A MARKET UPDATE for SEPTEMBER 2010

Special Message:

TCC is ready for another busy Atlantic Hurricane Season. Historically, this season has been marked with interruptions in the availability of chemicals. With rough seas and winds lending to the scarcity of transportation, as well as the potential effect on the numerous refineries and chemical producers in the gulf area, our recommendation is to carry a safe level of inventory for the next month or so.

Other products remain very tight and we are working to keep our customers supplied with the products they need to keep their businesses running. TCC is constantly analyzing market trends and consulting experts in an effort to propel our customers to the front of the pack when it comes to anticipating price and availability.

TCC President Robb Roach will be attending the EPCA annual meeting October 2-6, 2010 in Budapest, Hungary. The EPCA has always been a great resource in the chemical industry and promotes the exchange of strategies in an increasingly global economy. If you’re attending Robb would be delighted to meet with you, please contact him directly at Robb@thechemco.com to schedule a meeting.

TCC News:

TCC welcomes the newest addition to our sales staff Vincent Sika!

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

Biobased Succinic Acid

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

Events:

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

Downloadable Brochure

click here to download/view

Products In Transit/ Available Soon

2-Hydroxyethyl-Methacrylate Drums( In Stock! )

2-Hydroxypropyl-Methacrylate Drums

Succinic Acid Small Bags

Malic Acid Small Bags

90% Phenol Drums (Available Now!)

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

Maleic Anhydride Briquettes (In Stock and Available Now!)

Citric Acid (In Stock and Available Now!)

Acetyl TriButyl Citrate (In Stock and Available Now!)

New/ Updated Technical Information (hyperlinked):

Antimony Trioxide

Citric Acid

Epoxidized Soybean Oil

Succinic Acid

Malic Acid

Fumaric Acid

Tartaric Acid

New Products:

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

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

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

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

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

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

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

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

Critical Raw Materials Markets

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

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

Benzene
US September Benzene contract settled up $.22/ gallon to $3.01/ gallon. Spot prices are currently in the$3.02-3.03/ gallon range +

Natural Gas
Prices decreased during August across most of the lower 48, with prices falling below $4/MMBtu for the first time since May 7. Current spot pricing ~ $3.80/MMBtu. September contract reported at ~$3.75/MMBtu. Inventories continue above historical levels.

Oil
Oil has been pretty stable over the past month. Current spot prices in the $75/bbl range; futures are similar. /

Note: Natural gas extraction from shale formations (fracking) is also expected to yield substantial oil production as well.

Check thechemco.com for up to the minute info.

Orthoxylene
September contracts settled at $.455/lb, an increase of $.02/lb. from August. +

Propylene
August contracts were up $0.02 from July at $.56 for chemical Grade and $.575/ lb. for polymer grade. September increased a further $.025/ lb. at $.585 for chemical grade and $.60 for polymer grade.+

Chemicals Markets

Adipic Acid:
A large gap has formed between contract and spot pricing in North America. Inflated August spot pricing has rolled into September. Supply seems to be loosening and demand is still strong. We expect market conditions to improve in the coming months. Chinese producers are poised to become major suppliers in the NA market. The Chinese quality is good, but some buyers are resistant to commit due to logistical concerns. +

Ammonia: September pricing is in the $430/MT del in Tampa range. This is around a $50/MT increase over August pricing. Some predict a decline in October pricing. +

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

Antimony Trioxide:
Antimony prices continue to soar with the volatility of Chinese production. US consumption seems to be slowing with end users hesitant to commit to such high prices in this unpredictable market. Many are currently looking at alternative chemistries. /+

Dicyandiamide:
Prices are moderately stable and demand remains relatively soft. /

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

Fumaric Acid:
FA Pricing is on the increase. Global operating issues are tightening supply and pushing prices higher.

