Issue Date: May 25, 2009
China Takes Lead In Acetic Acid
FOR ACETIC ACID producers, China has become the main operating theater. Multiple acetic acid plants have just started production there or are about to. Demand for the ubiquitous chemical has been growing fast in the country, where it finds its way into materials including vinyls, polyesters, and engineering plastics.
"As is the case for many products, China demonstrates the greatest growth in the world for acetic acid," says John Fotheringham, the Shanghai-based general manager of acetyl intermediates at U.S. chemical maker Celanese. "We've consistently seen, until very recently, double-digit growth for acetic acid in China."
Both Celanese and BP, respectively the world's first- and second-largest producers of acetic acid, are establishing an impressive presence in China. Together, the two companies already operate roughly 50% of the world's production capacity. Fotheringham notes that demand for acetic acid typically expands at a rate 1–1.5% higher than a country's gross domestic product. The Chinese economy may grow by 6–8% this year, but it grew well over 10% annually until 2007.
Celanese moved the management of its acetic acid business to Shanghai in 2007, a decision that involved the relocation of a half-dozen global managers. The same year, it started up a 600,000-metric-ton-per-year facility in Nanjing. Earlier this month, the firm announced that it would double the plant's capacity by year-end. "We're here because this is where the growth is," Fotheringham says.
In 1998, BP started up a 150,000-metric-ton acetic acid plant in Chongqing, in southwest China. A joint venture with Sinopec (China Petroleum & Chemical Corp.), the plant has since been expanded to accommodate an annual production rate of 350,000 metric tons. The site will be further enhanced with a new unit that will bring capacity to more than 1 million metric tons in 2011. Moreover, BP and Sinopec will complete construction later this year of a 500,000-metric-ton facility in Nanjing.
Home to plants operated by the world's two largest producers, Nanjing is becoming a major acetyls production base. According to Celanese, Nanjing is a good location because of the infrastructure and the support it gets from the Nanjing Chemical Industry Park. BP declined to be interviewed for this article but a senior BP executive told C&EN in 2003 that Nanjing is attractive because carbon monoxide can be produced economically in that city. There is a large petrochemical industry in Nanjing that can buy off the excess hydrogen that carbon monoxide production generates. Carbon monoxide is a critical material in the production of acetic acid via the methanol carbonylation method that both BP and Celanese favor.
The BP executive told C&EN that it would be unwise for BP and Celanese to operate acetic acid plants in the same city (C&EN, July 21, 2003, page 12). He said both companies would incur high shipping costs to deliver to faraway customers as nearer markets became oversupplied.
Yet, according to Fotheringham, it's good for business that the two world leaders in acetic acid will be producing in Nanjing. "It will attract downstream investment to that region," he says. Since last year, Celanese itself has opened facilities in Nanjing producing the acetic acid derivatives vinyl acetate and acetic anhydride. Fotheringham says these investments make the Nanjing site the company's largest acetyls complex in the world.
Since 2003, the Chinese acetic acid market has changed considerably with the emergence of several local competitors. Two of them, Shanghai Wujing and Jiangsu Sopo, set up their facilities a few hours' drive from Nanjing.
The development could be worrisome to BP and Celanese given the propensity of Chinese companies to undercut competitors in almost every industry. But Fotheringham says Celanese is well positioned to face the new competition. He notes that even though the economic downturn has hurt the acetic acid business—sales volumes in China declined by as much as 40% in the fourth quarter of 2008—Celanese has been able to continue operating its Chinese facilities profitably at more or less full capacity. In contrast, he says, several of the firm's new competitors have had to halt production because they could not cover operating costs.
Celanese's technology is such that the firm can build its plants at a far lower cost than can its competitors, Fotheringham claims. And once the plants are built, the company can boost capacity for a modest capital outlay. Earlier this month, Celanese announced a technological breakthrough that would enable it to increase capacity at Nanjing to as much as 1.5 million metric tons per year for a minimal cost.
William Bann, business manager for acetyls, methanol, and olefins at the consulting firm Tecnon OrbiChem, explains that both BP and Celanese have developed their own acetic acid production technology by constantly improving a methanol carbonylation process originally invented by Monsanto. Both companies diligently guard their know-how. "They go to court when they think it's encroached," Bann says.
The firms' technologies consist of a combination of plant design know-how and proprietary catalysts. In addition, Bann says, "their plants are always bigger scale than anyone else." Celanese guards its secrets more stringently than BP. The company has never licensed its process, whereas BP has done so on a few occasions and even operates its Chinese facilities with a partner.
ALTHOUGH acetic acid is a widely used material that has been produced industrially for over a century, commercial production presents multiple challenges. Fotheringham says start-up problems at new facilities are an industry-wide phenomenon, with carbon monoxide being a common source of headaches. Back in 2000, Celanese had trouble supplying its Asian customers because the carbon monoxide producer Singapore Syngas couldn't consistently supply its new acetic acid facility in Singapore.
Fotheringham says all went smoothly with Wison, Celanese's supplier in Nanjing. But he warns that new Chinese producers may not be so lucky. "CO is a notoriously difficult molecule to produce," he says. "We do anticipate all sorts of start-up issues associated with all kinds of new competitors."
Beyond the start-up phase, problems continue once acetic acid facilities are operating. In Chongqing, the BP-Sinopec venture Yaraco has reportedly experienced natural-gas supply interruptions over the past two years, leading to intermittent acetic acid production stoppages. And in 2007, Celanese temporarily halted production at a plant in Texas because of problems with a reactor.
Smooth production isn't critical in periods of slack demand. But Tecnon OrbiChem's Bann says double-digit growth in Chinese acetic acid demand will likely resume by 2010. This can only be good news for the acetic acid producers—Western and local—clustered around Nanjing.
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