A MARKET UPDATE for February 2011

Special Message:

Want to know where your chemical pricing will be in the near future? Watch the news!

Major Global Events have always had an impact on chemical pricing (whether up or down). The major difference today is that it happens much, much more quickly. The ebb and flow of information is instantaneous and light years ahead of where it was just 10 years ago. The impact of instant communications is far reaching and undeniable, just ask former Egyptian President Hosni Mubarak. The protests in Egypt that ended with his resignation began as an event on Facebook and the creator of this page and hero of the protests was Wael Ghonim a “Google Executive.” This is strange to say the least but it is a good example of the power of communications. The first action by the Egyptian government was to shut down telephone and internet in an attempt to halt communication. They failed and the results, as far as our industry was a temporary spike in oil pricing, the delay of the EMethanex Plant Commissioning and a lot of displaced foreign workers and diplomats. It could have been much worse.

Despite the ease of communications and the vast number of portals available to almost everyone there remains a need to have personal communication. Especially with a major supplier. TCC remains committed to having real people answer our telephone, real sales people in every region possible and real information that is not watered down or swayed to our benefit.

TCC News:

It was great to see everyone in Charlotte at InFormex 2011! It was a fantastic event and we look forward to New Orleans, LA in 2012!

Be sure to follow us on our new facebook page

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

Myriant Technologies reports that they are staying on track to meet the full scale production goal of Q1- Q2 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

Events:

2011 International Petrochemical Conference
Sunday, March 27 – Tuesday, March 29, 2011

600 E. Market Street
San Antonio, TX 78205
Chemspec USA
Philadelphia, Pennsylvania
Convention Center from May 3-5 2011.
EPCA Berlin
Germany
October 1-5, 2011

Downloadable Brochure

click here to download/view

New Products IN STOCK

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 (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

2- Hydroxypropyl Methacrylate Drums

Succinic Acid 25 Kg. Bags

Antimony Trioxide (High Tint, Supersacks)

New/ Updated Technical Information (hyperlinked):

Antimony Trioxide

Citric Acid

Epoxidized Soybean Oil

Succinic Acid

Malic Acid

Fumaric 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 February Benzene contract settled up $.51/ gallon to $4.35/ gallon (January $3.84/ gallon). This is record breaking territory. Spot prices are currently in the$4.14- $4.16/ gallon range. +

Natural Gas
Recent Henry Hub spot price has been trading lower at ~$4.00/MMBtu.

Oil
Oil moderated after Mubarak’s resignation but remain near US$90/ barrel. Current spot prices are in the $89 – 90/bbl range; futures are similar /

Orthoxylene
February contracts settled at $.55/lb, an increase of $.04 from January. +

Propylene
It looks like February contracts will roll. February prices will remain at $.74/lb for chemical Grade and $.775/lb. for polymer grade. Producer pressure for an increase of an additional $.025/lb. in February was reported but appears to be thwarted. /

Chemicals Markets

Adipic Acid:
There is continued pressure from Benzene and Ammonia and this will inevitably lead to price increases. Availability remains limited especially in Europe due good global demand and rationalization in 2010. Demand has been slow for the beginning of Q1 but this is expected to quickly change. Lower priced offers from China are no longer available. /

Ammonia:
February business for Tampa was fixed at US$515/ metric ton up $40/ met ton from January. Based on Black Sea pricing ($465- $475) higher prices are expected. +

Ammonium Nitrate:
AN prices have moved up $25- $50/ ton due to the higher priced ammonia we’ve seen over the last few months. Seasonal demand will kick in shortly and this will also pressure price. There has been some recent rationalization in North America which could lead to availability issues once this demand season kicks in. +

Antimony Trioxide:
Antimony prices are moving up again as end users return to the market with cautious demand. Buyers are reporting record pricing in excess of US$5.50/ lb. and moving higher. Most industry experts feel US pricing will remain under pressure in Q1 as Chinese production will be limited. Many consumers are looking at alternative chemistries +

Dicyandiamide:
Prices leveled and consumers responded with orders thus pressuring availability for the short term. The Chinese New Year has delayed shipments. There is pressure from the Chinese Government to stop Dicyandimaide production due to its massive consumption of energy and it’s ill effects on the environment. /+

Epoxidized Soybean Oil:
Soy Bean Oil pricing is once again under pressure from feedstocks. Prices have moved and another increase has been announced for March. +

Fumaric Acid:
FA Pricing has leveled yet butane values continue to keep cost under pressure. Global operating levels have normalized. /+