Glycol (Mono, Di and Tri):
MEG – There is a 0.03/lb increase slated for September. The increase was justified by rising energy and transportation costs. +

DEG prices have been on the increase in North America. Spot pricing for Sept is in the $0.69-0.72/lb range. This is an increase of about 0.03/lb for September. +

Triethylene Glycol is extremely tight due in part to a domestic plant outage and another producer on allocation. The TEG market typically accelerates as the colder months approach, so things should be interesting for the remainder of the year. +

Isophthalic Acid:
Pricing has leveled but supply issues remain. Allocations continue but most users seem to be better supplied then they were in August +

Maleic Anhydride:
Prices remain largely unchanged for September to follow the stable market environment in August. RM Butane increased by about 2% in August. /

Malic Acid:
Malic Acid supply has recently become quite short and prices are high. A South African producer had some manufacturing problems on some of their lines, this brought capacity out of a balanced market ++

Melamine:
Melamine availability has become an issue. Pricing has been stable but under pressure from escalating Urea cost/

Methanol:
The Methanex Non-Discounted Reference Price for September increased by 0.03/gal to US$1.08/ gallon. Spot material has been tight and producers feel this increase is warranted. Spot barge offers are currently in the $.94- $.96/ gallon range and stable. + /

Notes:

  • Trinidad’s M5000 plant is scheduled to be taken off line for 45 days beginning at the end of Sept. This will take 225k tons out of the market for this period.
  • Unplanned outages and improved demand have been responsible for keeping global methanol prices stable.
  • Numerous planned, extended outages are expected for Q4 of this year.
  • The new Metor 2 plant in Venezuela is producing commercial quantities of on-spec methanol.
  • Demand in China continues to grow as does its own production. Imports are behind last year but will improve if global methanol values decline.
  • European demand is good while North America demand is seen as flat.

Nitric Acid:
Nitric Acid pricing is stable at the moment. Demand is flat. Pricing is expected to remain stable through Q3, 2010 but increased ammonia pricing will keep the stability under pressure. /

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

Phthalic Anhydride:
Orthoxylene contract pricing increased slightly in September. Demand has been improving. We expect a $.02/ lb. increase for October in line with orthoxylene. +

Plasticizers and Plasticizer Alcohols:
Plasticizer supply is still the main concern, but demand seems to be softening in certain markets (i.e. automotive, housing, etc.)

Nanya have upgrade work on their 2-EH unit scheduled to begin mid-September. This is scheduled to last for 7 weeks. Their INA unit will also be down for maintenance during the same time period. This will make the global DINP supply situation even worse.

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

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

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

TCC Plasticizers available:

 

Phthalate:

 

Styrene monomer:
Styrene pricing is steady, with the price of benzene remaining firm.

Urea:
Urea prices are moving up quickly and are currently in the US$335- $350/ ton range +

Notes:

  • Urea prices have increased by $120- $150 per ton in the last 2 months.
  • 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

Merger and acquisition deals of $50 million or more reported for the first half of the calendar year were up 45% compared to the same period in 2009. There were 45 agreements announced at a value of $28 billion.
American Chemistry Council (ACC) figures indicate that the US economic stimulus programs may have peaked in March and that economic recovery is stagnant. Analysts predict that the chemical industry will see weak demand during the third and fourth quarters.

The ACC reported that June chemical production in the US slipped 0.5% following a drop of 0.4% in May.

The first emission limits on mercury air pollution from cement factories were issued by the EPA in August. Starting in 2013, the regulations will cut mercury emissions and particulate matter by 92%. Cost to industries affected was estimated at $950 million/year.

On August 27, the EPA rejected a petition from environmental groups to ban the use of lead in bullets and shotgun shells, claiming it doesn’t have jurisdiction on a second amendment issue. The Center for Biological Diversity, the American Bird Conservancy and three other groups had asked for a ban on lead bullets, shot, and fishing sinkers. The agency is still considering what to do about sinkers.

With global warming legislation sidelined by Congress, advocates are bracing for battle over EPA rules concerning Green House Gas (GHG) emissions. Legislative efforts to counteract EPA climate rules have begun and more are expected, with EPA’s first climate rules to take effect in January next year.

Legislation recently introduced in the House of Representatives would revamp the Toxic Substances Control Act (TSCA) which has remained essentially unchanged since it became law in 1976. The bill would require companies to supply EPA with minimum data on each compound they produce or import. Manufacturing trade groups have expressed concerns that the law would impose unnecessary and time-consuming burdens on chemical producers.

