A MARKET UPDATE for March 2011

Special Message:

Our thoughts and prayers are with all the citizens of Japan during this time of need. It is far too early to gauge or understand the far reaching impacts of this tragedy on business and humanity. Only time will tell. Today we are hopeful that the crisis will not continue and that the people of Japan will have time to mourn their losses and recover.

From Wikipedia:
The 2011 Sendai earthquake and tsunami was a 9.0 MW megathrust earthquake off the coast of Japan that occurred at 14:46 JST (05:46 UTC) on Friday 11 March 2011. The epicenter was reported to be 130 kilometers (81 mi) off the east coast of the Oshika Peninsula, T?hoku, with the hypocenter at a depth of 32 km (20 mi).

The earthquake triggered tsunami warnings and evacuations along Japan’s Pacific coast and in at least 20 countries, including the entire Pacific coast of North America and South America. The earthquake created extremely destructive tsunami waves of up to 10 meters (33 ft) that struck Japan minutes after the quake, in some cases travelling up to 10 km (6 mi) inland, with smaller waves after several hours in many other countries.

TCC News:

We’re heading to the NPRA! This week we begin our annual migration south to San Antonio. If you have not arranged for a meeting with TCC yet please contact Javier Fernandez at Javier@thechemco.com

Be sure to follow us on our new facebook page

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

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

Biobased Succinic Acid

Events:

2011 International Petrochemical Conference
Sunday, March 27 – Tuesday, March 29, 2011
Grand Hyatt San Antonio
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 an In Stock

“NatureFlexx 211” Bio- Based Plasticizer

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

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

2-Hydroxyethyl Methacrylate Drums( In Stock! )

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

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

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

Maleic Anhydride Briquettes (In Stock and Available Now!)

Citric Acid (In Stock and Available Now!)

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

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

Products In Transit/ Available Soon

Succinic Acid 25 Kg. Bags

Antimony Trioxide (High Tint, Supersacks)

New/ Updated Technical Information (hyperlinked):

Adipic Acid

DiOctyl Adipate

ChemFlexx 206

Antimony Trioxide

Epoxidized Soybean Oil

Diisononyl Phthalate

Malic Acid

Tartaric Acid

New Products:

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

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

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

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

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

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

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

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

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

Critical Raw Materials Markets

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

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

Benzene
US March Benzene contract settled up $.04/ gallon to $4.39/ gallon (February $4.35/ gallon). This is record breaking territory. Spot prices are currently in the$4.05- $4.10/ gallon range. /

Natural Gas
A very recent uptick in pricing is likely associated with the new plateau for oil prices. Current spot NG pricing is $4.25/MMBtu. +

Oil
Crude oil prices have gone up after Mubarak’s resignation, turmoil in Libya and the tragedy in Japan. Current prices are in the $103/bbl range; futures are uncertain. +

Orthoxylene
FMarch contracts settled at $.59/lb, an increase of $.04 from February +

Propylene
March contracts resolved with a decrease, with pricing at $.71/lb for chemical Grade and $.725/lb. for polymer grade

Chemicals Markets

Adipic Acid:
There is continued pressure from Benzene and Ammonia as well as production issues. Availability continues to be limited especially in Europe due to good global demand and rationalization in 2010. Demand has been slow for the beginning of Q1 but this is has changed. Lower priced offers from China are no longer available for the moment. +

Ammonia:
March business for Tampa was fixed at US$550/ metric ton up $35/ met ton from February. Based on Black Sea pricing ($480- $485) higher prices are expected. +

Ammonium Nitrate:
AN prices moved up $25- $50/ ton due to the higher priced ammonia we’ve seen over the last few months. Seasonal demand has started to kick in which will pressure price. The rationalization in North America will lead to availability issues once as the demand season ramps up +

Antimony Trioxide:
Antimony prices are moving up again end users have what is considered cautious demand. Buyers are reporting record pricing in excess of US$6.00/ lb. and moving higher. Most industry experts feel US pricing will remain under pressure as we move into Q2 as Chinese production will be limited. Most consumers are looking at alternative chemistries. +

Dicyandiamide:
Pricing is stable for the moment but we are just now entering the higher demand season. /

Epoxidized Soybean Oil:
Both domestic and import pricing has moved up on higher raw material costs and competing demand for soybeans. Harvesting of soybeans is currently underway in South America. Price pressure on soy beans is due to record exports to China, increased demand for fuels and the situation in the Middle East. +

