Chemical Profile: Asia acrylic acid

01 March 2013 09:11  [Source: ICB]

The main application for acrylic acid (AA) is as an intermediate for several polymers and compounds. Crude (unrefined) AA is used almost exclusively to make acrylate esters, which include butyl acrylate (butyl-A), ethyl acrylate (ethyl-A), 2-ethylhexyl acrylate (2EH-A), and methyl acrylate (methyl-A).

Glacial AA is widely used for the production of superabsorbent polymers, mainly used in the personal care industry.

Absorbent polymers consume approximately 30% of the acrylic acid produced, while about 50% is used for application in the acrylate esters sector.

The major downstream markets for AA and acrylate esters include coatings, elastomers, adhesives, thickeners, textiles, plastics additives and paper treatment.

An unclear global macroeconomic outlook resulting from the ongoing eurozone crisis has resulted in market participants taking a cautious approach to purchasing. AA and acrylate esters prices closely track propylene prices, as producers consistently face squeezed margins on weak buying interest.

The majority of end-users are purchasing on a need-to basis, unwilling to take risks. Several added that demand in southeast Asia for the paint sectors remains weak. The tonnage of imported cargoes of AA into China grew by a mere 3.3% in 2012, compared to 2010, weighed down by bearish market sentiment.

Nippon Shokubai shut its Himeji facility in late September 2012 because of an explosion at one of its tanks. This resulted in a surge in prices for AA and acrylate esters in Asia. The company's acrylic acid and SAP facilities, which include a 460,000 tonne/year acrylic acid unit and a 320,000 tonne/year unit for SAP, were ordered to shut by the government.

Prices started to decline in the middle of 2012, tied down by the weak global macroeconomic environment. Prices increased towards the end of the year, mainly because of an anticipated tightening in supply due to the outage at Nippon Shokubai's Himeji facility.

However, the uptrend was largely capped by weak buying interest, as the majority of end-users were sitting on ample inventory and were unwilling to build inventories because of prevailing weak downstream demand, especially in the paints sector.

On the other hand, producers took this opportunity to gain back margins lost through the year, as well as higher production costs resulting from firmer upstream values.

The catalytic process requires only gas-phase propylene and air, the propylene reacting with oxygen to form acrolein and then acrylic acid. The acrylic acid is then purified through distillation steps to produce glacial acrylic acid.

Most market participants continue to keep a close eye on the situation at Nippon Shokubai's Himeji facility. The restart date at the plant remains unclear, with expected approval due to be given by the government by the end of February. However, according to several market participants, the company will not restart the facility before April, as some lines were damaged during the explosion.

Supply for GAA remains tight in Asia after the start-up of Taiwan's Formosa Plastics Corp (FPC) new 60,000 tonne/year SAP plant in Mailiao. Supply in Asia is expected to tighten in the near term, owing to scheduled maintenance at several plants, with prices expected to be on an uptrend, tracking feedstock propylene prices.

BASF PETRONAS is expected to undergo a turnaround in end-March/early-April for three weeks, while South Korea's LG Chem will shut its No 1 crude AA line in March, No 2 and No 3 crude AA lines in May and April respectively, and its No 4 line in June.

Nippon Shokubai Indonesia is on schedule to start up its new 90,000 tonne/year SAP plant and 80,000 tonne/year AA unit in Cilegon, Indonesia, in August. The company has currently put on hold plans to build another new AA/SAP facility, either in Asia or Europe, with maximum capacity of 160,000 tonne/year of AA and 120,000 tonne/year of SAP.

End-users said downstream demand - especially in the paint and coating sectors - remains weak, despite March being the peak season. Furthermore, demand in Thailand has been dented by the country's increased labour cost, which has reduced the competitiveness of Thailand's manufacturing sector.

By: Samuel Wong

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