Surfactants Monthly - May 2024

May 2024 Surfactants Monthly

Promos:

We had our 14th World Surfactants Conference in Jersey City, May 9 – 10th and it was great (more below). Now we are gearing up for our 10th Asian Surfactants Conference in Kuala Lumpur, November 20 – 21 (training on the 19th). This will be our first event in KL and we are at the great ParkRoyal Collection Hotel in Bukit Bintang. We moved to KL in recognition of the increasingly important role of Malaysia in the production and the consumption of surfactants. If you have an interest in speaking or would like to recommend a speaker, please get in touch with me.

The News

As you know, we don't give conference summaries here. You gotta be there is our motto. So what I’ll do here is to note a few companies that I met at our event in Jersey City but that were not speaking.

A spinout company from the Auckland University of Technology, New Zealand, Spherelose, has developed a surfactant concept based on small spheres of cellulose, coated partially with a hydrophobic film and partially with a hydrophilic one. Amphiphilic. Just like a surfactant – but without the traditional tadpole (head and tail) like structure. Fascinating.

A UK company, Econic, is using captured carbon dioxide to build renewable chemicals and have made good inroads into polyols for coatings. Their next frontier is surfactants, built on novel structures. Worth keeping an eye on.

Geno (formerly Genomatica) is well known to many readers. Their recently formed Joint Venture with Kao, Loreal and Unilever, called Future Origins, is focused on making detergent range (C12 - 14) alcohols via fermentation. Renewable carbon obviously. The technology is the original LS-9 E. Choli fermentation, acquired by Geno from the Renewable Energy Group.

A brand new company coming out of UK’s Cambridge University, Bravely Cultured, has new surfactant chemistry derived from marine biology. Early stage. Very interesting.

And, indirectly as a result of the conference, I’ve also become aware of an early stage Danish biotech company, Norfalk, backed by Novo-Nordisk, making bio-based surfactants that are not your regular sophoro or rhamno lipids. One to keep an eye on.

Macroeconomics: In addition to Evercore, I get periodic bulletins from the investment bank, Nomura Greentech. The most recent edition highlighted (at least for me) again the large EV / EBITDA market multiple premium of specialty chemical companies over commodity companies. But looking further at the graph below offers a depressing reminder of the chemical company valuation discount vs the market as a whole.

Chemical companies are consistently value lower than the overall market and even specializes are as likely to be below as above the market average in any given year. Commodities? They barely exceed half the market EV to EBITDA multiple. Can someone smarter than me tell me (most of our readers) tell me why this is? Growth rates maybe? Cyclicality? Given this picture, it is easy to understand the financial slicing and dicing that has been going on with Dow/Dupont and then more recently with Dupont again (more below). What next for BASF (EV/EBITDA of 8.5 according to Yahoo Finance) vs a 12.0 multiple for chemicals as a whole? Just speculating here. Haven’t heard anything.

Transaction multiples of, course, are a different story. The graph below shows one deal, somewhat relevant to our space, Clariants’ acquisition of Lucas Meyer from IFF at 16.3X. Clariant themselves, BTW, is trading at around 10.6 X and the stock has essentially been treading water since 2003. Go figure. The key factor here though is SABIC’s 31.5% stake in Clariant. There was some takeover talk in 2022 and should that revive, one might expect a run-up in the stock price (again just speculating).

Elsewhere in the report, in a section entitled Chemical Commodities, I like this graph, especially the natural gas.

As to which companies are trading at high and low multiples: Here’s the top ten EV/EBITDA multiple companies per Nomura for 2024 YTD. Well done Croda!

And here's the bottom 10. Notice Chemours down there for obvious reasons after the terrible few months they’ve had, controversy-wise.

Not hugely surfactant relevant - but heres’ a very informative graphic from Nomura, explaining the recently announced DuPont split.

