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Delving into Derivatives: Oxo Alcohols, Acrylates and SAP
22 February 2021
In recent years and month, our petrochemical product experts
have developed and launched several complementary services that are
providing a more comprehensive in-depth analysis and insight of the
short-term market developments for different propylene derivatives.
This includes new Market Advisory Service offerings for two of the
smaller end use segments - acrylic acid, which accounted for about
4 percent of the global propylene consumption in 2020, and the oxo
alcohols (2-ethyl hexanol and butanols), which are estimated to
have consumed about 7 percent of the global propylene production in
2020 when combined.
Understanding the oxo chemicals market requires an integrated view
along the value chain from feedstocks (propylene) through
intermediates, derivatives and different end use sectors. IHS
Markit is offering expert analysis along the entire oxo chemicals
value chain with its new Global Oxo Alcohols and Plasticizers
Market Advisory Service to help accurately navigate the changing
market dynamics. This new service not only provides monthly
contract and spot pricing but also provides a strategic outlook
with price forecasting, cost analysis, trade data and detailed
operational analysis. Key products covered in the monthly market
report include n-butanol (NBO), iso-butanol (IBO), 2-ethylhexanol
(2-EH), dioctyl phthalate (DOP), dioctyl terephthalate (DOTP), and
diisononyl phthalate (DINP).
The acrylic acid industry and the complete acrylic acid value
chain, through acrylate esters and super absorbent polymers (SAP),
continue to provide a challenging business environment for all
participants. With the Global Acrylates and SAP Market Advisory
Service, IHS Markit brings the benefit of its tried and tested
methodology to this little understood business sector. This service
not only includes regional price data, margin analysis, production
capacities and economics, quarterly supply-demand balances, and
import-export flows but also provides information about end-use
demand and shipments, as well as plant and project news across the
value chain. Key products covered in the monthly market report
include glacial acrylic acid (GAA), butyl acrylate (BA), 2-ethyl
hexyl acrylate (2-EHA), super absorbent polymers (SAP), methyl
methacrylate (MMA), methyl acrylate (MA), and ethyl acrylate
(EH).
Regional Cash Costs Developments
As part of the Global Oxo Alcohols and Plasticizers and the
Global Acrylates and Super Absorbent Polymers services Market
Advisory Services, comprehensive cost analysis is carried out and
to give some insight into the various markets, a summary of the
recent developments is presented. The global nature of these
markets makes the developments between regions critical and both
services seek to give a comprehensive view on the interplay between
regions and the consequence for various markets.
The major cost element for acrylic acid and oxo alcohols
(n-butanol, iso-butanol, 2-ethyl hexanol) lies with the regional
differences in propylene, the main feedstock used in the production
of this material, and energy costs. As such, the cost advantage of
acrylic acid moves with the cost for propylene which often benefits
U.S.-based producers. While there may be substitute materials
available through the acrylates chain in the paints and coatings
industry, this is not the case for the oxo alcohols or GAA through
the SAP chain. Substitution in the coatings markets could
potentially come from other non-propylene-based solvents systems or
through the water-based coatings chain.
The attached chart shows a comparison of regional production
cash costs for glacial acrylic acid and oxo alcohols as of late
January 2021. We have established a cost profile that we believe to
be generic for each region which represents the sum of raw
materials, variable, and fixed costs excluding corporate overheads
and depreciation. Additional in-depth analysis of these factors is
also incorporated in our analysis.
Starting with glacial acrylic acid, the issue of feedstock
availability continued to plague North American operators in
January and drove prices ever higher. The surge in cash costs seen
in recent months put tremendous downward pressure on margins and
left producers with little recourse than to announce further price
increases in January, with another increase likely to be seen in
February. In Europe, the acrylic acid value chain has been marked
by the tightening of feedstocks and intermediates. Prices for
propylene are expected to increase further until the second quarter
of 2021 when the spring turnaround season is starting and imports
from the US will have vanished. In Asia, cash costs for acrylic
acid declined slightly in January on weaker propylene which moved
them closer to European levels. While North America still enjoyed a
lower cost position in January, this advantage will likely
disappear in spring and early summer of 2021 as the start-up of new
derivative capacities will shift the supply demand balance to a
tighter position.
Moving on to the oxo alcohol markets, cash costs in Northeast
surged at the end of 2020 as market sentiment firmed due to rising
prices for the feedstock propylene accompanied by a largely
unchanged supply and demand situation. At the beginning of the new
year, Asian propylene prices started their descent which has
brought down cash cost levels while Europe and North America saw
both prices and costs moving up. In 2020, European production cash
costs for both 2-ethyl hexanol and n-butanol have been more
competitive than usual on the global stage due to the low oil price
environment. This has protected the European market from imports.
On average, cash costs are still around $100/t below those in North
America and almost 200 $/t below Asian costs which could
potentially open the arbitrage between the regions again. However,
the prompt international trade remains to be dominated by
availability rather than price arbitrage.
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these competitive markets?
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The
Chemical Market Advisory Services covers more than 30 chemical
products, comprising of 5 main chemical and derivative families,
Aromatics and Fibers, Inorganics, Olefins and Derivatives, Plastics
and Polymers and Syngas.