June 2010

Benzoic Acid
Fluoroelastomers
Formic Acid
Magnesium Oxide and Other Magnesium Chemicals
Petroleum Liquid Feedstocks—Naphtha and Gas Oil
Polybutadiene Elastomers
Polyphenylene Ether Resins/Alloys
Surfactants, Household Detergents and Their Raw Materials
Chemical Week’s PriceWatch
CEH Reports and Product Reviews in Preparation
PEP Reports Scheduled for 2010
SCUP Reports Scheduled for 2010

CEH Marketing Research Report Abstract
BENZOIC ACID
By Sebastian N. Bizzari with Milen Blagoev and Takashi Kumamoto

Global capacity utilization in the production of benzoic acid increased slightly to 68% in 2009, largely as a result of stronger demand in most world regions between 2006 and 2009. During 2006–2009, world capacity for benzoic acid grew in step with world consumption.

In 2009, beverages and food accounted for nearly 43% of the world consumption of benzoic acid in the form of sodium and potassium benzoate, up from 41% in 2006. This was mainly a result of increased use in preservation as packaged food and beverages continue to gain in popularity and availability. World consumption of benzoic acid in sodium and potassium benzoate is forecast to grow at an average annual rate of about 3% during 2009–2014. Other major applications include benzoate plasticizers, alkyd resins and animal feed.

The following pie chart shows world consumption of benzoic acid:

Sodium and potassium benzoate accounted for most consumption in Asia (where China is the largest world producer and consumer), Europe, and South and Central America. Benzoate plasticizers accounted for most consumption in North America and Central and Eastern Europe.

World growth prospects for benzoic acid in food and beverages are significant. The main factors behind this growth are:

• Improving living standards, particularly in Asia.
• Food safety (preservation); longer shelf lives are anticipated as more food and ready-to-drink beverages are consumed days or weeks after production.
• Increased popularity of processed foods and ready-to-drink beverages.

Demand growth in Europe and North America is largely attributable to increased consumption in benzoate plasticizers; in both regions, production and demand for benzoate plasticizers are forecast to grow significantly. This is largely due to use as replacements for phthalate plasticizers, some of which are being increasingly regulated; these regulations are the main drivers behind increased demand for benzoate plasticizers. Asian demand for benzoic acid in benzoate plasticizers is also expected to grow quickly; however, consumption volumes are considerably smaller than in both Europe and North America. In Asia, sodium and potassium benzoate and benzoyl chloride are also fast-growing markets for benzoic acid. China has become the world’s main supplier of benzoyl chloride and sodium benzoate.

(For the complete marketing research report on BENZOIC ACID, visit this report’s home page or see p. 618.8000 A of the Chemical Economics Handbook.)

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CEH Marketing Research Report Abstract
FLUOROELASTOMERS
By Uwe Löchner and Yoshio Inoguchi

This marketing research report on fluoroelastomers discusses three major types of polymers: fluorocarbon elastomers; fluorosilicone elastomers, also referred to as fluorosilicone rubber; and perfluorocarbon elastomers.

The major global producers of fluorocarbon elastomers are DuPont, Dyneon, Solvay Solexis and Daikin. The largest Chinese producer of fluorocarbon elastomers is Zhonghao Chenguang Research Institute of the Chemical Industry. Dow Corning, Shin-Etsu (Shincor) and Momentive (formerly GE Silicones) are the major producers of fluorosilicone rubber.

The global market for fluoroelastomers in 2009 was largely determined by the global economic crisis, which particularly hit the automotive industry in the United States, Europe and Japan. Total demand for fluoroelastomers is forecast to grow at an average annual rate of around 5–6% through 2014. Major market drivers are the recovery from the economic crisis, further tightening of emission standards in many of the industrialized countries and strong expansion of automobile production in China.

The following pie chart shows world consumption of fluoroelastomers:

Fluorocarbon elastomers are fluorine-containing polymers noted for their exceptional resistance to heat, weathering and a wide variety of fluids and chemicals, as well as for their excellent sealing and mechanical properties. They are used in highly demanding applications where extreme temperature ranges and chemical attack are encountered. The chief limitations on the use of fluorocarbon elastomers are cost and the relatively different technology of compounding and curing, which may involve long postcure times. The cured products generally have fairly-low-temperature flexibility and low resilience. Solvent resistance is generally high; however, certain organic liquids can cause considerable swelling. In addition, fluorocarbon elastomers are very sensitive to moisture and require a strictly controlled environment to process, thereby making the processing of fluorocarbon elastomers difficult. Hence, it is costly to compound these polymers.

