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CHEMICAL INDUSTRIES 

NEWSLETTER 

A monthly compilation of SRIC report abstracts and news 

January 2006 

CEH Marketing Research Report Abstract 

ETHYL ALCOHOL 

By 

Michael P. Malveda 

with 

Hossein Janshekar and Yoshio Inoguchi 

Brazil and the United States continue to be the largest ethyl alcohol producers and consumers in the world. In 

both Brazil and the United States, fermentation ethyl alcohol is used primarily in motor fuels as a direct blend 

with gasoline, an oxygenate and gasoline volume extender. In Western Europe, recent significant fermentation 

ethyl alcohol consumption increases have occurred in the motor fuels segment, both as a direct blend and for 

ETBE production. Synthetic ethyl alcohol production has stagnated and traditional synthetic ethyl alcohol usage 

for solvent applications and chemical raw materials has declined. In Japan, the industrial market is supplied from 

both synthetic and fermentation sources; no significant amount of ethyl alcohol is used in motor fuels. The 

following graph shows consumption of ethyl alcohol by end use in the United States, Western Europe and Japan: 

100 

Percent of Regional Total 

Consumption of Ethyl Alcohol by End Use—2004 

80 

60 

Fuels 

Solvent Applications 

Chemical Raw Materials 

Human Consumption 

Other 

40 

20 

0 

United States Western Europe Japan 

Ethanol use in fuels is gaining increasing support worldwide. In the United States, ethanol production and 

consumption for fuel has increased and the United States is a global leader, along with Brazil. European fuel use 

has also grown at high levels and will continue as a result of EU mandates. In 2001, the Chinese government 

began using ethanol in automobile fuels for environmental reasons and this use is expected to increase faster than 

SRI Consulting ● Menlo Park, California 94025

January 2006 

Chemical Industries Newsletter 

any other ethanol use. Likewise, in India, the government decided to allow the sale of E-5 (5% ethyl alcohol blend 

in gasoline) in 2002. As a result, more ethanol plants are being constructed. 

Technological progress continues to increase production efficiency from feedstocks such as corn and sugar crops. 

Cost-effectiveness would aid producers and consumers alike. Continued research and development in cellulose 

production of ethanol would benefit the ethanol industry in the future. 

Legislation is a key factor worldwide for increasing and promoting ethanol fuel use. The new Energy Bill in the 

United States, the EU Biofuels Directive, the continued Caribbean Basin Initiative (CBI) tariff waivers, the 

privatization of ethanol industries, and promotion of and research into ethanol fuel use by some Asian 

governments all contribute to legislation and support for ethanol use. Ethanol’s use in solvent applications will 

continue to be affected by volatile organic compound (VOC) laws and regulations. This will limit ethanol use in 

this market segment. 

(For the complete marketing research report on ETHYL ALCOHOL, visit this report’s home page or see p. 644.5000 A of the Chemical 

Economics Handbook.) 


ETHYLENE-PROPYLENE ELASTOMERS 

By 

R. J. Chang 

with 

Masahiro Yoneyama 

Ethylene-propylene elastomers (EP elastomers) are the third-largest synthetic rubber consumed worldwide, after 

styrene-butadiene rubber and polybutadiene rubber. EP elastomers are characterized by their outstanding 

resistance to oxygen, ozone and heat, making them particularly useful in many applications such as automotive, 

roofing and power cables. Two basic types of EP elastomer are produced: ethylene-propylene copolymer (EPM), 

which requires vulcanization by means of free radical generators, and ethylene-propylene terpolymer (EPDM), 

made by copolymerizing ethylene and propylene with a small amount of a nonconjugated diolefin that is 

vulcanized in the conventional manner with sulfur or with peroxides. EPDM is estimated to account for 80–85% 

of total world production of ethylene-propylene elastomers. The following pie chart shows world consumption of 

EP elastomers in 2004: 

World Consumption of EP Elastomers—2004 

Other Asia 

India 

China 

Rest of 

the World 

North 

America 

Japan 

Eastern Europe 

Latin 

America 

Western 

Europe 

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Chemical Industries Newsletter January 2006 

Supply was very tight in 2004 and some end users were put on allocation as consumption outstripped production 

slightly. It is believed that off-grade materials and changes in stocks accounted for the production deficit. Supply 

is expected to remain tight at least for the next two years because 2005 capacity includes 140 thousand metric tons 

of metallocene-based plants built by Dow and ExxonMobil, which are primarily for making ethylene/alpha-olefin 

copolymers. Although they can act as swing capacity for making metallocene-based EPDM, it is difficult or 

undesirable in practice. Thus, the effective operating rate for making EPDM is estimated at 91% in 2004–2005. 