Air Products and Chemicals has extended its offer to buy Airgas until October 29. Air Products said that it reached an agreement with the Federal Trade Commission on a consent decree for its $5.5 billion takeover. Airgas management has said that the offer is grossly undervalued.

Dow Chemical has become an official Worldwide Olympic Partner, and has been named the “Chemistry Company” of the Olympic Movement. Dow will work with the International Olympic Committee and National Olympic Committees through 2020.

Dow moved to a net profit of $659 million in the second quarter. The company reported a loss of $332 million in the same period of 2009. Sales rose 20% year on year to $13.6 billion.

It’s been reported that Ashland has put its distribution business up for sale. Ashland Distribution is the world’s third largest chemical distributor with 2009 sales of $2.9 billion.

German chemical distributor Brenntag has acquired Houghton Chemical’s industrial chemical distribution business for $7.1 million. Annual sales are estimated to be $30 million.

Total Chemical reported a net operating profit of $361 million in the second quarter on a sales increase of 29%.

PolyOne Corp. reported increased sales of $629 million and increased earnings of $45.7 million for the second quarter. This compares to $496 million and a loss of $1.9 million during the same period in 2009.

BASF second quarter net profits jumped to €1.18 billion from €343 million in the same period in 2009 on higher sales of chemicals, plastics and performance products.

LyondellBasell’s second quarter results showed earnings of $203 million compared with a loss of $353 million a year earlier. The company recently emerged from bankruptcy.

On August 12, BASF lifted force majeure on Plastomoll DNA, Palatinol N, Hexamoll DINCH and other grades.

The EU proposal that Germany end its subsidies of hard coal production in 2014, four years earlier than planned, could affect the strategies at chemical producers such as Evonik. Evonik’s primary ownership is a coal foundation responsible for the phase-out. The company’s second quarter net profit leapt to €240 million, up from €89 million in the year-ago period.

Lanxess is expanding its Mesamoll product range of phthalate-free plasticizers. It has been reported that production capacity will be increased by 40% in Krefeld-Uerdingen, Germany.

INEOS is planning to build a deep-sea ethylene terminal at its Zwijndrecht facility in the Netherlands. The terminal is expected to go on line in 2012.

India’s Reliance Industries Ltd. reported a 32% increase in first quarter profits to $1.03 billion compared to the same period in 2009. The company stated that this is its highest-ever quarterly net profit.

Bisphenol-A (BPA) continues to raise concerns. California Senator Feinstein is reported to be adamant that a food safety bill under negotiation in the Senate should restrict the use of BPA in food and beverage containers. ACC officials have noted that there is no readily available alternative to BPA for can and jar linings. The Senate apparently plans to take up the legislation in September.

The Maine Board of Environmental Protection was to have held a public hearing in August on a proposal to prohibit the sale of children’s products and reusable food and beverage containers that have BPA.

The Canadian government said on August 24 that it is close to designating BPA as toxic under Canadian law. Canada was the first country in the world to ban plastic bottles made from BPA. The ACC continues to maintain that the chemical is safe.

Archer Daniels Midland has presented a corn-based isosorbide as a possible substitute for BPA in various plastics uses. This makes ADM the first company in North America to renew such a product.

The House Ways and Means Committee has proposed a 20% cut in the federal tax credit for corn based ethanol. This would reduce the subsidy to 36 cents/gallon from its current 45 cents/gallon. But the proposed bill would maintain the current tariff of 54 cents/gallon on foreign ethanol.

US companies involved with the production of cellulosic ethanol have said that their prices are equal to corn-based product. Cellulosic ethanol is produced from biomass feedstock such as wood chips, switch grass, corn cobs, corn stalks and other agricultural wastes.

Flint Hills Resources expects to complete its acquisition of two Hawkeye Growth ethanol plants in September. No price for the Iowa facilities was disclosed.

CleanTech Biofuel recently was granted a patent for converting municipal solid waste (MSW) to cellulosic biomass feedstock. The patent covers process and apparatus which is said to clean and separate MSW into recyclables and feedstock.

The UK reported GDP increase of 1.1% for the second quarter, which was stronger than expected.

German GDP growth for the second quarter was reported as 2.2%, the highest in the EU. The German unemployment rate in August was stable at 7.6%. This was cited by the labour agency as indicative of clear rebound of the German economy.

