A MARKET UPDATE for June 2011

Special Message:

Last week we released our first video in a series about the products TCC handles in North, Central and South America. This video features one of our first and largest products Urea.

TCC was incorporated in Rhode Island in 1988. At that time we had very few products and partnerships. What we did have was Urea, a product that was ignored by most chemical marketing companies since it was inexpensive, not too profitable, and there was a lot of competition. Nick Roach CEO of TCC and our first squad of sales people brought value to our relationship with customers and our supplier. We focused on technical sales of this product, despite the fact that the largest market by far was for fertilization. We grew our position in technical urea by taking pride in what we were selling, improving the packaging, developing new applications, and challenging our competition. Urea remains one of our most important and largest volume products to this day. We are proud of the fact that we still have the same supplier today and the relationship continues to grow.

Urea and the relationships that have developed are a perfect example of the philosophy that TCC maintains as a company. We take pride in our supplier relationships and trust that they will support us as much as we support them. We live and die by our suppliers and are not a company that buys only where we can get the cheapest price. We support our producing partners with market information, technical development, and face to face meetings with our customers which invariably lead to a healthy and growing relationship.

We will never change this philosophy which has had the greatest benefit on our customers. They enjoy competitive, rate-able, and high quality supply of their most important raw materials.

To view this video please click this link:
http://www.vimeo.com/24834423

TCC News:

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Upcoming Events:

SPI’s Flexible Vinyl Products 22nd Annual Conference
July 10-13, 2011
EPCA Berlin
Germany
October 1-5, 2011
Latin American Petrochemical Annual Meeting
Nov. 5-8, 2011 Buenos Aires
NPRA 2012
April 1-3, 2012 San Antonio, TX
NPE International Plastics Showcase
April 1-5, 2012 Orlando, FL

Downloadable Brochure

click here to download/view

New Products In Stock

Dibenzoate Esters (In stock and available!)

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

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

Citric Acid 25 Kg. Bags, 2,000 lb. Sacks and 50% Solution
(In Stock and Available Now!)

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

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

Maleic-Anhydride-briquettes (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):

Epoxidized Soybean Oil

Diisononyl Phthalate

Adipic Acid

DiOctyl Adipate

ChemFlexx 206

Antimony Trioxide

Malic Acid

Tartaric Acid

New Products:

ChemFlexx Dibenzoate Esters are a non-phthalate, primary, high solvating plasticizer for Polyvinyl Chloride (PVC). Used to improve the performance of or replace ortho-phthalate plasticizers, these esters can increase your processing speed and lower processing temperatures.

Boric Acid is a weak acid of boron commonly used as an flame retardant. This white powder is gaining popularity as a replacement for the extremely expensive flame retardant antimony trioxide. TCC offers boric acid in 25 Kg. bags on pallets.

Melamine Crystal 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 AcidSuccinic 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 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 subtle 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 June Benzene contract settled down $.17/ gallon to $4.06/ gallon (May $4.23/ gallon). Spot prices are currently in the$$3.72- $3.76/ gallon range. –

Natural Gas
Spot prices reported ~$4.80/MMBtu in the Northeast due to heat wave and air conditioning demand. Working natural gas in storage rose as of early June. +

Oil
When the OPEC June meeting ended in a decision not to increase production, prices rose to above $100/bbl. Subsequent independent Saudi announcement to increase production resulted in lower price hovering at $90- $94/bbl. –

Orthoxylene
June contracts settled at $.62/lb, a decrease of $.05 from May. –

Propylene
June contract prices settled with decreases of $.15/ lb. to $.82/lb for polymer grade (Was $.97/ lb.) and $.805/lb (Was $.955/ lb.) for chemical grade. Contract prices had increased $.365 during the past six months. –

Chemicals Markets

Adipic Acid:

Adipic Acid pricing has stabilized as production issues and scheduled maintenance outages become a thing of the past. Demand has also waned in Asia hence new offers from China are noted. Adipic remains tight in Europe but this situation is expected to end shortly. -/

Ammonia:
June business for Tampa moved up US$5/ metric ton to US$570/ metric ton, NOLA at $550/ metric ton. This increase is due to natural gas curtailments in Trinidad but lower prices are seen for coming months. +

Ammonium Nitrate:
AN prices have stabilized yet demand is heavy for mining. Pressure from Ammonia has become less of an issue and lower ammonia pricing is expected in coming months. /

Antimony Trioxide:
Antimony prices have had significant erosion over the past few weeks. Buyers are hesitant to buy as pricing moves lower. Consumer pricing is in the $6.50/ lb. range. Some consumers have found success in alternative chemistries and are abandoning ATO use all together or to the highest level possible.

Dicyandiamide:
Pricing is at a two year high as energy demand in China is high during the summer season. 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. Prices should stay inflated through summer. Demand has been very good for fertilizer and flame retardant applications. +

Epoxidized Soybean Oil:
Both domestic and import pricing has moved lower on weak demand and lower soybean prices.