Fluorosilicone elastomer is also known as fluorovinylmethyl silicone rubber. Fluorosilicones have a combination of fluorocarbon and silicone characteristics. They resist solvents, fuel and oil similarly to fluorocarbons and have high- and low-temperature stability similar to silicones. Fluorosilicones are widely used in aerospace fuel systems and in automotive fuel emission controls.

Perfluoroelastomer is a high-performance elastomer with exceptional chemical resistance properties and high-temperature stability. It can be used for all applications where the properties of regular fluorocarbon elastomers are not sufficient. Perfluoroelastomers are usually copolymers made of tetrafluoroethylene and perfluoromethylvinyl ether. Perfluoroelastomers are mainly used in high-performance O-rings. The most important feature is the extreme reliability. Companies that are working in this area include DuPont, Solvay Solexis, Dyneon and Daikin.

(For the complete marketing research report on FLUOROELASTOMERS, visit this report’s home page or see p. 525.6000 A of the Chemical Economics Handbook.)

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CEH Marketing Research Report Abstract
FORMIC ACID
By Sebastian N. Bizzari and Milen Blagoev

Global capacity utilization in the production of formic acid decreased to 79% in 2009 from 83% in 2006, largely as a result of lower demand in many world regions coupled with additional capacity commissioned during 2006–2009. Between 2006 and 2009, world capacity for formic acid grew at an average annual rate of 2.5%, outpacing world consumption, which declined marginally during the same period. Most capacity growth occurred in China. The largest importing regions for formic acid during 2009 were Europe, Asia, Central and South America, and North America; China was the single largest exporter, followed by Western Europe and the Republic of Korea.

The following pie chart shows world consumption of formic acid:

Silage preservation/animal feed additives surpassed leather and tanning as the largest world application for formic acid during 2006–2009. Improving living standards globally have led to increased consumption of meat; as a result, demand for formic acid in silage preservation and animal feeds has increased. Europe is the largest market for this application since the European Union banned antibiotic growth promoters in early 2006. However, use of formic acid in silage preservation and animal feeds is also increasing in most other regions. Leather and tanning applications account for large markets in Central and South America, the Middle East, India, the Republic of Korea and Europe (Italy, Spain and France). In India and Southeast Asia, the textile and rubber markets are also large consumers of formic acid.

(For the complete marketing research report on FORMIC ACID, visit this report’s home page or see p. 659.2000 A of the Chemical Economics Handbook.)

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CEH Marketing Research Report Abstract
MAGNESIUM OXIDE AND OTHER MAGNESIUM CHEMICALS
By Stefan Schlag with Kazuteru Yokose and Yan Ping

This marketing research report covers primarily magnesium oxide (MgO or magnesia), with additional data on magnesium hydroxide (Mg[OH]₂), magnesium chloride (MgCl₂), magnesium sulfate (MgSO₄ or Epsom salts) and precipitated magnesium carbonate (MgCO₃) as available. Magnesium chemicals are used in many different applications, including refractories, agriculture (both as fertilizer and in feed), the production of magnesium metal, water treatment, deicing, pigments and paints. Magnesium oxide is the most commercially important of the magnesium chemicals.

The following graph provides a breakdown of the world consumption of magnesium chemicals:

Until mid-2008 the global magnesium oxide market had been tightening, because of continued global growth in the main consuming industry—refractories for steel and cement production—for dead-burned magnesia (DBM) and fused magnesia (FM). In the same period Chinese exports, which had dominated the market in previous years, started to decrease. In addition, environmental applications had gained ground for caustic-calcined magnesia (CCM). Accordingly, companies around the world announced plans for capacity expansions, or a return to production activities in dead-burned magnesia that had been given up years before, when inexpensive Chinese imports had made these activities unattractive. However, as the economic downturn started in late 2008, consumption started to decrease and projects were postponed or came under review.

China dominated the global market with its exports covering roughly one-fourth of the global market outside China. Exports fell substantially in 2009 as a consequence of reduced demand after the economic downturn, and because of the export taxes imposed on magnesium oxide products by the Chinese government.

