Surfactants, Oleochemicals

Market Overviews

Caustic soda

 
Updated to Q1 2019

Europe

European domestic production and supply availability of caustic soda was reduced in Q4 2018 due to production issues in northwest Europe and France and low water levels on the Rhine. However, import availability – particularly in the Mediterranean – remained high. This followed an increase in shipments from the Middle East and Asia due to long markets in both regions. Shipments from the US to the Mediterranean and Nordic markets also increased.

European caustic soda demand was stable to slightly lower in Q4 compared with the previous quarter. Demand fell in late November and December as market players reduced stock positions before the end of the year. Falling prices in the Mediterranean during most of the quarter also deterred buyers. However, for most markets and for the majority of the quarter, downstream activity and demand were similar to that seen in Q3.

Latin America

Continued abundant availability is forecast for Latin America in Q1 2019, as alumina refiner Alunorte is expcted to continue at a rate of 50%. Participants noted uncertainty as to when Alunorte could increase rates to normal, as no timetable has been announced. Supply in the Americas could tighten once Alunorte increases alumina production rates.

Caustic soda demand in Latin America is expected to remain steady in Q1, continuing a trend seen in Q4. Demand from Alunorte is expected to remain at 50% of previous levels with no agreement on when normal production will resume. Elsewhere in the region, demand is likely to remain stable at current moderate levels, although demand from the paper/pulp sector is expected to be healthy following an improvement in exports.

US

Lengthening supply during Q4 2018 sent US spot caustic soda prices lower for both domestic barges and for export parcels. The longer supply was a direct result of an outage at Alunorte, an alunina refiner in northern Brazil that was expected to buy 600,000 dmt out of the US. However, the refiner’s consumption was only half that rate in 2018, displacing an unexpected 250,000 dmt during the last half of the year.

Demand for US liquid caustic soda remained steady in the US domestic market with a slight seasonal decline for water treatment purposes as cooler weather arrived. Spot export demand remained relatively steady for most of the year, but at a lower level than previous years, throwing US production plans out of sync. Demand for pulp and paper production, chemical processing, soap and detergent manufacture and textiles remained steady

Asia

Spot volumes from South Korea are expected to be minimal in Q1 2019. South Korean producers will be concentrating on building up inventories to cater for domestic downstream expansions due to come online by mid-2019. Despite this, the supply from other northeast Asian producers is expected to remain long during Q1 2019 due to mounting inventory pressures caused by the ongoing halt of exports into India.

Downstream demand in China is expected to recover after the Lunar New Year. Increased domestic demand of 120,000 dmt/year is expected from expansions to South Korea’s epoxy resin, super absorbent polymer, semiconductor and oil and gas sectors, which will come online in the first half of 2019.

Ethylene oxide

 
Updated to Q4 2018

US ethylene oxide (EO) supply was healthy as production was normal and downstream demand into ethylene glycols and ethanolamines slowed down with the end of high season. In general, the markets turned bearish with seasonality kicking in and a bevy of uncertainties weighing on business sentiment. EO producers in the US include BASF, Dow Chemical, Eastman Chemical, Huntsman, Indorama Ventures, LyondellBasell and Shell Chemical.

Demand tapered off in the downstream polyethylene terephthalate (PET) sector. Demand from the anti-freeze and de-icing sector was seasonally normal, but did not received a significant boost due to milder than expected weather. EO contract prices steadily moved down due to lower feedstock ethylene prices. EO is largely used to make monoethylene glycol (MEG), a key feedstock for PET. EO’s secondary outlet is in surfactants.

Fatty acids

 
Updated to Q3 2017

In the US, C18 stearic and oleic fatty acid supply is expected to continue to trend to a finely balanced market amid sustained demand in most end-use sectors. Feedstock fats and grease market direction is uncertain for the third quarter, as some of the prices direction will depend on the outcome for the biodiesel industry and their production rates.

Stable conditions are expected to prevail in the European fatty acids markets. Supply and demand fundamentals in both the palm and tallow-based stearic and oleic markets are expected to continue at steady levels from Q2, players in both markets have noted recently. Players will continue to look to upstream trends in feedstock palm and tallow prices during Q3 negotiations, but early quarterly agreements have largely been settled at rollovers from Q2 levels.