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

Glycol (Mono, Di and Tri):
MEG – A 6-7 cts increase was announced for March. Export demand is very good to Europe and Asia. U.S. demand is still good. Benchmarks are set at $.68- $.72/ lb.. Inventories are good. /+

An increase announcement of 4 cts/ lb. was made for March on good local demand and export opportunities. Benchmarks for March are $.70- $.79/ lb.. February postings range from US$.66/to $.75 lb. +

Triethylene Glycol pricing increased by $.02/ lb. for March. 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:
A US$.04/ lb. increase was announced for molten maleic anhydride due to increased butane costs. Butane has been pushing higher and remains the largest driver for the recent increases. Briquette pricing is also moving higher as higher butane values worldwide put pressure on producer cost. +

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

Melamine:
Melamine availability remains an issue. Urea prices have plateaued and this has mitigated any increase pressure. No new price announcements are noted. Melamine is in stock and immediately available. /

Methanol:
TThe Methanex Non-Discounted Reference Price for March has rolled over at US$1.28/ gallon. U.S. Spot pricing has been steady. Offers are currently in the $1.08- $1.14/ gallon range. Contract pricing for April will likely stay in the $1.28/ gallon range unless we have a major outage. /

Notes:

  • Spot and contract pricing is getting closer.
  • A natural gas curtailment in Trinidad and Tobago has been extended. This has not been a major event but has caused some producer buying.
  • The Methanex Medicine Hat Plant will be online in April. Commercial Volumes are expected at that time.
  • Overall demand (seasonal, derivatives, and other) has been very good and supply is sufficient.

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 and limited availability, especially Phenol. Demand has improved along with the economy. Pricing will likely continue to increase in Q2, 2011. +

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

Plasticizers and Plasticizer Alcohols:

Plasticizer and plasticizer alcohol pricing remains under pressure from underlying feedstock costs. (i.e. propylene, ethylene, orthoxylene, , phthalic anhydride). Increases are noted for April.

Linear alcohols supply has improved but remain tight. Isononyl Alcohol availability remains limited and in some regions there is a shortage. 2-EH alcohol availability is tight and due to planned and an unplanned maintnenace outage the situation may get worse. +

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

TCC Plasticizers available:

 

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)
ChemFlexx DOTP (DiOctyl Terephthalate)
Brominated DOP
ChemFlexx 9 11 Phthalate

Styrene monomer:
Styrene pricing moved slightly higher in March as benzene values improved upon the record price level. +

Urea:
Urea prices were advancing until a positive grain report and a cold wet start to Spring 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 $350- $360/ ton range for Granular and $390- $400/ ton range for Prilled. /

Notes:

  • Yara shut down their Libyan Urea Plant the first week of March due to fighting between the army and protestors neat Lifeco. No damage to the plant has been reported.
  • 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 has four main aims:

-to boost public appreciation of chemistry in meeting world needs
-to encourage interest in chemistry among young people
-to generate enthusiasm for the creative future of chemistry
-to celebrate the contributions of women to chemistry

The American Chemistry Council (ACC) reported a chemical production increase of 1.1% in January, following a revised gain of 1% in December.

Abbott Laboratories plans to cut workforce by 1,900 jobs in an effort designed to maintain current profit levels with annual savings of $200 million. The jobs are marketing and manufacturing positions and represent about 2% of Abbott’s workforce. The company stated that the health care reform law and resultant higher costs as a major reason for the action.

Air Products will not seek to appeal a court ruling that effectively ended its long battle to take over competitor Airgas.

On March 14 Berkshire Hathaway said that it will spend approximately $9 billion cash to acquire specialty chemical manufacturer Lubrizol Corp. Berkshire already owns more than 125 manufacturing and service businesses.

Eastman announced that it was discontinuing DEP and DBP production at the end of 2011.

Bayer, in combination with a German university and an energy company, recently achieved a process that converts emissions into polyurethane feedstock at a pilot plant in Leverkusen, Germany.

Dow Chemical and Davy Process Technology announced the licensing of a new oxo alcohol project in China.

DuPont will acquire food ingredient and enzyme producer Danisco for $5.8 billion as part of the company’s strategy to increase its presence in the food, nutrition, and clean energy industries. DuPont and Danisco already have a joint venture for the production of cellulosic ethanol and hope to start operating a commercial scale facility by 2013.

