A MARKET UPDATE for January 2010

Events:

We would like to meet with you at the upcoming Informex Show in San Francisco, CA and/or at the IPC/ NPRA in San Antonio, TX! Please contact Kathy Rushton at kathy@thechemco.com to schedule an appointment!

Feb 16-19, 2010 InforMex San Francisco, CA
Mar 28-30, 2010 International Petrochemical Conference
Oct 27-29, 2010 IFAI EXPO Americas
Oct 27 – Nov. 3, 2010 K Show Dusseldorf, Germany

Downloadable Brochure

click here to download/view

New Products:

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

New Products:

FOOD ADDITIVE PRODUCT LINE

Food Grade Acids:
Ascorbic Acid
Citric Acid (fine, granular)
Fumaric Acid (CWS, granular)
Malic Acid (DL, L, D)
Folic Acid
Succinic acid
P-Anisic Acid
P-Toluene Sulfonic Acid
Picolinic Acid
Lactic Acid & salts
Citrazinic Acid
Tartaric Acid (Granular & Powder)
Difluorophenylboronic Acid
Squaric Acid
Etc.

Food Preserving Agents:
Methyl Paraben, NF
Propyl Paraben, NF
Sodium Benzoate
Potassium Benzoate
Potassium Sorbate
Benzoic Acid
Butylated Hydroxy Toluene
EDTA (Disodium, Etc)
Sodium Erythorbate
Erythorbic acid
Sorbic Acid
Etc.

Others:
Caffeine Anhydrous USP
Glycine
L-glutamine
Casein
Methyl Salicylate
Taurine
Sucralose
Gums (Xanthan, Guar, Etc.)
Aspartame
Xylitol
Vitamins (B1, B2, Etc.)
Phosphates (dipotassium, tricalcium etc.)
Creatine Compounds (monohydrate,
citrate. Etc.)
Specialty food grade oils

Samples and tech data available upon request.

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

Critical Raw Materials Markets

Oil: Current spot prices are in the $73.00- $75.00/ bbl range after a brief $80 spike at the beginning of the year.

Check our homepage at thechemco.com for up to the minute info.

Natural Gas: Current spot pricing ~ $5.54/MMBtu as the cold weather moderated. February futures also decreased to $5.496/MMBtu. Inventories are .2% below the five year average.

Benzene: US Benzene contract pricing increased by US$.57/ gallon in January to US$3.55/ Gallon. Spot prices have moderated lower from the $3.70- $3.80/ gallon level and are currently at $3.60- $3.65/ gallon.

Propylene: January US contract prices were increased $.03/lb bringing chemical grade and polymer grade to $.555/lb and $.57/lb respectively.

Orthoxylene: January contracts settled on $0.48/lb an increase of $0.035 and $0.045 from December’s two price levels

Chemicals Markets

Methanol: The Methanex Non-Discounted Reference Price for February will remain at US$1.10/ gallon. Spot barge offers are currently in the $.97- $.98/ gallon range and firm to moving up. Off take is steady as seasonal demand continues and derivative consumption improves slightly.

Notes:

  • The Chinese Governement intends to link Natural Gas pricing with the price of Crude Oil. This should increase the cost of natural gas and hence the cost to produce methanol from natural gas.
  • Methanex has increased the production at their operations in Chile by approx. 20%. A second unit was restarted in late December. Gas supply to this site should continue to improve.
  • Methanex is expected to have their new plant in Egypt at full operating rates by the end of this quarter.
  • Producers and Traders continue to keep very thin inventories in North America. Even a slight change in supply and demand could mean a huge change in price.
  • New production globally is expected to affect the methanol market by the end of the second quarter. Spot prices should move lower, eventually pushing contract lower as well. Pricing should remain steady until then.

Urea: Urea prices are in the US$310- $320/ ton range and steady.

Notes:

  • Urea pricing has escalated $75/ ton since mid- November.
  • There is a lack of demand in the U.S. right now yet international prices are firm and in some cases moving up.
  • Corn prices are moving lower and many feel this will drive urea pricing lower in the coming weeks.

