A MARKET UPDATE for AUGUST 2010

Special Message:

Many of the products that TCC handles remain extremely tight. Everyone at TCC would rather fight for each order versus tell any of our valued customers that we just don’t have what they need. We are doing our best to keep all of our historic customers supplied with 100% of their requirements and will help out our friends when we have extra material available. The nature of our industry at this time reminds us that supply should not always come down to the lowest price. It is not always in the best interest of a company to save every last penny only to sacrifice supply when it is most important. There will always be cycles in this industry and it is our responsibility to act on behalf of our loyal customers during these critical supply periods as it is the customers responsibility to not over value price when things change. Nothing is ever constant, things WILL change but TCC will always remain customer focused. We are good people working hard to create “Global bonds in Chemistry.”


TCC News:

Effective August 1, 2010 Barbara Baker, Kathy Rushton and Barbara Cournoyer will be officially retired from service at The Chemical Company. They will be dearly missed by everyone and have all contributed to the growth and culture of TCC. Thank you Barbara B., Kathy and Barbara C.! We wish you all a healthy and happy retirement!

Myriant Technologies reports that they are staying on track to meet the full scale production goal of Q1 2012 for bio- based succinic acid. Due to the limited availability and extreme price of Adipic Acid many users in both technical and food applications are looking at this bio-based alternative.

Biobased-Succinic-Acid

TCC President Robb Roach will be attending the EPCA annual meeting October 2-6, 2010 in Budapest, Hungary. Please contact Robb at Robb@thechemco.com to schedule a meeting.

We would like to welcome Cynthia Brunetti and Stephanie Accaputo to the TCC office staff. Stephanie will be filling Barbara Baker’s big shoes handling Methanol and Urea amongst other products and Cythia will be crunching numbers, payables and handling credit. Welcome!

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

Events:

October 27-29, 2010 IFAI EXPO Americas
October 27 – Nov. 3 K Show Düsseldorf, Germany

Downloadable Brochure

click here to download/view

Products In Transit/ Available Soon

2-Hydroxyethyl-Methacrylate Drums

2-Hydroxypropyl-Methacrylate Drums

Succinic Acid Small Bags

Malic Acid Small Bags

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

New/ Updated Technical Information (hyperlinked):

Antimony Trioxide

Citric Acid

Epoxidized Soybean Oil

Succinic Acid

Malic Acid

Fumaric Acid

Tartaric Acid

New Products:

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 August Benzene contract decreased by US$.03/ gallon to US$2.79/ Gallon. Spot prices are currently at $2.86- $2.87/ gallon. –

Natural Gas
Prices increased during the second half of July as a result of warmer than normal weather across most of the lower 48. August has seen a retreat of pricing. Current spot pricing ~ $4.71/MMBtu. August contract reported at $4.51/MMBtu. Inventories are well above historical levels. +

Oil
Oil has been moving up over the last month. Current spot prices in the $81-82+/bbl range; futures at $77/bbl. +
Note: Natural gas extraction from shale formations is also expected to yield substantial oil production as well.

Check thechemco.com for up to the minute info.

Orthoxylene
July contracts settled at $.425/lb, a decrease of $.025/lb. from June. –

Propylene
July contracts rolled over at $.54 for chemical Grade and $.555/ lb. for polymer grade. \

Chemicals Markets

Adipic Acid:
Adipic Acid pricing continues to move up on increased demand and competition for any available product. All producers are reported to be “sold out.” Unplanned and forthcoming planned outages will continue to add to AA’s supply constraints. Availability will remain the critical issue as decreased raw material costs will have little effect on pricing. Chinese Adipic producers have cranked up production at a time when demand is limited thus prices have moved lower and quickly. We expect supply/ availability issues to remain for the next month or so. ++

Ammonia: August pricing has increased over July some $25/ton to $380/ mt del. In Tampa +

Ammonium Nitrate:
Low density AN prices are currently stable. Demand on both low and high density has softened due to a lack of mining and cheaper alternatives for fertilization. /

Antimony Trioxide:
Good Demand and limited availability are responsible for keeping Antimony Trioxide pricing at historic levels. Consumers continue to hold off and buy only as needed. /+

Dicyandiamide:
Prices have increased recently as freight and electricity costs in China have risen. We expect pricing to continue to move up in the coming months. +

Epoxidized Soybean Oil:
Soy bean pricing has moved up steadily over the last month or so yet ESO pricing remains stable. Demand is seen as good. /

Fumaric Acid:
Fumaric Acid pricing and availability have stabilized. Maleic Anhydride producers continue to push for higher pricing. Normal butane averaged $1.32- $1.33/ gallon in July. /