Asia’s fatty acids market faces an uncertain quarter. Buyers have remained cautious as palm oil prices are expected to soften further in the second quarter of 2017 as production recovers further. Fatty acid prices saw some upward support as producers lower plant utilisation due to sluggish demand, but it remains to be seen how long producers will maintain their current operating rates.

Fatty alcohols

 
Updated to Q2 2017

Asia’s fatty alcohol market is expected to remain subdued as a result of volatility in feedstock prices. Lower plant utilisation continued to shorten supply, allowing sellers to maintain certain premium for their spot cargoes. However, fatty alcohol prices were expected to soften in the coming months as producers gain access to cheaper feedstock.

European quarterly fatty alcohols trading activity has declined because of feedstock PKO price volatility. Buyers prefer to purchase monthly in what seems to be a restructuring market. Meanwhile, sellers are unhappy about inventory management as many bring their feedstocks in from Asia and run plants to produce fatty alcohols in Europe.

US mid-cut fatty alcohol contract prices saw modest gains in the first quarter of 2017, rising 5 cents/lb over Q4 2016. Feedstock palm kernel oil (PKO) prices soared during the middle of Q1 2017, creating a bubble as PKO prices began to fall quickly. During the Palm Oil Conference (POC) in early March, expectations of strong alcohol price gains were discussed. Less than a week after the POC PKO prices dropped and sellers’ contract targets fell alongside the feedstock fall. Going into Q2, contracts appear ready to rise again as sellers were able to secure some gains from high-cost feedstock prices that hit during the bubble. Buyers’ expectations going forward are that mid-cut alcohol prices are likely to continue to soften on lower PKO costs, mitigating the string of double-digit increases that dominated previous quarters.

Glycerine

 
Updated to Q3 2017

Refined glycerine prices in the third quarter are expected to be sharply higher as Chinese demand has pulled down supply out of southeast Asia and the US biodiesel sector has just started to ramp up production. Kosher crude glycerine supply is very low and limited availability for spot volumes. Prospects are looking much better for US glycerine in 2017.

Spot European glycerine prices have been rocketing amid tight market supply in recent months but it is unclear whether they will continue to do so amid the approaching summer holiday season. Some sources believe that the holiday season will bring quieter levels of demand which will lend relief to tight market conditions and an element of price stabilisation. However, others cite bouts of scheduled maintenance at some plants as drivers for continuing tight supply.

Asia’s glycerine prices will be well-supported going forward with supply expected to remain short at least for the next two months. The short supply situation may ease once Indonesian biodiesel producers ramp up production for the national mandate, but it may take some time before more glycerine cargoes hit the market.

Linear alkylbenzene & sulphonate

 
ICIS has a global network of reporters in Houston, London, Singapore, Shanghai, Mumbai and Moscow, ensuring unrivalled coverage of established and emerging markets.

Our reporters develop expert knowledge of the specific markets they cover, developing contacts and building knowledge of the market on a local and global basis, in order to offer insight into prices and the factors driving prices.This expertise enables us to produce independent and accurate price assessments which are relied on by key market makers for their decision making.

Our petrochemical and chemical pricing information is published in individual reports, dependent on the different regions we cover for each market, including Linear alkylbenzene & sulphonate.

Soap noodles

 
Updated to Q2 2017

The standard blend 80/20 soap noodles market in Asia will see another challenging quarter with most market participants not expecting any significant pick-up in demand.

With the cold season over, demand in China was expected to increase somewhat, but downstream product consumption has remained slow so far. In India, the consumer market remained affected by the country’s demonetisation policy in late 2016.

Trade discussions continued to be plagued by persistent talks of the availability of competitively-priced cargoes, and the bearish buying sentiment meant that soap noodles prices are expected to largely track raw material prices.

Sorbitol

 
Updated to Q4 2015

Contract prices for crystal grade and liquid sorbitol in the US market will rollover between Q3 and Q4 within the annualised contract format where no monthly negotiations take place.

Confectionary end-use markets for sorbitol are showing good seasonal demand in Q4.

