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Asian oleochemicals sector attractive for companies willing to invest in new technology, M&A
FOCUS ON SURFACTANTS A MONTHLY REPORT FROM CAROLINE EDSER FEBRUARY 2012
ASIAN OLEOCHEMICALS, COMPANY STRATEGIES AND MEGATRENDS
In this issue
RAW MATERIALS
1-3
Asian oleochemicals sector attractive for companies willing to invest
SURFACTANTS
3
ASSOCIATED PRODUCTS
3
Dow Corning announces sustainable soy wax produced using green chemistry process
APPLICATIONS
3-5
Save money on your laundry
LEGISLATION MARKET REVIEWS
5-6 6
Lessons for the chemical industry from consumer markets
COMPANY RESULTS
6-7
Diversifieds still growing
COMPANY NEWS
7
BASF further develops its corporate strategy
EVENTS
SURFACTANTS
AN INTERNATIONAL NEWSLETTER MONITORING TECHNICAL AND COMMERCIAL DEVELOPMENTS FOR ALL SURFACE ACTIVE AGENTS ISSN 1351–4210
8
Key themes in this issue of Focus on Surfactants include growth of the oleochemicals sector in Asia, corporate strategies being adopted by chemical companies, and, what may prove to be a new word for some, the “megatrend”. Although Southeast Asia has long been a source of raw materials such as palm oil and coconut oil, it is only within the past 20 years that production of oleochemicals such as fatty acids and alcohols has been carried out in the region to any significant extent (p 1-2). Investors that can provide either new technology and/or financial backing via mergers/acquisitions have the opportunity to tap into a growing sector that is being driven primarily by increased demand for surfactant-based products within Asia itself. Lion Eco Chemical, an Asian producer, has predicted that the global market for surfactants will more than double to 30 M tonnes in volume terms by 2030 (p 3), with Asia accounting for most of the increase. Key elements of the strategy being adopted by BASF, the largest chemical company globally, include a focus on sustainable development, innovative new materials, and expansion of its portfolio (p 7). Sustainability and corporate responsibility are also important components of Clariant’s strategy (p 4). According to a new eBook published last year, successful companies will be those that develop products that benefit society as a whole, as opposed to those focused only on improving their bottom line (p 6). In contrast CEPSA Quimica, the Spanish firm, is aiming to grow by increasing its capacity, including that for linear alkylbenzenes, and geographic
SURFACTANTS
expansion via acquisitions (p 2). A strategy of diversification remains attractive for many chemical companies (p 6), whereas speciality chemical companies are seeking to adapt to the ongoing difficult economic climate by focusing on innovation, emerging markets, and global megatrends (p 6-7). So what are these megatrends? As already mentioned, sustainable development is described by Clariant as a key megatrend by which it will seek to use renewable raw materials such as biomass and organic waste (p 4). According to the report on the eBook (p 6), global megatrends comprise the opportunities provided by the ageing Western population and the requirements for improved water quality, increased food production, and reduced greenhouse gas emissions. DuPont is cited as an example of a company that has realigned its business to take account of these megatrends, in addition to focusing on emerging markets (p 6). The impact of these megatrends on the surfactants sector remains to be seen. This issue edited by Dr Alan Skull
RAW MATERIALS Oleochemicals Asian oleochemicals sector attractive for companies willing to invest in new technology, M&A Strong growth is projected for Southeast Asia’s oleochemicals sector
SURFACTANTS
SURFACTANTS
FOCUS in 2010-2012, driven by a rise in demand from an expanding consumer market and better access to palm oil, palm kernel oil, coconut oil, and other raw materials. The region’s oleochemical production is primarily focused on fatty acids, fatty alcohols, methyl esters, and refined glycerine. These products find use in surfactants, soaps and detergents, food emulsifiers, and other applications. More than 20 years ago, Asia Pacific had no oleochemicals market. Oleochemicals production was concentrated in developed markets like the US, Europe and Japan. Today, most global fatty acid expansion will happen in Asia while fatty acid demand in Europe and the USA will be met through a combination of tallow- and palm-based material. Companies that are willing to invest in new technologies and grow via acquisitions and mergers will find themselves in a good position to capture opportunities in Asia’s thriving oleochemicals sector. Original Source: ICIS Chemical Business, 21 Nov 2011, (Website: http://icischemicalbusiness.com) © Reed Business Information Limited 2011
