Optical Brightening Agents for Papermaking – the supply and demand situation

paperinsight additive supplOptical brightening agents (OBAs) are used in large quantities to increase the brightness or whiteness of paper and board products and for details of what optical brigthening agents are and their raw material composition, please refer to an earlier blogpost.  Recently, there has been a number of changes in the market which have impacted on the supply and demand for these products.

Demand has been in a state of flux, with further consolidation in the industry and closure of paper mills in Europe and the USA countered by the increased demand in Asia and South America. When demand shifts to Asia and South America, there are different options for the sourcing of OBAs as there are strong regional manufacturers of the products which are usually more competitive than the European or international producers.

On the supply side, there have been three significant effects. First, the Chinese government has belatedly chosen to clamp down on the polluting producers of the diamond-stilbene (DAST) raw material and as China is the major producer (> 40%), removing a significant amount of DAST increased raw material prices significantly. The remaining DAST producers in India and elsewhere could not pick up the deficit and DAST prices increased from below $1.50 to over £5.00 only to fall back to  around $3.50. This supply shortfall is not too dissimilar to the situation that occurred before the Beijing Olympics when the Chinese government prevented a number of DAST and OBA manufacturers from producing in order to cut down on the pollution wafting over the Olympic sites.

Second, to compound things, exchange rates have been volatile – especially the devaluation of the Euro against the dollar.

Third, oil prices fell dramatically only to recover somewhat but it is unlikely that prices will return to the $100/barrel level in the near future.

So, what of the product producers? Those that were back integrated and produced DAST had some relief, and tried to take advantage of the situation, increasing DAST and OBA prices; however, the OBA market in Europe was saturated and there was little upward movement in pricing and this situation is likely to remain.

From a European perspective the situation is:

  • European manufacturers of OBA face much higher higher material costs but have lower product logistic costs.
  • As the raw materials are based on oil, the oil price fluctuations we have seen recently have reduced raw material costs although DASDA pricing is not entirely dependant on oil pricing.
  • Chinese, Indian and Indonesian manufacturers importing into Europe are having to either absorb the dollar and raw material increases or find a way to compete with current European pricing. Most paper mills look at the delivered cost of OBAs (DDP) and the supply chain costs from India or China are significant, even when importing companies ship powder OBAs and dilute them in Europe.
  • Chinese, Indian and Indonesian manufacturers do not offer the more innovative OBAs and are therefore competing with what are essentially ‘commodity’ OBAs.
  • The OBA market is very competitive and there are too many suppliers. Aside form the manufacturers, the market is further fragmented by European suppliers which source from India, China and Indonesia.  These suppliers are also subject to the same effects that their suppliers (importing manufacturers) are facing.
  • A number of importers seem to flout both REACH and patent compliance for short-term gain.
  • New entrants into the market seem to struggle with both the compliance and basic service requirements of their customers.

The outlook for price increases in the OBA market in Europe is bleak and the market will remain fragmented.  The question is how long all the players in the European OBA market will be able to live with very low margins – there will be some exiting the market in 2015/2016.

 

 

Paper Optical Brightening Agents: What are they made of?

paperinsight speciality additivesStilbene-based optical brightening agents (OBAs) are used widely in the manufacture of coated and uncoated white paper and board with with around 125,000 tons being produced in countries such as China, Europe, India, Taiwan, and Indonesia.

Chemically, this type of OBAs is based on a diamino-stilbene structure (abbreviated to DAST or DASDA) which derives from toluene through various intermediates. DAST has recently been in short supply as key production units were closed for environmental reasons in China, where the largest production capacity is situated. It is estimated that the current DAST capacity is around 70,000 tons/year.

For paper optical brighteners and the stilbene brighteners used in detergents, the diamino-stilbene is then reacted with cyanuric chloride [CYCL] followed by one of the following: aniline, sulphanilic acid [SANS] or aniline disulphonic acid [ALDS], depending which OBA is required. A schematic of the route to producing OBAs is shown below.   OBA Key Materials – website[embeddoc url=”http://www.canda-international.com/wp-content/uploads/2015/05/OBA-Key-Materials-website.pdf” viewer=”google”]

 

BASF declares Force Majeure for a range of EO-based products

paperinsight marketBASF has declared Force Majeure due to technical problems with its ethylene oxide (EO) production.

The statement from BASF is as follows:

‘BASF’s European production sites for ethylene oxide have experienced significant technical problems leading to a Force Majeure declaration on ethylene oxide on May 19, 2015. Due to the ethylene oxide (EO) shortage BASF has subsequently to declare Force Majeure for EO-based products produced in Europe in the portfolio of Home Care and Industrial & Institutional Cleaning, Formulation Technologies, AgChem Additives and certain EO-based products in the portfolio of Personal Care.

The resulting effects of the Force Majeure for customers are currently being evaluated. BASF expects that the supply situation of the affected products will improve towards end of June. Meanwhile BASF is implementing measures to limit the consequences for its customers. BASF will continuously inform customers about the development and the details regarding the supply capability with the affected products.’

It is likely to affect some of the raw materials and products used in papermaking such as the ethoxylates used in for foam control, deposit control, cleaning etc

For the press announcement from BASF, please click here.

For examples of where ethylene oxide is used, click here.

European Patent Office: A pinch of mixed salt for Archroma as Blankophor lose optical brightener patent opposition

PatentThe European Patent Office (EPO) has ruled in favour of Archroma (Clariant) regarding an opposition filed by Blankophor against a patent filed for a mixed salt of an optical brightening agent. The patent in dispute is EP 2 260 145 B1 and the Archroma press release provides interesting detail: click here.

It is clear from the comments credited to Dr Bernd Hauschel that Blankophor are not happy with the decision and it is not difficult to agree with this viewpoint as the patent is creative in its case for proving it has an ‘inventive step’ – a general patentability requirement present in most patent laws, where an invention should be sufficiently inventive or ‘non-obvious’. The use of optical brighteners in the presence of most metal ions, or counter-ions, whether added to the paper making process or naturally present in the process is not new. It will be interesting to read the details of the EPO’s patent ruling.

Dr. Bernd Hauschel, Head of Technology and Intellectual Property at Blankophor GmbH, stated: “Even though we have a different view on the decision of the European Patent Office, we do respect their decision after we lost the opposition case against Archroma’s patent. For this reason, we decided to enter into a license agreement to avoid any infringement of the Archroma patent in the context regarding our products. We also like our patents to be respected.”

Archroma acquired the patent in the private equity purchase of the paper chemical business of Clariant and the intellectual property is owned by a company, Clariant Finance (BVI) Limited, Road Town, Tortola (VG), in the British Virgin Islands tax haven, despite the work being done by inventors based in Switzerland (formerly UK) and France.

Optical brightening agents are used in large quantities to improve the brightness or whiteness of paper and are sold to the paper industry for prices which generate low profit margins as the market is crowded with many manufacturers and suppliers competing for a market which is in decline in Europe and the USA and facing challenges in the rest of the world – let’s hope that this dispute did not erode the profits of the two companies.