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High palm oil prices force fatty acid cuts
FOCUS than 200,000 tonnes/y of n-paraffin to 2010. The Hindu, 6 Jun 2007, 130 (134), 19 & ICIS Chemical Business, 11 Jun 2007, (Website: http://icischemicalbusiness.com)
Oleochemicals More efforts needed for European market The Malaysian Palm Oil Board (MPOB) says Malaysian plantation companies must produce crude palm oil using best management and agriculture practices to guarantee the industry’s sustainability and exports to Europe. The demand for Malaysian palm oil from many European countries has declined considerably in recent times, following agitation by environmental non-governmental organizations from the US and Europe. These NGOs believe and promote the idea that the production processes of Malaysian palm oil are not sustainable and not environment friendly, the MPOB says. While overall exports from Malaysia to the European Union increased by 13.6% from 2.27 M tonnes in 2005 (worth Ringgit 3.24 bn) to 2.58 M tonnes (worth Ringgit 3.77 bn) in 2006, palm oil exports to France have decreased from 10,557 tonnes to 5073 tonnes, while those to Portugal have also declined by about 50%. The Roundtable on Sustainable Palm Oil (RSPO), a global palm oil alliance pact [Focus on Surfactants, Oct 2006 & Feb 2005], gives palm oil certification. Malaysia is aiming at receiving this certification in Nov 2007, which will regain the confidence of European consumers. The Star, 15 & 26 Jun 2007, (Website: http://www.thestar.com.my)
High palm oil prices force fatty acid cuts There is concern among Asia’s smaller fatty acid makers that high palm oil prices will force them to lower operating rates, or even shut down. Rising palm oil prices have boosted prices of some fatty acid grades by more than 35%. But the attitude of buyers has not kept pace, resulting in thin trading. Triple-pressed stearic acid bids passed the $1000/tonne FOB SE Asia barrier in June, up from AUGUST 2007
ON
S U R FAC TA N T S
$720-750/tonne in Mar 2007. Smaller plants will find it difficult to continue producing and could be forced to halt temporarily or operate at reduced margins. The largest producers in the region, which include IOI Oleochemical, Palm Oleo and Natural Oleochemicals, with a combined capacity of close to 1.5 M tonnes/year, are not likely to be greatly affected. A number of derivative plants in the region have temporarily gone offstream in recent weeks, as they are not able to absorb or pass on the increased prices. Palm oil and oleochemical traders and producers blamed meagre harvests and the high volumes exported to China for falling inventories and soaring prices for feedstock. In 1Q 2007 alone, China’s demand for palm oil was up 38% on a year earlier. One source expects prices to increase from the current $750/tonne to $1000/tonne. Another expects there to be an annual shortage of 7 M tonnes/y by 2010. With annual output of 37 M tonnes that is a considerable shortfall. A third analyst expects prices to receive an additional thrust shortly when biofuels take off in Asia. Meanwhile, global stocks of palm oil are falling rapidly. In Malaysia, they fell 12% in Apr 2007. ICIS Chemical Business Americas, 4 Jun 2007, (Website: http://www.icbamericas.com) & Handelsblatt Wirtschafts- und Finanzzeitung, 5 Jun 2007, (106), 32 (in German)
Oleos: No to Big Oil’s fat fuel The US oleochemical industry is allying itself with biodiesel manufacturers to stop oil companies from claiming the $1/gal tax credit when producing renewable fuel using small amounts of biomass. Dennis Griesing of the Soap and Detergent Association (SDA), which represents the US oleochemical industry, says, “subsidized co-production of renewable diesel on the part of large oil companies threatens the availability and pricing of tallow – an important raw material for oleochemicals”. In Apr 2007, the Internal Revenue Service extended the definition of renewable diesel to include the addition of biomass such as fats and oils to conventional petroleum refinery processes. ConocoPhillips recently said it would
