27 September 2013 10:09 [Source: ICB]
Ethyl acetate (etac) is an active solvent that is mainly used in industrial lacquers and surface coating resins. It is also used as an extraction solvent for pharmaceuticals and food, and as a carrier solvent for herbicides. Miscellaneous uses include adhesives and solvents.
Demand for ethyl acetate has been reasonable during recent months, although market activity quietened during the summer holiday season, as is traditionally the case.
Europe is structurally short and relies on imports to meet demand. Material often arrives into Europe from countries such as India and Mexico, and to a lesser extent, Brazil.
It is possible that imports from Saudi Arabia could now increase, with Saudi International Petrochemical Co (Sipchem) having commercially started up its 100,000 tonne/year etac/butyl acetate (butac) plant in Jubail from 1 September. The plant was on a trial run from 10 May 2013. Fierce competition between European producers and importers is often cited as a key reason for the difficulties faced by the former in raising etac prices in line with increased feedstock costs. This means that producers’ margins are often under pressure.
Producers and distributors agree it is a buyers’ market, with sellers often having little option but to be flexible with price targets.
In August, European petrochemical distributors Bax Chemicals BV exited the market in order to focus on the activities of Bax Chemicals Export Overseas BV. Both changes in the chemical trading and distribution market during recent years, and the economic crisis, have taken their toll, director Erik Schurgers explained in a press release.
The European ethyl acetate (etac) market saw prices soften by around €55/tonne from early April to early September, to an average of €855/tonne FD NWE. This was despite higher feedstock costs. While acetic acid prices held relatively steady this year, the August ethylene contract price settled at an increase of €40/tonne from July, followed by a further €50/tonne increase in September.
This latter ethylene price hike resulted from fears of western nations’ possible military intervention in the Syrian crisis impacting the supply of crude oil from the Middle East. This drove up crude oil – and hence naphtha – prices in late August. Prior to these latest feedstock price hikes, etac producers had already complained of compressed margins for many weeks. This stemmed from the inability to pass already-high feedstock costs on to customers because of fierce competition between sellers as well as muted demand during the holiday period.
There is now speculation that, depending on upstream prices nearer the time, producers may try to increase etac prices in October.
Distributors speak of poor demand. One added that it has never seen such slow business in August and September, and that there has been no pick-up following the end of the summer holidays. It attributes this to adverse macroeconomic conditions.
However, during the latter half of September there appeared to be pockets of demand, depending on selling prices. According to one distributor, it was not possible to sell at €850-860/tonne FD in Germany. Selling prices were as low as €820-835/tonne, the source said.
A second distributor saw prices at €860-880/tonne FD NWE for full truckloads. Partial truckloads might be priced above this range, the source added. However, a producer said that one of its distributor customers had been purchasing extra volumes in September. It attributed this partly to the fact that its prices were fixed for the duration of the month, while other sellers might have been trying to increase prices. There was also an expectation of October prices being higher, which could have encouarged some pre-buying, the source said.
The primary method of etac production is esterification of ethanol with acetic acid in the presence of a catalyst, although some is produced by catalytic condensation of acetaledehyde with alkoxides. Several newer technologies have been commercialised. INEOS (formerly as BP) uses a process at its plant in Hull based on ethylene and acetic acid with a solid catalyst. This process, Avada, is targeted at locations where competitive ethanol is not available.
UK-based Davy Process Technology’s method, which only uses ethanol feedstock, is used by South Africa’s Sasol in a 50,000 tonne/year plant in Secunda. The ethanol is dehydrogenated to acetaldehyde, which further reacts to form etac. China National Petroleum has developed a one-step ethanol process where ethanol is partially oxidized to acetic acid, and then esterified with excess ethanol.
The European ethyl acetate market is mature, with growth unlikely. With global supply greater than demand, and Europe structurally short of ethyl acetate, it is likely to remain a net importer.
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