Wednesday, December 6, 2017

Chemical Industry Support of the Fish Farming Industry

The fish farming industry (also represented by the term aquaculture industry) now provides more than 50% of global fish consumption (compared to caught/captured fish).  This percentage has greatly increased in the last 30 years and is expected to continue to increase.  In recent years, fish have accounted for around 20 percentage of total global human consumption of animal protein.  As the aquaculture industry continues to innovate and expand its production, it is likely this 20 percentage will increase.  In fact, with an increasing global population expected to reach 9 billion by 2050, the increase is paramount.  Click here for a good overview of such data from the United Nations (PDF file).

The chemical industry has been a major supplier to the aquaculture industry.  Materials supplied have included:  amino acids; antioxidants; carotenoid pigments; enzymes; proteins; stabilizing agents: trace elements; and vitamins.    Public, chemically-related companies marketing materials to the aquaculture industry include:  Ajinomoto; Archer Daniels Midland; BASF; Darling Ingredients; DSM; and Navozymes.

Two large, public companies that farm fish with large fish retail businesses are the Thai company Charoen Pokphand (click here to go to its website; click the Thai language link to get to the English site) and the Norwegian company Marine Harvest (click here to go to its website).  In 2016, Charoen Pokphand sold for approximately $1.9 billion its farmed fish.  This sale amount represented a 6% increase over 2015.  For Marine Harvest, farmed fish revenues in 2016 was approximately $3.7 billion and in 2015, $3.3 billion, a 12 % increase.   According to data found on the Internet, farmed-fish consumption growth globally is expected to increase about 8% per year.


The growth of the aquaculture industry over the last 30 years seems to me to be a good example of how a “new industrial sector” can benefit the chemical industry.

Friday, December 1, 2017

Chemical and Metal Shortage Alert – November 2017

The purpose of this blog is to identify chemical and metal shortages reported on the Internet.  The sources of the information reported here are primarily news releases issued on the Internet.  The issue period of the news releases is November 2017.

Section I below lists those chemicals and metals that were on the previous month’s Chemical and Metal Shortage Alert list and continue to have news releases indicating they are in short supply.  Click here to read the October 2017 Chemical and Metal Shortage Alert list.

Section II lists the new chemicals and metals (not on the October alert).  Also provided is some explanation for the shortage and geographical information.  This blog attempts to list only actual shortage situations – those shortages that are being experienced during the period covered by the news releases.  Chemicals and metals identified in news releases as only being in danger of being in short supply status are not listed.

Section I. 

None
      
Section II.   Shortages Reported in November not found on the Previous Month’s List

Ethane:   Mexico; production not keeping up with demand
Hydrogen peroxide:  Texas; production not keeping up with demand
Polysilicon:  China; production not keeping up with demand

Reasons for Section II shortages can be broadly categorized as: 

1.  Mining not keeping up with demand: none
2.  Production not keeping up with demand:  ethane; hydrogen peroxide; polysilicon
3.  Government regulations: none
4.  Sources no longer available: none
5.  Insufficient imports: none

6.  Supply not keeping up with demand:  none

Thursday, November 23, 2017

Supply Chain and Sustainability Management at a Few Chemical Companies

Fourteen large, mostly European chemical companies (with annual revenues ranging from $61 billion to $4.9 billion) belong to a non-profit organization, called Together for Sustainability (TfS), that assists each company in its supplier evaluations and audits.  Chemical companies of the size of the ones belonging to TfS often have thousands of suppliers paying billions of dollars, e.g., BASF, a TfS member, reports in its 2016 annual report it has 70,000 suppliers paying $36 billion to those suppliers and Clariant, another member, in its 2016 annual report, states it has 5,250 suppliers paying $2.1 billion to them.

These large amounts paid to so many suppliers represent a significant business concern for the companies and an important response to this concern is effective evaluations and audits of the suppliers.   Belonging to the TfS allows these companies to share supplier evaluations and audits, done by TfS directly or by TfS subcontractors, reducing the need for each company to do its own evaluations and audits for many, but not all, suppliers.

The emphasis on the evaluations and audits done by (or on behalf of) TfS is to support member sustainability management.  This management is intended to ensure the long-term sustainability of the company, a sustainability which depends to a large extent on suppliers.  Click here to go to the TfS website and read more about what TfS does.

