OUTLOOK ’18: Asia’s acetic acid market to be driven by demand growth

SINGAPORE (ICIS)–Asia’s acetic acid market in 2018 is widely expected to be driven by downstream demand growth namely in the purified terephthalic acid (PTA) and acetic anhydride sectors while the lack of new acetic acid plant capacities kept producers’ sentiment optimistic.

Despite a lighter schedule of acetic acid plant turnarounds in 2018 compared with 2017, market players generally anticipate prices to be supported by organic downstream demand growth, barring any unforeseen acetic acid plant outages as seen in 2017.

Asia Acetic acid plant turnaround 2018-2019

Company	Capacity (tonnes/year)	Location	Turnaround period
Jiangsu Sopo Chemical	1.2 m	Zhenjiang, Jiangsu, China	Typically June/July: 15-20 days
Sipchem IAC	400,000	Jubail Industrial City, Saudi Arabia	Q2 2018: 0.5-1 month
GNFC	115,000	Gujarat, India	2018: 0.5 month usually aroud April
Daicel Corporation	450,000	Himeji, Japan	2018 – Mid May to mid June: 1 month
Chang Chun Petrochemical	600,000	Mailiao, Taiwan	2019
Lotte BP Chemical	600,000	Ulsan, S. Korea	Apr/May 2019: 1 month

In the downstream purified terephthalic acid (PTA) sector, the following new and idled PTA plants are expected to start up or restart in the fourth quarter of 2017.

Company	Location	Capacity (‘000 tonnes)	Status
Huabin (former Yuandong)	Shaoxing, Zhejiang	1,400	Started trial operation with no PTA production on 17 Oct. No further update.
Oriental Petrochemical Taiwan Co Line3	Kuanyin	1,500	Expect start up in end November
Jiaxing Petrochemical No 2	Jiaxing, Zhejiang	2,200	Expected start-up in Q4
Xianglu Petrochemical	Gulei	3,000	Possible restart before yearend

Meanwhile, confirmed new acetic acid capacities in 2018 are limited to relatively small plants located in Iran and India.

Company	Location	Capacity (‘000 tonnes/year)	Start-up
Bushehr Petrochemical	Iran	300	2018
Assam Petrochemicals	India	200	2018
Indian Oil Corporation	India	1,000	N/A
Reliance	India	1,000	TBC. Around 2020

Some market players also anticipated improved plant operating rates in the downstream ethyl acetate sector in China next year to drive demand for acetic acid. This followed measures from the government such as the imposition of penalties from the environmental impact inspections.

Other government-led measures – namely China’s plan to blend renewable fuels such as ethanol into its gasoline supply by 2020 – will also incentivise previously idled acetic-to-ethanol integrated producers to restart their plants.

In 2013, Celanese commissioned a 275,000 tonne/year ethanol plant in Nanjing, which uses its patented TCX technology that turns natural gas or coal into ethanol by using acetic acid as an intermediary. Although the plant was idled since early 2017 due to unfavourable margins, the restart of the plant would curtail the merchant acetic acid volumes.

Meanwhile, the demand outlook in the downstream ethyl acetate/butyl acetate sector was mixed, with buoyant demand expected in southeast Asia, with an increase in plant capacity by 2021 or 2022.

On the other hand, the difficulty in passing on hefty hikes in acetic acid feedstock costs – as was the case in the latter half of 2017 – may prompt some ethyl acetate/butyl acetate producers to adjust their plant operating rates in 2018, some market players added.

This came on the back of an extended price rally in the latter half of 2017which caught market players offguard, as the much anticipated price corrections after the completion of the heavy schedule of acetic acid plant shutdowns in the second quarter failed to materialise as a string of unexpected events affecting supply unfolded.

China’s Shanghai Wujing – a key exporting producer – experienced a prolonged plant outage from mid July to mid October due to mechanical issues. 

Over in the US, Hurricane Harvey – which made landfall on 25 August over eastern Texas – knocked out chemical plants and refineries on the Gulf Coast.

Just when the market was in the process of recovering from the aftermath of Hurricane Harvey’s impact on global acetic acid supply, Eastman’s plant experienced an explosion on 4 October, which led to a global scramble for acetic acid in November and December.

Coincidentally, the supply imbalance had also deteriorated in China in December due to curtailed production at several plants located in Tianjin , Chongqing and Jiangsu , as the effects of the government’s policies to combat pollution affected the supply of feedstocks such as carbon monoxide.

Spot prices across Asia subsequently hit their highest levels last seen in May 2011 and looks set to start 2018 on a high.

Looking further ahead, demand growth would also stem from the downstream acetic anhydride sector.

India’s Jubilant Life Sciences plans to bring onstream a 50,000 tonne/year acetic anhydride project in 2019. This would translate to an additional requirement of 65,000 tonnes/year of acetic acid. Construction however, has yet to kick off.

New capacities in the PTA sector are also being planned in China (please see below).