Mitsui has announced plans to build a new metallocene-based plant with 75 thousand metric tons of capacity 

totally dedicated to production of EPDM, but the plant will not come on stream until 2007. 

(For the complete marketing research report on ETHYLENE-PROPYLENE ELASTOMERS, visit this report’s home page or see p. 525.2600 A 

of the Chemical Economics Handbook.) 


HYDROGEN PEROXIDE 

By 

Stefan Schlag 

with 

Kazuteru Yokose 

Apparent consumption of hydrogen peroxide on a global basis is believed to have been almost 3 million metric 

tons in 2004. Consumption has increased substantially over the past few years, driven by global growth in the 

pulp and paper industry, in particular in China, Southeast Asia and South America. In South America, mining is 

a growing demand sector. In North America, consumption is projected to grow by about 1.8% and growth in 

Japan is forecast to be about 4.5%. Consumption will increase in Western Europe at an average annual rate of 

4.8% over 2004–2009, with the largest part of the additional consumption accounted for by the production of 

propylene oxide using the HPPO process. 

The following graph shows consumption of hydrogen peroxide by end use in North America, Western Europe 

and Japan: 

Consumption of Hydrogen Peroxide by End Use—2004 

100 

80 

60 

Percent of Regional Total 

Pulp and Paper 

Chemicals and Laundry Products 

Textiles 

Environmental Applications 

Mining 

Other 

40 

20 

0 

North America Western Europe Japan 

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January 2006 


The primary factor driving past and projected growth in hydrogen peroxide consumption is concern for the 

environment. Hydrogen peroxide, which decomposes into water and oxygen, is replacing oxidizing compounds 

such as chlorine in pulp bleaching and other applications. Hydrogen peroxide is also used as-is or in an activated 

form to treat inorganic and organic pollutants in industrial and municipal applications. While the hydrogen 

peroxide market has traditionally been diversified across a broad spectrum of uses, rapid growth in consumption 

in pulp bleaching has forced the business to be driven primarily by demand in this one application. 

Over the 2004–2009 period, hydrogen peroxide consumption will continue to be driven by demand in pulp 

bleaching and the new application of propylene oxide production, which is scheduled to start in 2008 and will 

consume an estimated 150 thousand metric tons by 2009. Demand in China, South America, Eastern Europe and 

Other Asia is projected to grow faster than in the developed regions. 

(For the complete marketing research report on HYDROGEN PEROXIDE, visit this report’s home page or see p. 741.5000 A of the Chemical 



NATURAL FATTY ACIDS 

By 

Michael P. Malveda 

with 

Milen Blagoev, Ralf Gubler and Kazuo Yagi 

Many new fatty acid plants have been built in Southeast Asia, which is the major source of coconut, palm and 

palm kernel oils used as raw materials for C 8 -C 14 fatty acids. Altogether, producers of fatty acids from oil 

splitting in these countries (excluding China and India) have a total capacity of almost 2 million metric tons. 

Significant amounts of this increasing production are being exported to other world areas, including North 

America, Western Europe and Japan, all three of which are now net importers of fatty acids derived from fat and 

oil splitting. 

Worldwide production of fatty acids from splitting is dominated by two large producers—the Uniqema Group 

(formerly known as the Unichema Group and now owned by the Imperial Chemical Industries PLC) and the 

Cognis Group. The Uniqema Group operates four plants in different European countries, one plant in the United 

States and a joint venture in Malaysia, all with a total capacity of over 800 thousand metric tons. The Cognis 

Group operates one plant in the United States, one in Canada, one in Europe and a joint venture in Malaysia, with 

a total annual capacity of over 400 thousand metric tons. These capacity estimates exclude any fatty acid capacity 

that is part of the continuous soapmaking process and also exclude any capacity in Latin America or Eastern 

Europe. Indonesian producers Acidchem, Palm Oleo and Natural Oleochemicals also account for a significant 

amount of fatty acid splitting capacity. Another large producer is the Akzo Nobel Chemical Group, which 

operates plants in North America, Europe and Asia. In North America, Twin Rivers Technologies is a major 

producer. 

By far the largest worldwide tall oil fatty acid (TOFA) producer is the International Paper Company, which owns 

Arizona Chemical in the United States as well as TOFA producers in Finland, Sweden and the United Kingdom. 

It operates five plants. 