produce as much as 175 M gals/year of renewable fuel using animal fats at some US refineries. A bill was introduced in May 2007 to eliminate the tax credit for co-produced renewable diesel. Under the legislation, producers who make renewable diesel solely from renewable sources would remain eligible for the tax credit. One senior member of the House Ways and Means committee said, “unless the abuse of this tax credit is prohibited, it will have the exact opposite effect of what Congress intended – it will discourage the creation of real renewable diesel fuel – and all on the taxpayer’s dime”. Tallow prices are said to have gone up by more than 80% since 4Q 2006 because of the consequences of biofuel subsidies for co-produced renewable diesel. ICIS Chemical Business Americas, 4 Jun 2007, (Website: http://www.icbamericas.com)
Ethoxylates/Other Ethylene oxide in the US The 10 major ethylene oxide producers in the US with sites and site capacities are: BASF, Geismar, LA, 485 M lbs/y; Dow Chemical, Plaquemine, LA, 602 M lbs/y, Seadrift, TX, 950 M lbs/y, and Taft, LA, 1700 M lbs/y; Eastman Chemical, Longview, TX, 230 M lbs/y; Equistar Chemicals, Bayport, TX, 800 M lbs/y; Formosa Plastics, Point Comfort, TX, 550 M lbs/y; Huntsman, Port Neches, TX, 1000 M lbs/y; Old World Industries, Clear Lake, TX, 780 M lbs/y; PD Glycol, Beaumont, TX, 700 M lbs/y; Shell Chemicals, Geismar, LA, 920 M lbs/y; and Sunoco, Claymont, DE, 120 M lbs/y. US market demand for ethylene oxide in 2006 was 8.465 bn lbs and in 2010 it is expected to be 9.34 bn lbs, representing growth of 2.5%/y through 2010. Historical and current pricing levels are listed, together with imports and exports between 2001 and 2006. The main end use for ethylene oxide is in the manufacture of ethylene glycol and other glycols (52%). It is also used in the production of ethanolamines (15%), ethoxylate surfactants (13%), miscellaneous products, including polyether polyols, cholines, hydroxyethyl cellulose (12%), and 3
Oleochemicals More efforts needed for European market The Malaysian Palm Oil Board (MPOB) says Malaysian plantation companies must produce crude palm oil using best management and agriculture practices to guarantee the industry’s sustainability and exports to Europe. The demand for Malaysian palm oil from many European countries has declined considerably in recent times, following agitation by environmental non-governmental organizations from the US and Europe. These NGOs believe and promote the idea that the production processes of Malaysian palm oil are not sustainable and not environment friendly, the MPOB says. While overall exports from Malaysia to the European Union increased by 13.6% from 2.27 M tonnes in 2005 (worth Ringgit 3.24 bn) to 2.58 M tonnes (worth Ringgit 3.77 bn) in 2006, palm oil exports to France have decreased from 10,557 tonnes to 5073 tonnes, while those to Portugal have also declined by about 50%. The Roundtable on Sustainable Palm Oil (RSPO), a global palm oil alliance pact [Focus on Surfactants, Oct 2006 & Feb 2005], gives palm oil certification. Malaysia is aiming at receiving this certification in Nov 2007, which will regain the confidence of European consumers. The Star, 15 & 26 Jun 2007, (Website: http://www.thestar.com.my)
High palm oil prices force fatty acid cuts There is concern among Asia’s smaller fatty acid makers that high palm oil prices will force them to lower operating rates, or even shut down. Rising palm oil prices have boosted prices of some fatty acid grades by more than 35%. But the attitude of buyers has not kept pace, resulting in thin trading. Triple-pressed stearic acid bids passed the $1000/tonne FOB SE Asia barrier in June, up from AUGUST 2007
ON
S U R FAC TA N T S