Adipic Acid: Adipic Acid pricing advanced in January and another increase is expected for February. Both the U.S. and Europe remain tight due to a combination of limited availability due to production issues and rationalization and a notable increase in demand. Pricing has increased on higher raw material costs most notably benzene.

Melamine: Melamine pricing has moved up both domestically and imports. Demand has improved. China remains the low cost supplier worldwide but not all consumers can use what is considered lower quality product.

Phenolic Resins: Prices have firmed with increased Phenol and Formaldehyde pricing. A limited number of players has resulted in few options for consumers and many have opted to seek toll manufacturing opportunities.

Ammonium Nitrate: Low density AN prices are currently stable. Demand on both low and high density has softened considerably in most sectors and due to the extreme prices seen in 2008 some have successfully found alternate chemistries for their application.

Ammonia: Current U.S. Gulf NOLA barge pricing is reported at US$275/ton (NOLA Barge) down from $325 in December. Higher numbers are being sought in Tampa ($355/ met ton Del.). International prices are climbing higher and some feel domestic prices will follow in February.

Nitric Acid: Nitric Acid pricing is stable at the moment. Demand is relatively weak. Pricing is expected to remain stable through Q1, 2010.

Plasticizers and Plasticizer Alcohols:

Plasticizer demand has improved worldwide. A US$.05/ lb. increase has been announced by all majors for February 1, 2010. Chinese buying has been ravenous pushing prices up some 10-15% in the past month.

State level phthalate restrictions/ bans are having a more rapid and greater affect on phthalate plasticizers.

TCC Plasticizers available:

Non- Phthalate:

  • “ChemFlexx NP 500” Non- Phthalate Replacement for General Purpose Plasticizers
  • “ChemFlexx NP 600” Non- Phthalate Replacement for DIDP
  • “NatureFlexx 509” Phthalate Free General Purpose
  • Epoxidized Soybean Oil
  • TOTM (TriOtcyl Trimellitate)
  • DOA (DiOctyl Adipate)
  • 8 10 Trimellitate

Phthalate:

  • DINP (DiIsononyl Phthalate)
  • “ChemFlexx 206” Linear Phthalate Plasticizer
  • “ChemFlexx 208” Low Temp Linear Phthalate Plasticizer
  • DOP (DiOctyl Phthalate)
  • DUP (DiUndecyl Phthalate)
  • DMP (DiMethyl Phthalate)
  • Brominated DOP
  • 9 11 Phthalate

Epoxidized Soybean Oil: Pricing has increased on improved demand and increases on raw materials.

Dicyandiamide: Prices are moving up quickly on demand, increased raw material costs, and limited availability due to the upcoming Chinese Holiday. Producers are reporting tight inventories and higher prices moving forward.

Dicyclopentadiene: Prices are stable with underlying crude values. The Polyester Resin market continues to be extremely slow.

Fumaric Acid: Fumaric Acid has become relatively snug and prices are moving up in line with butane values. Global values have also increased as demand improved and raw material costs move up.

Malic Acid: Global values have improved with demand and increased raw material cost. Non- food/Technical applications are being re-looked at as other acid values remain inflated (eg. Citric).

Isophthalic Acid: Prices have increased in line with underlying raw material costs. Demand has also improved in most major markets.

Maleic Anhydride: Demand has improved slightly (although supply and demand remains completely imbalanced) and prices have moved up but not at the levels announced. Prices have increased between $.02- $.05/ lb. over the last two months. Underlying butane costs are the driver as supply obviously isn’t an issue. Rationalization of US plants is expected. The briquette market has surged as European rationalization and limited availability has created a supply and demand imbalance.

Styrene monomer: Benzene values have moved higher and so has SM pricing. We expect pricing to advance into February.

Phthalic Anhydride: Orthoxylene has increased $0.035 and $0.045 from December’s two price levels thus we expect PA pricing to move up as well for February. Demand is weak in North America. Many customers have been forced to scramble for flake product while Koppers works out the issues.