GAPKI withdraws from roundtable; RPSO wavers as a result The Indonesian Palm Oil Producers Association (GAPKI) revealed at the end of Sep 2011 its withdrawal from the Roundtable on Sustainable Palm Oil (RSPO) as it aims to commit to the Indonesian Sustainable Palm Oil (ISPO) scheme, a sustainability platform established in Aug 2011 by the government. GAPKI members would still be permitted to maintain ties with the RSPO but they would be asked to comply with the ISPO’s requirements. Indonesia’s sustainable palm oil output is currently pegged at around 1.95 M tonne/y. RSPO, an organization that aims to encourage the sustainable production of palm oil, also appears to be experiencing trouble with criticisms from Malaysia. According to the Malaysian government through its deputy prime minister, the increase in consumption of RSPO-certified palm oil has not been as strong as expected and the premium associated with cultivating the fruit has declined considerably. The Malaysian Palm Oil Association will notify its members to refrain from 2
ON
S U R FA C TA N T S
obtaining certification from RPSO until the premium it generates picks up. Original Source: Oils and Fats International, Nov 2011, 27 (8), 3 (Website: http://www.oilsandfatsinternational.com/) © Quartz Business Media Ltd 2011. Original Source: TCE (formerly The Chemical Engineer), Nov 2011, (845), 13 (Website: http://www.tcetoday.com) © Institution of Chemical Engineers 2011
Analyst: Palm oil set for a bull market in 2012 Leading industry analyst Dorab Mistry anticipates that the palm oil market will witness significant growth during 2012, as production in South-East Asia is set to decline and demand is set to increase. Mistry also expects Malaysian palm oil to touch Ringgit 4000/tonne by Jun 2012 due to strong demand and tight supply scenario. The short-term forecast for palm oil is Ringgit 3300/tonne for Jan 2012 owing to top producers Indonesia and Malaysia entering a flat phase in the oil palm biological cycle that lasts between six and nine months. According to a survey of 13 respondents at the Indonesian Palm Oil Conference and Price Outlook in Bali, average palm oil prices are likely to decline to Ringgit 3115/tonne in 2012, from a record average witnessed in 2011. Original Source: The Star, 3 Dec 2011, (Website: http://www.thestar.com.my/) © Star Publications (M) Bhd 2011
Linear alkylbenzenes News focus: CEPSA Quimica unveils growth strategy Spanish major CEPSA Quimica has unveiled a new growth strategy, involving product and geographic expansion through acquisitions, as well as debottlenecking projects to boost production. The firm intends to build up its core areas of linear alkylbenzenes (LAB), purified isophthalic acid (PIA), phenol and polyethylene terephthalate (PET) via acquisitions. CEPSA has held some preliminary talks, particularly in phenol, and would like to complete a phenol acquisition by end-2012. The firm has earmarked around €100 M for debottlenecking projects as part of
efforts to strengthen its production sites. Construction is expected to begin in 2012, with completion due by end-2013. In San Roque, Spain, the firm will lift normal paraffin capacity from 400,000 tonnes/y to 450,000 tonnes/y, while PET output will be boosted from 175,000 tonnes/y to 220,000 tonnes/y. In Salvador de Bahia, Brazil, LAB capacity will be increased from 220,000 tonnes/y to 260,000 tonnes/y and sulfonic acid capacity will be raised from 80,000 tonnes/y to 120,000 tonnes/y. The firm will also boost purified terephthalic acid capacity at its facility in Montreal, Canada, from 600,000 tonnes/y to 650,000-700,000 tonnes/y. Original Source: ICIS Chemical Business, 14 Nov 2011, (Website: http://icischemicalbusiness.com) © Reed Business Information Limited 2011
Ethoxylates/other Chemical profile: propylene oxide European propylene oxide (PO) supply is currently fairly balanced following limited supply in 1H 2011 because of extended plant maintenances. Plant operating rates reportedly range in the low-90%, while demand is said to be much higher in 2011 than in 2010. Monopropylene glycol (MPG), which is the second largest derivative, had a strong performance in 1Q 2011 because of the severe winter in Europe. European PO demand is projected to increase by 3-4%/y, driven primarily by polyols/polyurethanes. Eastern Europe, the Middle East and Africa is forecast to achieve a higher growth rate of 5-6%/y. US-based Dow Chemical has a proposed jv project that includes PO in Saudi Arabia, with commissioning in 2016 [Focus on Surfactants, Jan 2012]. Market sources say that additional PO capacity will be needed to meet demand from new downstream plants being built by Germany’s BASF and Bayer MaterialScience, for startup in 2014. A table presents European propylene oxide capacity, in thousand tonnes/y, by company. A line graph tracks European propylene oxide prices from Jan 2010 to Nov 2011. Original Source: ICIS Chemical Business, 21 Nov 2011, (Website: http://icischemicalbusiness.com) © Reed Business Information Limited 2011