Fumaric Acid:
FA Pricing has stabilized on better availability and stable butane/ maleic anhydride pricing. Butane has been in the $1.80/ gallon range since mid May. /

Glycol (Mono, Di and Tri):
MEG – July increases of US$.03- $.05/ lb. have been announced. U.S. demand is still good. Benchmarks are set at $.64- $.68/ lb.. Inventories are good. -/

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:
PIA pricing has stabilized as raw material costs move lower. Lower import prices are noted and may lead to lower domestic pricing in the coming months. /

Maleic Anhydride:
Prices will roll for July as demand tapers and production issues are fixed. Butane is in the US$1.80/ gallon range and stable. /

Malic Acid:
Malic Acid supply has improved as availability from China improves. TCC has Malic Acid in stock and available. /

Melamine:
Melamine availability has improved and prices were moving lower. Urea prices have spiked as of late putting pressure on melamine costs. Look for higher melamine prices in the coming months. /+

Methanol:
The Methanex Non-Discounted Reference Price for July has once again rolled over at US$1.28/ gallon. U.S. Spot pricing has been steady in the $1.08- $1.09/ gal. range. Contract pricing for July should see a roll or slight decrease. /

Notes:
Market conditions are considered stable and quiet.

Venezuela’s Metor 1 plant is expected to re-start the last week of June.

Nitric Acid:
Nitric Acid pricing has stabilized. Demand remains good. /

Phenolic Resins:
Resin producers may finally get some relief on phenol pricing as benzene values move lower. Phenol remains extremely tight though and availability is the key issue. Resin prices have stabilized for the moment. /

Phthalic Anhydride:
Orthoxylene contract pricing has decreased for June by US$.05/ lb PA pricing is expected to follow for July.

Plasticizers and Plasticizer Alcohols:

Plasticizer and plasticizer alcohol demand has been good throughout 2011 but some weakness in the global economy may affect price and demand in the coming months.

Pressure from underlying feedstock costs (i.e. propylene, orthoxylene, ethylene, phthalic anhydride) has finally turned the corner and started moving lower.

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:
Non- Phthalate:

Phthalate:

Styrene monomer:
Styrene will continue to move lower for July. Demand is also expected to slow for the summer season.

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 $500/ 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 0.3% in April, following a revised flat report for March. Gains were reported in all regions.

Senate Republican leaders urged the Obama administration to send Congress three pending free trade agreements without attaching other legislation intended to help workers hurt by increased trade. The agreements with South Korea, Colombia, and Panama have been stalled for months.

US manufacturing companies, in a reverse of fortunes, are scrambling for home-grown skilled labor. Manufacturing activity is growing modestly, while retirements are starting to drain factories of their most experienced workers, and the US education system isn’t turning out sufficient people with the math and science skills needed to operate and repair sophisticated factory equipment.

The 2011 hurricane season is forecast to be more active than normal, which could have an impact on Gulf refineries and offshore wells. But the US is less vulnerable than it was when hit by Hurricane Katrina in 2005 as natural gas supplies in shale formations have taken some pressure off the Gulf operations.

In May, the US Chamber of Commerce sponsored America’s Small Business Summit in Washington. Hundreds of business owners attended and one of the common concerns was about the federal health care law enacted last year. Sen. Jon Kyl, R, AZ has proposed a Small Business Health Relief Act in response to their concerns. This would repeal some of the most objectionable provisions of the current legislation.

DuPont plans to increase its TiO2 capacity by 350,000 MT/year by the end of 2014. It plans a $550 million investment in US, Mexico, and Taiwan. A number of US chlor-alkali producers announced their third caustic soda price increase this year, citing tight supply/disruptions.

Research into Bisphenol A (BPA) continues, even though US and other government agencies have not declared it to be unsafe. The author of a study of low dose BPA exposure stated that the anti-BPA campaign transcends data, facts, and results. A report from the World Health Organization has stated that there is no single replacement for BPA in all food contact applications. The American Chemistry Council and the Grocery Manufacturers Association are among groups opposing an Oregon bill to ban BPA in baby products because such a regulation would be “overreaching.”

It was reported that the EPA plans to delay draft greenhouse gas (GHG) emissions limits for power plants. Federal regulators are seeking a two month extension of the July 26 deadline. The regulations would have the greatest impact on coal-burning electric utilities.

Dow Chemical has delayed the introduction of its Powerhouse solar shingle until the fourth quarter. Dow had previously announced that the solar shingle would be available in some US markets by the middle of this year. Powerhouse shingles can be installed like ordinary shingles, and can generate electricity from sunlight. Dow has declined to reveal per-unit cost of the product.

