US Chemical Profile: Isopropanol

02 April 2012 00:00  [Source: ICB]

Isopropanol capacityUSES

Isopropanol (IPA) is mainly used in solvents, with outlets in cosmetics and personal care products, de-icers, paints and resins, pharmaceuticals, food, inks and adhesives.

It is also used in the extraction and purification of natural products, such as vegetable and animal oils and fats. Other applications include use as a cleaning and drying agent in the manufacture of electronic parts and metals, and as an aerosol solvent in medical and veterinary products.

Chemical compounds manufactured from IPA include derivative ketones such as methyl isobutyl ketone (MIBK), isopropylamines and isopropyl esters.

SUPPLY/DEMAND

US IPA demand has been stable, with prices throughout the year essentially rising and falling solely on upstream values.

Sources uniformly see supply as nearly balanced with demand, or slightly loose because of buying interest diminished by sharply higher pricing in March 2012. However, the rate of feedstock chemical-grade propylene (CGP) increases has been slower.

Supply problems apart, buying interest from the US IPA market typically responds to the overall domestic economy. One buyer suggests downstream demand could strengthen if a fiscal conservative wins the US presidential election in November.

Among downstream markets, US new home construction fell by 1.1% in February 2012 from the previous month, according to the US Department of Commerce.

The decline was driven by a sharp 9.9% drop in the core market for single-family homebuilding.

For upstream propylene feedstock, US inventories hit a record 5,633m bbl in the first week of January 2012, but have since declined. US propylene inventories rose by 4% in the week ended March 16 to 4,501m bbl, which represents the first increase for stockpiles in the past 10 weeks, according to the US Energy Information Administration (EIA).

US refineries operated at 82.2% of capacity during the week ended March 16, down from 86.4% in the first week of January, according to data from the EIA.

PRICES

With March contract gains of about 15 cents/lb ($331/tonne, €248/tonne), US IPA contract prices are nearly flat from levels that were seen a year ago.

Although IPA values rose in the second quarter of 2011 alongside stronger CGP figures, softer prices eventually followed feedstock down to the high 60s cent/lb range in January 2012, before starting upward again in February.

Isopropanol in gulfUpward price pressure stemmed solely from upstream propylene. The sharp March IPA increase was driven by a 30% jump in February CGP values from January.

A 5% increase in March propylene prompted April IPA initiatives of 5 cents/lb from most producers. One large producer had yet to join the April price push.

Domestic spot truck and railcar IPA values were also rising in line with contract gains, although one source reported that some import pricing was at parity with domestic contract values.

Spot FOB export pricing from the Port of Houston was confirmed in a range of 75-77 cents/lb, as assessed by ICIS in the week ended March 23.

One buyer said some import pricing is at parity with domestic contract values, but there is no consensus on that.

TECHNOLOGY

There are two commercial routes used in manufacturing IPA. One is an older method based on indirect hydration of refinery-grade propylene. This process uses sulfuric acid to form isopropyl sulfate, which is then hydrolyzed with steam to form sulfuric acid and IPA. The crude IPA is then distilled to the desired purity.

The second route uses the direct hydration of CGP (90-99%). This method eliminates the need for sulfuric acid. Instead, propylene and water are heated and the liquid-vapor mixture is pressurized, passed into a trickle flow reactor containing sulfonated polystyrene (PS) ion-exchange resins.

Alternatively, the reaction can be carried out in a gas phase over a phosphoric acid-based fixed-bed catalyst.

There is also a liquid-phase route employing a soluble tungsten catalyst. The IPA is distilled from the aqueous solution.

OUTLOOK

If the pace of US IPA price-hike efforts continues to taper off, buying interest will heighten and bring the market back into more balance, sources said.

Additionally, if European production rebounds, the US market could end up oversupplied, buyers said. Given that potential, one buyer warned producers to moderate how aggressively they pursue contract price gains.

If prices keep rising, even at slower pace, that could attract imports. Because contract prices are moving into the high 80s cent/lb range for March, one buyer felt IPA prices would put the product at risk of near-term competition from cheaper imports.


Author: Feliza Mirasol and Larry Terry



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