Glycol (Mono, Di and Tri):
MEG pricing contract pricing is in the mid $.30’s per lb. with spot in the low to mid $.30’s per lb. Buyers are hoping for lower prices but nothing has gotten into the $.20’s per lb. yet. –

DEG inventories remain very low. MeGlobal announced a US$.03 lb. increase for August. Their benchmark is now US$.66/ lb +

Triethylene Glycol pricing did weaken slightly for July. Benchmarks are at $.87- $.93/ lb. fob Gulf and demand is seasonally slow –

Isophthalic Acid:
Due to the Flint Hills Force Majeur and subsequent complete shut down of their PIA unit Isophthalic Acid is on sales control and therefore prices have surged. ++

Maleic Anhydride:
The lower butane prices have yet to make a difference on MA pricing as producers enjoy improved margins. Demand in the U.S. is stable as demand in Europe remains good fir US producers due to the BASF closure in Q2. –

Malic Acid:
Global values have leveled. Non- food/Technical applications are being re-looked at as other acid values remain inflated (eg. Citric). Normal butane values are in the low $1.30’s. /

Melamine:
Melamine pricing has leveled on better availability from China and moderating urea prices. /

Methanol:
The Methanex Non-Discounted Reference Price for August will remain at US$1.05/ gallon. Spot barge offers are currently in the $.90- $.92/ gallon range and stable. /

Notes:

  • Unplanned outages and improved demand have been responsible for keeping global methanol prices stable.
  • Numerous planned, extended outages are expected for Q4 of this year.
  • The new Metor 2 plant in Venezuela is producing commercial quantities of on-spec methanol.
  • Demand in China continues to grow as does its own production. Imports are behind last year but will improve if global methanol values decline.
  • European demand is good while North America demand is seen as flat.

Nitric Acid:
Nitric Acid pricing is stable at the moment. Demand is flat. Pricing is expected to remain stable through Q3, 2010. /

Phenolic Resins:
Prices have declined slightly in line with underlying values. A limited number of players has resulted in very few options for consumers and many have opted to seek toll manufacturing opportunities. /

Phthalic Anhydride:
Orthoxylene pricing will push prices lower in August. Demand has been improving. We expect a $.025/ lb. decrease for July in line with orthoxylene. –

Plasticizers and Plasticizer Alcohols:
Another increase was announced for Mid- July as supply constraints push plasticizer and plasticizer alcohols pricing up. Feedstock costs have been moderating but the lack of feedstock (particularly C-4) availability (due to the cracking of light feeds) has affected the supply of the alcohols.

On July 21, 2010 BASF declared Force Majeur on all of its Isononyl Alcohol based plasticizers. The unplanned outage at their Ludwigshafen, Germany plant is expected to last at least 14 days.

Linear alcohols and plasticizers remain extremely tight. TCC still offers our own ChemFlexx 206 and as a functional replacement for most linear plasticizers.

Limited availability and extreme pricing on Trimellitic Acid and Adipic Acid has further aggravated the availability and cost of adipate and trimellitate plasticizers. ++

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

TCC Plasticizers available:
Non- Phthalate:

 

Phthalate:

 

Styrene monomer:
Benzene values have moved lower and Styrene has followed. – –

Urea:
Urea prices are moving up quickly and are currently in the US$290- $295/ ton range. +

Notes:
Urea prices have increased by $70- $80 per ton in the last 4 weeks.

PotashCorp’s Trinidad Urea plant was shut down on july 24th due to a mechanical issue. This outage is expected to last a week

Urea demand for Diesel Exhaust Fluid is expcted 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

In spite of concerns about a “double-dip” recession, chemical industry mergers and acquisitions activity appears to be picking up. There were 23 completed deals during the first half of 2010 compared to 7 in the same period of 2009. Many chemical companies are reporting strong performance and have funds to invest.

Senate Democrat leaders dropped their efforts to cap greenhouse gas emissions as part of a broad energy bill, putting aside for an indefinite period a centerpiece of President Obama’s energy plans. The proposal would have allowed utilities to trade permits to pollute as they worked to shift away from coal in a concept commonly called “cap and trade.”

Senate Democrats unveiled a trimmed-down energy bill on July 27 that focused on offshore drilling reforms including the liabilities incurred by oil companies. Republicans said they wanted to be able to offer amendments to the measure. WVA Senator Rockefeller said he was considering offering an amendment to stop the EPA from regulating industrial emitters of greenhouse gases. Natural gas companies registered their opposition to the surprise addition of a measure that would force companies to disclose the chemicals being used at each well being drilled in the huge gas fields located across the US.

