A MARKET UPDATE for April 2011

Special Message:

From Nick Roach CEO of The Chemical Company:

What impressed me most about the 2011 NPRA was the different attitude of those U.S. producers integrated back to crude versus those integrated back to natural gas. Derivatives of crude are escalating like crazy and in short supply, yet derivatives of natural gas are in balanced supply, and very competitive for the most part. There was also positioning, not just talk, for new gas based production on the horizon.

Understanding that there is old and new technology available, or becoming available, to manufacture existing crude based chemistry from natural gas could and should make for historic changes in North America. Throughout most of our history gas based production has not been as competitive as conventional oil derived products. It is my guess that this will no longer be the case. Even gasoline made from natural gas will eventually develop in the U.S. Technically it is feasible to make most of the crude based chemicals that are the basics of our industry from natural gas.

The game has changed in the North America with the development of huge natural gas reserves throughout our country. Estimates are running between forty and eighty years of natural gas available to service the entire energy demands throughout the U.S. and Canada. What will this mean? It means countries like Canada and Trinidad and the regions such as the Middle East who have relied on the US to consume huge amounts of their gas will eventually see the markets dry up as they become marginally profitable. They will be forced to look for other more profitable outlets. I see the development of new gas based production of what has historically been crude based production expanding throughout the world.

It is my belief that this new production using natural gas will far out strip any bio- based development over the next four decades. This is not something that will affect your company in the next few years, but it will be part of our future. Remember they don’t call it natural gas because it’s not natural, although it takes a lot of care to use it safely, the worries about long term effects on the environment are not as complicated as crude.

Gas will be the natural product of the future.

TCC News:

We’re heading to Philly for ChemSpec! Next week you can see the TCC team at our booth G17. If you would like to arrange for a meeting with TCC please contact Javier Fernandez at Javier@thechemco.com

Be sure to follow us on our new facebook page


Habla Español??? The TCC website is now in Spanish!

Myriant Technologies reports that they have made significant progress at the Lake Providence, LA site. Construction is in full swing and the excitement is building. Myriant is staying on track to meet the full scale production goal of Q1- Q2 2012 for their bio- based succinic acid. Demand for Bio based alternatives is growing as consumers look to place a percentage of their purchases with companies producing from bio based, renewable feedstocks.

Biobased Succinic Acid

Upcoming Events:

Chemspec USA
Philadelphia, Pennsylvania
Convention Center from May 3-5 2011.
SPI’s Flexible Vinyl Products 22nd Annual Conference
July 10-13, 2011
EPCA Berlin
Germany
October 1-5, 2011

Downloadable Brochure

click here to download/view

New Products an In Stock

“NatureFlexx 211” Bio- Based Plasticizer

Dicyandiamide 25 Kg. Bags (In stock and available now!)

Melamine Crystal 25 Kg. Bags (In stock and available now!)

2-Hydroxyethyl Methacrylate Drums( In Stock! )

Malic Acid Small Bags ( In Stock and Available Now! )

90% Phenol Drums ( In Stock and Available Now! )

Fumaric Acid Big Bags (In Stock and Available Now!)

Maleic Anhydride Briquettes (In Stock and Available Now!)

Citric Acid (In Stock and Available Now!)

Acetyl TriButyl Citrate (Out NatureFlexx 509 is in Stock and Available Now!)

Adipic Acid 25 Kg., 500 Kg. and 1,000 Kg. Bags (In Stock and Available Now!)

Products In Transit/ Available Soon

Succinic Acid 25 Kg. Bags

Antimony Trioxide (High Tint, Supersacks)

New/ Updated Technical Information (hyperlinked):

Adipic Acid

DiOctyl Adipate

ChemFlexx 206

Antimony Trioxide

Epoxidized Soybean Oil

Diisononyl Phthalate

Malic Acid

Tartaric Acid

New Products:

Melamine Crystal is an organic compound that is often combined with formaldehyde to produce melamine resin, a synthetic polymer which is fire resistant and heat tolerant. Melamine resin is a very versatile material with a highly stable structure. Uses for melamine include whiteboards, floor tiles, kitchenware, fire retardant fabrics, and commercial filters. Melamine can be easily molded while warm, but will set into a fixed form. This property makes it ideally suited to certain industrial applications.
Spec:Melamine Crystal