Glycol (Mono, Di and Tri):
MEG – A 4 cts increase was announced for February. Demand is very good as extreme cold weather continues across most of the lower 48. Spot MEG is in the US$.50/ lb. range and steady. Inventories are good /+

DEG prices are holding with seasonal slow demand. No increase announcements were made for February but one producer decreased their price to get in line with others. Spot pricing for February is in the US$0.54-0.57/lb range. February postings range from US$.66/to $.75 lb /

Triethylene Glycol pricing remains at or near $.90/ lb. The cold weather has kept demand solid. /

Isophthalic Acid:
Raw material costs have pushed Isophthalic pricing higher. Availability remains good but pricing has reached a higher threshold. +

Maleic Anhydride:
January saw another price increase of US$.03/ lb. Feedstock pressure (Butane) remains the largest driver for the recent increases. +

Malic Acid:
Malic Acid supply has improved and pricing has responded. Cost pressure from feedstock butane will remain an issue. TCC has Malic Acid in stock and available. /+

Melamine:
Melamine availability remains an issue. Pricing is also under pressure from escalating Urea cost. No new price announcements are noted but with increased urea pricing comes increase Melamine pricing. +

Methanol:
The Methanex Non-Discounted Reference Price for February decreased by US$0.07gal to US$1.28/ gallon. The decrease was based on lower spot prices, good operating rates on global capacity and demand that does not meet the overall production volume at this time. Spot has been relatively steady over the last couple of weeks with offers currently in the $1.00- $1.03/ gallon range. A decrease in contract pricing is expected for March.

Notes:

  • The commissioning of the EMethanex plant in Egypt has been cancelled until the political situation improves.
  • There are some operational issues in the United States and Trinidad but neither are affecting availaility.
  • Demand for seasonal applications has been very good.

Nitric Acid:
Nitric Acid pricing is under pressure due to increased ammonia cost. Demand is good. Price increase announcements were implemented in January. /

Phenolic Resins:
Pricing is under pressure due to underlying feedstock costs. Demand is improving. Pricing is under pressure and will likely continue to increase in Q1, 2011. +

Phthalic Anhydride:
Orthoxylene contract pricing has increase for February by US$.04/ lb. PA pricing is expected to follow for March. /+

Plasticizers and Plasticizer Alcohols:
Plasticizer and plasticizer alcohol pricing is under pressure from underlying feedstock costs. (i.e. propylene, orthoxylene, ethylene, phthalic anhydride). Further increases are expected.

Increases are noted for Jan 1, 2011 on all plasticizers and for Feb. 1, 2011 for all general purpose, specialty, non-phthalate and phthalate free products.

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 higher in February as benzene values reached record levels. +

Urea:
Urea prices were advancing until a positive grain report stopped the momentum. The Urea supply pipeline is full in anticipation of a spring thaw. Prices climbed throughout Q4 and into January but have stabilized as of late in the $375- $400/ ton range. +

Notes:

  • North Amercia is expected to plant 90 million acres of corn in 2011. Corn is heavily fertilized.
  • 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 year 2011 is known by industry and professional organizations throughout the world as the International Year of Chemistry (IYC 2011.) The IYC 2011 provides an opportunity to showcase the industry’s contributions to the economy, health, medicine, energy, environmental concerns, clean water and much more. The yearlong event was created by U.N. Educational, Scientific & Cultural Organization.

As a result of the November, 2010 election, representatives of the US chemical industry are optimistic about improving Congressional help and cooperation in advancing manufacturing and industry competitiveness.

The American Chemistry Council (ACC) reported that US chemical production increased 0.5% in December. Declines in pharmaceuticals, industrial gases and others were offset by gains in plastics, coatings, and electronics.

The National Research Council plans to explore the application of inherently safer chemical manufacturing processes. First public meetings are in February with a report expected in September.

Perstorp has acquired Ashland’s pentaerythritol business at an undisclosed cost. The deal does not include Ashland’s manufacturing facility, real estate, or employees.

The American Council on Science and Health dismissed recent studies that link bisphenol A and phthalates to certain illnesses, saying that the researchers failed to provide sufficient evidence to validate their findings.

The Canadian government has issued new regulations limiting the use of phthalates in children’s items. The products coming under the new regulations are DEHP, DBP,BBP,DINP,DIDP,DNOP. In the past, manufacturers have followed voluntary restrictions on their use.