Global fatty acids supply continues to exceed fatty acids demand. In 2004, capacity utilization rates increased 

slightly in North America to about 85–90%. Industry sources believe that European capacity utilization is less 

(71%) than in North America. In Southeast Asia, capacity utilization rates are reported to be running at 80–90%. 

Asia currently accounts for 35% of global production and is expected to account for more than 50% of global fatty 

acid production by 2010. 



Whether used as such or in the form of various derivatives, fatty acids are ultimately consumed in a wide variety 

of end-use industries. The economic growth of many of these industries (e.g., rubber, plastics and detergents) is 

often a good indicator of the overall economic performance of a region. Not surprisingly, historical growth in the 

consumption of fatty acids has tended to approximate growth in regional GNP. 

(For the complete marketing research report on NATURAL FATTY ACIDS, visit this report’s home page or see p. 657.5000 A of the Chemical 


CEH Product Review Abstract 

POLYPHENYLENE SULFIDE RESINS 

By 

R. J. Chang 

with 

Thomas Kälin and Goro Toki 

Polyphenylene sulfide (PPS) resins exhibit exceptional resistance to thermal degradation and high heat distortion 

temperatures, as well as outstanding chemical and flame resistance. Major markets include automotive, electrical 

and electronics, industrial and appliances. World demand for PPS grew briskly at 9–11% per year during 

2001–2004, driven primarily by automotive applications. Although growth in the production of automobiles in 

North America, Western Europe and Japan has been sluggish, PPS resins have benefited from the ever-increasing 

under-the-hood temperatures of automobiles and the need for fuel and flame resistance in many automotive 

parts. This trend is expected to continue, and demand is projected to grow at approximately 10% per year during 

2004–2009. 

The following graph shows regional supply/demand for PPS resins as a percentage of the world total: 

World Supply/Demand for Polyphenylene Sulfide Resins—2004 

100 

Percent of World Total 

80 

60 

40 

20 

United States 

Western Europe 

Japan 

China 

Rest of the World 

0 

Annual Capacity Production Net Imports Net Exports Consumption 

In 2004, Japan and the United States remained the two dominant producing countries. In November 2005, supply 

was tight, and lead time in the United States was approximately twenty weeks. With world consumption 


January 2006 


expected to grow at approximately 10% per year during 2004–2009, all producers announced plans to increase 

capacity. 

World capacity for PPS is expected to grow at an average annual rate of about 13% during 2004–2009. 

Consumption is forecast to grow at an average annual rate of 10%. China is expected to show the highest rates of 

growth in capacity and consumption (20% per year). The rest of the world (mostly other Asian countries) is also 

expected to show high growth rates of 20% per year. Consumption growth will be fueled mainly by automotive 

under-the-hood applications and by new extrusion and thermoforming grades that have been introduced into the 

market in the past two years. 

(For the complete product review on POLYPHENYLENE SULFIDE RESINS, visit this report’s home page or see p. 580.4600 A of the 

Chemical Economics Handbook.) 

PEP Report Abstract 

ADVANCES IN NAPHTHA STEAM CRACKING 

By 

Anthony Pavone 

(PEP Report 248A, December 2005) 

This PEP report is designed to help clients better understand the technology changes that are being incorporated 

in modern, state-of-the-art naphtha steam crackers, and also to assist operators of existing steam crackers in 

providing incremental upgrades to improve performance and profitability. 

For grass roots naphtha steam crackers, we provide an engineering process design and corresponding production 

economics for a 1.2 MM tpy naphtha steam cracking unit that incorporates state-of-the-art technology. These new 

developments include mercury and arsenic pretreatment of feedstock, DMSO addition to naphtha very low in 

sulfur content, furnace operation for both maximum ethylene and maximum propylene business objectives, front 

end depropanizer fractionation trains, dual depropanizer tower optimization, front end hydrogenation of 

diolefins with dilute hydrogen, mixed refrigerant cryogenics, and low pressure (20 bar) process compression. For 

this configuration, we have also provided material balances for light and full-range naphtha operated for both 

maximum ethylene and propylene yields. 

We have also prepared a comparison of the licensed process offerings currently made by KBR, Lummus, S&W, 

Technip and Linde. 

We also explore typical debottlenecking strategies to incrementally increase production capacity. These include 

cracked gas and refrigeration compressor upgrades, major driver modifications, quench oil and water wash tower 

modifications, and fractionation train tray and packing modifications. 

