USES

Ethyl acetate (etac) is an active solvent thatis mainly used in industrial lacquers andsurface coating resins. It is also used asan extraction solvent for pharmaceuticalsand food, and as a carrier solvent for herbicides.Miscellaneous uses include adhesivesand solvents.

SUPPLY/DEMAND

Supply originating in Europe was largelystable throughout 2016, with no major productiondisruptions. The year came to bedominated by levels of imports.

As demand and prices dropped in theearly part of the year, price levels becametoo low for Indian producers/exporters tobreak into profit. Demand remained subduedearly in the year and this followedinto summer.

The traditional summer lull kept pricessubdued as the market balanced in June. Asmall hike in July began a flurry of activitythat was coupled with the announcementof 100,000 tonne/year expansion, byINEOS, to its plant in Hull, UK.

As summer came to an end and playersreturned to fill their tanks, they found limitedvolumes available across Europe.

The limited level of imports from Indiahad led to a deficit over summer that onlybecame obvious once demand spiked.

Despite the elevated price levels, exportersremained cautious over moving materialinto Europe. High feedstock costs, imeport tariffs and increased shipping ratescombined to erode potential profit from theEuropean market. As a result, high demandlevels could not be met and prices continuedto climb.

Only once demand began to drop in Novemberand import levels slowly filled theexcess did prices begin to fall. The marketbalanced out towards the end of the year asdemand fell away.

TECHNOLOGY

The primary method of etac production isesterification of ethanol with acetic acid inthe presence of a catalyst, although some isproduced by catalytic condensation of acetaldehydewith alkoxides.

Several newer technologies have beencommercialised.

INEOS (formerly as BP) uses a process atits plant in Hull based on ethylene and aceticacid with a solid catalyst.

This process, Avada, is targeted at locationswhere competitive ethanol is notavailable.

UK-based Davy Process Technology’smethod, which only uses ethanol feedstock,is used by South Africa’s Sasol in a 50,000tonne/year plant in Secunda.

The ethanol is dehydrogenated to acetaldehyde,which further reacts to form etac.China National Petroleum has developed aone-step ethanol process where ethanol ispartially oxidized to acetic acid, and thenesterified with excess ethanol.

PRICES

Etac prices have gradually declined sinceat the end of 2015 and into 2016 beforereaching a nadir in the summer.

The dropping oil price began the negativetrend, and suppliers focusing onmarket share maintained the downwardpressure. This focus saw profits sacrificedto secure volumes.

Importers refused to sell so low and weredriven away from the European market.

The demand lull around summer sawprices reach a nadir in June, with pricesat their lowest level since after the 2008financial crash.

The lack of imports had an impact, as adeficit had built up in the market over summer.When customers found the marketshort of demand, prices leaped significantly.It took even more hikes for prices to beattractive to importers due to the myriadissues discussed above.

From October 2016, imports began toincrease in volume and the marketbalanced. Importers remained hesitant,however, remaining nervous that pricescould drop while their product was stillin transit.

Only towards the end of the year whendemand began to drop, in the lead upto Christmas holidays, did prices slipdownwards but levels remain above €900/tonne on average.

OUTLOOK

Etac market players generally agreethat prices are unlikely to return to the€700/tonne levels seen in 2016. Indianexporters remain restricted in the amountof product they are willing to risk sendingto Europe because of additional transportcosts. A supply glut, is therefore, unlikelyto develop.

Players expect demand to pick up againin January and some have predicted priceswill at least maintain at current levels ifnot increase back to the mid €900s/tonne.

It is unclear what effect the extra capacityat the INEOS Hull facility will have onthe European market.

There has been some trepidation bysources, fearing overreliance on oneproduction source. To avoid this possibility,some buyers may develop relationshipswith foreign producers to ensure continuoussupply, even if this involves payingslightly higher prices.