The amount of data and analysis found in the annual and sustainability reports of the TfS chemical companies indicate the extent that these companies are embracing sustainability as an important strategic management goal.  The data and analysis demonstrate how value and supply chain considerations interact with sustainability considerations.  Reviewing several TfS-membered companies’ annual and sustainability reports found the following:

  • ·         Solvay seeks to detect sustainability risks and opportunities along the entire value chain (cradle to grave for products)
  • ·         AkzoNobel has a company-wide approach to continuous improvement of its integrated supply chain function, looking for breakthroughs in process, packaging, and digitalization
  • ·         Arkema is implementing improved information technology for supply chain optimization
  • ·         BASF sustainability is an integral part of its supply chain strategy
  • ·         Bayer has had more than 700 sustainability assessments of suppliers made by TfS and in 2016 conducted more than 70 external audits and more than 160 internal audits related to its suppliers
  • ·         Clariant has initiated an integrated planning landscape to improve supply chain management
  • ·         Covestro regards adherence to sustainability within the supply chain as crucial to value creating; social, ethical, environmental, and governance factors, in addition to economic ones, are used in supplier selections
  • ·         DSM has had 96% of their approximately 1,000 critical suppliers go through the evaluation and audit process
  • ·         Evonik, with approximately $8 billion spent on raw materials, supplies, services, and energy, emphasizes automation and optimization in its procurement process.



 A 2013 survey of more than 500 supply chain executives, conducted by PWC, focused on what these executives are doing to enhance their supply chain management.  Click here to read the report on this survey (PDF file).

Tuesday, November 7, 2017

Surfactants Business Prospects

The following public companies report (in their annual reports) that they produce surfactants: AKZO Nobel; BASF; DowDupont; Clariant; CRODA; Evonik; Henkel; Huntsman; KAO; and Stepan.  Of these companies, only one, Stepan, reports any financial data on their surfactants business.  For Stepan, surfactants is a separate, reportable segment.

Surfactants sales account for about 70% of Stepan’s sales.  These sales decreased $24.3 million from 2015 to 2016, a 2% change.  Gross profit margin percentages (GPM%) increased by 1% from 2015 to 2016, but was only 17% in 2016, not a particularly good GPM% for a chemical company.  Surfactant operating income in 2016 was 8% of sales and 9% in 2015.  These surfactant business results do not seem to me to reflect a strong, robust business.  And the Stepan results could reflect the surfactant business results for other companies that produced surfactants.

Countering what appears to be a recent lackadaisical surfactant business performance is the introduction of biobased surfactant products.   Of the ten public companies mentioned above, at least four of them write about biobased surfactants in their annual reports (Clariant; CRODA; Evonik; and Henkel).   CRODA has recently commissioned a manufacturing facility in the United States producing 100% biobased surfactants.


Targeting biobased surfactants could be an excellent example of good supply/value chain management.  The purchasers of these company surfactants, (retailers of detergents, soaps, and other products containing surfactants) are likely assessing their customers and are concluding that detergents, soaps, and other consumer products containing biobased surfactants are growing in demand.   A 2011 Genencor consumer survey found that more than 50% of consumers in the United States and Canada are likely to buy biobased products and more than 60% are confident that biobased products are better for the environment (click here to find more details on this survey).  A more recent, 2017 European-centered report examines trends in biobased products in several industrial sectors and found that in the personal and home care sector (i.e., soaps and detergnets) the market is especially receptive to biobased, environmentally friendly products (click here to read this report-PDF file).  Increasing demand for differentiated products usually leads to higher profitability.

Wednesday, November 1, 2017

Chemical and Metal Shortage Alert – October 2017

The purpose of this blog is to identify chemical and metal shortages reported on the Internet.  The sources of the information reported here are primarily news releases issued on the Internet.  The issue period of the news releases is October 2017.

Section I below lists those chemicals and metals that were on the previous month’s Chemical and Metal Shortage Alert list and continue to have news releases indicating they are in short supply.  Click here to read the September 2017 Chemical and Metal Shortage Alert list.

Section II lists the new chemicals and metals (not on the September alert).  Also provided is some explanation for the shortage and geographical information.  This blog attempts to list only actual shortage situations – those shortages that are being experienced during the period covered by the news releases.  Chemicals and metals identified in news releases as only being in danger of being in short supply status are not listed.

Section I. 

