OUTLOOK ’19: US acetic acid headed toward record new year

HOUSTON (ICIS)–US acetic acid (AA) is pointed toward a record  2019, with new capacity possibly coming on line in Texas and export prices currently headed toward a multi-year low.

Celanese should set one record, though it may have to wait a year. The US-based producer plans to add the first new capacity in decades at its huge Clear Lake, Texas plant, with the expansion of 140,000 tonnes/year capacity at its 1.5m tonne/year AA unit there, which is the largest in the US.

In announcing the project, Celanese did not specify when the work would start, stating only that it would be done by the end of 2020.

In December, Celanese finished a similar-sized expansion of its vinyl acetate monomer (VAM) plant at Clear Lake, adding 150,000 tonnes of new capacity.

A US buyer questioned the need for new AA capacity, considering that the price drops in the second half of 2018, with all US units up and running at the end of the year.

“I don’t see any need for expansions unless there is going to be more consumption,” the buyer said. “Having too much product with the same demand? We will see.” 

Celanese chief executive Mark Rohr took a different view in his last earnings conference call of 2018, saying the acetyls market is about to hit an extended up-cycle.

Rohr said the proverbial 100-year storm – such as Hurricane Harvey in 2017 – tends to happen every 3-5 years in the global acetyls market.

“So we think we’re in a period where the business is going to be tight,” Rohr said.

The Celanese chief spoke about acetyls in general, but his comments also fit the pattern of acetic acid export prices over the past decade.

In the following 10-year chart, AA prices look like an awkward W, with the middle section extending 8 ½ years and the peaks on each side separated by a decade.

AA prices deviated by less than $200/tonne for more than eight years before breaking out in late 2017-early 2018, prompted by a hurricane in Texas and a plant explosion in Tennessee. Prices jumped near a 10-year high in mid-2018 before falling back inside the previous range.

Rohr called the new US acetyls capacity being added at Clear Lake a “slight incremental expansion” that would not have much impact, if any, on the tight global market. Demand could creep up a little, he added, but Rohr predicted “upside potential” for Celanese in tight market conditions.

“We see ourselves moving from one dip that lasted a long time to one up-cycle that’s going to last a very long time,” Rohr added.

Focus article by Lane Kelley

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