Dow Chemical Company and Mitsui & Co., Ltd. have completed the formation of a 50/50 joint venture to construct, own, and operate a new membrane chlor-alkali facility to be located at Dow’s Freeport, TX site. The organization will be called Dow-Mitsui Chlor-Alkali LLC. Dow plans to use its chlorine share as feedstock and market the caustic soda on behalf of the joint venture. Mitsui’s chlorine share will be converted to ethylene dichloride by Dow for Mitsui’s use.

Ineos and PetroChina have agreed to form a partnership in new trading and refining joint ventures in Scotland and France.

DuPont recently opened a $30 million coatings lab at its research center focused on improvement of vehicle paint.

BP has announced that it will seek buyers for its Texas City, TX and Carson, CA refineries. This would cut BP’s refining capacity in the US by 50% to approximately 740,000 bbl/day.

The EPA rejected appeals from industry groups, including the ACC and the American Petroleum Institute to re-evaluate stricter sulfur dioxide air quality regulations that were implemented last year.

Although legal under a Supreme Court ruling, EPA’s use of the Clean Air Act to regulate greenhouse gases is controversial. The EPA has said that it’s confident that it will not have to alter current or pending regulations as part of the review framework announced by President Obama.

Representative Fred Upton (R -MI) chair of the House Energy and Commerce Committee, will introduce a bill that “prevents the Clean Air Act from being transformed into a regulatory vehicle.” Senator James Imhofe (R-OK) ranking Republican on the Senate Environmental and Public Works Committee plans to introduce the same bill in that chamber.

New federal regulations will require producers and importers of 19 chemicals including some used in consumer goods, to provide information regarding the health and environmental implications of their products. This action is supported by the ACC, as it encourages voluntary reporting from chemical firms.

PBF Energy has completed its acquisition of Valero’s Paulsboro, NJ refinery for $340 million. Refinery capacity was reported as 180,000 bbl/day. This is PBF’s second acquisition of a Valero property in a year.

Russia’s chemical production grew by 15% in 2010 compared with 2009. Major producer Sibur’s subsidiaries produced 16.5 million MT of petrochemicals, a 6.6% increase for the company. Sibur expects a growth of 14%+ year on year increase in petrochemical output to 18.8 million MT.

German unemployment fell to 7.7% in 2010, creating a demand for skilled workers in industries such as engineering, high tech and health care. Germany’s business confidence hit its highest level since 1991 in December.

Repsol (Spain) is planning to explore new joint ventures with Sinopec, the Chinese state-owned energy and chemical company. Sinopec invested $7.1 billion last year to acquire a 40% interest in Repsol Brazil.

The Chinese economy grew at 10.3% last year, but inflation exceeded the government’s target with a CPI growth of 3.3% year to year. Producer price index increased 5.9% over the year.

China’s trade surplus declined in December to $13.08 billion, a nine month low. The full year surplus declined for the second straight year.

South Africa’s Sasol group plans to invest $1.04 billion in shale gas in western Canada and will consider a regional gas to liquids plant.

A panel of geologists, toxicologists, engineers and doctors will review the techniques and analysis the EPA uses to draft a study of the potential environmental and health impacts of hydraulic fracturing (fracking) – the process of injecting a high pressure mix of chemically treated water and sand underground in order to break apart a rock formation and release the gas. This Hydraulic Fracturing Study Plan Review Panel is composed of 23 members, all but four of whom are affiliated with research universities; six are from Pennsylvania where much of the huge Marcellus shale gas deposit is located.

Large volume production of shale natural gas could depress ethane price in future, providing cheap feedstocks to petrochemical and polymer producers.

The EPA is close to completing a blueprint for extensive research into fracking and will help decide whether state level regulation is adequate.

Interior Secretary Ken Salazar said that he’ll weigh congressional input if the department seeks rules to toughen oversight of natural gas drilling on public lands. He also stated that should the department move forward with disclosure requirements for fracking chemicals it will do so in a way that will consider public and congressional concerns.

UPS reported fourth quarter revenue of $13.42 billion, an increase of 8.4% year to year. Quarterly operating profit of $1.8 billion was up 44%. Total 2010 revenue was $49.5 billion, up 9.4%. UPS average daily volume was 17.7 million packages.

FedEx inaugurated its new unified streamlined LTL network, offering shippers the choice of two levels of service. FedEx Freight Priority and FedEx Freight Economy are said to meet the needs of LTL shippers.

The Association of American Railroads reported that total carload volume in 2010 was up 7.3% year to year at 14,820,128 carloads. Intermodal volume increased by 14.2% over the same period.

