SURFACTANTS

An evolving but low-growth market benefits buyers Ample supplies keep prices low while environmental concerns push producers to invest in capital equipment and research and development By Cheryl Cullinan Lewis/ Senior Editor

urfactant buyers in the U.S. are enjoying a favorable market. S Increasing capacity for both raw

materials and surfactants is increas- ing competition. The ample supply levels along with the slow growth in demand is creating downward pres- sure on prices. Some producers fore-

cast this trend will continue

keep on top of the market. Environ- mental concerns and regulations and the “green” movement are pushing surfactant producers to invest in cap- ital equipment and research and development. As surfactants are reformulated to focus on more renewable, biodegradable and/or recyclable components, surfactant producers are working closely with customers in an effort to create envi- ronmentally friendly products that perform adequately.

Surfactants or surface-active agents can act as detergents, disper- sants, foaming agents, penetrants, spreaders and wetting agents. Major markets include household deter- gents and cleaners, industrial and institutional cleaners, personal care products and industrial applications.

conditions. Prices for ethylene and natural alcohols will generally favor buyers, while benzene tags will increase over the short term because of seasonal production trends.

U.S. bulk contracts for ethylene remained at 21c/lb, according to CPI Purchasing’s exclusive Transaction Price Survey. Buyers forecast ethyl- ene prices will remain at that level through the first half of this year.

U.S. bulk contracts for benzene will increase through the second quarter of 1994. Prices remained at an average of 98.5c/gal from July through October 1993. Now, ben- zene contracts are under upward pres- sure due to seasonal declines in pro- duction. Buyers forecast U.S. bulk contracts will increase to $1.07/gal by the second quarter.

Natural alcohol prices are forecast to incur downward pressure at least through next year. This pressure is coming from increases in natural alcohol capacity worldwide.

ing that is more difficult to predict is the effect of weather on certain crops used to manufacture specific raw materials, such as coconut oil,” says Lawrence B. MOSS, vice president of Witco’s Oleo/Surfactant Group- household, personal care, industrial and institutional.

”Natural alcohol can be substitut- ed for industrial alcohol,” says Doug Rumaner, international business manager for IC1 Surfactants. Fatty alcohol prices likely will decline, putting downward pressure on com- modity surfactant prices during the next year.

Producers agree pricing for many commodity surfactants will be very competitive during the next year or so. Surfactant prices vary widely based on the chemistry, raw materi- als and the processes used to manu- facture them, according to Moss. U.S. bulk contracts for linear alkyl- benzene sulfonate (LAS), a commod- ity surfactant, averaged 55c/lb in the third quarter of 1993. Buyers forecast prices will remain at that level through the first quarter of 1994.

“In general, there is downward pressure on pricing in the surfactants industry,” says Tom O’Brien, Vista Chemical Co.’s manager of sales for surfactants. The reason is the severe oversupply versus demand. This oversupply situation likely will con- tinue through 1995, especially for alcohols and linear alkylbenzene.

Other market factors could put

From July through October 1993, c

”One factor for raw material pric- ‘ I

Superior solubility and compatibility in systems containing high levels of actives and/or builders, such as concentrated liquid detergents.

Henkel is a world leader in surfactant tech- nology. With our plant in Cincinnati, Ohio, we operate the largest alkyl polyglycoside produc- tion capacity in the world. And our alkyl polyglycoside plant now under construction in Germany wil l further assure supply.

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upward pressure on prices for some surfactants. “Supply lines of key raw materials appear to be satisfactory; any increase in price will probably be tied to the additional costs involved in complying with environmental regulations and increases in the over- all cost of business,” says Moss.

The surfactants industry is being hard hit by capital expenditures to meet environmental regulations. “The environmental regulations in the U.S. are adding significant costs to domestic production,” says O’Brien. “This results in an unlevel playing field when worldwide com- petitors do not have to invest capital with zero return to meet stringent environmental regulations.”

The “natural“ movement During the past several years, the

use of oleochemical-based feedstocks has increased because of the trend to more “natural” products. “There’s been a lot of work by Greenpeace and other organizations to further efforts for consumers to become environ- mentally conscious,” says O’Brien.