Mono Ethylene Glycol: MEG pricing has firmed and a $.07/ lb. increase has been announced for February. Spot is trading in the US$.46/ lb. range and the new benchmark for February will be US$.51- $.53/ lb.

Diethylene Glycol/ Triethylene Glycol: DEG pricing continues to firm as exports to Asia tighten availability. Spot pricing pushed higher to US$.42/ lb. and a February 1st price increase of $.06- $.07/ lb. will bring benchmark pricing to US$.49- $.50/ lb. Triethylene Glycol demand surged with the freezing weather. Another $.05/ lb. increase has been announced for Feb. 1 and benchmark pricing is at $.75/ lb.

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 Institute for Supply Management predicts that this year will see continued but slow recovery. Spokesmen for the organization used terms like “long slow process.” Revenues in manufacturing are expected to increase by 5.7% in 2010 but this after a 10.7% decrease in 2009.

DuPont reported fourth quarter profits of $441 million, compared with a loss of $629 million the year before.

Ashland reported a fiscal first quarter profit of $86 million, compared to a loss of $119 million a year earlier.

BASF’s Wintershall oil and gas unit expects to be on schedule for its April start of construction of a natural gas pipeline from Russia to Germany.

PEMEX, Mexico’s state owned energy group, announced that it would supply ethane feedstock for a $2.5 billion chemical complex to be built by Brazil’s Braskem and Mexico’s Idesa. The facility is expected to produce one million MT each per year of ethylene and polyethylene. Completion date is expected for 2015.

Lonza is closing three plants in Canada, UK, and US and moving small molecule production to Asia.

INEOS has made a filing in bankruptcy court requesting that LyondellBasell cancel its demolition plans at its Chocolate Bayou, TX plant. INEOS wants LyondellBasell to sell the high density polyethylene plant to it instead.

Chemtura plans to emerge from Chapter 11 bankruptcy protection by mid-year. Management stated that the company has generated positive cash flow and accumulated cash balances.

The American Chemistry Council plans to add small to medium sized companies to its membership in order to make the trade group a broader and more effective advocacy group. ACC will waive dues for three years, as well as add affiliate members.

Dow Chemical recently introduced its new line of DOW POWERHOUSE solar shingles (photovoltaic panels) that can be installed on rooftops with standard asphalt shingles. The new system was reported to be less costly than solar panels. Dow forecasts an annual business in excess of $5 billion.

Dow Chemical has finalized an agreement to sell its acrylic acid and esters business and a specialty latex division to Arkema. Dow had been ordered to divest several assets as a result of its acquisition of Rohm and Haas last year.

A bill that would establish national emission standards for formaldehyde in composite wood products has been approved by the US Senate Committee on Environment and Public Works. The proposed bill would require wood products sold in the US to meet formaldehyde emission standards of ~0.09 ppm by 2012.

The EPA Administrator announced at the Copenhagen global climate change meeting that the agency has determined that CO2 and five other greenhouse gases are pollutants that threaten public health and welfare and therefore should be regulated under the Clean Air Act. A bipartisan group of Senators has introduced legislation to block this proposal. The “resolution of disapproval” would prevent the EPA from taking action on emissions.

New York State has created a list of 85 chemicals for state agencies to avoid buying, without issuing an actual ban. The “chemical avoidance list” was drawn up by an advisory council and was represented as the best way to comply with Governor Paterson’s executive order to buy environmentally friendly chemicals.

Under new regulations, California chemical manufacturers will be required in 2011 to use non toxic chemicals in their products. The American Chemistry Council, as part of the Green Chemistry Alliance, is seeking to moderate them. An ACC spokesman said that they are enormous in scope, fail to consider the benefits of banned chemicals, fall short of scientific risk assessment and will cause the loss of jobs.

The Washington state House has approved a bill that would ban food and beverage containers, including baby bottles that contain bisphenol A. If the measure is passed by the state Senate, the ban will take effect on July 1. The Wisconsin state Senate unanimously passed similar legislation banning its use in baby bottles for children less than five years of age.