Transportation Secretary Ray LaHood has said that the cross-border trucking program with Mexico would be revived as soon as possible as part of US obligations under NAFTA.

The International Chamber of Commerce (ICC) announced new international commercial terms (Incoterms) which came into effect on January 1, 2011 replacing the Incoterms 2000. The new rules have been updated in order to address the recent trends in global trade and practices. The current 13 Incoterms have been reduced to 11. Significant changes have been made to the terms, which are used when the goods are to be delivered to the buyer at the specified point in the buyer’s country, where the risk is passed to another party.

The Economy

The US government deficit for the first two months of fiscal 2011 was $283 billion, $14 billion less than the same period a year earlier.

The American Chemistry Council projects that overall US chemical production volumes will increase by 3.1% in 2010 compared to declines of 4.7% and 4.5% in the previous two years. Because of an increase of 16.8% in exports this year, the US 2010 $100 million trade deficit in chemicals will shift to a surplus of $3.7 billion. Low cost natural gas from shale has been a major contributor to this turnaround. The ACC forecast for 2011 calls for chemical output to increase by 3.0%.

The National Association for Business Economics projects GDP growth sub-par through the first quarter of 2011, but accelerating gradually through the rest of the year. The NABE survey panel projects GDP growth of 2.7% in 2011.

On or about January 1, 2011, federal, state, and local tax rates were expected to rise sharply. President George W. Bush’s tax cuts expired on that date, meaning that the federal income tax rates, dividend taxes, and capital gains taxes would have gone up significantly. President Obama and Republican leadership reached a last minute compromise to avoid this.

The Conference Board’s Leading Economic Index increased 1.1% in November to 112.4 (2004=100) following an adjusted 0.4 % increase in October and a 0.6% increase in September.

The Conference Board Consumer Confidence Index which had improved in October and November decreased in December. It stands at 52.5 (1985=100) down from 54.3 in November. Analysts state that all signs continue to suggest that the economic expansion will continue into 2011.

The Institute for Supply Management’s Manufacturing Index registered at 57% in December, showing strength in autos, metals, food and electronics. This was the seventeenth consecutive monthly expansion.

In November, retail and food services sales adjusted for seasonal variations increased .8% from October and were 7.7% above a year earlier. Total sales for the September – November 2010 period were up 7.8% from the same period a year ago.

Privately owned housing starts in November of 530.000 were 4.0% below the revised October estimate of 552,000 and14.7% below the November 2009 rate of 621,000. Single family housing starts in November were at a rate of 465,000 or 6.9% above the revised October figure of 435,000.

New orders for manufactured durable goods in November decreased $2.6 billion or 1.3% to $193.7 billion. This decrease, down three of the last four months, followed an October decrease of 3.1%.

November unfilled orders for manufactured durable goods increased $3.4 billion or 0.4% to $825.7 billion and followed a .7% October increase. This indicator has been up ten of the last eleven months.

Consumer Price Index increased 0.1% in November. In the last twelve months, the index for all items increased 1.1% before seasonal adjustments. During the same period, the index for all items less food and energy rose 0.8%. The energy index rose 3.9% with the gasoline index up 7.3% while the food index rose 1.5%.

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

Inflation: Annual inflation rate was 1.1% for November.

Unemployment: November 9.8% after 9.6% in each of the previous three months.

Trade Deficit: For October 2010 the goods and services deficit decreased to $38.7 billion from an adjusted $44.6 billion in September as imports decreased and exports increased.

Crude Oil: Currently trading in the $90’s/bbl, range. Global oil demand for 2011 is forecast at an increase of 1.6% over 2010. OPEC noted that markets were well supplied. The CEO of Gulf Oil was recently quoted as saying that the price could approach $150/bbl by mid-year.

Natural Gas: The Marcellus shale gas basin is estimated to hold enough reserves to meet US demand for more than a decade. There is increasing environmental concern regarding “fracking” chemicals used to extract the gas.

Industrial production increased 0.4% in November after a decrease of 0.2% in October. Total industrial production in November was 5.4% above its level of a year earlier. Capacity utilization rate for total industry in November rose to 75.2 %, and 5.4 % below 1972 – 2009 average.

The Bureau of Economic Analysis third estimate of third quarter Gross Domestic Product showed a gain of 2.6% from the second quarter. This compares to an increase of 1.7% in the second quarter.

The US dollar trading at 81.6 yen. $1.33 = euro. The British pound sterling = $1.54.

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