20 April 2009 11:00 [Source: ICB]
Will fats and oils development for industrial use still rise despite lower petroleum prices?
INDUSTRIAL USE of fats and oils has seen rapid growth and development over the past few years, driven mainly by high petroleum and natural gas prices as well as growing demand for natural or renewable-based products.
US fats and oils used for industrial applications rose last year to an estimated 11.9bn lbs (5.4m tonnes), up by 9% from 2007, and by 24% from the 2006 figure of 9bn lbs, according to the US Department of Agriculture's (USDA) Economic Research Service (ERS).
Methyl esters, or biodiesel, was the biggest factor in the increase in fats and oils use, while applications in lubricants and similar oils also had significant spikes, the USDA reported in its 2009 Oil Crops Yearbook.
An estimated 700m gallons of US biodiesel was produced last year, according to the National Biodiesel Board (NBB). Around 34% of biodiesel raw material came from refined soybean oil, 31% from crude soybean oil, 11% from inedible tallow and grease, and 24% from other fats and oils.
"The production of US biodiesel, which now accounts for over 75% of soybean oil's industrial use, experienced an annual average growth rate of an astonishing 90% for most of this decade," says Kenneth Doll, research chemist, Food and Industrial Oil Research Unit at the USDA's Agriculture Research Service (ARS).
The use of soybean oil in surfactants, specialty coatings, and bio-based lubricants are also growth areas, says Doll.
"The bio-based lubrication market was 15m gallons in 2007 but is expected to reach 30m gallons by 2017. This is despite a relatively flat market for all of the lubrication industry," he adds.
For the marketing year 2008-2009 (October-September), the global industrial use of vegetable oil is estimated to be around 25m tonnes, up by 7% from 2007, according to senior oilseed economist Keith Menzie of the USDA's World Agriculture Outlook Board. Menzie presented his projections at the annual American Fats and Oils Association (AFOA) meeting held late last year in New York.
"Industrial use now accounts for 20% of the global total vegetable oil consumption compared to 10% in 2001-2002," said Menzie. "Growth was mostly from the European Union, US, Argentina and Malaysia."
EU industrial use of vegetable oil grew by 25%/year from 2001-2002 through 2006-2007, added Menzie. For 2008-2009, 6% of the global vegetable oil production used by the EU will be for biodiesel, according to the USDA.
But with fats and oils prices rising amid a lower petroleum price, the question lingers whether development and uses for fats and oils-based chemicals will become stale.
"The volatility of petroleum prices increased the competitiveness of bio-based materials in petroleum-dominated markets. However, this window of opportunity was somewhat short-lived as agricultural commodity prices also increased, and later, petroleum prices lowered," says Doll.
While being green and sustainable are often mentioned as drivers for bio-based product development, they tend to be tie-breakers, says Andy Shafer, vice president, sales and market development at Illinois, US-based Elevance Renewable Sciences.
"The most significant challenge for renewable-based industrial products is to provide improved performance at competitive economics," says Shafer. "The chemical industry is looking for innovative solutions that provide advantages in performance, economics, security of supply, and stability of pricing."
Shafer adds that while the current recession certainly affected sales of most consumer- driven goods, Elevance's business appears to be less significantly affected than other alternatives based on petroleum products.
"New products are being introduced using our technology in candles and personal care products. Our established products also continue to sell well," he says.
"But new customers and new applications for natural oil-based polyols have buoyed us through the downturn," says director of sales and marketing Larry Armbruster.
Customers, however, are still not willing to pay a premium for green, adds Armbruster. "Customers push for green as long as it is cost-competitive with existing products on the market."
Among all industrial applications, biodiesel is projected to be the leading contributor to the reduction of US fats and oils use this year, according to the USDA-ERS. Soybean oil use in biodiesel production is forecast to decline from 2.9bn to 2.2bn lbs for the 2008-2009 marketing year.
