Alcohols heady with new capacities

09 October 2006 00:00  [Source: ICB Americas]

THE FATTY alcohols market is bracing for a period of overcapacity.

Close to 1 million tonnes of alcohol capacity - mostly from new oleochemical alcohol plants in Asia - will be added to the market over the next two years, according to a new study by Brewster, N.Y.-based Colin A. Houston & Associates (CAHA).

The share of oleo-based alcohols within the overall higher alcohols market, which is currently at 1.7m tonnes, is expected to increase from 61% last year to 65% by 2010.

"The new oleo alcohol capacity will impact not only petro-based alcohols but also the 2.6m-tonne market for linear alkylbenzene (LAB), the major competing detergent intermediate," says Joel Houston, CAHA president. "Many alcohol prices have fallen below LAB pricing in the different regions but attention will be focused in Asia where the oleo producers compete with their lowest costs."

Mid-cut detergent range alcohol prices in the US were quoted in the range of 59-69c./lb., according to chemical pricing service ICIS pricing, compared to 68-79c./lb. a year ago.

Industry sources quote LAB prices in the mid-60c./lb. range.

"Oleo alcohol prices have probably reached the bottom, barring some major change in the vegetable oil market," says Neil Burns, VVF's vice president of US operations. "Alcohols are now very cost-effective vehicles for surfactant production of alcohol sulfate and alcohol ethoxylates, and are very competitive with LAB as feedstocks for detergent and other types of cleaning products."

In Asia, the LAB/alcohol rivalry is expected to intensify as alcohol producers move to expand into detergents.

"Personal care already uses large volumes of oleo alcohols while little alcohol is used in Asian laundry detergents," says Houston. "Surplus alcohols coming from Asia will be exported to Western markets but will be limited by factors such as logistics."

Alcohol surfactants will be hindered as well by the current global constraints in ethylene oxide supply and in ethoxylation capacity, notes Janice Mabe, Huntsman's director of base surfactants, Americas.

"Aside from the possible constraints in vegetable oils supply for feedstock, infrastructures are also needed to complete the derivatization of these alcohols into surfactants," adds Mabe.

A major LAB producer, Huntsman, notes LAB's tough market situation. Aside from the growing competition, the industry has been bombarded by rising petroleum-based feedstock costs and current overcapacity.

Total global LAB capacity this year, excluding the new capacity that recently came on stream in the Middle East, was estimated at 3.44m tonnes.

"LAB is a tough, generally oversupplied market although supply of paraffin - LAB's major feedstock - has been a bigger constraint than expected this year," says Mabe. "Margin increases, badly needed particularly for LAB, have not really been achieved."

Huntsman says it expects a fairly tough market situation for surfactants in early 2007 brought on by the additional alcohol supply from Asia. The company is currently looking at growth opportunities within the oleochemical sector driven by the expected glut of fatty alcohols as well as glycerine from biodiesel.

"In surfactants, we have developed a unique process to produce ethoxylates from methyl esters and vegetable oils.," says Mabe. "Their performance characteristics are similar to linear alcohol ethoxylates and nonylphenol ethoxylates in detergent formulations. These surfactants fill the need for greener chemistries and they have a very competitive cost structure."

OUTLOOK FOR HIGHER OLEO ALCOHOL CAPACITY

ADDITIONS BY PRODUCER, 2006-2007

	Thousand tons
Producer	Location	2006	2007	Nettotal	Net C12+basis	New	Surfactant integration
Sasol/Wilmar JV	China	-	60	60	60	-	X
Liaoyang Hua Xing	China	80	-	80	68	-	-
Teck Guan	China	-	100	100	85	X	-
Kao Philippines	Philippines	70	-	70	55	-	X
Pan Century	Philippines	30	-	30	30	X	-
Musim Mas	Indonesia	-	100	100	100	X	-
Ecogreen Oleo	Indonesia	50	-	50	50	-	X
Sawit Mas	Indonesia	40	120	160	150	X	(X)
PalmOleo/KL Kepong	Malaysia	-	100	100	100	X	-
Cognis Thai	Thailand	-	100	100	85	-	X
Godrej	India	30	-	30	30	-	X
Oxiteno	Brazil	-	80	80	80	X	X
TOTAL		300	660	960	893	6	7SOURCE: Colin A. Houston and Associates

LATE SPOT PRICES

Crude vegetable oils
Coconut oil, t.l. N.Y.	lb	30.75c
Corn oil, Midwest	lb	24.50c
Cottonseed oil, West Texas	lb	26.50c
Linseed oil, Minneapolis	lb	44c
Peanut oil, Southeast (rest.)	lb	53c
Soybean oil, Decatur, Ill.	lb	22.90c
Refined vegetable oils
Coconut oil, t.w. N.Y.	lb	38.75c
Corn oil, jumbo tanks, N.Y.	lb	34.25c
Palm oil, N.J.	lb	29c
Peanut oil, jumbo tanks, N.Y.	lb	66c
Soybean salad oil, N.Y.	lb	28.17c
Oil meals
Cottonseed, 41% bulk, West Texas	ton	$137.50
Linseed, ext., 34% bulk, Fargo, N.D.	ton	$87
Soybean, unrest., 48% bulk, Central Ill.	ton	$173.50
Fats & greases
Grease, white, choice, tanks, dlvd., Chic.	lb	16c
Grease, yellow, max, 10% dlvd., Chicago	lb	12.50c
Lard, loose, bulk, tanks, dlvd., Chicago	lb	30c
Tallow, inedible, fancy, tanks, dlvd., Chic.	lb	17c
Tallow, edible, bleach, tanks, dlvd., Chic.	lb	20c

By: Doris de Guzman
+1 713 525 2653

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