FEBRUARY 2012
ASIAN OLEOCHEMICALS, COMPANY STRATEGIES AND MEGATRENDS
In this issue
RAW MATERIALS
1-3
Asian oleochemicals sector attractive for companies willing to invest
SURFACTANTS
3
ASSOCIATED PRODUCTS
3
Dow Corning announces sustainable soy wax produced using green chemistry process
APPLICATIONS
3-5
Save money on your laundry
LEGISLATION MARKET REVIEWS
5-6 6
Lessons for the chemical industry from consumer markets
COMPANY RESULTS
6-7
Diversifieds still growing
COMPANY NEWS
7
BASF further develops its corporate strategy
EVENTS
SURFACTANTS
AN INTERNATIONAL NEWSLETTER MONITORING TECHNICAL AND COMMERCIAL DEVELOPMENTS FOR ALL SURFACE ACTIVE AGENTS ISSN 1351–4210
8
Key themes in this issue of Focus on Surfactants include growth of the oleochemicals sector in Asia, corporate strategies being adopted by chemical companies, and, what may prove to be a new word for some, the “megatrend”. Although Southeast Asia has long been a source of raw materials such as palm oil and coconut oil, it is only within the past 20 years that production of oleochemicals such as fatty acids and alcohols has been carried out in the region to any significant extent (p 1-2). Investors that can provide either new technology and/or financial backing via mergers/acquisitions have the opportunity to tap into a growing sector that is being driven primarily by increased demand for surfactant-based products within Asia itself. Lion Eco Chemical, an Asian producer, has predicted that the global market for surfactants will more than double to 30 M tonnes in volume terms by 2030 (p 3), with Asia accounting for most of the increase. Key elements of the strategy being adopted by BASF, the largest chemical company globally, include a focus on sustainable development, innovative new materials, and expansion of its portfolio (p 7). Sustainability and corporate responsibility are also important components of Clariant’s strategy (p 4). According to a new eBook published last year, successful companies will be those that develop products that benefit society as a whole, as opposed to those focused only on improving their bottom line (p 6). In contrast CEPSA Quimica, the Spanish firm, is aiming to grow by increasing its capacity, including that for linear alkylbenzenes, and geographic
SURFACTANTS
expansion via acquisitions (p 2). A strategy of diversification remains attractive for many chemical companies (p 6), whereas speciality chemical companies are seeking to adapt to the ongoing difficult economic climate by focusing on innovation, emerging markets, and global megatrends (p 6-7). So what are these megatrends? As already mentioned, sustainable development is described by Clariant as a key megatrend by which it will seek to use renewable raw materials such as biomass and organic waste (p 4). According to the report on the eBook (p 6), global megatrends comprise the opportunities provided by the ageing Western population and the requirements for improved water quality, increased food production, and reduced greenhouse gas emissions. DuPont is cited as an example of a company that has realigned its business to take account of these megatrends, in addition to focusing on emerging markets (p 6). The impact of these megatrends on the surfactants sector remains to be seen. This issue edited by Dr Alan Skull
RAW MATERIALS Oleochemicals Asian oleochemicals sector attractive for companies willing to invest in new technology, M&A Strong growth is projected for Southeast Asia’s oleochemicals sector
SURFACTANTS
SURFACTANTS
FOCUS in 2010-2012, driven by a rise in demand from an expanding consumer market and better access to palm oil, palm kernel oil, coconut oil, and other raw materials. The region’s oleochemical production is primarily focused on fatty acids, fatty alcohols, methyl esters, and refined glycerine. These products find use in surfactants, soaps and detergents, food emulsifiers, and other applications. More than 20 years ago, Asia Pacific had no oleochemicals market. Oleochemicals production was concentrated in developed markets like the US, Europe and Japan. Today, most global fatty acid expansion will happen in Asia while fatty acid demand in Europe and the USA will be met through a combination of tallow- and palm-based material. Companies that are willing to invest in new technologies and grow via acquisitions and mergers will find themselves in a good position to capture opportunities in Asia’s thriving oleochemicals sector. Original Source: ICIS Chemical Business, 21 Nov 2011, (Website: http://icischemicalbusiness.com) © Reed Business Information Limited 2011