Succinic Acid is a dicarboxylic acid comprised of four carbon atoms. The chemical is produced as a colorless crystalline solid and is used in the drug, agriculture, food products, and other industries.
Spec: Succinic Acid

NP500 Non-Phthalate Plasticizer Non-phthalate plasticizer to replace general purpose phthalate plasticizers like DOP, DOTP and DINP. Drums, Totes and Bulk Available.
Spec: ChemFlexx NP500

NP600 Non-Phthalate Plasticizer Non-phthalate plasticizer to replace the general purpose phthalate plasticizers DIDP. Drums, Totes and Bulk Available.
Spec: ChemFlexx NP600

NatureFlexx 509 100% Phthalate Free General Purpose Plasticizer! This high molecular weight plasticizer is an excellent, phthalate free replacement for general purpose phthalate plasticizers like DINP, DOP, DOTP, Etc. Drums, Totes and Bulk Available.
Spec: NatureFlexx 509

Malic Acid A suttle and persistent sour in food applications as well as an excellent acidulant. New technical applications are being discovered as well. Food and Technical Grade material is in stock and immediately available. Packaging is 25 Kg. Bags, 2,000 lb. Supersacks and a 50% solution.
Spec: DL Malic Acid

Please contact Robb Roach at robb@thechemco.com or Tel: (401) 423- 3100 for more information.

We appreciate your taking the time to review this newsletter. We welcome your comments as well as contributions regarding our readers’ company/industry activities. Please send them to Bob Beavins at chemcobob@comcast.net

**Please note that all products are now in Alphabetical Order and many products are hyperlinked to their own information page.**

Critical Raw Materials Markets

At the end of each paragraph you will notice a symbol and the meaning of these symbols are as follows:

+ Denotes upward pricing momentum
\ Denotes stable pricing momentum
– Denotes downward pricing momentum

Benzene
US April Benzene contract settled down $.51/ gallon to $3.88/ gallon (March $4.39/ gallon) but May settled back up to US$4.23/ gallon. Spot prices are currently in the$4.10- $4.20/ gallon range. +

Natural Gas
Natural Gas pricing has had upward momentum for the last two weeks likely due to increased demand as a result of the high competing energy values. Spot prices reported ~$4.60/MMBtu. /

Oil
NYMEX Crude oil prices have stabilized in excess of US$110/ barrel. Brent Crude is in the US$125/ barrel range. +

Orthoxylene
April contracts partially settled at $.64/lb, an increase of $.05 from March. +

Propylene
April contracts have shocked most, with at US$.15/ lb. increase putting pricing at $.86/lb for chemical grade and $.875/lb. for polymer grade. Another shocking increase is expected for May. ++

Chemicals Markets

Adipic Acid:
There is pressure from Benzene and Ammonia as well as scheduled maintenance outages. Availability has improved in most regions except Europe. Demand has been steady. Lower priced offers from China are not currently available. /

Ammonia:
April business for Tampa moved up US$5/ metric ton to US$555/ metric. Despite continued natural gas curtailments in Trinidad buyers are hopeful that there will be a decrease or a roll. /

Ammonium Nitrate:
AN prices continue to move up. At least one major has announced a $35/ ton increase due to higher priced ammonia that we’ve seen over the last few months. Seasonal demand has started to kick and agricultural demand for an and it’s raw materials is excellent. As predicted the rationalization in North America has lead to availability issues. +

Antimony Trioxide:
Antimony prices have leveled over the last three weeks. Buyers are reporting record pricing in excess of US$7.00/ lb. Some consumers have found success in alternative chemistries and are abandoning ATO use to the highest level possible. /

Dicyandiamide:
Pricing is moving rapidly higher due to increased freight costs and calcium carbide pricing. Calcium Carbide is a major raw material to Dicyandiamide production and vast amounts of energy are needed to produce it thus it is being strictly controlled by the Chinese Government. ++

Epoxidized Soybean Oil:
Both domestic and import pricing has moved up on higher raw material costs and competing demand for soybeans. All agricultural commodities are under price pressure. A market wide increase of $.05- $.10/ lb. for ESO in noted for May. +

Fumaric Acid:
FA Pricing has moved up on higher butane values. Maleic Anhydride has become limited in availability and pricing has moved up. This will eventually push FA prices even higher. /+

Glycol (Mono, Di and Tri):
MEG – April rolled over but may will see some reductions in price. Export demand is very good to Europe and Asia but this will likely ease. U.S. demand is still good. Benchmarks are set at $.64- $.68/ lb.. Inventories are good. -/

DEG- Weak demand is noted which is good considering the number of current turnarounds. A decrease of 3 cts/ lb. was made by one major for May. Benchmarks for May $.67- $.76/ lb

TEG- With the end of the cold weather comes the end of the seasonal TEG demand. Spot offers are around US$.90/ lb.