The European Commission announced that three phthalates will be on the “Authorization List.” They are DEHP (DOP), BBP, and DBP. The authorization process seeks to insure that substances are utilized and controlled within allowed applications. The deadline to gain authorization for these materials is February 2015. Other phthalates, such as DINP, DIDP, and DPHP are not now on the candidate for authorization list.

Two bills that would reauthorize the Chemical Facility Anti-Terrorism Standards (CFATS) program are under consideration in the House. The content is similar but one would place CFATS under the Department of Homeland Security, removing it from the authority of the House Energy and Commerce Committee. The ACC has endorsed the action.

BASF announced a feasibility study for the production of acrylic acid, butyl acrylate, and superabsorbent polymers in Brazil. The study is to be completed by the end of 2011.

Evonik has put its carbon black business on the market and estimates are that a successful bidder could pay as much as $1.2 billion/€900 million for it. Annual sales are approximately €1 billion.

SABIC reported 2010 fourth quarter net income of $1.55 billion, up 27% from a year earlier.

INEOS signed a joint venture agreement with Sinopec to build a 400,000MT/year phenol plant in Nanjing, China. The facility is expected to be on line by the end of 2013.

INEOS Bio and New Planet Energy started construction on their $130 million joint venture biorefinery in Vero Beach, FL. Start-up is planned for mid-2012, with expected production of 24,000MT/year of advanced biofuels from yard and household wastes.

Chevron intends to build a $1.4 billion base oils plant at its Pascagoula, MS refinery. The company said that this would make it the world’s largest producer of premium base oils, with a capacity of 25,000bbl/day.

Dow Chemical Company announced that it intends to “green” its own operations, in part by investing $100 million in internal projects that will reduce the company’s energy consumption and greenhouse gas (GHG) emissions.

Faced with a court order deadline and Congressional pressure, the EPA has overhauled its rules for toxic air pollution from industrial boilers. The final rules will cost approximately $1.8 billion less than those originally proposed. The boiler rules have been labeled as an early test of President Obama’s executive order to review the effects of new rules on businesses.

Momentum is increasing in the US to reverse the regulatory efforts regarding green house gases (GHGs). Congressional leaders are attacking federal rules on the regulation of GHGs on legal and practical grounds. The Energy Tax Prevention Act, which would prevent the EPA from regulating greenhouse gases, has been passed by the House Energy and Commerce Committee. Republican leaders promised a floor vote prior to the Easter recess. The bill would repeal the EPA’s finding that carbon dioxide and other heat trapping gases are a threat to human health and the environment. A number of legislators have spoken out regarding the EPA’s “backdoor regulations.”

Japan’s gross domestic product fell 1.1% in the fourth quarter of 2010, and was less than the forecast of 2% for the period.

Following the recent earthquake and subsequent tsunami, most Japanese automakers have idled production. It’s expected that international assembly plants will soon feel the impact of the shutdown on parts supplies.

China’s holdings of US bonds reached 1.16 trillion at the end of December, 2010, almost $270 billion more than previously estimated.

The Chinese economy grew at 10.3% last year, following a 9.2% increase in 2009. China’s annualized consumer price inflation rate in January was 4.9% while the CPI was 6.6% higher.

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. January’s trade surplus fell to $6.45 billion.

Citigroup’s chief economist has predicted that China should overtake the US to become largest economy in the world by 2020, and then be overtaken by India by 2050.

Russia’s EuroChem reported 2010 financial results, showing an increase in profits of 81% from year to year. EuroChem Group produces primarily nitrogen and phosphate fertilizers.

A forecast from South Africa’s Standard Bank, Africa’s largest, stated that investment from China into Africa is likely to go up to $50 billion by 2015, an increase of 70% since 2009.

Two Canadian energy firms plan to build a $5 billion oil sands upgrading and refining project in Alberta. When completed, the project will convert 50,000 bbl/day of bitumen into more than 30,000 bbl/day of ultra-low-sulfur diesel.

On March 15 the Obama administration proposed requiring power plants using coal or fuel oil to reduce emissions of mercury and other hazardous pollutants by 91%, in a move that could accelerate the US shift toward natural gas. A number of utility companies have expressed concern that they won’t have the time to comply. Some labor unions, such as the Utility Workers Union of America, have stated their opposition because it will cost jobs.