LyondellBasell Industries plans to increase its US ethylene output and may build another plant as rising shale gas supplies increase US competitiveness. Expansions at existing Texas plants could increase capacity by about 500 million lbs/year.

RAG-Stiftung announced that it will prepare specialty chemicals company Evonik Industries for an initial public offering within the next 15 months and possibly in 2011. RAG noted that if changes in raw material prices, negative currency fluctuations or other complications cause problems, it will halt the IPO.

European chemical distributors are emphasizing sustainability through the chemical industry’s Responsible Care Program which fosters environmental practices, product responsibility and occupational safety. The European Association of Chemical Distributors also oversees these activities.

The April unemployment rate in Germany reached 7%, the lowest level since record keeping began in 1990. Across the 17 nation eurozone unemployment was unchanged at 9.9%. The German decline has yet to produce an equivalent rise in consumer spending.

German chemical industry 2011 growth forecast has been increased to 5% following a strong first quarter.

On May 30, Germany announced plans to become the first major industrialized power to shut down all 17 of its nuclear plants in the wake of the disaster in Japan. The phase-out is expected to be complete by 2022. It has been reported that the target is to raise energy generated from renewable sources from today’s 17% to 35% in 2020. France, which has 58 reactors, stated that it was not ready to give up nuclear energy. Italy scrapped nuclear power in 1987. Switzerland said that it would phase out nuclear generation by 2034.

The Polish government will restart its chemical industry privatization program in September. A majority stake will be offered in the country’s largest chemical group, Ciech.

Poland met with US shale gas experts and officials as it seeks to exploit shale gas reserves that would give the country energy independence. If successful, it would end Poland’s dependence on importing 70% of its gas from Russia.

DSM and Roquette Freres, a starch and derivatives company, announced plans to build a commercial scale bio-based succinic acid plant in Italy. It is expected to come on stream in the second half of 2012. DSM said that it will be Europe’s largest biosuccinic acid plant.

China’s imports grew by 28.4% while export growth slowed, resulting in a smaller than expected $13 billion trade surplus. The Chinese government continues its effort to make the yuan an international currency, but efforts are tied to a dependence on the US dollar. The risk of speculation in the yuan has been noted by Chinese authorities.

ConocoPhillips, Exxon, Shell, and Chevron have led the effort to form the Marine Well Containment Co. to build a spill containment system that will be permanently placed in the Gulf next year. To date, the companies have committed $1 billion to the project.

Exxon CEO Rex Tillerson recently said that natural gas will be the fastest growing major energy source and will soon overtake coal as the second largest global energy source behind only oil. Exxon has said that it expects natural gas to supply 26% of world energy demand by 2030, up from 22% in 2010.

The American Chemistry Council and other industry groups have expressed opposition to a bill that would grant tax incentives to promote natural gas use in vehicles. Their position is that the bill will distort markets and increase production costs for US manufacturers.

Shell Oil Co. said it plans to build an ethylene cracker plant in the Appalachian region utilizing Marcellus shale natural gas. Shell produces ethylene from oil in Texas and Louisiana but its only natural gas cracker is a joint venture in China. Projected volume from the new facility is in excess of one million tons of ethylene per year.

The Energy Department in May named a panel to recommend ways to improve the safety of hydraulic fracturing (fracking), a process that has expanded the potential to extract the fuel. The panel is expected to identify any immediate steps to improve safety and environmental performance within 90 days. Within six months they will also develop advice for the government on practices for shale extraction.

A bill that would impose a one year moratorium on hydraulic fracturing recently cleared the New York State Assembly. It still needs the state Senate’s approval to become law. As many as 4,500 jobs could be affected.

Many environmental groups are opposed to fracking, saying that the chemicals used in the process are pollutants. The US chemical industry has opposed suggestions that federal agencies should oversee fracking , arguing that individual states should continue to have regulatory control.

The battle over allowing heavier and longer trucks on interstate highways is brewing in Congress. The American Trucking Association and other industry groups support the action. They’re opposed by the railroad industry, the AAA, and the Teamsters union. Current law bans fully loaded trucks heavier than 80,000 lbs. An increase to 97,000 lbs. is proposed.

April rail carloads were down 0.2% compared to a year earlier. Intermodal car loadings showed an 8.8 % gain year to date. However, railroad volumes still trail 2008 on a volume basis.

The Economy

The US government deficit for the first eight months of fiscal 2011 was $929 billion, $6 billion less than the same period last year. Revenues were reported as higher than they were last year by 19%. Outlays were lower by 17%. Forecasts indicate that the federal government will end fiscal 2011 with a deficit of $1.3 trillion.

A new report issued by S&P Valuation and Risk Strategies estimated that companies on the S&P 500 will probably pay basically the same amount of taxes in 2011 as they did in 2008, a finding that suggests that profits are returning to pre-recession levels. Yet, those companies are not hiring.