Obviously, the goal of these efforts is good. Too often, however, the mes- sages portrayed to the consumer are incomplete or misleading, according to O’Brien. “Some companies are fur- thering their sales by misleading the consumer so we, as a company, sup- port environmental consciousness but at the same time we are pushing that good science be used to evaluate the total cradle-to-grave environmen- tal impact of a surfactant,” says O’Brien.

For example, some producers and others in the industry have claimed for the past several years that oleo- chemical- or natural-based alcohols and surfactants are inherently better for the environment. Some in the industry, such as Vista‘s O’Brien,

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believe there really is no significant difference in the performance, cost or environmental impact between oleo- chemical-based or petrochemical- based raw materials and surfactants. (Vista makes surfactants that are derived from both raw materials.) The real benefit for buyers is in hav- ing another source of raw materials.

But surfactant suppliers must respond to the demands of their cus- tomers. “With regard to environmen- tal concerns, we look at several alter- natives in the raw materials we use to make product,” says Witco’s Moss. “Many of the choices we make are based on our need to be responsive to customer requests for environmental friendliness, biodegradability, etc. in raw materials.” These requests, says Moss, are often driven by the desire to advertise products in this same fashion.

Some consumer products and even some surfactants themselves that can be called natural are priced at a premium. However, ”A small per- centage of the market will continue to buy natural and get charged big prices,” says Vista’s O’Brien. “Through education, people will use good science/cost/performance crite- ria. All of Vista’s current products- surfactant intermediates and surfac- tants-are biodegradable. ”

In addition to the trend toward nat- ural products, some surfactant buyers are sourcing raw materials to produce products that are “cruelty free”-not tested on animals. “These issues are tending to override performance in some niche markets,” says Herb Nor- man, chairman, Norman Fox & Co.

Surfactant capacity About 200 companies in the U.S.

offer surfactants, according to the Freedonia Group, a market research firm in Cleveland, Ohio. The busi-

Benzene (Average US. bulk contract)

1.10 .

Q1 Q2 Q3 Q4F Q1F Q2F Q3F 1993 1994 1

F=forecast Source: CPI Purchasing

ness consists of three very different types of producers. Large detergent companies, such as Colgate-Palmo- live, Dial, Lever Brothers, and Procter & Gamble dominate captive produc- tion, which accounts for about 40% of the business. Most of these com- panies also offer some surfactants to the merchant market; they also pur- chase some surfactants.

The second type of producers are large chemical and petrochemical companies, including Dow Chemi- cal, Du Pont, Henkel, Monsanto, Shell, Union Carbide and Texaco. These companies generally focus on commodity surfactants although some do produce specialty surfac- tants as well.

Smaller, specialized companies are the third type of surfactant pro- ducer. These include companies such as Witco and Stepan.

Surfactant producers can manufac- ture a wide range of products from commodity to specialty with capaci- ty levels varying widely depending on the type of surfactants offered. Procedures from batch processing to dedicated plant processing are used.

Several producers recently expand- ed their facilities. Cytec Industries, a business unit of American Cyanamid Co., just completed an expansion of its USP-grade sulfosuccinate surfac- tant capacity at its Linden, N.J., plant. The project increased produc- tion levels by 50%.

Vista Chemical has boosted capac- ity for its narrow range or peaked Novel I1 alcohol ethoxylates at its Lake Charles, La., chemical complex. Vista now is going fully commercial with its new production and will con- tinue to expand the plant’s capability on an ongoing basis.

Henltel completed construction of its first large-scale, 50-million lb/yr alkyl polyglycoside production plant

SURFACTANTS

Surfactants: a primer A surfactant or surface-active

agent is used to alter the surface properties of liquids or liquid-solid materials. Chemically, a surfactant molecule consists of two major parts: A hydrophobic section, usu- ally a hydrocarbon chain, which is oil soluble and attracts oillgrease type materials. The second part, the hydrophilic portion of the mol- ecule, includes the chemical func- tional group and is water soluble. There are four categories of surface-

active agents, relating to their elec- trolytic behavior: Anionics: Anionic surfactants have a negative charge when they disso- ciate. Major anionic surfactants include linear alkylbenzene sul- fonate (LAS), sulfonates, carboxylic acid salts, phosphates and sulfates. Cationics: Cationic surfactants have a positive charge electrolyti- cally. Quaternary ammonium salts and amine oxides are the major cationic surface-active agents.

