Competitiveness of sugar cane ethanol derivatives November 2010
Brazilian Chemical Industry (ref. Melhores e Maiores Exame Magazine - data 2009) Turnover (USD million) Indexes Chemical and Petrochemical Sector (averages) 851,2 Total Debt (%) 54,7 Nº of Employees 941 Ebitda (USD million) 43,7 Taxes on Sales (USD million) 150,8 Exports Value (USD million) 108,8 Exports / Sales (%) 12,8 Margins / Sales (%) 3,1 Total Asset (USD million) (profitability on asset, %) 752,5 7,3
Acetic Acid Value Chain PVAc Methanol Low Pressure Carbonylation Ethylene VAM PVOH EVA P- Xylene Oxidation TPA PVB Acetaldehyde Liquid Phase Oxidation Acetic Acid Acetic Esters (EA,BA) Acetic Anhydride n- Butane Liquid Phase Oxidation Cellulose Acetate
Demand is primarily driven by growth in the applications of VAM and PTA VAM PVA Emulsions Poly vinyl alcohol EVA, PVB Driving Forces Demand is driven by construction, textile, paper, packaging. Globally, demand growth is greatest in Asia. PTA Polyester fibers: 60-65% PET bottles and plastics: 20-25% PET tape and film: 10-15% Strong demand for man-made fibers in emerging markets, specially Asia. PET penetration in bottle and packaging. Acetate Esters Solvents in industrial coatings Printing inks Process Solvent Growing awareness and concerns about VOC Replacement by acetate esters Water-based and solid coating systems. A. Anhydride/ C. Acetate Cigarette filter tow Health consciousness in cigarette smoking Textile fibers Acetate fibers replaced by other fibers Plastics Other uses of AA include CA propionate and butyrate, acetylsallicilic acid, acetominophen.
Bases of Competition Integration or producer/supplier relationships are key enablers along the acetic acid value chain Basic Chemicals (e.g. methanol/ethanol) Forward Commodities (e.g. HOAc/VAM) Differentiated Commodities (e.g.pvac) Price/Cost Low/stable manufacturing cost Low raw material cost, logistics Low cost raw material Production scale, logistics Production scale / integration Value pricing Leading-edge technology Technology generation Product Quality Commodity business No significant differentiating factor Performance in applications Supplier accreditation Supply Reliability Scale, multiple siting, logistics Scale, multiple siting, logistics Proximity to customer base Logistics, Just-in-time Responsiveness Non-differentiating factor Non-differentiating factor Sales Skillbase Market Focus Manufacturing Flexibility Limited Institutional selling Non differentiating factor Non-differentiating factor HOAc : limited VAM : market-oriented HOAc : non-differentiating factor VAM : value added focus Non-differentiating factor Technical Service nil Nil / limited High degree of responsiveness Shared development initiatives Application awareness Customer partnership Value added / application focus Multiple sites, plant configuration Application development Strong customer focus
Methanol carbonylation is the most widely used technology for acetic acid production accounting for 63% of installed capacity The technology trend in the acetic acid business has been displacement of ethylene-based production with lower methanol carbonylation route. The methanol carbonylation process proves to be up to 30% more cost-effective than competing processes. Carbonylation of methanol technology belongs to BP( British Petroleum), but is already in the public domain while catalyst production for synthesis and high process capitalistic factors, do not permit the utilization of this process to others companies. On the other hand, access to competitive natural gas natural with long term supplying guarantee, limits entrance of new plants.
Ester Solvents ( EA, BA) Major esters produced from acetic acid are ethyl acetate (EA) and butyl and isobutyl acetate (BA), which account for more than 75% of U.S. production. (Other esters include propyl, isopropyl, 2-ethylhexyl and methyl acetates.) Ethyl acetate applications, dominated by solvent uses in coatings, should be globally impacted by environmental pressures to limit VOC emissions. Major Applications ( % for EA ) Coatings: (55-60%) (lacquers, enamels, paints, varnishes) Inks: (20-25%) Plastic solvents: (10-15%) Process solvents: (2-5%) Driving Forces Lacquers and enamels demand is driven by growth in automobile coating, wooden furniture and appliance finishes, paper and fabric coatings. In many of its uses, EA is replacing MEK due to its environmental profile. However, EA is preferred in cellulose formulations; MEK in vinyl formulations. Secondary applications are driven by consumption in the pharmaceutical, photo and cup protection industries.
Challenges on Long Term Competitiveness Long term availability of competitive raw materials Process technology development Customers
Key Success Guides Being RENEWABLE is not a guarantee of success, It has to be GREEN and YELLOW. Being GREEN and YELLOW is not enough. It has to be PROFITABLE on a long term basis.