Baked goods and non-sugar product end-uses are also faring well in US demand, with increasingly good prospects for sugarless gums and diet bars.

In the sugarless gum and diet bar end-uses, other sugar alcohols, such as maltitol and mannitol, are being used along with sorbitol.

Sorbitol feedstock corn prices are circulating in the high $3/bushel, with expectations that the 2015 US harvests for corn and soybeans are likely to be excellent.

Corn carryover factors between 2015 and 2016 are unclear, but they are expected to be ample for inventory availability in 2016.

Asia’s sorbitol prices are expected to remain stable in the fourth quarter as demand is expected to pick up towards this period, while supply is seen to remain healthy. Run rates at regional plants are likely to remain high to cover the seasonal firmer demand. Supply from China is expected to weigh on prices to some extent as the regional economy slows.

Biodiesel

 
Updated to Q4 2018

Europe

Supply of RME is set to remain low for the fourth quarter, with a low upstream rapeseed crop putting pressure on already tight stocks. Length in the FAME 0 market may ease in the fourth quarter due to an anti-subsidy investigation brought against Argentina by the European Commission regarding SME.

RME demand is anticipated to reach its peak in the fourth quarter, with this blend being winter grade material. However, FAME 0 buying interest is expected to fall, with European countries unable to use this blend in winter due to regulations in the region.

US

The blending waiver exemptions remain a concern. EPA’s granting of dozens of small refinery hardship exemptions undercut prior year volumes and could still have serious negative impact on future year standards. With the uncertainty regarding the blending waivers, it is unclear how this will affect the blending volumes this year.

The blending waiver exemptions remain a concern. With the uncertainty regarding the blending waivers, it is unclear how this will affect the blending volumes this year. EPA’s granting of dozens of small refinery hardship exemptions undercut prior year volumes and could still have serious negative impact on future year standards.

Updated to Q3 2018

Asia

Supply is expected to still increase as PME biodiesel producers in Indonesia and Malaysia continue to try and meet increased buying interest from Asian importers. Market sources said most deals have already been transacted and feedstock prices are also rising, cutting into margins. Any increase in domestic blending mandate requirements could also lead to higher supply.

The EU market is uncertain as stocks are deemed to be high amid thin appetite for imports. The US has also imposed ADDs on Indonesian biodiesel. Demand from India and China could taper off as crude oil prices and gasoil prices decline and domestic consumption in southeast Asia is still largely driven by regulation.

Europe

Availability of RME is generally lower in the third quarter, compounded this year by several production cuts. This may improve sooner than originally anticipated, however, due to a drop in imports into the region. Lower imports are expected to push up the volume of RME produced, with players anticipating healthier levels of RME supply by the end of the third quarter.

RME demand is expected to remain seasonally low in the third quarter, though some buying interest is anticipated in order to blend with large volumes of PME set to enter Europe from Indonesia. Fatty acid methyl ester 0 (FAME 0) buying interest is typically at its peak at the beginning of quarter three, tapering off towards quarter four.

US

Biodiesel production is expected to increase, despite limited demand. Producers are hopeful after the Environmental Protection Agency (EPA) proposed a blending increase in the biomass-based diesel category under the Renewable Fuel Standard (RFS). EPA’s granting of retroactive small refinery hardship exemptions undercut prior year volumes and could still have a negative impact on production.

With no certainty regarding the retroactive blending waivers for various US refiners, buyers have limited interest in forward purchases. The political environment for getting the $1/gal tax credit extended is getting more difficult and biodiesel lobbyists will continue pushing on the extension of the tax credit for blenders, but uncertainty remains.

Latin America

Ongoing biodiesel trade wars will continue during the third quarter as a multi-tiered trade fight continues to rage for Argentine biodiesel sector. September will be a key month as the European Commission (EC) will decide if it reinstates import tariffs on biodiesel from Argentina which could force Argentine producers to slow production.

Ongoing biodiesel trade wars will likely push down demand for exports. European demand will possibly disappear as they retroactively impose tariffs on Argentine biodiesel imports in September. Argentine producers will have to look to open new export markets globally to offload volume and also increase domestic blending volumes and consumption.

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