"Soybean oil demand from this market was already tightening as diesel fuel prices collapsed faster in 2008 than the feedstock costs for biodiesel," says Mark Ash, USDA-ERS oilseed analyst. "For January 2009, domestic consumption of soybean oil for biodiesel already plunged 53% from the same month last year."
The slowdown in biodiesel leaves available soybean oil for smaller but more value-dense markets, notes Doll.
"Our production of agricultural oils will certainly be affected by various market conditions, like all industries. Still, we will always have to make our chemicals, materials and fuels out of something. Environmental concerns and finite fossil resources dictate that there is a long-term future in the use of renewable resources," he adds.
Amid the current price drop in petroleum, soy chemistry is still economically competitive in many more markets, according to US-based consulting firm Omni Tech International. In September, Omni Tech issued a report for the US soybean group United Soybean Board (USB) about the potential impact of rising petrochemical prices on soy use for industrial applications.
"Relative increases in natural gas and petroleum pricing will continue to lead to increased use of soy materials in markets where performance issues have been sufficiently addressed," reported Omni Tech.
"In those markets where performance and/[or] processing costs are still an issue, the competitive motivation for seeking improved performance of soy products while still remaining economically competitive is significantly increased."
NEW PRODUCTS SPROUT
The USB noted a total of 28 soy-based products introduced last year with its soybean checkoff program compared with 26 products launched in 2007. Applications include polyurethanes (PU) and other resins, solvents, adhesives, printing inks and coatings.
"The US soybean checkoff looks for industry partners to grow demand for our product by partnering with them to research and create new soy technologies," said Todd Allen, USB new uses chairman in a statement. He noted last year's success such as soy polyol-based foam now being used in Ford Motor automobiles.
Ford uses soy-based seat cushions and backs on more than 1m vehicles, which is an equivalent to using more than 76,000 bushels of soybean, says Debbie Mielewski, technical leader of Ford's plastic group.
"We are extending our partnership with the USB through investigating soy meal and flour as filler for several automotive plastics. With the soy foam, we are now conserving over 1m lbs of petroleum and reducing over 5m lbs/year of carbon dioxide emissions," adds Mielewski.
The rigid foam market and flexible foam market have reportedly seen much growth in the use of natural oil polyols, says BioBased Technologies' Armbruster.
In August last year, the company launched its second-generation natural oil polyol Agrol Diamond for the rigid foam market. The company says it has made a significant investment in its research and development capabilities.
"There has been a lot of activity in formulating natural oil polyols in a variety of new applications," says Armbruster.
"Some products act as fillers and can be used only at lower levels while others perform more similar to petroleum-based products. There is also a lot of work being done with the additives to improve natural oil polyol performance," he adds.
Elevance's Shafer notes emerging renewable products in sectors such as personal care and cosmetics, candles, corrugated and packaging, lubricants and antimicrobials.
Soy and vegetable wax candles are said to be the fastest-growing sector of the candle industry. Elevance recently introduced a soy-based wax for use in compression candles, which, adds Shafer, was difficult for soy waxes to do without Elevance's novel technology.
"Our collaboration with Tetramer Technologies has resulted in the synthesis of over 100 novel waxes. We are now beginning the commercial screening of a select few of these interesting products," he says.
Elevance's soy wax collaboration with US specialty chemical company Dow Corning also resulted in multiple cosmetic and personal care products on store shelves in Latin and North America, says Shafer.
"We expect that our development efforts will result in additional products being introduced very soon, expanding this product line," he adds.
Also in cosmetics and personal care is the USDA-ARS' recent development of soybean oil-based biodegradable sunscreen called Soyscreen, and soy-based hydrogel for use in hair-care.
"The hydrogel can expand and contract in response to changes in temperature or acidity levels, which makes it suitable for hair care application and drug-delivery - two high-value markets," says Doll.
He also notes the recent increasing use of soy extenders in the manufacture of wood composite materials. "The acceptance of this biobased product is high because of the lower emissions compared to formaldehyde-based resins," he adds.
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