Isophthalic Acid:
Raw material costs have pushed Isophthalic pricing even higher. Availability has become more limited and prices are on the rise some $.05/ lb. for domestic and $.10/ lb. on import. +

Maleic Anhydride:
Uh oh! Good demand, turnarounds, supply disruptions, allocations, etc. Most consumers are positioning themselves for a critical supply situation which will inevitably lead to higher prices. A US$.04/ lb. increase was announced for may on molten maleic anhydride. To add insult to injury Butane has been pushing higher but takes a back seat to availability at the moment. +

Malic Acid:
Malic Acid supply has improved and pricing has leveled but higher priced Maleic Anhydride and limited availability will certainly lead to higher prices in coming months. TCC has Malic Acid in stock and available. +/

Melamine:
Melamine availability has improved. Urea prices have plateaued for the moment and this has mitigated any increase pressure. No new price announcements are noted. /

Methanol:
The Methanex Non-Discounted Reference Price for May has once again rolled over at US$1.28/ gallon. U.S. Spot pricing has been steady in the $1.00- $1.10/ gal. range. /

Notes:

  • Global Supply and Demand are considered stable at this time.
  • Natural gas curtailments continue in Trinidad and Tobago. This has not been a major factor yet and has not affected supply or pricing.
  • China continues to be the key to global balance.
  • Venezuela’s Metor plants will be taking a planned maintenance in Q2.

Nitric Acid:
Nitric Acid pricing is under pressure due to increased ammonia cost. Demand is good. /+

Phenolic Resins:
Pricing and supply are under pressure due to underlying feedstock costs and limited availability, especially Phenol. Demand has improved along with the economy. Pricing will likely continue to increase throughout Q2, 2011. +

Phthalic Anhydride:
Orthoxylene contract pricing has increase for April by US$.05/ lb (Mar. was also up $.04/ lb.). PA pricing is expected to follow for April. +

Plasticizers and Plasticizer Alcohols:

PPlasticizer and plasticizer alcohol demand has been good throughout 2011. Pricing remains under pressure from underlying feedstock costs. (i.e. propylene, orthoxylene, ethylene, phthalic anhydride). An increase has been announced for all branched, linear and specialty plasticizers for May following the April increase.

Branched and Linear alcohols supply has improved but remain tight, especially 2-EH and Isononyl Alcohol. +

Note: Many plasticizers have limited availability. Please contact TCC for further details.

TCC Plasticizers available:

 

Phthalate:

 

Styrene monomer:
Styrene pricing moved lower in April as benzene values slipped. Most feel Benzene will settle higher in May forcing SM pricing up. /+

Urea:
The wet weather throughout much of the United states has pushed Urea pricing back up. Prices have climbed from the $330/ ton range to almost $350/ ton as farmers switch away from ammonia and to urea for better fertilization in damp conditions. +

Notes:

  • NOLA inventories are low especially on prill.
  • Urea and UAN are the choice fertilizers in wet conditions.
  • Urea demand for Diesel Exhaust Fluid is expected to significantly increase over the next two years.

For more information on these or any of the products and services provided by TCC please contact Robb Roach directly at Robb@thechemco.com or go to our web site at thechemco.com

Chemical Industry News

The American Chemistry Council (ACC) reported a chemical production increase of 0.9% in February, following a revised gain of 1.2% in January. The largest gains were reported in the Gulf Coast, Ohio Valley, and Southeast regions.

The ACC commented on March 30 regarding recent study findings about BPA and DEHP exposure in food sources. According to the ACC, the work confirms that consumers have minute exposure to these chemicals, indicating that BPA exposure is more than 1,000 times lower than established government standards. The research was conducted by The Silent Spring Institute. Earlier in the month, a Maine House committee unanimously voted to ban BPA from food and beverage containers sold in the state.