Russia’s economy grew at a rate of 4% in the first half of the year, showing continued improvement. Industrial output was 9.6% higher compared with January – July 2009.

The Russian government has dropped its plans to impose duties on exports of potassium chloride, which had been announced at 5% commencing 1/1/2011. Major Russian producers export 80 – 90% of their products.

China July industrial production increased by 13.4% from a year earlier. Inflation in July was 3.3%.

The Chinese government has ordered 2,087 steel and cement mills as well as other factories with poor energy efficiency to close as it works to improve the environment. The facilities must close by late September.

Indian GDP was up 8.8% year to year in the second quarter, and was the fastest rate in more than two years. Industrial output rose more than 12%.

The US Postal Service is now offering shipping services at 1,083 Office Depot stores throughout the US. Services available are priority mail, flat rate boxes and envelopes, parcel post, etc.

Second quarter intermodal loadings were up 17.2% from the same period a year ago, but were down from the first quarter.

Latest estimates for import cargo volumes at US container ports show a 15% increase year to year, with a volume of 14.5 million containers.

The Economy

A US government deficit of $165.4 billion was reported for July, compared with $180.7 billion a year earlier. In the nine months of fiscal 2010 to date, the deficit is $1.17 trillion; the administration foresees as much as $1.47 billion for the fiscal year.

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

The Conference Board’s Leading Economic Index increased .1% in July following an adjusted 0.3% decrease in June and a 0.5% increase in May. A Conference Board spokesman said the indicators point to a slow expansion through the end of the year.

The Conference Board Consumer Confidence Index which had dropped in July increased in August. It stands at 53.5 (1985=100) up from 51.0 in July. Analysts cite continuing levels of consumer apprehension about the future.

The Institute for Supply Management’s Non-Manufacturing Index (NMI) registered at 54.3% in July, up from 53.8% in June. In the manufacturing sector the index was reported as 55.5%, down from 56.2 in June. Any reading that is 50 or better represents economic growth. July was the twelfth consecutive month above 50.

In July, retail and food services sales adjusted for seasonal variations increased 0.4% from June and were 5.5% above a year earlier. Total sales for the May – July 2010 period were up 5.9% from a year ago. Gasoline station sales were up 12.2% from July 2009.

Privately owned housing starts in July of 546.000 were 1.7% above the revised June estimate of 537,000 and 7.0% below the July 2009 rate of 587,000. Single family housing starts in July were at a rate of 432,000 or 4.2% below the revised June figure of 451,000.

New orders for manufactured durable goods in July increased $0.6 billion or 0.3% to $193.0 billion. This increase followed two consecutive monthly decreases. July unfilled orders for manufactured durable goods decreased $1.1 billion or 0.1% to $802.8 billion and followed a 0.1% June increase.

Consumer Price Index increased 0.3% in July. The index has increased 1.2% over the last 12 months, not including seasonal adjustments.

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

Inflation: Annual inflation rate was 1.2% for July based on higher energy costs. It is projected to be lower for the rest of the year rising to ~1.5% in 2011.

Unemployment: July 9.5% after a reported 9.5% in June with 9.4% seen at year end and lower in 2011. In July, Nevada reported an unemployment rate of 14.3% and the highest rate in the US.

Trade Deficit: For June 2010 the goods and services deficit increased to $49.9 billion from an adjusted $42.0 billion in May as imports continued to increase more than exports.

Crude Oil: Currently trading in the mid $70’s/bbl, with some decreased price forecasts of ~$65 at year end. Global oil demand for 2011 is forecast at an increase of 1.6% over 2010. US inventories continue high.

Natural Gas: Giant supplies of natural gas have been uncovered around the world and some experts predict reduced oil dependency in future. US inventories are above the five year average.

Industrial production increased 1.0 % in July after a 0.1% June decrease. Capacity utilization rate for total industry in July rose to 74.8 %, up 5.7% from a year earlier but 5.8 % below 1972 – 2009.

The Bureau of Economic Analysis reported a Gross Domestic Product gain of 1.6% in the second quarter of 2010. This compares to an increase of 3.7% in the first quarter.

The US dollar trading at 85.4 yen. $1.28 = euro. The British pound sterling = $1.55.

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