INSIGHT: Surfactants market needs commitment

26 April 2012 21:00  [Source: ICIS news]

By Joseph Chang

JERSEY CITY, New Jersey (ICIS)--Just because ethylene capacity increases, it doesn’t mean that ethylene oxide (EO) capacity will rise with it. And pertinent to the surfactants market, you can count even less on additional supplies of purified EO.

“EO is very tight, and very significant investments need to be made to purify EO for use in surfactants and detergents,” said Mark Miller, business director, home and personal care, at Germany-based BASF, at the 2nd ICIS World Surfactants Conference in Jersey City, New Jersey, US.

In the US, while the shale gas boom has led to a rash of announced ethylene investments, this has not been accompanied by any comparable level of EO, and especially purified EO, projects.

There are two outlets for EO – ethylene glycol (EG) for polyethylene terephthalate (PET) that goes into textiles (polyester) and beverage bottles, and purified EO for surfactants.

EG draws the majority of EO production, as polyester fibre and PET bottles continue to drive growth, noted Doug Rightler, president of consultancy EO&D, at the ICIS surfactants conference.

That poses a challenge for surfactants producers that require purified EO.

In the US, INEOS is planning to add 150,000 tonnes/year of purified EO capacity by 2016, while Shell has announced an ethane cracker to come on line in 2017, but no purified EO capacity, noted Rightler.

US producer Huntsman plans to increase EO capacity at its plant in Port Neches, Texas, by 250m lb/year (113,000 tonne/year), with the output going into amines and surfactants.

And EO buyers should monitor China’s development of coal-to-methanol-to-olefins plants, Rightler pointed out.

The olefins can then be used to make EG and EO, and China is indeed focused on producing these products, noted the consultant. But if these projects do not go through, as there are significant technical challenges, China’s EG will have to be supplied from conventional production. That would further tighten EO supply, driving EO prices even higher.

Producers also typically prefer to manufacture and sell EG over EO because EO’s explosive properties make it difficult to transport, said Rightler.

Surfactants manufacturers need commitment – commitment from ethylene and EO producers to make purified EO. That requires confidence in future demand growth.

One indication of such upcoming growth is that India-based conglomerate Reliance Industries (RIL) has announced that it is planning to enter the global surfactants market.

Reliance sees this as the missing link in its value chain from oil and gas, all the way down to the retail segment, said Harish Davey, president of strategy and business development at Reliance, at the ICIS surfactants conference.

Reliance plays on both ends of the value chain, as well as in basic chemicals.

Davey projects the India surfactants market to grow from $2bn (€1.5bn) in 2010, to $6bn by 2020.

Additional reporting by Doris de Guzman in Jersey City

Author: Joe Chang

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