The majority of the magnesium oxide produced worldwide is consumed as refractory magnesia. The primary use of refractory magnesia is in furnace linings in the iron and steel industry. This market suffered from the economic crisis, with decreases in global steel production volumes in 2008 and 2009. The second major market for refractory magnesia is in the production of cement; developments in this market in the economic downturn were similar to the steel market. However, global cement production grew in the 2007–2009 period with Asia, and to a lesser extent Africa and the Middle East, making up for the losses in the European, North American and CIS markets.

The largest end use for magnesium hydroxide is in environmental uses—flue gas desulfurization and wastewater treatment. Ease of handling, increasing environmental markets and the high price of caustic soda had spurred demand in these applications in previous years. In 2008 and 2009, the growth trend reversed with the decrease in industrial activity; however, it is expected to return during the forecast period 2009–2014 as the global economy recovers. The use of magnesium hydroxide in flame retardants is a fast-growing application. Magnesium hydroxide is the second-most-important mineral flame retardant after alumina trihydrate (ATH).

China dominates the global magnesium chloride market, producing and consuming about 60% of all magnesium chloride. The Middle East and Israel in particular are also very large exporters of magnesium chloride. Trade statistics show Europe also exports magnesium chloride; however, it seems likely that Europe’s trade is overstated. The largest merchant end uses for magnesium chloride in the Western world are for dust control and deicing, whereas Asia, and China in particular, consume by far the largest part of all magnesium chloride for the manufacture of Sorel cement.

China dominates the magnesium sulfate market with about two-thirds of global production and more than one-third of global consumption. Magnesium sulfate is used in many different applications. Its main use is as a fertilizer (mostly in the kieserite, or natural, form of magnesium sulfate). It is also used in the consumer market as Epsom salts or “bathing salts,” in industrial applications such as mining and fermentation, in the pulp and paper industry, and as a salting-out agent for acrylonitrile-butadiene-styrene (ABS) resins.

(For the complete marketing research report on MAGNESIUM OXIDE AND OTHER MAGNESIUM CHEMICALS, visit this report’s home page or see p. 747.2000 A of the Chemical Economics Handbook.)

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CEH Marketing Research Report Abstract
PETROLEUM LIQUID FEEDSTOCKS—NAPHTHA AND GAS OIL
By Sean Davis

Naphtha and gas oil have two basic uses—as the primary component in the production of gasoline and fuels and as a feedstock for the production of olefin and aromatic petrochemical products. This report covers the supply/demand situation for naphtha and gas oil in North America, Western Europe, the Middle East and Asia, with a special emphasis on the availability of these hydrocarbons for the production of chemicals.

The chemical uses of naphtha include use as a feedstock for steam cracking to produce petrochemicals (ethylene, propylene and pyrolysis gasoline) and input to catalytic reforming to produce reformate for gasoline blending stock and BTX (benzene, toluene and xylenes) extraction. Gas oil is used as a chemical feedstock for steam cracking, although it is generally preferred less than naphtha and natural gas liquids (NGLs, including liquefied petroleum gas [LPG]), as its use depends primarily on feedstock and ethylene coproduct pricing structures.

Despite steady global petrochemical demand over the past ten years, the recent economic recession resulted in declines in petroleum liquid feedstock consumption in developed regions. Between 2006 and 2009, North America and Western Europe experienced a 1–2% average annual drop in naphtha and gas oil consumption on weakened derivative demand and record crude oil pricing, forcing a shift to more economical feedstocks. In contrast, the Middle East and Asia enjoyed 3–5% average annual growth during the same period on continued economic growth and new derivatives plant construction, despite the downturn and corresponding start-up delays. Japan experienced slight growth during the same period, particularly in gas oil chemical consumption, benefiting from regional activity.

The following pie charts show world consumption of naphtha and gas oil.

The gasoline market plays different roles in each of the regions. Gasoline is the dominant end use for naphtha in the United States and Western Europe. In the United States, gasoline demand is the primary reason petroleum is processed. It also determines the use of other refinery fractions; for example, much of the straight-run gas oil fraction produced in U.S. refineries is upgraded into lighter components in downstream processes, such as catalytic cracking. In Western Europe and Japan, gasoline accounts for a smaller portion of the crude petroleum processed because refineries in these regions have traditionally emphasized the middle distillates—heating oils and diesel fuels. In the rest of Asia and in the Middle East, where there is less demand for gasoline, paraffinic naphtha is the dominant steam cracker feedstock, primarily for olefin production. However, as gasoline demand increases globally, demand for aromatic naphtha in the gasoline pool will increase.