$720-750/tonne in Mar 2007. Smaller plants will find it difficult to continue producing and could be forced to halt temporarily or operate at reduced margins. The largest producers in the region, which include IOI Oleochemical, Palm Oleo and Natural Oleochemicals, with a combined capacity of close to 1.5 M tonnes/year, are not likely to be greatly affected. A number of derivative plants in the region have temporarily gone offstream in recent weeks, as they are not able to absorb or pass on the increased prices. Palm oil and oleochemical traders and producers blamed meagre harvests and the high volumes exported to China for falling inventories and soaring prices for feedstock. In 1Q 2007 alone, China’s demand for palm oil was up 38% on a year earlier. One source expects prices to increase from the current $750/tonne to $1000/tonne. Another expects there to be an annual shortage of 7 M tonnes/y by 2010. With annual output of 37 M tonnes that is a considerable shortfall. A third analyst expects prices to receive an additional thrust shortly when biofuels take off in Asia. Meanwhile, global stocks of palm oil are falling rapidly. In Malaysia, they fell 12% in Apr 2007. ICIS Chemical Business Americas, 4 Jun 2007, (Website: http://www.icbamericas.com) & Handelsblatt Wirtschafts- und Finanzzeitung, 5 Jun 2007, (106), 32 (in German)
Oleos: No to Big Oil’s fat fuel The US oleochemical industry is allying itself with biodiesel manufacturers to stop oil companies from claiming the $1/gal tax credit when producing renewable fuel using small amounts of biomass. Dennis Griesing of the Soap and Detergent Association (SDA), which represents the US oleochemical industry, says, “subsidized co-production of renewable diesel on the part of large oil companies threatens the availability and pricing of tallow – an important raw material for oleochemicals”. In Apr 2007, the Internal Revenue Service extended the definition of renewable diesel to include the addition of biomass such as fats and oils to conventional petroleum refinery processes. ConocoPhillips recently said it would
produce as much as 175 M gals/year of renewable fuel using animal fats at some US refineries. A bill was introduced in May 2007 to eliminate the tax credit for co-produced renewable diesel. Under the legislation, producers who make renewable diesel solely from renewable sources would remain eligible for the tax credit. One senior member of the House Ways and Means committee said, “unless the abuse of this tax credit is prohibited, it will have the exact opposite effect of what Congress intended – it will discourage the creation of real renewable diesel fuel – and all on the taxpayer’s dime”. Tallow prices are said to have gone up by more than 80% since 4Q 2006 because of the consequences of biofuel subsidies for co-produced renewable diesel. ICIS Chemical Business Americas, 4 Jun 2007, (Website: http://www.icbamericas.com)
Ethoxylates/Other Ethylene oxide in the US The 10 major ethylene oxide producers in the US with sites and site capacities are: BASF, Geismar, LA, 485 M lbs/y; Dow Chemical, Plaquemine, LA, 602 M lbs/y, Seadrift, TX, 950 M lbs/y, and Taft, LA, 1700 M lbs/y; Eastman Chemical, Longview, TX, 230 M lbs/y; Equistar Chemicals, Bayport, TX, 800 M lbs/y; Formosa Plastics, Point Comfort, TX, 550 M lbs/y; Huntsman, Port Neches, TX, 1000 M lbs/y; Old World Industries, Clear Lake, TX, 780 M lbs/y; PD Glycol, Beaumont, TX, 700 M lbs/y; Shell Chemicals, Geismar, LA, 920 M lbs/y; and Sunoco, Claymont, DE, 120 M lbs/y. US market demand for ethylene oxide in 2006 was 8.465 bn lbs and in 2010 it is expected to be 9.34 bn lbs, representing growth of 2.5%/y through 2010. Historical and current pricing levels are listed, together with imports and exports between 2001 and 2006. The main end use for ethylene oxide is in the manufacture of ethylene glycol and other glycols (52%). It is also used in the production of ethanolamines (15%), ethoxylate surfactants (13%), miscellaneous products, including polyether polyols, cholines, hydroxyethyl cellulose (12%), and 3