30 January 2012 00:00 [Source: ICB]
The second-largest outlet is purified terephthalic acid (PTA), used in polyethylene terephthalate (PET) bottles and polyester fibers. Acetic anhydride and solvents (ethyl acetate, butyl acetate) are the third- and fourth-largest users, respectively.
The European market balance varied greatly in 2011. Force majeure declarations from UK-based BP Chemicals and US-headquartered Celanese in the first half of the year saw the market move from balanced to tight. Availability improved once Celanese's unit in Nanjing, China, and BP's facility at Hull restarted.
During the tight period, a number of sources turned to the well-supplied Chinese market to look for opportunities to move material from China to Europe. When ships started to arrive in the second quarter, product easily found a home, but by September it was evident that supply was starting to outweigh demand. By the end of the year, the market was largely balanced once more.
Assuming that there is no major loss of production among European suppliers, the acetic acid market is expected to remain fairly balanced through 2012.
European contract prices in the fourth quarter of 2011 fell by around €70-100/tonne ($91-130/tonne). Values were assessed by ICIS at €550-600/tonne FD (free delivered) NWE (Northwest Europe).
Market participants generally agreed that this represented the average reduction from quarter three, although some reported numbers outside this range. Sources attributed the price reductions to ample availability of material rather than any marked drop in demand.
Some contract business is now conducted on a monthly basis. European spot prices declined from a 2011 high of €800-900/tonne FD NWE, recorded in early May, to €470-500/tonne FD NWE at the beginning of January 2012.
The dominant process is methanol carbonylation, which accounts for more than 65% of world capacity. Other processes are the oxidation of acetaldehyde (used by German producer Wacker) and the liquid-phase oxidation of n-butane or naphtha.
Wacker has investigated three bio-based routes. The ACEO process involves conversion of a biomass feedstock to ethanol (using yeast), producing acetic acid via gas phase oxidation. A 500 tonne/year pilot plant has been running in Burghausen, Germany, since late 2009.
A second route converts biomass-based butanediol (BDO) to methyl ethyl ketone (MEK), then acetic acid, while the third involves directly converting biomass to acetate/acetic acid using bacteria.
The European market for acetic acid is mature and there are no plans to invest in additional capacity in the region. This is in sharp contrast with Asia, where some 1m tonnes/year of capacity was added in 2011.
Additional proposed capacity totalling more than 3m tonnes/year is under consideration in China and India.
There is currently no lack of supply in Asia, as illustrated by Chinese producer Jiangsu Sopo's decision to cut operating rates at its 1.4m tonne/year acetic acid plant at Zhenjiang, in Jiangsu province, to 50% in December in response to mounting inventories.
Consequently, Asia's capacity to meet any shortfall in Europe, as demonstrated by the large volumes imported in mid-2011, seems assured for the foreseeable future.
Europe will remain structurally dependent on imports, with an increasing proportion likely to be sourced from Asia and the Middle East.
Demand is very difficult to predict at this time on account of the prevailing economic uncertainty in Europe, but this in itself may reduce offtake in the coming months.
Speaking at the World Methanol Conference in December 2011, Nigel Suttie, director of syngas chemicals for global consultancy CMAI, forecast that demand in Western and Central Europe would grow by 1.2% annually over the next five years, driven principally by new downstream PTA capacity coming on line.
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