More than forty plastics and chemical trade groups have pledged to work together in fighting plastic litter and waste in the oceans.

Perstorp announced a 2-EH acid capacity increase in Singapore and Stenungsrund, Sweden. The additional 40 kta volume is expected to come on line in 2013.

On April 6 the Senate voted against four bills that would have prevented the EPA’s ability to limit greenhouse gas (GHG) emissions. Other EPA-related amendments to a small business bill as proposed by Democrats Baucus, Rockefeller, and Stabenow failed to gain support. The Obama administration welcomed the Senate’s action.

On April 7 the House approved Energy and Commerce Committee Chairman Fred Upton’s bill aimed at the EPA’s ability to impose GHG limits. This was the day after the Senate did not pass similar legislation. NPRA President Charles Drevna called the passage of the House bill an important victory, commenting that in the short time that the GHG regulations have been in place, thousands of American jobs have already been lost.

Senate staffers charged with modernizing the Toxic Substances Control Act met recently with experts on Europe’s REACH system in order to learn the details of the EU program for chemicals.

A group of 19 state attorneys general wrote to EPA Administrator Lisa Jackson urging her to delay the enforcement of GHG emission rules by at least three years. The request for deferral was based in part on the disruption that rapid implementation would cause.

The March German unemployment rate fell to 7.1% from 7.3% in February, the lowest level since records were compiled for a united Germany in 1992.

Inflation across the 17 nation eurozone climbed to 2.6% in March from 2.4% in February. This exceeded the European Central Bank’s target of just below 2% and raised concerns that this could slow economic growth.

The tragedy in Japan shut down major petrochemical production in addition to many other facilities. In a move towards reconstruction, the central bank put 28 trillion yen ($350 billion) into the financial system. With a projected move away from nuclear power, Japan will need much higher supplies of oil, natural gas, and coal for its energy needs in addition to any alternative sources.

China has been building up its strategic reserves of rare earth metals while reducing exports. China dominates the rare earths market. A new bill has been introduced in the House seeks to curtail dangerous reliance on China for these critical materials, which are used in part in military applications.

Russia’s chemical production in January rose by 12.8% compared with same period last year, while plastic and rubber products output increased by 26.2%. February imports of polystyrene and other styrene-based polymers rose by 63% from January with a volume of 13,000MT.

A free-trade agreement with Colombia is close to completion. The White House has said that the agreement will boost exports to that country by $1.1 billion and increase US GDP. Similar agreements with South Korea and Panama are pending.

US shale gas production now accounts for 12% of total gas production. The ongoing volume increase has resulted in a decoupling of natural gas/oil prices. As the cost has come down there has been greater incentive to extract ethane from the shale gas. US ethylene producers are taking advantage of the increased ethane supplies. A major result of this development has been improved competitiveness of US petrochemical manufacturers in global markets.

An on-line registry in which shale gas exploration and production companies will voluntarily disclose the chemicals they use in their hydraulic fracturing (fracking) operations is set to be activated in a few weeks. It is not clear if this will satisfy the critics of fracking.

The Bureau of Land Management will hold three regional forums in late April in order to discuss further the use of fracking on federal onshore lands. Discussion topics are expected to be chemical disclosure, well construction and integrity, wastewater management.

According to a paper published in the Journal of Chemical Technology and Biotechnology, biomass-derived ethanol is an ideal primary renewable fuel, not corn.

The Colorado State University’s annual storm forecast called for 16 named storms in the Atlantic basin between June 1 and November 30. Nine are expected to turn into hurricanes.

On Monday, April 4 gold and silver hit 31-year high prices while oil and grain hit their highest levels since 2008. Spot gold traded at $1432/ounce and silver traded at $35.58/ounce.

The Economy

On April 5 the US Senate voted to rescind a tax-reporting requirement that was included in last year’s healthcare overhaul law. The vote was 87-12 to repeal a requirement for businesses and landlords to file a form 1099 with the IRS for purchases of goods and services exceeding $600 per year.

A recent report stated that more people in the US work for the government (22.5 million) than in all of manufacturing (11.5 million). This is close to a complete reversal of the picture in 1960 when there were 15 million workers in manufacturing and 8.7 government employees. With the exception of Indiana and Wisconsin, every state in the US has more government workers than workers in construction, farming, fishing, forestry, manufacturing, mining and utilities combined.

