The Sulfonamide Rollercoaster – a cost insight

AxcentiveArchive

Plasticizers, like angels, come in many forms. During periods of feedstock turbulence and rapid cost realignment, this can make it difficult for formulators and procurement managers to follow what is going on and make the right decisions because plasticizers of different chemistries are differently affected and their cost adjusts by different amounts.

One useful general indicator is the cost of the aromatic or BTX (Benzene-Toluene-Xylene) stream which is the ultimate feedstock for the majority of plasticizer families. Phthalates derive from xylenes via phthalic anhydride, benzoates from toluene oxidation via benzoic acid; even non-aromatic adipates from benzene via cyclohexane. But the significant differences in downstream processes and other raw materials still allows for significant variation in the extent of change resulting from the same raw material movement. This is why updates on the feedstock and raw material cost dynamics of individual plasticizer families are useful.

With a global industry niche of sales Sulfonamides are a lesser-known class of specialty plasticizer which is mostly hidden within the ‘Others’ category in industry reports. Feedstock-wise they are in good company, deriving primarily from toluene. The global production base is essentially concentrated in Asia hence very much dollar-based.

Well-positioned to comment on recent cost and price trends for Sulfonamides in Europe is France-based Axcentive sarl, a global leader in this chemistry, better known to users by their Ketjenflex® brand. While the formulation industry enjoyed tumbling prices for phthalates and most other types of plasticizer through the second half of 2014 on the back of falling toluene and xylene, Axcentive explains that Sulfo prices did not soften in Europe largely because the dollar strengthened so far against the euro as to negate that feedstock advantage and even make the product more expensive for European buyers by the end of the year. Around the same time, the sulfonamide industry was also disproportionately affected by a flurry of activity by chemical producers to comply with environmental regulations.

Axcentive announced a series of price increases starting from January 2015 to cover these increases, according to management. Sulfonamides stood out as the only chemical in the plasticizer sector to be increasing at that time.

Toby Heppenstall, General Manager of Axcentive, explained that the environmental costs were largely related to stricter waste water regulations. Some plants that had made these investments in earlier years found themselves unable to pass on the costs to the market. Many others understandably waited until the latest possible moment. Now that the whole industry has moved, the cost effect is finally being reflected in the price and passed on to downstream consumers.

“In Q1 we were out there on our own, calling for an increase which was sorely needed – especially in Europe due to the double impacts of currency and regulation – but disconnected from raw material movement. It felt completely counter-intuitive to customers and that was hard” says Axcentive’s Heppenstall.

Since Q2 2015, Xylene and Phthalic Anhydride prices have recovered so other plasticizers are finally on the rise again and the Sulfonamide price gap is restored relative to alternative technologies. (Sulfonamides have a higher value per kg than most other plasticizers).

And the long term outlook for Sulfonamides? Mr Heppenstall is confident.

“Winning at Sulfo is ultimately not only about our cost position vs other technologies. Sulfonamides are used when formulators need not only plasticization but adhesion promotion and other distinct benefits. For Axcentive, the future sustainability of the product line also depends on our success in developing new applications for Sulfo and here we have several exciting projects in coatings and inks”.

Likening plasticizers to angels will never meet with universal approval. When it comes to external cost shocks though, almost everyone will agree that ‘the Devil comes in many forms’!