Gas oil is predominantly used in the fuel markets. In the United States gas oil is consumed in refining processes to produce gasoline blending components. In Western Europe and Asia, little upgrading of gas oil is done (compared with the United States). Increased production from Fischer-Tropsch-based gas-to-liquids projects may replace some gas oil fuel demand in Western Europe and Japan.

During 2009–2014, demand for naphtha and gas oil for petrochemical use is projected to increase at around 2.8% per year for the regions covered in this report. Demand growth will be most evident in Asia and the Middle East, although new ethylene capacity there will be based largely on natural gas liquids. Recovery in North America and Western Europe will be slow as refiners adjust to rising crude oil prices and derivative producers adjust capacities relative to future demand growth.

(For the complete marketing research report on PETROLEUM LIQUID FEEDSTOCKS—NAPHTHA AND GAS OIL, visit this report’s home page or see p. 390.0000 A of the Chemical Economics Handbook.)

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CEH Marketing Research Report Abstract
POLYBUTADIENE ELASTOMERS
By Emanuel Ormonde

The world operating rate for polybutadiene elastomers (BR) in 2009 was estimated to have been 76%, down from 83% in 2007. The lower operating rate in 2009 was associated with a decrease in demand and thus, in production, with below-average capacity buildup because of the global economic recession during 2008–2009.

In 2009, tires and tire products were responsible for 70% of worldwide polybutadiene consumption. The dominance of tires in polybutadiene elastomer demand has declined slightly since 1980, when they accounted for 78%. Polybutadiene elastomers will continue to encounter variations in tire industry demand. Polybutadiene elastomer requirements fluctuate with industry and customer preferences for different types of tires, such as high-performance (lower BR content) or high-mileage (higher BR content). Tire wear and purchasing choices are directly influenced by driving habits and overall economic conditions. Retreading of truck tires tends to increase when prices of new tires increase. As a result, use of polybutadiene elastomers declines slightly.

The following pie chart shows world consumption of polybutadiene elastomers:

Production of polybutadiene elastomers is the second-largest end use for butadiene worldwide, accounting for 27% of total butadiene consumption in 2009. This is second only to styrene-butadiene rubber (SBR), which accounted for about 32% of butadiene consumption in the same year. Certain trends in different regions have influenced polybutadiene elastomer consumption. Russia and other Eastern European countries had a catastrophic drop-off in use during the 1990s because of the weakness of their economies and other problems associated with shifting from centrally planned governments. From 1990 to 1999, consumption of polybutadiene elastomers declined by about 10% per year. However, since 1999, polybutadiene elastomer consumption has experienced growth because of the more stable economies and governments. Annual growth of about 10% is expected in these countries during the forecast period of 2009–2014, especially with increased economic cooperation among European nations. In Asia, China is continually undergoing rapid economic development and technological improvements, causing polybutadiene elastomer production and consumption to increase in the forecast period. By 2014, polybutadiene elastomer consumption in China should reach one million metric tons. Polybutadiene elastomer operating rates in Asia are expected to be 85–95% in the next few years as demand continues to grow. World polybutadiene elastomer consumption is expected to grow at 4–5% per year to 2014.

(For the complete marketing research report on POLYBUTADIENE ELASTOMERS, visit this report’s home page or see p. 525.3000 A of the Chemical Economics Handbook.)

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CEH Marketing Research Report Abstract
POLYPHENYLENE ETHER RESINS/ALLOYS
By Eric Linak with Hiroaki Mori

Polyphenylene ether (PPE) resins are relatively nonpolar, amorphous resins with low moisture absorption, good strength and high heat-resistance properties. Practically all PPE is alloyed with high-impact polystyrene (HIPS) or nylon to produce economical blends that compete for use with polycarbonate (PC), polybutylene terephthalate (PBT), and other engineering thermoplastics. The average PPE content of alloys is about 45%.

Production of vehicles dropped significantly in the U.S. in 2009, which curtailed consumption of PPE in automotive applications. The switch to metal body panels and discontinuation of certain automotive lines also negatively impacted use in the U.S. Also, use of PPE alloys remains vulnerable to replacement with other plastics, especially less expensive ABS and PC/ABS alloys. In the United States and Western Europe, demand in the other major markets for PPE alloys, electrical/electronics and business machines, declined significantly in the 2000s as production migrated to other countries, mainly in Asia. There will be some growth in these regions as the economies recover from 2009.

