kilo Tons per Annum (KTA) bio-ethylene plant along with its downstream unit(s) in India, based on bio-ethanol produced in the plant in a 50:50 Joint Venture (JV) mode.
About GAIL: GAIL, a Maharatna Central Public Sector Enterprise, is India’s leading natural gas transmission and distribution company with gas transmission & distribution pipelines, processing and petrochemicals plants besides interest in upstream oil & gas blocks and LNG regasification terminals in India. GAIL is dedicated to enhancing the nation’s energy infrastructure and promoting sustainable development through various initiatives in natural gas, petrochemicals, and renewable energy. For more information, please visit gailonline.com
About Petron: Petron specializes in setting up biomass and grain processing biorefinery projects to produce ethanol, bio-ethylene, bio-chemicals (ethylene oxide / mono ethylene glycol, Methanol) and various bio-fuel projects worldwide. Petron along with its affiliates and partners brings technology experience in production and supply of setting up biorefinery projects. Petron has technologies for producing both bio-ethanol and bio-ethylene. Petron commands 90% global bio-ethylene technology market.
This is barely surfactant related but, I read in Cosmetics Business (and on X) Elon Musk's social media platform X sued some of the world's largest advertisers including Unilever. The lawsuit alleges that the companies have unlawfully conspired to boycott X, and purposefully deprived X of billions of dollars in revenue. X said that the group of advertisers, via a World Federation of Advertisers initiative called Global Alliance for Responsible Media (GARM), acted in a conspiracy against the platform that violated US antitrust law. The lawsuit comes after a report published by the US House of Representatives Judiciary Committee in July. X president, Linda Yaccarino said this report highlighted how “GARM and its members directly organised boycotts and used other indirect tactics to target disfavoured platforms”. Interestingly, the cartel, GARM just folded two days later, rather than fight the lawsuite. Ah well, at least it provides us with the opportunity to publish this picture [those not following the significance, need to read the blog more often]
There's a member of the Unilever Board of Directors in these pictures
Anyone marketing or considering marketing cosmetics ingredients in Europe should read this trio of articles in the recent HPC Today: here, here and here. The entire supply chain and a properly calculated Product Carbon Footprint (PCT) are going to get more scrutiny. Also, the grouping of certain types of compounds together is likely going to result in various one bad apple spoiling the bunch scenarios. We’re seeing this already with silicones. Look out for other cases where, you have one product in a broader group that is, say, a skin irritant and the whole group gets tarred with that brush.
Beware bad apples
An article in Process Chemie magazine which I translated from German concerns Levaco and reads as follows (Chill. I used Google). “Levaco Chemicals is investing several million euros in a new alkoxylation reactor to strengthen its production in Leverkusen. A strong commitment to Germany as a location. According to the company, the new alkoxylation reactor increases the capacity by 3,000 t/a, enabling the production of larger batches and the development of new product classes. This step is part of the strategic strengthening of Germany as a location in the Leverkusen Innovation Park, where the new headquarters was recently opened.
The reactor is used to produce alkoxylates by resising various raw materials with ethylene oxide and/or propylene oxide. With a reaction volume of 25 m3 and a working range of 20 to 200 °C and 0 to 8 bar, the boiler is equipped with a pressure water circuit for heating and cooling, which allows for more precise temperature and avoids hot spots.”
We’ve noted here how Henkel has been very active with Bio Mass Balance marketing. So has Shell. Here is one among a number of pieces they have put together targeting the personal care market. Your thoughts?
Everything gets all co-mingled but it's cool because it's all accounted for.
I like this article by Reuters about Malaysia Palm Oil “Malaysia announces adopt-an-orangutan plan for palm oil importers” It goes on to read, in part: “Companies that import palm oil from Malaysia will be able to adopt orangutans but they will not be able to leave the country, the commodities minister said on Sunday, in a revised version of a conservation scheme announced earlier this year. Plantations and Commodities Minister Johari Abdul Ghani also pledged to halt deforestation in Malaysia, saying 54% of the country was forested and that the level would not fall below 50%. In May, the minister put forward a plan to send orangutans abroad as trading gifts in an effort to allay concerns about the impact on the animals' habitat of palm oil production, which tends to involve clearing forest land. The plan raised objections from conservation groups fearful for the welfare of the orangutans that are critically endangered.
"The animals cannot leave their natural habitats. We have to keep them here. And then we will meet the countries or the buyers of our palm oil if they want to work together to ensure that these forests can be looked after and preserved forever," Johari told a news conference in Sabah, northern Borneo.
