Uses

Acetic acid is used mostly to make vinyl acetate monomer (VAM), which accounts for one-third of consumption. The biggest use for VAM is in the production of base resins for water-based paints, adhesives, paper coatings, films, textile finishes and chewing gum.

The second largest derivative for acetic acid is purified terephthalic acid (PTA), which is the fastest growing derivative. PTA demand is driven by a boost in polyethylene terephthalate (PET) bottle resins and polyester fibre.

Supply/demand

Supplies were constrained in April for US acetic acid as access to material was limited following the fire at the Intercontinental Terminals Company (ITC) tank farm.

Since then, acetic acid market conditions have held steady, reflecting ample supplies. Market activity remains slow with movement in spot methanol a potential offset to supplies. Any impact from Q2 production outages in downstream VAM were not seen affecting the well-supplied acetic acid market.

Global production issues have put some upward pressure on US acetic acid in the second half of 2019 with outages and lower production rates seen in China and Europe.

But any impact from global outages may see a shift as new capacity comes online for acetyls, moving the focus to the US rather than China.

Prices

The fire at ITC and resulting constrained material led to a price increase for US acetic acid in late April.

Since then, prices were stable-to-lower as steady demand from Mexico and Latin America was offset by new lows in feedstock methanol pricing, both in the US and Europe.

US acetic acid pricing has followed feedstocks in 2019, as it did in the fourth quarter of last year. Historically, most of the price moves in US acetic acid in 2018 stemmed from oil and methanol values.

US acetic acid export prices hit a 10-year high in mid-2018 on outages and a force majeure, but after that values fell on the resolution of plant issues and the steady decline in oil prices.

While feedstock methanol does play a part in acetic acid pricing, there is a viewpoint that there is no longer a strong correlation between the two - that US acetic acid pricing relies solely on supply and demand fundamentals.

Technology

Of all the major industrial organic chemicals, acetic acid has the most diverse production technology and uses the most varied feedstocks.

Two principal methods involve producing acetic acid from methanol (derived from natural gas), as followed by Celanese and other producers, and from coal, which is Eastman Chemical’s method. When methanol is used as a feedstock, it is reacted with carbon monoxide.

Methanol carbonylation came about in 1913, when Germany-based BASF discovered that methanol could be carbonylated to acetic acid. BASF started its first such plant in 1960, using cobalt iodide as a catalyst. Process development continues in methanol carbonylation, which accounts for more than 65% of world capacity. Eastman begins its process with high-sulphur coal, and through gasification, produces a synthesis gas that is converted into a number of chemicals including methanol, methyl acetate, acetic acid and acetic anhydride.

Of the two methods, using methanol feedstock has become the dominant production technology.

Other processes involve the oxidation of acetaldehyde (used by Germany’s Wacker) and the liquid phase oxidation of n-butane or naphtha. Japan’s Chiyoda developed an acetic acid process, Acetica, which uses a heterogeneous supported catalyst system and a bubble column reactor.

It is reported that this catalyst system has high productivity and improved rhodium management, and produces an acetic acid yield of more than 99% from methanol.

Outlook

Acetic acid in the US is headed towards a record 2019, with new capacity possibly coming online, and export prices headed toward a multi-year low. Celanese’s plan to expand its acetic acid plant in Texas by 800,000 tonnes/year and its addition late last year of 150,000 tonnes/year of new VAM capacity mark the first new significant US acetyls capacity in decades.

Celanese did not specify when the expansion would happen, only that it would be by the end of 2020. No other acetyls producer has announced any new US capacity. In fact, other producers are pulling back from the business on supply issues.

Eastman ceded sales and marketing of most of its acetic acid to BP in 2018 after a force majeure.

Market activity for US acetic acid remains slow, and downstream demand for VAM typically tapers off each year following the summer seasonal uptick for use in paints and coatings. Feedstock methanol is one factor that can change pricing of US acetic acid, in the absence of supply or demand changes.