Legislation recently introduced in the House of Representatives would for the first time enable the EPA to determine whether commercial chemicals are safe. This measure would revamp the Toxic Substances Control Act (TSCA) which has remained essentially unchanged since it became law in 1976. The bill would require companies to supply EPA with minimum data on each compound they produce or import. The ACC calls the bill a step toward modernization of the country’s chemical safety laws. SOCMA, the Society of Chemical Manufacturers and Affiliates, was more critical, saying that the legislation will hamper innovation.

The Senate Homeland Security and Government Affairs Committee has approved legislation that would extend chemical security standards through October 4, 2013. The American Chemistry Council saw this action as a vote of confidence in existing regulations.

Univar, one of the world’s largest independent chemical distributors, has filed to sell an estimated $862 million in shares in an IPO. The company was acquired in 2007 by UK-based private equity company CVC Partners for $1.85 billion.

Dow Chemical plans to run a short trial at its Midland, MI facility to determine if plastic waste such as polyethylene and polypropylene can be be used as fuel as an alternative to natural gas.

DuPont said that second half sales will increase based on better than expected automobile production and continued demand for materials used in electronics and paint. CEO Ellen Kullman that company sales will increase more than 15% this year.

Solutia recently announced an increase in profits of 26% for the second quarter, a net income of $41 million compared with $10 million a year ago. Net sales rose to $518 million.

PPG second quarter profit of $272 million exceeded analysts’ estimates and was 86% above the $146 million reported a year earlier.

BASF, the world’s biggest chemical company, reported second quarter income in excess of expectations of €1.18 billion, compared with the €343 million a year earlier. Sales for the period increased to €16.2 billion with demand rising across most of the company’s businesses.

On July 21, BASF declared force majeure on Plastomoll DNA, Palatinol N, Hexamoll DINCH and other grades. The company cited technical problems with its INA plant in Ludwigshafen, Germany as the cause.

Akzo Nobel is set to sell National Starch and Chemical to Corn Products International, with the transaction expected to be completed at the end of the third quarter.

Styron LLC, recently sold for $1.6 billion by Dow Chemical to Bain Capital, a private equity firm, will establish its headquarters and global operations center in Philadelphia, PA. The North American Operation Center will be in Midland, MI where a number of Styron facilities are located.

Bisphenol-A (BPA) continues to raise issues. California Senator Feinstein is reported to be adamant that a food safety bill under negotiation in Congress should include a ban on BPA, in spite of the lack of health warnings from the FDA. The FDA has said that if it thought BPA was unsafe they would be taking strong regulatory action. ACC officials have noted that there is no readily available alternative to BPA for can and jar linings.

The American Farm Bureau, the Coalition of Service Industries and the National Association of Manufacturers have issued an approach to double US exports in five years, which is goal of the administration. The three organizations recommended enacting pending trade agreements and pursuing new ones, reduction of non-tarrif barriers, improving export promotion efforts and financing policies.

RusVinyl, a joint venture of SolVin and Sibur, is scheduled come on stream in 2013. Its manufacturing capacity is estimated at 330,000 MT of PVC and 235,000MT of caustic soda per year. The new company will use a PVC technology from SolVin. SolVin is a joint venture between Solvay and BASF.

The fourth Russian Congress of Plastics Converters will be held in Moscow on November 22 and 23. The event is organized by the Moscow government, the Russian Federation of Plastics Converters, the Russian Chemists Union and the RCC Group media and consulting company.

China’s exports grew by 44% year-to-year in June on a recovery in global demand. A Chinese government economist estimated that exports had peaked for the year.

China and Taiwan reached agreement to either eliminate or reduce import tariffs on hundreds of products including energy and petrochemicals.

Chinese authorities were quick to dismiss as not very reliable the International Energy Agency’s announcement that China was the world’s largest energy consumer in 2009, ending a century of US dominance.

On July 28 an oil tanker explosion was reported in the Strait of Hormuz. The cause has not been determined. The ship was said to be able to proceed under its own power.

Exxon Mobil Corp., Chevron Corp., Royal Dutch Shell PLC, and Conoco Phillips announced on July 21 that they are forming a joint venture to design, build, and operate a rapid-response system to capture and contain up to 100,000 barrels of oil per day flowing 10,000 feet below the surface of the sea. BP’s deepwater well had been leaking up to 60,000 barrels per day 5,000 feet below the surface. The companies will split an initial investment of $1 billion.

