Acetic Acid

*Millions of pounds per year of acetic acid. Most commercial production of virgin synthetic acetic acid is based on methanol carbonylation. The Pampa plant of Celanese produces acetic acid by liquid-phase oxidation of n-butane. Recovered acetic acid represents an additional major supply. The principal sources of recovered acid are the production of cellulose acetates and polyvinyl alcohol. Minor sources include the production of acetaminophen, aspirin, and peracetic acid.

Much of the production is for captive use in the production of vinyl acetate (VAM), acetic anhydride and acetate esters. Many VAM plants are integrated with acetic acid facilities.

In 2001, Celanese increased acetic acid capacity at Clear Lake, Tex., from 2.2 billion annual pounds to 2.6 billion pounds – a 20 percent increase. At the end of that same year, Celanese closed its 200 million pound acetic acid plant at Edmonton, Alberta, Canada. About the same time, Celanese also closed its vinyl acetate plant at Edmonton, which provided another 80 million pounds of recovered acetic acid capacity.

In September 2000, Celanese acquired Air Products’ polyvinyl alcohol (PVOH) business, which included PVOH plants at Pasadena, TX and Calvert City, KY. Both of these facilities also produce byproduct acetic acid. Since 1998, Celanese had been purchasing the total acetic acid output of these plants, which allowed Air Products to withdraw from the merchant acetic acid market.

BP Chemicals markets all of Sterling’s acetic acid.

DEMAND
2001: 5,526 million pounds; 2002: 5,629 million pounds; 2006: 6,095 million pounds, projected. Demand equals production plus imports (2001: 35 million pounds; 2002: 2 million pounds) less exports (2001: 671 million pounds; 2002: 725 million pounds).

GROWTH
Historical (1997 - 2002): 1.2 percent per year; future: 2.0 percent per year through 2006.

PRICE
Historical (1997 - 2002): High, $0.37 per pound, tech., tanks, dlvd., E.; low, $0.25, same basis. Current: $0.465 to $0.525, same basis.

USES
Vinyl acetate, 42 percent; acetic anhydride, including production of cellulose acetate, 34 percent; acetate esters, 10 percent; terephthalic acid, 8 percent; miscellaneous, including textiles and chloroacetic acid, 6 percent.

STRENGTH
Acetic acid is used as a solvent in the oxidation of p-xylene to terephthalic acid. Although only a small segment presently, it is growing at 4.5 percent per year because of demand for terephthalic acid in polyethylene terephthalate (PET) resins. The driver here is PET bottles for the carbonated drinks market. Vinyl acetate, the largest market for acetic acid is growing at roughly 3 percent per year.

WEAKNESS
Rising feedstock costs this winter have put pressure on acetic acid and its derivatives. The skyrocketing natural gas costs have prompted a flurry of price increase announcements as producers try to defend very slim margins. Industry watchers are considering that natural gas could average above $6 per Mbtu for 2003. For comparison, in 2002, natural gas averaged just slightly above $3 per Mbtu. The last time natural gas exhibited such a drastic spike was late 2000 and January 2001 when gas pricing hit $10 per Mbtu, but eventually backed off to more historical levels.

OUTLOOK
Acetic acid is a mature product, manufactured by a limited number of large producers.  During 2002, the acetic acid market tightened due to improved demand and a combination of planned and unplanned outages around the world. Supply is expected to remain tight during the first half of 2003 with more shutdowns planned. World demand growth is in the range of 3 to 4 percent per year, but only 2 percent in the U.S.

The fastest growing region is Asia, in particular China where demand is forecast to increase at 8 to 10 percent per year. As a result, most of the new capacity is targeted for Asia with a number of projects and expansions planned in China and Taiwan. In terms of acetic acid capacity, Asia has now overtaken North America to become the largest region. The Asian market still accounts for about 30 percent of the U.S. acetic acid exports, but this is down from a 50 percent take, in 1997.

Acetic acid is under severe pressure from the high cost of methanol and producers are seeking price increases. As the market is reasonably well balanced, the acid consumers have accepted these price increases. 

HISTORICAL DATA