Coca-Cola Co. has introduced a new bottle material made partly from plants. It is reported to have the same weight, feel, and function as a regular plastic bottle. The new bottle is made of 70% petroleum based and 30% sugar cane based materials.

Bayer Technology Services GmbH and Dow Water and Process Solutions have combined forces to offer a new biodiesel process called BayFAME. It is being offered as both inline and offline esterification process.

The US Food and Drug Administration has again missed its deadline for its health and safety assessment of BPA. A statement was issued that exposure to the chemical might be harmful to children.

Qatar Petroleum (QP) and ExxonMobil Chemical Qatar have signed an agreement to start developing a world class petrochemical complex in Qatar. The facility as planned will included the world’s largest steam cracker. Start-up is planned for Q4 2015.

In a deal valued at $41 billion, Exxon has agreed to buy XTO Energy, a leader in hydraulic fracturing or “fracking” technology, in which water, sand, and additives are pumped into the ground in order to unlock trillions of cubic feet of natural gas previously thought to be unobtainable. The process applies particularly to various shale formations in Texas, Louisiana, Montana, the Dakotas, New York and Pennsylvania. At current use, the amount of gas available is said to be a 90 year supply. Various interest groups and Congress members are leading an effort in opposition citing possible damage to groundwater quality and supply. The House Energy and Commerce subcommittee is scrutinizing the acquisition plan.

The recently-enacted Consumer Product Safety Improvement Act had an unexpected negative impact on the toy industry at the Christmas season. It was written in response to the recalls of Chinese made toys with the undeniable risk of lead paint but went beyond that by banning all children’s products containing a component with more than three hundredths of one percent lead. That meant that zippers, buttons, belts, and many toys were outlawed. The law also requires significant product testing by outside labs that small manufacturers couldn’t afford. Manufacturers and charities like the Salvation Army had to destroy hundreds of millions of dollars worth of toys and clothing. The Congress and the commission are working on a fix.

The Environmental Protection Agency has delayed until June its decision on whether to boost the ethanol content in gasoline from 10 to 15 percent. US ethanol production has not lived up to its earlier promises. The US will need to import large volumes of ethanol from Brazil in order to meet advanced biofuel targets. The price of industrial ethanol increased by 26% in 2009 because of tight supply caused by increased demand from makers of hand sanitizers. The US government subsidized biofuels in 2009 in the amount of $4 billion.

Iran has made an one billion euro agreement with a German firm to build, install, and run 100 gas turbo-compressors. The German company was not named. After Russia, Iran has the world’s second largest natural gas reserves.

A major new project in nuclear fusion/plasma technology for power generation will be taking place in Cadarache, France, backed by international investors from the EU, US, Asia, and Russia. It’s estimated that the project length could be as long as thirty years.

Valero’s ethanol capacity will be increased by 43% to 1.1 billion gallons/year with the acquisition of three more bankrupt ethanol plants. The total cost was reported as $272 million.

Interest in Canadian oil sands development has diminished as a result of the troubled economy. It’s been estimated that 1.7 trillion barrels of oil sands are available in Alberta, of which 175 billion barrels is recoverable with current technologies.

Brazil’s Braskem, in cooperation with enzymes maker Novozymes, will be developing large scale production of polypropylene from sugar cane. Braskem is moving to acquire the petrochemical units of Brazilian producers Petrobras, Odebrecht, and Quattor, which could make it one of the top five plastics resins makers in the world.

Germany’s chemical producers association, VCI, expects the industry to grow by 5% in 2010. This follows a decline in production of 10% in 2009.

China’s fourth quarter GDP growth was reported as 10.7% annualized. It was also reported that The Peoples Bank of China has begun to restrict credit growth in what is believed to be an effort to slow the growth of the economy. Industrial production is forecasted to increase by 11% this year.

Gross Domestic Product for the UK rose 0.1 in the fourth quarter, less than predictions of 0.4%. This was the first increase in six consecutive quarters.

There was a decline of 13.8% of chemical shipments on US railroads during 2009. Metals and lumber saw far greater declines. But December saw the highest number of loadings for the year. Chemicals comprise the second largest shipment category as reported by the Association of American Railroads. Coal is the largest rail category.