That 50% number caught my attention. Upon consulting the inestimable Statistisches Bundesamt ( of Germany), I learn (here) that forest cover in Germany, France and the UK is 32.7%, 31.4% and 13.2% respectively. Bet it was a bit higher in Robin Hood’s time…
Ah the good old days. Check out the lovely trees...
Now to the market news:
LAB and LAS:
The US market saw a slight decrease in price for LAB to around USD 2,000 per MT . Prices in the rest of the world were mixed and remained below that in the US as is usually the case.
Spot prices for LAS in Asia up slightly to – USD 1,200 – 1,300 per MT
Ethylene, EO and Ethoxylates:
EO in the US: Prices up slightly at 63 clb
EO in the EU : down slightly on weak demand to around 1,345 per MT.
In Asia, Ethoxylates are still trading at unusually low levels relative to alcholl.s.
Detergent Range Alcohols:
Reminder. We’re talking here about alcohol’s in the carbon chain length range 12 – 18, regardless of provenance – means they can be petrochemical, oleochemical or other (that would be coal mainly)
In Asia –Mid-cuts supply seems to be constrained and pricing being forced up – above the ethoxylate price. This seems to be anomalous and reader input is solicited.
A portion of the US fatty alcohol market is served by import and freight disruptions through the Middle East are being felt. Freight rates and lead times are going up. Prices are trending lower. Mid-cuts are moving around USD 1,900 - 2,000 per MT.
In Europe, a similar story, but weaker demand and downward pressure.
AI Corner
I found this article in Scientific American a little disturbing. It’s entitled “These Living Computers Are Made from Human Neurons” and it literally mean s exactly what it says. It discusses Swiss company FinalSpark, which earlier this year debuted its “Neuroplatform”—a computer platform powered by human-brain organoids—that scientists can rent over the Internet for $500 a month. [yes you read that right]. Neuroplatform uses a series of processing units hosting four spherical brain organoids each. Every 0.5-millimeter-wide organoid is connected to eight electrodes that electrically stimulate the neurons within the living sphere; those electrodes also link the organoids to conventional computer networks. The neurons are selectively exposed to the feel-good neurotransmitter dopamine to mimic the human brain’s natural reward system. These twin setups—positive dopamine rewards and electrical stimulation—train the organoids’ neurons, prompting them to form new pathways and connections much in the same way a living human brain appears to learn. [This is incredible right?]. “The challenge is to find the appropriate way to get neurons to do what we want them to do,” Jordan [the CEO] says. [Ah yes, the dream of every totalitarian state in history and a few today that may be a little too close to home]. So there you have it. Mind blown. Here's how the company illustrates its “product”.
Gets wilder every time I read it.
Additionally and somewhat related I guess, I read in the Verge that : OpenAI and Anthropic have agreed to let the US government access major new AI models before release to help improve their safety. The companies signed memorandums of understanding with the US AI Safety Institute to provide access to the models both before and after their public release, the agency announced on Thursday. The government says this step will help them work together to evaluate safety risks and mitigate potential issues. The US agency said it would provide feedback on safety improvements, in collaboration with its counterpart agency in the UK. [Excellent! I’m already sleeping more soundly. What could possibly go wrong?]
Never gets old...
Music Section
What have I been listening to? It’s really been back to the classics in the summer evenings as I work on a woodworking project in the garage. What’s neat about Spotify is that they’ll serve up some of the also-rans alongside Rush, Zeppelin et al, some of whom you’ve never heard for 40 – 50 years. There follows some trips down memory lane, some bands I saw live during those days and haven’t listened to that much since. You may be surprised at the sheer quality.
Pat Travers (Canada – I think)
Lone Star (Wales – definitely) . Check this debut album and the first song – version of the Beatles. They were truly magnificent in concert.
Mahogany Rush (not connected to you know who..). Dude went a little loopy and claimed to to be the reincarnation of Jimi Hendrix.
Riot (New York)
I know we’ve put this 1979 album on the blog before – but it’s great – so here’s Narita, the title track from the album of the same name. Gotta love this instrumental right?
Brand X was a project for Phil Collins when he was still a drummer. Cool Jazz Rock
They weren’t really also-rans but Montrose was Van Halen before Van Halen was. Who’s on vocals?
Hey – remember Rory Gallagher? Second rock concert I went to; in 19 er something. Here’s Shadow Play live in Montreux of all places. Underrated guitarist.
That’s it for this month! Get signed up for the Asian Conference now. See you there in KL - November 20 – 21 (Course on the 19th).