Ethanolamine Is Serious Short of Supply

By Zou Jinsong
Ethanolamine is an important organic chemical raw material used
in quite a few sectors such as surfactant, pharmaceutical,
pesticide, polyurethane (PU) auxiliary.

Production concentration in the world

The average annual growth rate of the ethanolamine capacity in
the world was around 5% from 1999 to 2004. The capacity was 1.507
million t/a in 2004. It was mainly distributed in North America,
Western Europe and the Asia-Pacific region and their proportion
in the world total was 41%, 29% and 20% respectively. The
development of the ethanolamine production has the following
features:

    (1) Concentrated production region:
The total capacity of ethanolamine in North America, Western
Europe and the Asia-Pacific region was 1.36 million t/a in 2004,
accounting for around 90% of the world total. The capacity in
the United States reached 595 thousand t/a, accounting for
around 40%.

    (2) Concentrated producer:
The four largest ethanolamine producers in the world include Dow
Chemical, Ineos, BASF and Huntsman. Their total capacity was 940
thousand t/a in 2004, accounting for around 62% of the world
total. Dow Chemical owned two units in the United States and
their capacity was 190 thousand t/a and 90 thousand t/a
respectively. Besides, it also had a 75 thousand t/a unit in
Malaysia and a 25 thousand t/a unit in Britain. The total
capacity of these four units was 380 thousand t/a, accounting
for around 25% of the world total.

    (3) Large production scale:
The average capacity of ethanolamine units in the world
(excluding China) was 60 thousand t/a in 2004. The average
capacity was 120 thousand t/a in the United States and 80
thousand t/a in Belgium. The production scale is relatively
small in the Asia-Pacific region. The 75 thousand t/a unit in
Malaysia owned by Dow Chemical is the largest ethanolamine unit
in the region.

Balanced supply and demand in the world

According to statistics made by Stanford Research Institute
(SRI), the output of ethanolamine in the world was 1.2 million
tons in 2004 and the operating rate of units was around 80%. The
United States is the largest producer, consumer and exporter of
ethanolamine in the world. Around 20% of the output in the United
States is used for export. The consumption of ethanolamine in
the United States was around 247 thousand tons in 1993 and
reached 450 thousand tons in 2004. The average annual growth rate
of the consumption was as high as 5.6% from 1993 to 2004.
   Due to the supply deficit of raw material ethylene oxide, the
output of ethanolamine in Western Europe was around 300 thousand
tons in 2004, being basically equal to the output in 2003. The
consumption of ethanolamine in Western Europe was 225 thousand
tons in 1994 and increased to 360 thousand tons in 2004. The
average annual growth rate of the consumption was 4.8% from 1994
to 2004. The import made in this region was mainly from the United
States.
   The demand of ethanolamine in downstream sectors in the
Asia-Pacific region increases rapidly. Ethanolamine has a
bright development prospect and a considerable growth space.
With the completion of a 75 thousand t/a unit in Malaysia and
a 40 thousand t/a unit in Oriental Union Chemical of Taiwan
province, the net import amount of ethanolamine in the
Asia-Pacific region has already reduced.
   Ethanolamine in foreign countries is mainly used in
surfactants, herbicides, gas purification, metal processing and
textiles. The consumption distribution in various regions of the
world is basically identical.
   The output of ethanolamine in the world will increase at a
relatively low average annual rate of 2.8% from 2004 to 2010.
It is expected that the total output of ethanolamine in the world
will reach 1.4 million tons in 2010. There is no plan for
constructing new large ethanolamine units in the world today.
It is expected that the operating rate of ethanolamine units in
the world will increase by different degrees before 2010.

Insufficient production in China

There are already more than ten ethanolamine producers in China
today with a total capacity of over 56 thousand t/a. The
ethanolamine production in China has made an outstanding
progress in recent years, but there is still a gap compared with
the world's advanced level.
    (1) Small production scale:
Fushun Huafeng Chemical (Group) Co., Ltd. is the largest
ethanolamine producer in China today. Its capacity has reached
25 thousand t/a, but still much lower than the production scale
in the United States and Western Europe. Small production scale
and great material/energy consumption have led to high
production cost and weak product competitive edge.

    (2) Underdeveloped technology:
The ethanolamine production technology used in China is mainly
from Zhejiang University. The material/energy consumption is
high and there are defects in the product separation.

    (3) Upstream units do not match with downstream units:
Most ethanolamine units are located at quite a distance from
ethylene oxide producers. There is a risk of supply interruption
in the purchase of ethylene oxide. Besides, ethylene oxide is
a hazardous chemical. The high freight leads to an increase in
production cost.

    (4) Low operating rate:
The capacity of ethanolamine in China has reached over 56
thousand t/a, but the production scale is small and the operating
rate is less than 50%. The import amount accounts for 80% of the
apparent consumption.

    (5) Unsatisfactory product quality:
Compared with imports, ethanolamine produced in China is still
unsatisfactory in some quality indexes. For example, when
ethanolamine is used in high-grade cosmetics its color can not
meet users' requirements.

Great supply deficit in the domestic market

Ethanolamine in China is mainly used in surfactants,
pharmaceuticals, pesticides, PU auxiliaries, gas purification
and rubber auxiliaries. The consumption distribution will have
no great changes in the next few years. Surfactants,
pharmaceuticals and pesticides will remain to be sectors with
great consumption proportion.
   With the rapid development of the economy in China, all
ethanolamine downstream sectors have developed rapidly. The
output of ethanolamine falls far short of the demand and the
import dependence was as high as 75% in 2005.
   As most of the market demand is satisfied by imports, a huge
impact has been produced on the development of the domestic
ethanolamine sector. In May 2003, Fushun Huafeng Chemical (Group)
Co., Ltd. and CNPC Jilin Petrochemical Co., Ltd. lodged an
antidumping case to the Ministry of Commerce, requesting for
dumping investigation into the import of ethanolamine from seven
places of origin. (CCR2003, No. 15) On November 14th, 2004 the
Ministry of Commerce made an announcement, deciding to impose
an antidumping tax of 9% - 74% on the import of ethanolamine
originated from Japan, the United States, Iran, Malaysia, Taiwan
province and Mexico with the duration of five years. (CCR2004,
No. 33) Since the implementation of antidumping measures, the
trend of rapid ethanolamine import growth in China has been
contained.

Stable demand growth in China