Richard Fisher, president of the Federal Reserve Bank of Dallas, stated to The Wall Street Journal that 37% of all net new American jobs since the recovery began were created in Texas. Mr. Fisher said that Texas is doing so well relative to other states because it has rejected the economic model prevailing in Washington.

On June 1, the Obama administration said that the government will lose about $14 billion in taxpayer funds from the bailout of the auto industry. This is lower than original estimates.

The Bureau of Economic Analysis second estimate reported that first quarter 2011 Gross Domestic Product increased at a rate of 1.8%. In the fourth quarter of last year real GDP increased by 3.1%. Current-dollar GDP, the market value of the nation’s output of goods and services increased 3.8% or $138.9 billion in the first quarter to a level of $15,010.3 billion. Fourth quarter increase was reported as 3.5% or $126.3 billion.

The Conference Board’s Leading Economic Index declined 0.3% in April to 114.0 (2004=100) following a 0.7% increase in March and a 0.9% increase in February.

The Conference Board Consumer Confidence Index which had improved in April decreased in May. It stands at 60.8 (1985=100) down from 66.0 in April.

The Institute for Supply Management’s Manufacturing Index registered at 53.5% in May, a decrease of 6.9% from April. A reading above 50% indicates that the manufacturing economy is generally expanding. The Non-Manufacturing Report for the same period was 54.6, higher than April’s 52.8; a reading above 50 represents continuing growth.

In April, retail and food services sales adjusted for seasonal variations were $389.4 billion, an increase of 0.5% from March and 7.6% above a year earlier. Total sales for the February 2011 – April 2011 period were up 8.1% from the same period a year ago.

Privately owned housing starts in April of 523.000 were 10.6% below the revised March estimate of 585,000 and 23.9% below the April 2010 rate of 687,000. Single family housing starts in April were at a rate of 394,000 or 5.1% below the revised March figure of 415,000.

Home prices in 20 US cities dropped in March to the lowest level since 2003, reflecting the continuing slump. A backlog of foreclosures, along with the possibility of more on the way indicated that home prices may stay depressed.

New orders for manufactured durable goods in Aprl decreased $7.1 billion or 3.6% to $189.9 billion. This followed a March 4.4% increase.

April unfilled orders for manufactured durable goods, up twelve of the last thirteen months, increased $1.6 billion or 0.2% to $849.5 billion and followed a 0.7% March increase.

Consumer Price Index increased 0.4% in April after rising 0.5% in March. In the last twelve months, the index for all items increased 3.2% before seasonal adjustments. Over the past 12 months the energy index has increased 19.0% with gasoline index up 33.1%. The food index rose 0.4% in April after rising 0.8% in March. It has risen 3.2% during the past twelve months.

The Producer Price Index increased 0.8% in April, following a 0.7% increase in March, and a gain of 1.6% gain in February.

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

Inflation: Inflation rate was 3.2% for April, following 2.7% in March. Average for the year projected at 3%, up from 1.5% in 2010.

Unemployment: May 9.1%, after April 9.0%, showing little change. Total nonfarm employment increased by 54,000 workers, following gains that averaged 220,000 in the prior three months. It was estimated that approximately 30,000 of the 54,000 jobs added in May were the result of an aggressive hiring program by McDonald’s.

Trade Deficit: For March 2011 the goods and services deficit increased to $48.2 billion from an adjusted $45.4 billion in February as imports increased more than exports.

Crude Oil: The OPEC meeting in Vienna was expected to result in increased output levels from its members, but it ended in impasse with levels unchanged. The Saudi oil minister called the session “one of the worst meetings we’ve ever had.” Within minutes of adjournment, July futures prices topped $100/bbl. Two groups within OPEC, one led by the Saudis, in favor of output increase, the other by Iran in opposition resulted in the deadlock. Saudi Arabia subsequently announced plans to increase production to ten million barrels per day, the highest level in 30 years. Analysts see this move as the Saudis reasserting their dominance over OPEC. The Saudis have stated that oil prices are too high and are a drag on economic recovery. Following the announcement, prices dropped and are in the $98/bbl range.

Natural Gas According to T. Boone Pickens, increased production of US shale natural gas will lessen foreign oil dependency, reduce greenhouse gas emissions and create jobs. At the same time, there is increasing legislative action regarding regulation of the fracking chemicals used to extract the gas.

Industrial production was unchanged in April after an increase of 0.7% in March. The increase of 0.1% in February was revised to a decline of 0.3%. Total industrial production in April was 5.0% above its level of a year earlier and was 93.1% of its 2007 average.

The capacity utilization rate for total industry moved down 0.1% to 76.9 %, and was 3.5 % below 1972 – 2010 average.

The US dollar trading at 79.85 Japanese yen. $1.46= euro. The British pound sterling = $1.64. Canadian dollar trading at US$.979

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