To extend major turnaround frequency to five-year intervals, we identify the major equipment that needs to be 

upgraded and/or made redundant. These include heavy service reboilers, compressor interstage coolers, TLE 

operation, upgraded furnace tube metallurgy, and quench cooler upgrades. 

Given the emphasis currently applied to on-line, real time economic optimizers, we review the vendor offerings, 

and describe the sources of economic credits that justify this type of SCADA investment. 

Lastly, we explore unit operating strategies to improve conversion and selectivity, reduce the volume of coke 

production and frequency of steam air decoking, and keep the unit running clean. We examine on-line washing of 

the cracked gas compressor, naphtha additives to reduce furnace tube coking and extend tube life, current 

hydrogenation catalyst availability, green oil management, intermediate draw-off trays on the primary 

fractionator for kerosene and diesel recovery, and improved process computer control offerings made by 

Honeywell and Foxboro. 



PEP Review Abstract 

BIODIESEL VIA AXENS HETEROGENEOUS CATALYSIS 

ESTERFIP-H PROCESS 

By 

Ronald G. Bray 

(PEP Review 2005-07, December 2005) 

Biodiesel is the methyl ester of fatty acids derived from renewable resources such as virgin vegetable oil, animal 

fats and used cooking oil. This biofuel can be used as a replacement for petroleum-based diesel in compression 

ignition engines with minimal modifications. 

The annual rate of growth in consumption of biodiesel during 1999–2004 exceeded 32%, reaching a global level of 

4.84 million tons/yr in 2004 (Chemical Economics Handbook estimates). Expansion is projected to continue at this 

phenomenal rate as a result of a variety of factors, including concerns about energy security, the environment and 

the skyrocketing cost of petroleum. 

The consumption of this biofuel is encouraged through various governmental incentives. EU Directive 

2003/30/EC set targets for a minimum fuels content from renewable resources with the goal of increasing content 

from today’s

January 2006 

CEH REPORTS AND PRODUCT 

REVIEWS IN PREPARATION 

Report Title 

Alkyl Acetates 

Amino Acids 

Calcium Chloride 

Cellulose Acetate Flake 

Cellulose Acetate/Triacetate Fibers 

Chlorobenzenes 

C 2 Chlorinated Solvents 

Ethanolamines 

Ethylbenzene 

Gasoline Octane Improvers 

Hydrochloric Acid 

Isophthalic Acid 

Isopropanolamines 

Lime/Limestone 

Neopentyl Polyhydric Alcohols 

Oxo Chemicals 

Phosphate Rock 

Plasticizer Alcohols 

Plasticizers 

Polyamide Resins (Nonnylon) 

Polyester Polyols 

Polyether Polyols for Urethanes 

Polyurethane Elastomers 

Polyurethane Foams 

Propylene Oxide 

Sodium Bicarbonate 

Sodium Carbonate 

Sodium Cyanide 

Styrene 

Styrenic Copolymers 

Sulfur 

Author 

Sebastian Bizzari 

Mike Malveda 

Stefan Schlag 

Stefan Müller 

Stefan Müller 

Thomas Kälin 

Jamie Lacson 

Elvira Greiner 

Koon-Ling Ring 

Michael Malveda 

Jamie Lacson 



Stefan Schlag 



Bala Suresh 




Henry Chinn 

Henry Chinn 

Henry Chinn 

Henry Chinn 

Henry Chinn 

Stefan Schlag 

Stefan Schlag 

Bala Suresh 



Bala Suresh 

This list is provided for the benefit of Chemical Economics 

Handbook users who may simultaneously be undertaking their 

own studies in these areas. Clients are welcome to write or call 

us in order to discuss the work in progress. 

CEH REPORTS AVAILABLE SEPARATELY 

To obtain a list of CEH marketing research reports or product 

reviews for sale separately, please see our website at 

http://www.sriconsulting.com/CEH/Public/Reports/ or 

contact: 

Ralf Gubler, Director, or 

Sebastian Bizzari/Koon-Ling Ring, Assistant 

Directors 

Chemical Economics Handbook Program 

SRI Consulting 

4300 Bohannon Drive, Suite 200 

Menlo Park, CA 94025 

Tel. (650) 384-4300 Fax: (650) 330-1149 


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CHEMICAL INDUSTRIES NEWSLETTER 

The Chemical Industries Newsletter is published monthly by SRI Consulting. The contents of the Newsletter are drawn from current research 

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Specialty Chemicals Update Program..................................Phil Calderoni, Director 

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© 2006 by SRI Consulting. 

All rights reserved. Unauthorized reproduction prohibited.

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