Graphite electrodes:  global; supply not keeping up with demand
Polyethylene:  United States; supply not keeping up with demand
      
Section II.   Shortages Reported in October not found on the Previous Month’s List

Magnesia:  Europe; production not keeping up with demand

Reasons for Section II shortages can be broadly categorized as: 

1.  Mining not keeping up with demand: none
2.  Production not keeping up with demand:  magnesia
3.  Government regulations: none
4.  Sources no longer available: none
5.  Insufficient imports: none
6.  Supply not keeping up with demand:  none



Wednesday, October 18, 2017

Some Data and Analysis on Cobalt Mined, Refined, and Consumed Amounts

The Internet was searched for data on amounts of cobalt mined, refined and consumed over the past few years, e.g., from 2011 to 2016.   Values found varied over a range.  The values in the following table (table 1) represent the amounts (in metric tons – mt) found that seemed to me to be most reliable.


table 1
mined amounts (mt)
refined amounts (mt)
consumed amounts (mt)
refined to mined yield
2011
109,000
82,300


2012
103,000
77,500
74,000
75%
2013
110,000
82,538
78,440
75%
2014
123,000
89,000
83,146
72%
2015
125,000
90,150
89,000
72%
2016
126,000
96,000
94,000
76%
cagr
2.9%
3.1%
6.0%



Also in the table are shown refined-to-mined yield percentages (the refined amounts column divided by the mined amounts column).    I am assuming that these percentages represent the limits of mined cobalt that can be processed (refined) with the processes used.  If correct, these percentages would represent a constraint that should be reviewed for improving.

The above table also shows the compounded annual growth rates (cagrs) for the amounts mined (2.9% from 2011 to 2016); the amounts refined (3.1% from 2012 to 2016); and the amounts consumed (6.0% from 2012 to 2016; a 2011 refined amount could not be found).  These cagr percentages were used to project estimated cobalt amounts mined, refined, and consumed for the period 2017 to 2022.  These projected amounts are shown in the following table (table 2).


table 2
mined amounts (mt)
refined amounts (mt)
consumed amounts (mt)
deficit amounts
2017
129,654
98,976
99,640
-664
2018
133,414
102,044
105,618
-3,574
2019
137,283
105,208
111,956
-6,748
2020
141,264
108,469
118,673
-10,204
2021
145,361
111,832
125,793
-13,962
2022
149,576
115,298
133,341
-18,042
cagr
2.9%
3.1%
6.0%



If the same cagrs for 2011(2012) to 2016 continue for the next 6 years (2017 to 2022), table 2 suggests that the amount of consumed cobalt starts to exceed the refined amount available (in table 1 refined amounts always exceed consumed amounts) and deficits in the amount of cobalt needed (consumed) compared to amounts available (refined) begin to exist.  Table 2 shows these deficit amounts.

Cobalt deficits over the next few years are being predicted by several analysts on the Internet.  The deficits shown in table 2 are probably too low because of the expected surge in electric vehicle use and the need for cobalt in these vehicles' batteries.   Projected annual consumed increases going forward from 2017 are likely to be much higher than the 6% used in table 2.


A conclusion is that mined cobalt needs to increase at a higher rate than in recent years.  Also, a higher process yield percentage (refined to mined yield) could help reduce possible future deficits.

Friday, October 6, 2017

Some Data on Industrial Enzymes

Based on an analysis of industrial enzyme marketing data found on the Internet, the global market for industrial enzymes in 2016 was approximately $7 billion.   The following table shows the most frequently referenced sectors where enzymes are used and an estimate of the 2016 market percentages and values of the enzymes used in each sector:

sector
approximate % of total global market value ($7 Billion)
approximate market value (in billion $)
food & beverage
28%
1.96
detergents
25%
1.75
animal feed
12%
0.84
nutraceutical
12%
0.84
personal care
12%
0.84
textile
5%
0.35
paper & pulp
5%
0.35
waste treatment
1%
0.07
total
100%
7


The data in the table is approximate, for example, the total global value might be $1 billion more or less than $7 billion.   The relative sector percentages and values are likely correct.  The total global value and the percentages and values for food and beverage and detergents are based on reported amounts on the Internet.    Percentages and values for textiles, paper and pulp, and waste treatment are best guess.

The following companies have substantial industrial enzyme sales:

Novozymes
DowDupont
Royal DSM
AB Enzymes (a division of Associated British Foods)
Chr. Hansen
Advanced Enzyme Technologies
Shandong Longda Bio Products

By far, Novozymes sells the largest amount of industrial enzymes, with approximately 50% of 2016’s $7 billion global sales.   Percentages of the industrial enzyme market for the other companies are more difficult to estimate as the companies do not separate out enzyme sales in their reporting.


Click here to read a good overview on the use of industrial enzymes.