FocusAsian ethanolamines demand to grow by 6-7% over next 3-5 years

29 February 2012 04:11  [Source: ICIS news]

By Becky Zhang                                       

SINGAPORE (ICIS)--Asia’s demand for ethanolamines is expected to grow by 6-7% per annum over the next three to five years, with the support of strong economic growth in China and India, market sources said on Wednesday.

This is compared with the 2-3% forecasted growth in the US and Europe for the same period, the sources added.

Asia’s consumption of ethanolamines has been growing rapidly, reaching 560,000 tonnes in 2011 and accounting for a third of the global market demand, according to ICIS data.

China is driving demand and prompting capacity expansions in Asia, the sources said.

The country’s ethanolamines consumption rose to 366,000 tonnes in 2011, which is close to three times the 125,000 tonnes recorded in 2005, according to ICIS data.

“China is our priority market as the country’s demand growth is fast,” a major southeast Asian producer said. “China’s domestic price is the major benchmark for our pricing.”

The country’s strong demand was mainly driven by rapid growth in the major downstream surfactants, pesticides/medications, polyurethane (PU) and cement sectors, with the former two accounting for two thirds of China’s market share in 2011, a major Zhejiang-based trader said.

“China’s large population and the [search] for a better quality [of] life drove demand for personal care and detergent products, [in which] ethanolamines is the major raw material,” a surfactant maker in southeast Asia said.

The country’s real estate market is another major booster for ethanolamines demand, mainly in the PU and cement sectors, and is expected to stay high in the next few years because of the large population, the Zhejiang-based trader said, adding that the current ease in monetary policy may temporarily dampen demand.

International players detected the potential growth of the ethanolamines market in China from 2005, when China met 70% of its demand with imports.

Some ethanolamines majors have built production bases in China in the past three years, bringing the country’s capacity to over 5m tonnes/year in 2011, up by 10 times from 2005 and making up a quarter of global capacity.

These included Taiwan’s Oriental Union Chemical Corp (OUCC)’s 40,000 tonne/year plant at Yizheng in Jiangsu province, Dutch producer Akzo Nobel’s 80,000 tonne/year amines complex at Ningbo in Zhejiang province and German chemical giant BASF’s 75,000 tonne/year amines complex at Nanjing in Jiangsu province.

With around 860,000 tonnes/year of capacity in 2011, Asia now has the largest production capacity of ethanolamines in the world, exceeding that in the US, which had a capacity of 806,000 tonnes/year for the same year, according to ICIS data.

More new capacities, mainly in China and the Middle East, are to come on stream in the next few years, with the latest start-ups expected in the second quarter of 2012.

These include South Korean firm Honam Petrochemical’s 50,000 tonne/year project in China and Saudi producer SABIC’s 100,000 tonne/year Saudi Kayan project at Al-Jubail.

Market players said they are aware that the capacities coming on line in China will change the trade flow of ethanolamines in Asia dramatically over the next two to three years.

“Now a large importer, China is to reduce its imports further if local production is able to provide sufficient ethanolamines of acceptable quality for domestic end-users,” a major European producer said.

China imported a total of 111,000 tonnes of ethanolamines in 2011, a significant fall of 31% from the previous year, according to the China customs.

India is the second-largest importer of ethanolamines in Asia.

With a total consumption of around 100,000 tonnes in 2011, mainly from the optical glass production and the textile industry, the country is relying the majority of its demand for monoethanolamines (MEA) and diethanolamines (DEA) on imports since import duties for the chemical were reduced to 7% from 20% in 2010, said a major India producer, who is also a trader.

The Asian ethanolamines market is highly dynamic, characterised by active spot trading and volatile price movements, a second southeast Asian producer said.

“The key driver of ethanolamines prices used to be demand, but now it’s more of feedstock prices and the macroeconomic environment,” the producer added.

Asia’s ethanolamines prices increased steadily to $1,300-1,400/tonne (€962-1,036/tonne) CIF (cost, insurance & freight) China for MEA, $1,300-1,420/tonne CIF China for DEA and $1,500-1,670/tonne CIF China for triethanolamines (TEA), up by 5-12% since the beginning of the year.

The increase was underpinned by reduced supply, restocking and firmer feedstock ethylene prices, ICIS data showed.

($1 = €0.74)

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By: Becky Zhang
+65 6780 4359

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