Sustainability News – Unilever: This came out in April, but I only just picked it up. According to Retail Detail, a Belgian publication, Unilever is lowering and delaying some sustainability targets. The target of consuming half as much new plastic by 2025 is being scrapped: rather, the multinational promises to use 30 % less plastic by 2026. Nor will it succeed in making all packaging made of reusable, recyclable or compostable plastic as early as 2025. For rigid plastics, Unilever delays that commitment until 2030, for flexible plastic packaging even until 2035. Also, the company is now going for 95 % sustainable sourcing by 2030, instead of the full 100 %. Originally, Unilever was also supposed to pay all suppliers a living wage in the magic year 2030, but that will now only apply to half of all procurement costs. Let ‘em eat cake! (that was me – not Unilever). Actually I am not unsympathetic to this movement toward reality – although this next bit makes me cringe. According to the article, Unilever calls for a UN treaty that “sets legally binding global rules” on plastic pollution, more policy support to try out new recycling models and – remarkably – that producers be held accountable for their packaging choices. Hmm apparently they want the (world) government to help them, because the market isn’t buying it. Ok – at least they’re honest. BTW – I just started re-reading Atlas Shrugged. Great book. Anyhow this, apparently is all the fault of that new CEO and arch villain– Hein Schumacher, who replaced the blessed Alan Jope, just under a year ago. But of course, we all know who’s really behind all this don’t we? – new boardmember and activist shareholder and all round bad dude Nelson Peltz, pictured here with his daughter, the inestimable, Nicola.

Aaww .. activist shareholders love their children too..

More Tide Evo News: In last month’s blog I asked if anyone knew any more about the ingredients in Tide Evo. The blog’s great readers came through. Olga Kuzmenkova of Colin A Houston and Associates provided this link, which clearly shows the following:

Interesting right? In the Cleaning Agent, that third one is more like a chelating agent / water softener. Apparently it is made by BASF at plants in Ludwigshafen and Lima, OH. BTW that whitening agent is a new one on me. Again – happy to get the wisdom of the blog crowd on any or all of these ingredients. Get in touch please !

Petrochemicals: Renewables and bio get all the press these days and so it’s easy to forget how important petrochemicals are to the surfactant value chain. Here’s a download from ICIS, that outlines. See if you can spot some key surfactant building blocks.

Download from ICIS

By the way – there’s been some fascinating news from the US oilfield recently. WHYY reported on lithium in fracking wastewater from the Marcellus shale in PA. The article refenreces a paper in Nature, here https://www.nature.com/articles/s41598-024-58887-x . Lithium is a key element for EV batteries. The paper notes that brine water that lies deep within the Marcellus Shale — and comes to the surface during gas production — could provide 38–40% of the current domestic demand for lithium.

Ingredient Disclosure: We’ve come a long way quite quickly. HAPPI magazine note a recent partnership between Erin Andrews (a Fox Sports commentator) and Church & Dwight around the new products - Deep Clean Liquid Detergent and Power Paks.

I was curious about ingredient disclosure – and with a few clicks, here’s a pretty detailed listing. Not bad.

Also – on the I&I front, HAPPI reported that P&G professional is launching Tide professional commercial laundry detergent and Downy professional fabric softener. It looks like they are targeted to small businesses. For Ingredient disclosure, they have a very comprehensive listing, including fragrance ingredients here :

We’ve written previously in the blog about EPA rulemaking requiring fenceline monitoring of ethylene oxide levels at facilities making and using ethylene oxide. In a fairly long article in Bloomberg Law, it looks like there is expected to be continued litigation as these rules come into play and it is possible that the courts may require some of the rules to be amended. Difficult right now, to predict what this might mean for the EO rules. The ACI (American Cleaning Institute) and the ACC (American Chemistry Council) are engaged in the process, so expect to hear more.

By the way, EO is a critical pillar of surfactants and investment continues apace. I just read a press release from Larsen and Toubro in India. It’s headlined. L&T Powers up Global Engineering: Delivers World’s Heaviest EO Reactor to China. It reads, in part: “Mumbai: The Heavy Engineering vertical of Larsen & Toubro (L&T) has dispatched two mammoth Ethylene Oxide (EO) Reactors for a project of the renowned chemical giant BASF in China. The reactors were dispatched from L&T’s A M Naik Heavy Engineering Complex at Hazira in Gujarat. Weighing 1,136 MT each, these are the world’s heaviest EO Reactors based on BASF’s technology. The reactors have been manufactured by deploying hi-tech engineering, Industry 4.0 manufacturing technology and world-class quality processes. EO Reactor is a crucial component in petrochemical plants. It facilitates the catalytic conversion of ethylene into ethylene oxide, which is a key intermediate in the production of various downstream chemicals.” So – I wish these reactors a long and productive life!