Nonionics: Nonionic surfactants have no electrical charge on disso- ciation. Major surfactants include ethylene oxide condensates, car- boxylic esters, nonylphenol ethoxy- late, alkanolamides, amine oxides and other specialty fatty acid esters. Amphoterics: Surfactants in the amphoterics category can act as either cationic or anionic surface- active agents. All amphoterics are specialties and include imidazo- lines and betaines.

in Cincinnati, Ohio, in the Spring of 1992. Now, the company is building a similar plant in Germany.

Other companies are adding to their capacity levels via acquisitions. Witco purchased Schering, including Sherex Co. in the U.S., in 1992. The purchase included two domestic sur- factant production facilities. “With the acquisition, we now have added a host of products and additional labo- ratories which are designed and able to meet the needs for milder and environmentally friendly surfactants demanded for the household, person- al care, and industrial and institu- tional cleaning markets,” says Witco’s Moss.

Slow growth in demand Demand for surfactants in the U.S.

is growing at the rate of the gross domestic product (GDP), according to producers. Because of the wide variety of end-uses, some products are enjoying growth as high as 10% while others are down to

opportunity for new and performing surfactants because of the product reformulation that is going on,” says Paul Allen, vice president of Henkel’s detergent surfactants business. “Many consumer product companies are coming out with concentrated products and products with improved cost performance as well as products offering better dermatological properties and improved biodegradability. ’ I

In 1992, Henkel introduced a new family of surfactants called Gluco- pon alkyl polyglycoside surfactants. The raw materials for these products are oleochemical-based fatty alcohols and dextrose. Benefits include improved performance in detergency and solubility, as well as biodegrad- ability and mildness. This surfactant can be used in any surfactant appli- cation, including concentrates. Pri- mary markets are household, indus- trial and institutional cleaning.

Recently, Henkel introduced its

expanded line of Glucopon surfac- tant concentrates for applications in household, industrial and institu- tional cleaning products. These new products offer users the same perfor- mance as Glucopon surfactants, along with added ease in product for- mulation and manufacturing.

In 1993, Henkel began offering Plantaren PS surfactants, which are easy-to-use, optimized, high-active composites of the company’s Plantaren surfactants and conven- tional surfactants. In personal care applications these surfactants pro- vide better performance for the cost, simplify product formulation and manufacturing, and are dilutable without the use of hydrotopes or alcohol.

Vista Chemical recently commer- cialized its peaked or narrow range Novel I1 alcohol ethoxylate produc- tion. These surfactants are marketed into the detergent, industrial and institutional cleaning, personal care,

agricultural and textile 1%, but overall growth is estimated at 2-3%/yr.

The growing concern over the environment is cre- ating opportunities for sur- factants. The environmen- tal issue is creating a demand for different kinds of processes and surfac- tants, says ICI’s Rumaner.

“Regulatory and environ- mental issues are the dri- ving forces in this indus- try,” says Janet Kosick, Lonza‘s product manager for specialty surfactants. Most surfactant producers are offering new products or gearing older products to meet the growing demands of consumers.

“We think there is an

U.S. surfactant demand (billion Ib/yr)

” applications. “In each of these cases, there’s a differ- ent attribute that offers ben- efits over the conventional counterpart,” says Vista’s O’Brien. In the personal care application, the resulting ether sulfate is milder because there is less free alcohol present than in an ether sulfate made from the conventional ethoxylate.

Home-Safe Specialty Chemicals, a division of Western Bed Products, Bronx, N.Y., is developing high-purity, food-grade products for industrial/com- mercial grade use as deter- gents and surfactants, among other applications. The company offers citrus

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terpenes in USDA, USP, and indus- trial grades in different formulas. Other terpenes are available based on legumes and deciduous seed oils.

