Product profile: Formic acid

2003/07/06

 

Producers are bullish about growth prospects in animal feed. Strong demand in Europe is likely to be followed in other parts of the world, particularly Asia where pig feed offers bright prospects

Uses

Formic acid's largest consumer worldwide is the leather industry, where it is used in the tanning and treatment of leather to prevent mould formation. The second biggest use is in agriculture, where it is used in silage preservation and animal feed. Formic acid is also used in the production of formates (used in oilfield chemicals, de-icers and coolants), artificial sweeteners, pharmaceuticals, plant protection agents and UV absorbers, as well as in textile dyeing and finishing.

Other uses include pH-control and neutralisation reactions, coagulation for natural rubber, degreasing, desulphurisation, paint stripping, rust removal and antioxidants.

Formic acid comes in two concentrations: 85%, which is the most common and regarded as the industry standard, and 98% (glacial), which accounts for about 30% of the market.

Supply/demand

Global demand is split roughly into the ratio 4:2:1 between Europe (including Africa and the Middle East), Asia-Pacific and the Americas. Europe has surplus capacity and is a net exporter to the Americas and Asia-Pacific. Global demand is put at 430 000-450 000 tonne/year with demand in western Europe put at 240 000 tonne/year. Western Europe is the world's largest consumer because of its large silage and animal feed markets - uses that are virtually non-existent in all other regions.

European producers say inventories have improved in 2003, after ending 2002 at a low level due to lower than normal production at some plants last year. Overall demand is sluggish because of the weak economy. However, consumption in animal feed is being boosted by its use as a replacement for non-prescribed antibiotics. Kemira started up a 20 000 tonne/year expansion in Oulu, Finland, in late 2002 and players say the extra capacity has been readily absorbed in the market.

Pricing

Market leader BASF announced a price rise of E50/tonne from 1 April in a bid to restore profitability. Other suppliers are also trying to push prices up but concede that it is very difficult. As a result, prices in Europe have risen moderately this year and current levels are quoted by one supplier at around E400-450/tonne (85%) ex-works.

Players say margins have improved slightly and they expect prices to remain stable for the rest of this year. One producer said that European prices have risen steadily over the past 18 months, gaining about 5-10% in most markets.

Technology

Formic acid was traditionally made from formamide but the formation of by-product ammonium sulphate has rendered this route unattractive. Large volumes are also recovered as a by-product from naphtha or n-butane oxidation, but the development of the methanol carbonylation process for acetic acid, which does not produce formic acid, has led to this route's decline. This process is still used by BP in the UK, Celanese in the US and Daicel in Japan.

A newer process from methyl formate has been commercialised by several companies and over half of production is based on this technology. (Anhydrous) carbon monoxide is reacted with methanol in the liquid phase. The methyl formate formed is degassed and any unreacted carbon monoxide is recycled, before being hydrolysed with water. The products are separated by distillation. In some cases, the formic acid-water mix is taken into an extraction tower where a secondary amide is used to extract the formic acid and some water. The mixture is distilled and excess water removed, leaving a 90% formic acid solution.

Another route, mostly used in small units, is based on sodium formate, where sodium formate is reacted with sulphuric acid to form formic acid and sodium sulphate. The sodium formate may also be obtained from the reaction between formaldehyde and acetaldehyde to give pentaerythritol.

Other routes have been developed but none have been commercialised. Technology developments are focused on efficiency improvements and developing new products and new applications.

Formic acid also occurs naturally in insects (ants, beetles, bees) and plants (nettles).

Health and safety

Formic acid is a clear, colourless, mobile liquid with a pungent odour. It is highly corrosive and a moderate fire hazard. Vapour is irritating to the eyes, skin and mucous membranes and the liquid can cause severe burns that are slow to heal.

Outlook

Global demand is forecast to grow at between 2% and 3%/year, as is overall consumption in western Europe. Demand in western Europe as an additive in animal feed is very strong and increasing at 8-10%/year. This is driven by the European Union's total ban on non-prescribed feed antibiotics from 2006. After then, growth in this sector will slow, although new markets in accession countries to the EU are set to provide a further fillip. Growth of nearly 10%/year is also expected in Europe from formates, although this is a small market. Perstorp is mulling a capacity expansion in Sweden for 2005/06.

Future strong growth in animal feed is also expected in Asia, particularly in China, where there is major growth potential for new pig-feed applications. BASF is building a 50 000 tonne/year formic acid unit in China as part of its large petrochemical complex in Nanjing. The plant is scheduled to start up in 2005. BASF has cancelled a previous joint venture project with Petronas in Kuantan, Malaysia, because of the poor economic climate and market demand.

West European formic acid capacity, '000 tonne/year

Company Location Capacity

BASF

Ludwigshafen, Germany 180

BP Chemicals

Hull, UK 50

Kemira Chemicals

Oulu, Finland 80

Perstorp

Perstorp, Sweden 23

Polioli

Vercelli, Italy 10
Source: ECN