Finally, we’ve talked a bit about Potion AI recently. The great Cosmetics Design recently did a video feature on them here. You have to register to watch, but it’s free.

Now to the market news:

With appreciation to ChemAnalyst for some of the news and information used herein.

LAB and LAS:

The US market saw a slight increase in price for LAB to around USD 2,090 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 1,270 – 1,360 per MT

Ethylene, EO and Ethoxylates:

EO in the US: Prices remain steady at 57 – 59 clb

EO in the EU : Off by about $20/MT at USD 1,410 – USD 1,580 per MT.

In Asia, Ethoxylates held steady to USD 1,180 – 1,430 per MT.

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 held steady around USD 1,600 per MT with downward pressure.

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 holding steady. Mid-cuts are around USD 1,800 – 2,000 per MT.

In Europe, a similar story, but weaker demand and downward pressure. Midcuts around USD 1,650 per MT.

AI Corner

In the latest (April) issue of Industrial & Engineering Chemistry Research, an article caught my eye: Surfactant-Specific AI-Driven Molecular Design: Integrating Generative Models, Predictive Modeling, and Reinforcement Learning for Tailored Surfactant Synthesis. It’s by a group at Louisiana State University. It’s open access and here’s the link. : https://pubs.acs.org/doi/10.1021/acs.iecr.4c00401

In summary ( and I took this mainly from the abstract) In this study, a 3-fold methodology design is presented that leverages the power of generative artificial intelligence (AI), predictive modeling, and reinforcement learning to create tailored molecules with desired properties. This model synergistically combines deep learning techniques with Self-Referencing Embedded Strings (SELFIES) molecular representation to build a generative model that generates valid molecules and a graphical neural network model that accurately forecasts molecular properties. The Variational Autoencoder (VAE) coupled with reinforcement learning helps refine molecule generation based on targeted attributes. Data from an experimental study involving surfactants were used to test the framework. A validation of the structural integrity of the molecules generated was conducted, and Tanimoto similarities were used to quantify the similarity and diversity between the original and generated molecular structures. Also, saliency maps for the generated surfactants were produced to identify the features explaining the property values. Lastly, molecular dynamics simulations were used to validate the stability of the generated molecules. The results showed that the proposed framework can effectively produce valid molecules within the set property threshold value. (Translation – It worked !). Very cool. I look forward to hearing more from this group.

Music Section:

The great YouTube algorithm has delivered again. This blog has been written to the following accompaniments.

The algorithm first pulled me in with this Psy Dub Mix - Dub Defenders. Music to write blogs by? I’ll honest the album art was a factor, but not the sole one, in my deciding to give it a listen. The music does not disappoint.

This got me reminiscing and then into the YouTube rabbit hole. There was some great dub in the UK in the late 70’s early 80’s in clubs and pubs in the larger cities, including Manchester, where I was living at the time.

How about the great Scientist? Here’s the original crackling vinyl version of Scientist meets the Space Invader. Give it a shot. You’ll thank me.

And how about Scientist - Heavyweight Dub Champion?

What the heck were they singing about? I don't know. I was, and still am, a young lad from South Shields. Not sure I could identify with much apart from the religious references. But it had a sound and a feeling that was truly meaty, succulent really, and vastly transportive.

Scientist was supposedly a protégé of King Tubby, so here’s the man himself

King Tubby - love that name. There were indeed some oddly named individuals in this scene. How about Eek-a-Mouse? Crazy name. Crazy Song – Assassinator

Finally - Bit of a Jazz Reggae fusion. Very nice. Another great name. Aston Family Man Barret. There are worse names no? I like the sound of Neil Family Man Burns myself. Seriously though, this is a great album. One of the things I love about most of this stuff is how the songs start. Not sure how to describe it. It’s just like - OK here’s the vibe and we’re unapologetically getting into it.

And look, I think it’s clear that Rush took some inspiration from the reggae greats – check this out from Signals. So, if Rush does it, then - well - what more justification do we need?

That’s it for this month! Stay tuned to the usual channels for the KL details for November but save the date: November 20 – 21 (Training on the 19th).

Surfactants Monthly - May 2024

Surfactants Monthly - April 2024