USES

There are different grades for fatty alcohol ethoxylates (AE) and they commonly find uses in personal care and industrial sectors.

The largest AE grades sold in the merchant market are those of lower moles, indicated as AE-1/2/3/5. These apply as intermediates for sodium lauryl ether sulphate (SLES, a subset of AES) production that goes into personal care products, mainly shampoos and body wash.

AE grades with a higher number of moles, such as AE-7 and AE-9, find their ways into the industrial and home care sectors. The most common applications include laundry detergents and cleaning agents.

SUPPLY/DEMAND

A key market driver is the available supply and price trend of mid-cut C12-14 fatty alcohols, which is most widely used for AE production. Over the past six months, C12-14 prices were on an uptrend and this has boosted downstream AE prices.

On the supply front, some producers hesitated to produce at full capacities owing to challenges in feedstock procurement. Spikes in C12-14 prices also deterred production, resulting in some suppliers swinging towards the production of alternative products such as nonylphenol ethoxylates and polyethylene glycols. Meanwhile, there are no additional plans heard for capacity expansion in the near term.

On the demand front, requirements are usually steady throughout the year owing to stable downstream consumption patterns. Detergents and cleaning agents are usually staples in the household and industrial sectors and hence, downstream demand is usually not seasonal. Nonetheless, it may be possible to see a slight increase in demand ahead of the summer season, with the warm weather strengthening downstream personal care demand.

PRICES

Overall, spot AE prices trended higher over the past six months with increasing fatty alcohol feedstock costs. Sellers raised offers to recover margins from rising production costs, while some buyers were receptive to the hikes owing to need-based buying. Nonetheless, customers were procuring cautiously based on what they require for downstream operations.

Prices in China rose to an average of $1,740/tonne CIF China in early February, gaining around 62% year on year. Meanwhile, prices in southeast Asia increased to an average of $1,750/tonne CIF Southeast Asia, up 54% versus a year ago.

TECHNOLOGY

Two main feedstocks go into AE production – namely mid-cut fatty alcohols (C12-14) and ethylene oxide (EO).

The number of EO moles can range from 1-30, with the latter contributing to specialty products. The overall AE market comprises about 80% commodity grades and 20% specialty grades. Commodity AEs consist of mainly 1-15 EO moles, but the most commonly traded grades are up to 9 moles.

OUTLOOK

The main drivers for the AE market will continue to be the upstream C12-14 and EO markets. Players have cited consistently high C12-14 costs as the key challenge to trade. Sellers will usually adjust their prices in line with upstream trends, while buyers are likely to continue procuring cautiously amid feedstock volatility.

Over the year, demand is likely to be in line with stable consumption patterns in the downstream sectors.

Some sellers have also highlighted the low cost of ethoxylation in China as a consistent challenge. This has given Chinese producers a competitive edge over imports from Southeast Asian producers.

Other exporters observed a rise in competitors in the domestic Chinese market, which is supplying to more end-users who used to purchase imports.

In the near term, steady C12-14 feedstock costs are likely to support downstream AE prices amid stable market conditions. Firmer upstream ethylene costs may also provide buoyance to EO feedstock prices.