Yes, you read that right… “2020 Qtr 5!” is the morbidly humorous term that some purchasing managers in the chemical industry are using to describe the first quarter of 2021 that ends this week.
As you know, 2020 was an extremely unusual year and that included the prices of chemicals, especially petrochemicals and especially quats.
As you likely know, quaternary ammonium salts which are the most common large scale commercial phase-transfer catalysts, are produced from amines which are produced from alcohols which are produced from alkenes.
For example, butanol is produced by hydroformylation of propylene. Butanol is a raw material for tributylamine which is the starting material for tetrabutylammonium bromide (TBAB) and methyl tributyl ammonium chloride.
The disruptions in the petrochemical markets in 2020 due to COVID-19 were severe and prices fluctuated making supply unpredictable. Those of you who do not work in the purchasing departments of your companies may not be aware that shipping costs increased very dramatically in 2020, sometimes more than 100% and lead times to fulfill chemical orders went from days/weeks to weeks/months!!!
The global demand for surface disinfectants and hand sanitizers experienced a crazy sudden increase and biocidal quats such as didecyl dimethyl ammonium chloride became one of the hottest items in the world. If you look at the bottle of disinfectant concentrate that you couldn’t even buy in April 2020, you will see a list of quaternary ammonium salts as the active ingredients, usually the ONLY active ingredient. If you were using one of those quat salts in your commercial PTC processes, you might have had to shut down your plant!
Several readers of the PTC Tip of the Month reached out to us in mid-2020 asking if we knew of any secret quat suppliers. In one case, a chemist contacted me to ask for his local hospital.
Billions of people around the world were happy to usher in 2021 and forget about the nightmare of 2020. Those of us who lost loved ones to COVID-19 (my uncle succumbed to COVID-19 in March 2020 in a hospital in New York City) will NEVER forget the pandemic. But we somehow have to move on and that included the psychological stress of 2020.
As the revolutionary vaccines are now being distributed in early 2021, there is an expectation that within a few months, markets may start to stabilize. However, oil prices continued to rise from $47/barrel on January 1 to $66 in mid-March. Availability, inflationary pricing and lead times for petrochemical derivatives continued to be tight in early 2021.
And then…the petrochemical industry in Texas quite literally froze during February 10-20. Petrochemical plants in Texas shut down suddenly and unexpectedly and that meant that alkenes were and continue to still be scarce. The shut down of the Suez Canal for nearly a week now in March, delayed 12% of the world’s shipping trade and that certainly didn’t help.
Propylene (PGP = polymer grade propylene) increased in price by 140% from $843 per metric ton on November 20, 2020 to $2,028 per metric ton on February 5, 2021 (data for propylene and butanol shown here) JUST BEFORE the Texas weather crisis shutdown! Butanol prices increased by 167% from April 20, 2020 to January 29, 2021 BEFORE the shut downs in Texas. That is when people started morbidly joking that the first quarter of 2021 was the fifth quarter of 2020.
We do not know when the prices, availability and shipping costs for quaternary ammonium phase-transfer catalysts will return to “normal” (whatever that means). But at least we understand how the various disruptions in the petrochemical markets affected our ability to obtain our catalysts.
A silver lining in this crisis is that COVID-19 forced new manufacturing entrants into the global quat salt supply chain. That means that as demand for disinfectant biocide quats decreases, prices may find a new low, but not too low, as the newly increased capacity is rationalized. Of course, that is a very long term thought since prices, availability and shipping costs are likely to remain tight over the next few quarters.
Most of the subscribers to the PTC Tip of the Month newsletter are process chemists and process engineers. We live in a space of uncertainty as we pursue process chemistry breakthroughs that have never been attempted before. The thoughts shared above demonstrate that the purchasing managers at your companies also live in a space that in the past year has been as uncertain as we experience in breakthrough R&D.
Say thank you to a purchasing manager at your company for keeping the supply chain moving forward since the product that your company sells pays your salary, pays for the flasks, pays for the HPLC and everything else you need to do the remarkable work that you do.
