Chemical profile: EU Isopropanol

14 September 2012 11:00  [Source: ICB]

USES

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

IPA capacitySome chemical compounds are made from IPA, such as methyl isobutyl ketone (MIBK), isopropylamines, and isopropyl esters. It is used to extract and purify natural products, such as vegetable and animal oils and fats. It is also used as a cleaning and drying agent in the manufacture of electronic parts and metals, and as an aerosol solvent in medical and veterinary products. IPA is available in different grades. The normal quality of anhydrous IPA is 99%+, while special grades (essence and pharmaceutical) are 99.8%+.

SUPPLY/DEMAND

Demand in Europe has been hit by weak macroeconomic conditions over the last 12 months. Buyers of IPA have adopted a hand-to-mouth approach to purchasing, only taking the quantities needed to maintain production. Because of the recent volatility of feedstock propylene costs, buyers have faced the risk of making large purchases prior to a significant fall in spot prices after raw material costs dropped.

This has caused the market to become more reactionary to price movements, seeing spikes in demand before expected price increases, and a tail-off in buying activity in the middle of the month as players wait for the propylene contract price ideas to be confirmed.

August demand increased in the last week of the month as consumers made purchases ahead of an expected rise in September propylene prices, which were confirmed with a €105/tonne increase in the feedstock contract price for September. Demand is expected to continue to rise into September and October, which are busy months in the IPA market.

Production in Europe remains stable with no unplanned maintenance outages reported over the last year.

PRICES

Spot prices have been affected by significant movement in the propylene contract reference price over the last year. In July 2012, technical grade IPA prices were 18% down on the previous quarter because the combined propylene price drop of €310/tonne over May, June and July pushed producers to pass reductions on to the market. In July, technical grade IPA reached a level of €920/tonne at the lower end, a price that has not been seen since December 2010.

However, prices started to rise in August following a €120/tonne increase in propylene, triggering buyers to replenish depleted inventories during the normally quiet summer holiday period. This buying activity, taking place when the majority of southern Europe shuts down production for the summer, was driven by a general agreement that technical grade prices had bottomed out and that September would see further price rises. Technical grade prices have seen a 11-14% rise, and cosmetic and pharmaceutical grade a 4-7% price increase over the last four weeks.

The range at the beginning of September put technical grade at €1,050-1,080/tonne. Players were already talking about further increases of up to €60/tonne on technical grade prices into September. Prices for cosmetic and pharmaceutical grade were €1,160-1,250/tonne, the gap with technical grade increasing due to repression of that grade's prices by the market.

TECHNOLOGY

Two routes are used to produce IPA commercially. The older method is based on the indirect hydration of refinery-grade propylene using sulphuric acid to form isopropyl sulphate, which is then hydrolysed with steam to form sulphuric acid and IPA. The crude IPA is distilled to the desired purity.

A newer route is the direct hydration of chemical grade (90-99%) propylene, avoiding the need for sulphuric acid.

A very small amount of IPA is produced by the hydrogenation of acetone in the liquid phase. This process is only suitable where excess acetone is available.

OUTLOOK

IPA capacityFrance's Novapex plans to double the isopropanol (IPA) capacity at its 40,000 tonne/year plant in Roussillon, France. The expansion will be done in two phases. The first will add 10,000-20,000 tonnes/year of extra IPA capacity at Roussillon, and is expected to be completed by mid-2013. A timeframe for the second phase of the expansion has not yet been set.

Additional IPA capacity expansion remains targeted in Asia. China's Dezhou Detain Chemical plans to start up its 50,000 tonne/year acetone-based IPA unit located at Dezhou in Shandong province in the middle of September. Taiwan's Chang Chun Plastics is building an 80,000 tonne/year facility at Panjin in China's Liaoning province, which will also operate using acetone as a feedstock. The facility is expected to start up in the first quarter of 2013.

Cosmetic and pharmaceutical grade is seeing growth in the detergents market. This grade makes up approximately 35% of acetone producers' IPA usage, and is more resilient to macroeconomic downturns. However, a large amount of buyers and distributors will purchase technical grade IPA and use it in place of cosmetic and pharmaceutical grade due to the former's lower cost. Only when customers require the ability to trace back through the production, storage and transportation process is it necessary to use pure cosmetic and pharmaceutical grade IPA, market sources said.

No more plant closures are anticipated in Europe.


By: Matt Tudball
+44 208 652 3214



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