Chemical Profile: Europe acrylic acid

31 January 2014 09:54  [Source: ICB]

Acrylic acid’s (AA) major derivative is acrylic esters, which include methyl acrylate (methyl-A), ethyl acrylate (ethyl-A), butyl acrylate (butyl-A) and 2-ethylhexyl acrylate (2-EHA). Crude (unrefined) acrylic acid is used almost exclusively to make acrylate esters. Major markets include surface coatings, adhesives and sealants, textiles, plastics additives and paper treatment.

With consumer confidence struggling to pick up, amid economic uncertainty, demand is reasonably lacklustre in a well-supplied market. Utilisation rates remain low and players along the supply chain are concerned that ongoing feedstock volatility – along with attractively-priced imports – will continue to squeeze margins.

January demand is higher than December levels but it is not particularly strong, which is usual for the beginning of the year as the market is returning to business from the holiday period. Buying interest is in line with or marginally higher than January 2013.

Players expect a clearer demand picture to emerge in February when prices are likely to face further upward pressure from producers keen to regain margin. Evonik Industries-Saudi Acrylic Acid Company (SAAC)’s joint venture firm Saudi Acrylic Polymer Company (SAPCO) has signed the mechanical completion certificate for the Evonik-licensed superabsorbents polymer unit in Jubail.

The plant’s operation and commercial production began in Q4 2013. The facility is expected to have a capacity of 80,000 tonnes/year of superabsorbent polymers (SAP), which goes to manufacture diapers and other personal hygiene products.

German producer BASF’s plans for a global-scale AA complex in Camacari, Bahia in Brazil, is the company’s largest investment project in South America to date. The plant is expected to come on stream by the end of 2014. Expected capacity is unconfirmed.

There are further AA plants scheduled to come on line in the coming years, but most are still far off from completion.

Russia’s Gazprom Neftekhim Salavat plans to start acrylic acid and butyl acrylate production in the fourth quarter of 2015. The new facilities, being built on the premises of Gazprom Neftekhim Salavat, are planned to have capacities to produce 80,000 tonnes/year of acrylic acid, 35,000 tonnes/year of ice class acrylic acid and 80,000 tonnes/year of butyl acrylate, according to the company.

In 2011, the company, formerly known as Salavatnefteorgsintez, was renamed to become Gazprom Neftekhim Salavat. It is based in Russia’s internal republic of Bashkortostan, and is one of the country’s leading fertilizer, ethylene and polymer producers.

On 10 December 2012, Gazprom Neftekhim Salavat signed the EPC contract with Japan’s Mitsubishi Heavy Industries, Sojitz Corporation and Turkey’s Renaissance Construction to build the acrylic acid and butyl acrylate units.

European January acrylic acid and acrylate esters contract prices largely rolled over or increased slightly, depending on ester and starting point, on the back of higher feedstock propylene costs. Feedstock propylene contract prices have been firm in recent months, but acrylic acid buyers have resisted increases on healthy supply and uncertainty regarding demand in a competitive market.

Margins started to erode in the second half of 2012 when feedstock costs were largely increasing and acrylate prices failed to keep up, because of ongoing weak macroeconomic conditions.

Looking at potential feedstock implications, a few participants expect propylene pricing to be fairly stable in 2014.

Spot prices have entered a period of stability. Butyl acrylate spot prices reached €1,750/tonne FD NWE in August 2013. Prices began to rise in May as peak season demand picked up, and the incline continued in June as buyers struggled to secure material, because of plant outages. Butyl-A is now trading at around €1,500/tonne FD.

Most plants are based on the gas-phase catalytic oxidation of propylene via acrolein. The reaction can be carried out in single or two-step processes, but the latter is favoured because of its higher yields.

Developing technologies include propane-based routes, as well as some based on fermentation. Catalysts have also been developed to produce AA from glycerol.

Most players in the sector are aiming for a year of growth in 2014. With GDP forecasts marginally higher for the year ahead, there is hope that acrylates consumption will see modest gains.

While growth prospects are tainted by caution, the general consensus is that demand has bottomed out, and positive sentiment is expected to return to the sector. However, some participants only expect to see significant improvement in demand in 2015.

By: Helena Strathearn
+44 208 652 3214

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