Treasury Secretary Geithner has said that the Obama administration is preparing a comprehensive proposal for corporate tax reform. In February, CEO’s from from GE, Intel, and others met with government representatives to discuss ways to trim the US corporate tax rate which at 35% is one of the highest in the world. Most observers don’t believe that an overhaul before the 2012 elections is likely.

The US government deficit for the first five months of fiscal 2011 was $642 billion, $10 billion less than the same period last year. Forecasts indicate that the federal government will end fiscal 2011 with a deficit of nearly $1.5 trillion, up from the $1.3 trillion in 2010.

The Bureau of Economic Analysis third estimate reported that Gross Domestic Product increased at an annual rate of 3.1% in the fourth quarter of 2010 compared to real GDP growth of 2.6% in the third quarter. Current-dollar GDP, the market value of the nation’s output of goods and services increased 3.5% or $126.3 billion in the fourth quarter to a level of $14,871.4 billion. Third quarter increase was reported as 4.6%.

The Conference Board’s Leading Economic Index increased 0.8% in February to 113.4 (2004=100) following an adjusted 0.1 % increase in January and a 1.0% increase in December.

The Conference Board Consumer Confidence Index which had increased in February, declined in March. It stands at 63.4 (1985=100) down from 72.0 in February.

The Institute for Supply Management’s Manufacturing Index registered at 61.2% in March. This was the twentieth consecutive monthly expansion. The Non-Manufacturing Report for the same period was 57.3, less than February’s 59.7 but a reading above 50 represents continuing growth.

In February, retail and food services sales adjusted for seasonal variations increased 1.0% from January and were 8.9% above a year earlier. Total sales for the December 2010 – February 2011 period were up 8.2% from the same period a year ago.

Privately owned housing starts in February of 517.000 were 8.2% below the revised January estimate of 563,000 and 20.5% below the February 2010 rate of 650,000. Single family housing starts in February were at a rate of 375,000 or 11.8% below the revised January figure of 425,000.

New orders for manufactured durable goods in February decreased $1.3 billion or 0.6% to $200.8 billion. This followed a January 3.7% increase.

February unfilled orders for manufactured durable goods, up ten of the last eleven months, increased $3.9 billion or 0.5% to $834.8 billion and followed a 0.8% January increase.

Consumer Price Index increased 0.5% in February after rising 0.4% in January. In the last twelve months, the index for all items increased 2.1% before seasonal adjustments. Over the past 12 months the energy index has increased 11% with gasoline index up 19.2%. The food index rose 2.3% during the same period. It was reported that food prices rose in February by the most in 36 years, with cold weather partly to blame.

The Producer Price Index increased 1.6% in February, or essentially double the month previous.

Interest rate:Prime at 3.25%, unchanged since 12/16/08. Federal Reserve Bank of Philadelphia President Charles Plosser and Richmond Federal Reserve President Jeffrey Lacker said on April 1 that the central bank might raise interest rates before year-end in response to the growing economy and rising inflation.

Inflation: Annual inflation rate was 2.1% for February.
Food prices showed their biggest gain in more than two years.

Unemployment:March 8.8%, after 8.9% in February.

Trade Deficit: For January 2011 the goods and services deficit increased to $46.3 billion from an adjusted $40.3 billion in December as imports increased more than exports.

Crude Oil: A recently released analysis by the International Monetary Fund stated that if supply-demand pressures continue, prices could spike as high as the 2008 $150 level.

Natural Gas: Marcellus shale gas basin and other deposits are estimated to be able to supply US needs for more than a decade at lower cost. There is increasing legislative action regarding regulation of the fracking chemicals used to extract the gas.

Industrial production decreased 0.1% in February after an increase of 0.3% in January. January’s previous estimate was decline of 0.1%. Total industrial production in February was 5.6% above its level of a year earlier and was 95.5% of its 2007 average. Capacity utilization rate for total industry declined 0.1% to 76.3 %, and was 4.2 % below 1972 – 2010 average.

The US dollar trading at 84.1 Japanese yen. $1.42 = euro. The British pound sterling = $1.61.

Leave a Reply

Your email address will not be published. Required fields are marked *