Since 2006, Japanese consumption has decreased significantly as many industries producing electrical/electronic goods and business machines moved to other Asian countries, particularly China. Moreover, the worldwide economic recession beginning in 2007 negatively affected the automotive and electrical/electronics industries.

In China, m-PPE compounds are used in automotive, business machine and electrical/electronic applications. Over 50% of PPE alloy consumption in the Republic of Korea and Taiwan is for business machines and for trays used to transport integrated circuits. Consumption in Malaysia has grown as a result of the shifting of some manufacturing facilities from Singapore. Consumption in Thailand has grown recently because of a shift of end-user production sites from Japan, Taiwan and the Republic of Korea.

The following pie chart shows world consumption of PPE alloys:

The major global supplier of PPE resins and alloys is SABIC Innovative Plastics, which is the only producer in North America and Europe. SABIC’s product is a homopolymer of phenylene ether trademarked PPO®. Saudi Basic Industries Corporation (SABIC) also operates compounding operations in Japan, China, the Republic of Korea and Thailand, where it produces PPO alloys by blending imported PPO with HIPS or nylon.

In 2007–2008, the economic recession adversely affected demand for plastics end uses. Outside of Japan, there was some recovery of the Asian economy in 2009. World demand is expected to grow around 5% per year in the 2009–2014 time period. However, the growth rate for PPE alloys is expected to be lower than those for other engineering plastics, as the prices of polycarbonates and other resins are expected to fall as a result of greater supply.

For the complete marketing research report on POLYPHENYLENE ETHER RESINS/ALLOYS, visit this report’s home page or see p. 580.1420 A of the Chemical Economics Handbook.)

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CEH Marketing Research Report Abstract
SURFACTANTS, HOUSEHOLD DETERGENTS AND THEIR RAW MATERIALS
By Hossein Janshekar with Syed Q. A. Rizvi and Yoshio Inoguchi

Innovation in laundry detergents over the past few years has focused on performance, ecological benefits, fragrance and keeping up with washing machine technology. A key trend is the recent shift to smaller packs of detergent concentrate. Front loader and high-efficiency machines, which use significantly less water than the traditional top-loader machines, continue to penetrate the market. Some companies (e.g., Evonik) aim to increase the solids content of household care and personal care products, thus reducing freight, storage and recycling costs. Average wash temperatures have dropped from around 60°C to 30–40°C, and in some parts of the world to as low as 20°C. In order for detergents to work at lower wash temperatures, more complex surfactant formulations, often using a carefully balanced blend of components, are needed. The major issue for detergent manufacturers in recent years has been managing higher raw material costs, while minimizing any price increases to their customers in a highly competitive and depressed consumer market. Other important considerations have been providing greater convenience to consumers in the use of the detergent products and maintaining minimum performance standards while reducing levels of surfactants to minimize their own cost increases.

Laundry detergents, both powders and liquids, and hand dishwashing liquids account for about 95% of the consumption of surfactants in household detergents. The large detergent manufacturers produce a portion of their own surfactants from purchased raw materials, but frequently buy some from surfactant suppliers.

The following graph shows consumption of surfactants for household detergents by major region:

The household detergents market is mature in North America, Western Europe and Japan, and rapid growth is limited to developing countries including China and India. The growing popularity of liquid laundry detergents as opposed to powders has affected the consumption of surfactants, as the former generally use much higher surfactant levels per washload. Consumer habits also differ somewhat from region to region. In the United States, more frequent washing of clothes results in greater per capita consumption of surfactants and detergents than in either Western Europe or Japan. Consumers are increasingly buying detergents at mass merchandising outlets that reflect their preference for low-cost products. In order to gain shelf space at these outlets, detergent manufacturers have to reduce their prices and thus must reduce their costs by lowering surfactant levels.

Higher surfactant prices in 2005–2008, reflecting higher raw material costs (i.e., crude oil, natural gas, and natural oils) resulted in efforts to offset these cost increases by lowering surfactant levels. After a period of high prices in 2008, surfactant prices started to level off or in some cases slightly decline in the summer of 2008. In 2009, compared with many other chemicals, surfactant prices did not drop much, despite sharp declines in crude oil and plant oils, the ultimate sources of surfactants.

(For the complete marketing research report on SURFACTANTS, HOUSEHOLD DETERGENTS AND THEIR RAW MATERIALS, visit this report’s home page or seep. 583.8000 A of the Chemical Economics Handbook.)

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