Consumption of Chloroacetic Acid Increases Stably

By Lu Yongmei

Aggravated market competition

The chloroacetic acid sector in China has developed rapidly in
recent years. The output of chloroacetic acid was 131 thousand
tons in 2000 and increased to 231 thousand tons in 2005 with an
average annual growth of 12.0%. The capacity of chloroacetic
acid in China was 249.9 thousand t/a in 2005 and the demand was
223 thousand tons. China has become the leading chloroacetic
acid producer and consumer in the world. The newly added capacity
was mainly completed during 2005-2006. Jiangxi Electrochemical
(Group) Co., Ltd. has expanded the capacity of its chloroacetic
acid unit to 10 thousand t/a and also plans to construct a 5
thousand t/a glyphosate unit. Henan Xuchang Dongfang Chemical
Co., Ltd. has constructed a 10 thousand t/a chloroacetic acid
unit to match its 6 thousand t/a aminoacetic acid unit. The 10
thousand t/a chloroacetic acid unit constructed by Shandong
Huayang Pesticide Chemical Industry Group put on stream in early
September 2006. By the end of September 2006, China had more than
50 chloroacetic acid producers with a total capacity of 270
thousand t/a. Major producers include Akzo Nobel Chloroacetic
Acid Chemical (Taixing) Co., Ltd., Wuxi Greenapple Chemical
Industry Co., Ltd., Zibo Dongfeng Chemical Plant, Hebei
Shijiazhuang Synthesis Chemical Plant, Shijiazhuang Hengyi
Chemical Co., Ltd., Jiangxi Electrochemical (Group) Co., Ltd.,
Shandong Huayang Pesticide Chemical Industry Group and Henan
Xuchang Dongfang Chemical Co., Ltd.
   During 2003-2005, major chloroacetic acid units in China had
a relatively high operating rate, the price of chloroacetic acid
was kept at a high level and both the production and the operation
were sound. In 2006, however, the market demand growth slowed
down. The period from February to April was the brisk season for
the chloroacetic acid consumption, but with the reduced profit
in downstream products chloroacetic acid in China had a regional
oversupply. The period from May to August was the slack season
for the chloroacetic acid consumption. Due to soft market demand
and fierce market competition, the operating rate of many units
reduced. Soft market demand, large inventory and power deficit
in summer forced many chloroacetic acid units to suspend
production. In mid-September, the chloroacetic acid market
entered the brisk sales season, suspended units restored
production, major producers started to increase the ex-factory
price of products and the market demand grew slowly. In the next
few months, the demand of chloroacetic acid will present a trend
of stable increase. The overall supply in the chloroacetic acid
market is sufficient in 2006 and the competition is fiercer than
2005. The export amount of chloroacetic acid reached 14 300 tons
from January to August 2006, an increase of 257% over the same
period of 2005. It is expected that the output of chloroacetic
acid will reach 236 thousand tons in 2006 and the growth will
be lower than previous years.

Stable demand growth

Chloroacetic acid as an important fine chemical intermediate is
mainly used in the production of pesticides, carboxymethyl
cellulose, pharmaceuticals and dyestuffs.

1.Pesticides

Chloroacetic acid can be used to synthesize more than 20
conventional varieties of insecticides, herbicides and plant
growth regulators. The variety with the greatest consumption of
chloroacetic acid is glyphosate. The output of glyphosate in
China has increased rapidly in recent years. China has become
the largest glyphosate producer in the world and most of the
product is used for export. It is expected that the average
annual growth of the chloroacetic acid demand in the pesticide
sector will be 8% from 2005 to 2010 and the demand will reach
120 thousand tons in 2010.

2.Carboxymethyl cellulose

Carboxymethyl cellulose is one of the sectors with the greatest
consumption of chloroacetic acid in foreign countries. China
started the carboxymethyl cellulose production rather late, but
the development is fast in recent years. Quite a few domestic
carboxymethyl cellulose producers conducted capacity expansion
in 2005. Foreign companies have also speeded up their
investments in the construction of production units in China.
CP Kelco of the United States has already constructed a 5
thousand t/a carboxymethyl cellulose unit in Taixing Economic
Development Zone. It is expected that the average annual growth
of the chloroacetic acid demand in the carboxymethyl cellulose
sector will be more than 10% from 2005 to 2010 and the demand
will reach 88 thousand tons in 2010.

3.Pharmaceuticals

In the pharmaceutical sector, chloroacetic acid is mainly used
to produce various vitamins and hormones. The vitamin sector in
China has developed rapidly in recent years. The export amount
of various vitamins in China was more than 80 thousand tons in
2005. China has become a major vitamin producer and supplier in
the world. The export of vitamins has a bright prospect. It is
expected that the average annual growth of the chloroacetic acid
demand in the pharmaceutical sector will be around 10% from 2005
to 2010 and the demand will reach around 29 thousand tons in 2010.

4.Dyestuffs

In the dyestuff sector, chloroacetic acid is mainly used to
synthesize vat dyes, sulfur dyes, disperse dyes and reactive
dyes. With the export growth of dyestuffs in China, the demand
of chloroacetic acid has increased drastically in recent years.
Some dyestuffs synthesized with chloroacetic acid as raw
material are traditional varieties and the market demand growth
will be slow in future. Besides, the capacity of dyestuffs in
China is already in surplus today. It is expected that the
average annual growth of the chloroacetic acid demand in the
dyestuff sector will be 5% from 2005 to 2010 and the demand will
reach 15.5 thousand tons in 2010.

5.Others

Chloroacetic acid can be used as raw material to derive many fine
chemical intermediates such as malonic acid, malononitrile,
mercaptoacetic acid and aminoacetic acid. Besides, it can also
be used to synthesize surfactants, softening agents, lime soap
dispersants, daily-use protective agents and plastic assistants.
It is expected that the average annual growth of the chloroacetic
acid demand in other sectors will be 8% from 2005 to 2010 and
the demand will reach around 95 thousand tons in 2010.
   The market demand of chloroacetic acid in China will
therefore reach 347.5 thousand tons in 2010.
  China has become a large chloroacetic acid producer and
consumer, but there are still many problems compared with the
international advanced level and the domestic market demand. (a)
Small production scale: The average production scale of
chloroacetic acid units in China is less than 5 thousand t/a
whereas the average production scale in foreign countries has
reached 30 thousand t/a. (b) Outdated production technology: 80%
of chloroacetic acid units in China still use the outdated
intermittent process with sulfur powder as catalyst. There are
therefore unstable product quality, high production cost,
serious environmental pollution and weak international
competitive edge. (c) The serious low-level redundant
construction and the fierce market competition have led to the
downturn of the economic performance in the entire chloroacetic
acid sector.
   The consumption distribution of chl