The first train with crude oil from Venezuela comprising 65 tank cars was expected to depart from Estonia to refineries in Belarus on July 27. Venezuela is expected to deliver approximately 4 million MT within twelve months.

The US Postal Service has proposed increases of four to six percent to take effect on January 2, 2011. This will create an estimated $3 billion increase in revenue in order to help offset a shortfall of $7 billion for fiscal year 2011. This is part of a comprehensive plan for greater flexibility for the USPS.

The trucking industry continues a gradual recovery and 88% of carriers surveyed expect volumes to increase. Carriers did not buy new trucks in 2008 and 2009 so that a capacity crunch in spite of new truck orders for 2010 is foreseen.

The Economy

The Associated Press quarterly AP Economy Survey shows that forecasts have turned gloomier in the past three months. The economists surveyed expect weaker growth and higher unemployment than previously reported. As a result, the economists think that the Federal Reserve will keep interest rates near zero until at least next spring. A majority believes that the recovery remains on track but with economic growth at a rate of less than three percent and unemployment continuing in excess of 9 percent.

A US government deficit of $68.42 billion was reported for June. In the nine months of fiscal 2010 to date, the deficit is $1.004 trillion. In June, revenue was $251 billion and spending was $319.47 billion compared to $215.4 billion and $306.67 billion respectively in June, 2009.

In July President Obama signed into law the most sweeping overhaul of lending and finance rules since the Great Depression, aimed at avoiding a recurrence of the 2008 meltdown. Opposition leadership is calling for the law’s repeal stating that it will cost consumers and will impede job growth while adding thousands of pages of new regulations.

On or about January 1, 2011, federal, state, and local tax rates are expected to rise sharply. President George W. Bush’s tax cuts expire on that date, meaning that the federal income tax rates, dividend taxes, and capital gains taxes will all go up significantly. The estate tax rate will go to 55% from the current zero rate. Congress is currently considering extending the cuts.

The Conference Board’s Leading Economic Index decreased .2% in June following an adjusted 0.5% increase in May and a 0.1% decline in April.

The Conference Board Consumer Confidence Index which had dropped in June decreased further in July. It stands at 50.4 (1985=100) down from 54.3 in June. Analysts cite increased levels of consumer anxiety, lackluster job growth and concern about income as some of the reasons.

The Institute for Supply Management’s Non-Manufacturing Index (NMI) registered at 53.8% in June, down from 55.4% in May.

In June, retail and food services sales adjusted for seasonal variations decreased 0.5% from May but were 4.8% above a year earlier. Total sales for the April – June 2010 period were up 6.8% from a year earlier. Gasoline station sales were up 8.8% from June 2009.

Privately owned housing starts in June of 549.000 were 5.0% below the revised May estimate of 578,000 and 5.8% below the June 2009 rate of 583,000. Single family housing starts in June were at a rate of 454,000 or 0.7% below the revised May figure of 457,000.

New orders for manufactured durable goods in June decreased $2.0 billion or 1.0% to $190.5 billion. This decrease followed a decrease in May of 0.8%. June unfilled orders for manufactured durable goods decreased $0.1 billion or 0.2% $802.9 billion and followed two consecutive monthly increases.

Consumer Price Index decreased 0.1% in June. The index has increased 1.1% over the last 12 months, not including seasonal adjustments.

Interest rate: Prime at 3.25%, unchanged since 12/16/08 .

Inflation: Annual inflation rate 1.1% for June and projected to be lower for the rest of the year rising to ~1.5% in 2011.

Unemployment: June 9.5% after a reported 9.7% in May with 9.4% projected at year end.

Trade Deficit: For May 2010 the goods and services deficit increased to $42.3 billion from an adjusted $40.3 billion in April as imports increased more than exports.

Crude Oil: Currently trading at ~$75/bbl, with some decreased price forecasts of ~$65 at year end.

Natural Gas: Giant supplies of natural gas have been uncovered around the world and some experts predict reduced oil dependency in future. Inventories continue high.

Industrial production increased 0.1 % in June after a 1.3% May increase. For the second quarter as a whole, total industrial production increased at an annual rate of 2.2%. Capacity utilization rate for total industry in June was unchanged at 74.1%, up 5.9% from a year earlier but 6.5 % below 1972 – 2009.

Revised estimates issued by the Bureau of Economic Analysis show a Gross Domestic Product gain of 2.7% in the first quarter of 2010. This compares to an increase of 5.6% in the fourth quarter of 2009.

The US dollar trading at 87.8 yen. $1.29 = euro. The British pound sterling = $1.56.

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