GAPKI withdraws from roundtable; RPSO wavers as a result The Indonesian Palm Oil Producers Association (GAPKI) revealed at the end of Sep 2011 its withdrawal from the Roundtable on Sustainable Palm Oil (RSPO) as it aims to commit to the Indonesian Sustainable Palm Oil (ISPO) scheme, a sustainability platform established in Aug 2011 by the government. GAPKI members would still be permitted to maintain ties with the RSPO but they would be asked to comply with the ISPO’s requirements. Indonesia’s sustainable palm oil output is currently pegged at around 1.95 M tonne/y. RSPO, an organization that aims to encourage the sustainable production of palm oil, also appears to be experiencing trouble with criticisms from Malaysia. According to the Malaysian government through its deputy prime minister, the increase in consumption of RSPO-certified palm oil has not been as strong as expected and the premium associated with cultivating the fruit has declined considerably. The Malaysian Palm Oil Association will notify its members to refrain from 2
ON
S U R FA C TA N T S
obtaining certification from RPSO until the premium it generates picks up. Original Source: Oils and Fats International, Nov 2011, 27 (8), 3 (Website: http://www.oilsandfatsinternational.com/) © Quartz Business Media Ltd 2011. Original Source: TCE (formerly The Chemical Engineer), Nov 2011, (845), 13 (Website: http://www.tcetoday.com) © Institution of Chemical Engineers 2011
Analyst: Palm oil set for a bull market in 2012 Leading industry analyst Dorab Mistry anticipates that the palm oil market will witness significant growth during 2012, as production in South-East Asia is set to decline and demand is set to increase. Mistry also expects Malaysian palm oil to touch Ringgit 4000/tonne by Jun 2012 due to strong demand and tight supply scenario. The short-term forecast for palm oil is Ringgit 3300/tonne for Jan 2012 owing to top producers Indonesia and Malaysia entering a flat phase in the oil palm biological cycle that lasts between six and nine months. According to a survey of 13 respondents at the Indonesian Palm Oil Conference and Price Outlook in Bali, average palm oil prices are likely to decline to Ringgit 3115/tonne in 2012, from a record average witnessed in 2011. Original Source: The Star, 3 Dec 2011, (Website: http://www.thestar.com.my/) © Star Publications (M) Bhd 2011
Linear alkylbenzenes News focus: CEPSA Quimica unveils growth strategy Spanish major CEPSA Quimica has unveiled a new growth strategy, involving product and geographic expansion through acquisitions, as well as debottlenecking projects to boost production. The firm intends to build up its core areas of linear alkylbenzenes (LAB), purified isophthalic acid (PIA), phenol and polyethylene terephthalate (PET) via acquisitions. CEPSA has held some preliminary talks, particularly in phenol, and would like to complete a phenol acquisition by end-2012. The firm has earmarked around €100 M for debottlenecking projects as part of
efforts to strengthen its production sites. Construction is expected to begin in 2012, with completion due by end-2013. In San Roque, Spain, the firm will lift normal paraffin capacity from 400,000 tonnes/y to 450,000 tonnes/y, while PET output will be boosted from 175,000 tonnes/y to 220,000 tonnes/y. In Salvador de Bahia, Brazil, LAB capacity will be increased from 220,000 tonnes/y to 260,000 tonnes/y and sulfonic acid capacity will be raised from 80,000 tonnes/y to 120,000 tonnes/y. The firm will also boost purified terephthalic acid capacity at its facility in Montreal, Canada, from 600,000 tonnes/y to 650,000-700,000 tonnes/y. Original Source: ICIS Chemical Business, 14 Nov 2011, (Website: http://icischemicalbusiness.com) © Reed Business Information Limited 2011
Ethoxylates/other Chemical profile: propylene oxide European propylene oxide (PO) supply is currently fairly balanced following limited supply in 1H 2011 because of extended plant maintenances. Plant operating rates reportedly range in the low-90%, while demand is said to be much higher in 2011 than in 2010. Monopropylene glycol (MPG), which is the second largest derivative, had a strong performance in 1Q 2011 because of the severe winter in Europe. European PO demand is projected to increase by 3-4%/y, driven primarily by polyols/polyurethanes. Eastern Europe, the Middle East and Africa is forecast to achieve a higher growth rate of 5-6%/y. US-based Dow Chemical has a proposed jv project that includes PO in Saudi Arabia, with commissioning in 2016 [Focus on Surfactants, Jan 2012]. Market sources say that additional PO capacity will be needed to meet demand from new downstream plants being built by Germany’s BASF and Bayer MaterialScience, for startup in 2014. A table presents European propylene oxide capacity, in thousand tonnes/y, by company. A line graph tracks European propylene oxide prices from Jan 2010 to Nov 2011. Original Source: ICIS Chemical Business, 21 Nov 2011, (Website: http://icischemicalbusiness.com) © Reed Business Information Limited 2011
FEBRUARY 2012