The American Trucking Associations have affirmed their support for the current hours of service (HOS) rules, stating their intent to maintain them. The Federal Motor Carrier Safety Administration (FMCSA) is in the meantime working on a new set of standards. The FMCSA has nine months to review its current rule and to submit a notice of proposed rulemaking. The National Industrial Transportation League is also in support of the current HOS rules. The association also reported tonnage increased 2.1% in December, following a November increase of 2.6%. Trucking represents 69% of tonnage carried by all modes of domestic freight transport.

The active capacity of the world’s leading ocean cargo carriers dropped by 2.4% during the last twelve months. Shippers may incur higher rates as a result of this reduction.

The Economy

The Conference Board’s index of Leading Economic Indicators increased 1.1% in December following a 1.0% gain in November and 0.3% in October. The Conference Board noted that the LEI increased for its nineth consecutive month. The six month growth rate was reported as 5.2%, significantly higher than earlier in the year. The Conference Board Consumer Confidence Index increased in December and January, but short term outlook was mixed with a slight reduction in the numbers of consumers expecting an improvement in business conditions.

In December, retail and food services sales adjusted for seasonal variations decreased 0.3% from November but were 5.4% above a year earlier. Total sales for the October – December 2009 period were up 1.9% from a year earlier. Total sales for 2009 were down 6.2% from 2008. Gasoline station sales were up 33.6% from December 2008. The National Retail Federation expects 2010 retail sales, excluding automobiles, gas stations, and restaurants to increase by 2.5% over 2009.

Privately owned housing starts in December of 557.000 were 4.0% below the revised estimate for November of 580,000 but 0.2% above the December 2008 rate of 556,000. Single family housing starts in December 2009 were at a rate of 456,000 or 6.9% below the revised November figure of 490,000.

New orders for manufactured durable goods in December increased $0.5 billion or 0.3% to $167.9 billion. This followed an adjusted November 0.4% decrease. Following a November increase of 0.8%, December shipments of manufactured durable goods, up for four consecutive months, increased 2.9% or $5.1 billion to $181.9 billion. December unfilled orders for manufactured durable goods decreased $8.6 billion or 1.2% to $715.5 billion and followed a November decrease of 0.7%. This figure has decreased for fifteen consecutive months.

Consumer Price Index rose 0.1% in December. The index has increased 2.7% over the last 12 months, not including seasonal adjustments.

Interest rate: Prime at 3.25% as of 12/16/08 and expected to remain the same well into 2010.

Inflation: Up 0.1% in December; core inflation rose 1.8% in the past twelve months and is within the Federal Reserve’s comfort zone of between one and two percent.

Unemployment: December 10.0%.

Trade Deficit: For November 2009 the goods and services deficit increased to $36.4 billion from an adjusted $33.2 billion in October as imports increased more than exports.

Crude Oil: Currently trading at ~$75 – $80/bbl, with little change in short term forecasts.

Natural Gas Spot prices and futures moved up as the temperature went down, and came down as the weather moderated. Supplies are more than adequate for short-term demand. A forecast for the coldest winter in a decade in the US Northeast was considered responsible for the January spike. Natural gas and heating oil futures prices decreased for February.

Industrial production increased 0.6% in December after a 0.8% November increase. For the fourth quarter as a whole, total industrial production increased at a rate of 7.0%. Capacity utilization rate for total industry in December was 72.0%, up from 71.3% in November, a level 8.9% below the 1972 – 2008 average.

Advance estimates issued by the Bureau of Economic Analysis show a Gross Domestic Product gain of 5.7% in the fourth quarter of 2009, compared to an increase of 2.2% in the third quarter. This advance estimate is based on incomplete data and will be revised in a report to be issued on February 26. In 2009, real GDP decreased 2.4% from the 2008 annual level to the 2009 annual level, in contrast to a 2008 increase of 0.4%.

The US dollar trading at 90.11 yen. $1.41 = euro. The British pound sterling = $1.62.

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