The US government awarded its first permit for deepwater drilling in the Gulf of Mexico since a moratorium was lifted after last year’s BP oil disaster. There are seven additional applications pending. The ban was lifted last October. Former President Bill Clinton has been quoted as saying that there are “ridiculous delays in permitting when our economy doesn’t need it.” He and former President G.W. Bush agree on the need to get offshore drilling workers back on the job, and the need for more domestic shale gas production.

US petrochemical producers have indicated that they want a clear federal energy policy to ensure the continued domestic shale gas supply before they make large investments in the steam crackers that utilize this feedstock. Gas production from shale formations may double by 2035 according to Energy Department projections. Greater capability to separate shale gas into ethane and other components will have a large impact on the ethylene market alone. Bayer, Chevron, and Eastman are moving towards building/reopening steam crackers.

Senator Bob Casey (D-PA) has proposed a bill that would bring back the EPA’s oversight of hydraulic fracturing operations, which was removed through an exemption in a 2005 energy bill. The bill would force drilling companies to provide the chemical formulations that they use in fracking fluids.

Tests of water in Pennsylvania downriver from sewage treatment plants that handle fracking wastewater raised no radioactivity concerns, according to the state Department of Environmental Protection. Pennsylvania is a major producer of shale gas. Of the 10.6 million barrels of wastewater from the Pennsylvania wells in the second half of 2010, at least 65% were recycled for use in drilling another gas well.

Royal Dutch Shell and Codexis are planning to launch a technology that will convert wheat straw and sugar cane bagasse into biofuels.

After announcing a loss of $329 million for the fiscal first quarter, the US Postal Service announced that it has received approval for rate increases to take place on April 17. Many of the changes center around consumer-based USPS offerings.

A potential closure of the Suez Canal caused by the unrest in Egypt could have a serious impact on container shipping. Container ships account for 55% of the net tonnage and 38% of the number of vessels transiting the canal.

Fourth quarter intermodal loadings were up 12.8% year to year. For all of 2010 they showed a 14.7% gain.

The DOT’s Bureau of Transportation Statistics announced that trade using surface transportation between the US and its NAFTA partners Canada and Mexico was up 24.3% in 2010 compared to 2009. Surface transportation as defined by the BTS is comprised mainly of freight movements by truck, rail and pipeline.

On March 3 it was announced that the US and Mexico have reached agreement on a cross-border trucking agreement and it was followed by strong negative reaction from the Teamsters union and independent trucking associations. The agreement, if approved by Congress, will end some of the $2.4 billion in tariffs on US goods imposed by the Mexican government after the previous project was killed in 2009. No specific details were released.

January orders for heavy-duty Class 8 commercial vehicles were up 320% from the previous year. This followed strong fourth quarter order activity. Class 8 includes tractor-trailers.

It has been reported that China is in negotiations over the construction of a 137-mile rail link across Colombia that represents a competitive route to the Panama Canal. The Chinese have been investing in minerals and mining in the area for the past few years.

The Economy

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

The National Association for Business Economics February Outlook upwardly revised its GDP growth predictions for 2011 to 3.3% from its earlier prediction of 2.6%.

The Bureau of Economic Analysis second estimate reported that Gross Domestic Product increased at an annual rate of 2.8% in the fourth quarter of 2010 compared to real GDP growth of 2.6% in the third quarter. The earlier advance estimate indicated 3.2%.

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

The Conference Board Consumer Confidence Index which had increased in January further increased in February. It stands at 70.4 (1985=100) up from 64.8 in January. 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 61.4% in February, a level not seen since May 2004. This was the nineteenth consecutive monthly expansion.

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

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

New orders for manufactured durable goods in January increased $5.3 billion or 2.7% to $200.5 billion. This increase followed three consecutive monthly decreases including a 0.4% December decrease.

US auto sales jumped 27% in February with GM showing a gain of 40%.

January unfilled orders for manufactured durable goods, up nine of the last ten months, increased $4.3 billion or 0.5% to $829.4 billion and followed a 0.2% December decrease.

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

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

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

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

Unemployment: February 8.9%, after 9.0% in January.

Trade Deficit: For December 2010 the goods and services deficit increased to $40.6 billion from an adjusted $38.3 billion in November. Imports increased $5.1 billion while exports increased $2.8 billion.

Crude Oil: The current Mideast political climate/instability has created an upward affect on the price of crude oil, now hovering at the $100/bbl range. Global oil demand for 2011 is estimated at an increase of 1.4% over 2010.

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

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

The US dollar trading at 80.9 Japanese yen. $1.41 = euro. The British pound sterling = $1.62.

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