The toncentrated push In the household and industrial

and institutional cleaning, the trend to concentrated products has been growing, pushed by growing envi- ronmental awareness. (See preceding article.) “Concentrated products allow for less packaging to be used as well as improved cost when used,” says Heidi Schonauer, Olin’s mar- keting manager for surfactants.

Several years ago, the concentrat- ed heavy-duty detergent powders took over a large share of the laundry powder business. Now, concentrated laundry liquids are rapidly making inroads. Other household cleaning products also are beginning to be offered as concentrates, and the trend is moving into the industrial and institutional marketplace.

The surfactants used in concen- trated products are, in general, tradi- tional surfactants. Buyers tend to look for multifuntionality of surfac- tants as well as solubility; both are

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important characteristics for con- centrated products. Novel I1 ethoxy- lates and Glucopon surfactants are among the new products discussed in this article that can be used in concentrated formulations.

“Customers are looking for surfac- tants that provide value added per- formance at cost effective use lev-

A n e w trend is the push for clear

products.

els,” says Schonauer. Multi- functional surfactants such as the C- Series of products from olin offer sequestering characteristics as well as surfactancy.

A new trend that is affecting the surfactants industry is the push for clear products. ”The public perceives clear as natural,’’ says ICI’s Ruman- er. The push for clear products can affect the choice of surfactants.

The Industrial Business of IC1 Sur- factants has introduced Citrosperse

microemulsifier, a new single blend microemulsifier designed to address the formulating challenges of devel- oping a clear microemulsion of d- Limonene. The emulsion is used in industrial cleaning, coatings and adhesives, food flavors and fra- grances. It can replace chlorinated solvents and other less environmen- tally acceptable solvents.

PPG Industries has added Jor- dapon ACI-30 ammonium cocoyl isethionate to its Jordapon line. ACI- 30 has many of the same properties as sodium cocoyl isethionate (Jor- dapon CI), which is used in facial bars and cleansers. These properties include mildness, high foaming, lubricious lather, and soft skin after feel. The new product also is highly water soluble, allowing clear liquid products to be readily formulated.

Surfactant producers are respond- ing quiclzly to changes demanded by the marketplace. They are continu- ing to work closely with customers to meet their needs despite the slow growth in demand, low profit mar- gins from depressed pricing, and high capital costs associated with environmental regulations.

SINOCHEM After 40 years development. SINOCHEM has been with high prestige in the world.

Besides its traditional commodities such as crude oil, petroleum products, fertilizer, rubber, plastics and other chemicals. SINOCHEM has begun to handle cereals, steel: autos, textile, garments, light industrial products, machinery and equipment, beyond trading, SINOCHEM has expanded into acting as agents for the processing of supplies materials and negotiation of compensation trades, joint ventures, barter trades and cooperative management deels, technical exchange, transportation financing, science and technology, real estate, insurance, supermarket, advertising and exhibition, information and consulting services, tourism and other areas.

From 1988, SINOCHEM operates cargo ships with a total carrying capacity of one million tons. Approximately one million cubic meters of oil storage facilities in coastal area are either completed or under construction. SINOCHEM invested in a 230,000 ton joint venture dock at Zhoushan. In 1991, SINOCHEM ranked 27th in Fortune magazine’s Global Service 500.

Adding to the three regional groups in Hong Kong, the United States, Australia and New Zealand, as well as the 70-odd overseas organizations, new organizations were set up in South Korea, Hungary, Russia and South Africa, thus creating better conditions for further development of SINOCHEM’s international operations.

SINOCHEM hope to develop friendship and cooperation with all friends both at home and abroad. SINOCHEM will make great efforts to promote the development of petroleum and chemicals trade.

For more information, please contact Mr. Wang Yuhai.

China National Chemicals Import & Export Corp. Add: Erligou, Xijiao, Beijing, China. Tel: 86-1-8426702 Fax: 86-1-8423221 Telex: 222895 CHEMI CN