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Annual surfactant sales have risen 3-4%, but as the trade war heats up, the economy could suffer. Looking for a new surfactant?
September 2, 2019
By: TOM BRANNA
Chief Content Officer
Effects from the trade war between the US and China is felt on both sides of the Pacific, as economic growth for both countries cooled during the second quarter. In fact, at 6.2%, China’s economy expanded at its weakest rate in at least 27 years, according to economists. Meanwhile, second quarter growth in the US decelerated but not as much as analysts expected. US GDP increased 2.1%, down from the first quarter’s 3.1% gain and the weakest increase since Q1 2017. As Happi went to press, there was a truce as US President Donald J. Trump said he would not impose tariffs on another $300 billion worth of goods until 2020. Still the tariff talk had a median 45% of economists predicting that the US economy would slip into recession in the next two years, up from 35% in the previous survey and the highest since the question was first asked in May, 2018. Of course, the further away an economy gets from its most recent downturn, the closer it gets to the next, so all of these estimates and predictions should be somewhat expected and taken with a grain of salt. Still, the trade wars were top-of-mind among a number of surfactant suppliers, who took part in Happi’s annual market review, and with good reason; taken together, the US and China accounted for one-third of global surfactant consumption in 2017. “The economic challenges facing the overall chemicals industry are also having a negative impact on the surfactant market,” observed AB Ghosh, managing director, surface chemistry, Nouryon. “This includes the ongoing trade dispute between the US and China, which appeared to be kicking into higher gear at the beginning of August, and the overall economic slowdown we have seen globally. This led to a challenging second quarter for the agro business in North America and a slowdown in the global personal care and cleaning markets.” According to Ghosh, these factors will continue to have a negative impact on the industry during the second half of the year, with the only positive being that raw material prices have remained relatively stable. “The economic challenges have not altered our organizational strategy, but it does present questions on expected growth rates,” he added. According to Univar executives, last year the surfactant market was impacted by constrained supply during a high demand period. This year, the trend reversed and is putting pressure on the surfactant market overall. The distributor expects that during the next three to five years, nonionic surfactants will dominate the conversation as new capacity comes online in the US. Whether nonionic, anionic, cationic or amphoteric, without factoring in trade war effects, Allied Market Research predicts the global surfactant market will post annual gains of 5.4% to reach $64 billion by 2025. Mild and Green Besides talking trade tensions, surfactant industry executives extoled the virtues of their newest products, many of which are designed to satiate consumers’ hunger for mild, green personal care and household care formulas. Along those lines, finished product formulators are requesting more ingredient data than ever before to assuage consumers and retailers about the safety of their products. “There has been a significant growth in surfactant demand in 2019 compared to last year. Surfactants that are nature inspired, environmentally friendly, have excellent performance and aesthetic appeal, are becoming more popular,” observed Divya Namjoshi, technical and marketing specialist, Ajinomoto Health & Nutrition North America. “Customers are looking for milder surfactants that have excellent cleansing and moisturizing properties. Formulators are shying away from petroleum-derived and nature-disrupting products as sustainability is becoming an important focus for the industry. Beauty products that have natural claims and ‘free-from’ claims are showing good growth.” Similarly, Bob Griffiths, vice president of sales, Innospec, told Happi that the surfactant market in 2019 continues to favor the mild product range that Innospec produces. “Isethionates, taurates, glutamates and glycinates remain in strong demand due to their mild sulfate-free basis,” he explained. According to a BASF spokesperson, the sulfate-free segment for 2019 is softer than 2018, a year with numerous brand extensions and new product launches. Still, BASF maintains that fundamentals for the sulfate-free segment continue to look good as launches continue to be strong and consumers are demanding mild products that perform. Sebastien Massard, global marketing manager, Vantage Personal Care, agreed the demand for mild surfactants has been particularly strong, driven by the need for formulations compatible with sensitive skin. “As the trend for facial cleansers grows, formulators are looking for ingredients that will be acceptable for use in the face, an area particularly sensitive to irritation,” he said. Massard noted that the cleansers category has been performing very strongly, fueled by new beauty routines inspired by Japan and Korea, where skin cleansing is a mandatory step before applying any additional beauty products. Water-free formats, like shampoo-bars or granulated cleansers, have invigorated innovation within these categories, too. Question Marks But not every supplier agrees with that assessment. Yes, they concur, demand for mild, green materials continues rising, but these demands come at a time when concerns are growing about the market’s potential. “The past 12 months have been tepid in terms of growth and choppy in terms of month over month demand,” observed Richard Rehg, vice president of commercial at Pilot Chemical Company. “The pockets of growth we saw in the oil and gas market in the last half of 2018, slowed in 2019, and overall, consumer-facing goods like home and personal care are declining. Industrial markets continue to run flat year over year, but it’s cautious in the wait and see approach from trade wars and geo-political concerns.” Of course, generally, surfactants in the cleaning market are tracking with economic performance across the regions. According to executives at Evonik, slower growth in the home care markets of North America and Europe are expected due to formulation optimization, change in end users’ habits such as using professional services or less intensive cleaning, as well as single dose packaging. On the flip side, higher incomes in developing global regions including the Asia Pacific region will drive demand for higher-end products such as liquids over powder laundry detergents, along with penetration of automated machines. Regulatory Issues As industry observers watch economic and geopolitical issues, they are keeping eye on regulators’ intent. Several suppliers noted that potential bans on 1,4-dioxane could drive completely different buying/spending patterns in the marketplace as costs will increase significantly to achieve the much lower contamination levels. “It’s unlikely that consumers would shoulder the cost differential, which puts pressure on surfactant manufacturers to change the game,” opined Rehg. Stuart Holt, global technical marketing manager, cleaning at Nouryon, said cleaning product customers are asking for dioxane residual information for ethoxylated products, disclosures in compliance with California’s Cleaning Product Right-to-Know Act, naturally-derived surfactants, and biodegradable polymers. “Some customers are moving away from petroleum derived materials, but cost/performance characteristics continue to hold strong for petroleum- derived materials, and there will always be a place for synthetics,” he added. Shannon Smith Butz, technical director, surfactants at Coast Southwest, Inc., noted an uptick in the sales of pre-formulated blends, particularly ones with a natural story and with specialty preservative packages that are free from isothiazolinones and formaldehyde. “Formulators have been replacing surfactants that contain formaldehyde releasers for many years; we are seeing an increase in requests to replace methylchloroisothiazolinone and methylisothiazolinone with alternate preservatives,” she explained. To meet these demands, Coast Southwest is introducing surfactants which are either preservative-free or preserved with safer and more effective preservative packages. “We are offering a number of surfactants with alternate preservatives, such as Sharomix AM24, benzoic acid, or phenoxyethanol, as well as surfactants that are self-preserving,” she said. “Formulators want more sophisticated ways to reduce environmental impacts. Besides seeking bio-based ingredients, they are examining the entire lifecycle of their products. As a result, they are developing more concentrated formulations and formulations with better efficacy at lower use levels.” To meet their demands, Coast Southwest offers Endinol B-DLM, which can be used to produce concentrated cleaners. According to Leandra Moraes, hair care marketing manager, Chemyunion’s customers have been demanding milder surfactant solutions that reduce the concentration of synthetic and claim sulfate-free products, the latter corroborating Mintel data on the latest cosmetic product launches in Europe and America. They are also asking for less eco-toxic products with the same performance, a challenge that is not always possible to achieve. “We have been working in alternatives to supply raw materials that can perform as a surfactant, but are 100% solid,” he added. Ghosh told Happi that new regulations have had an impact on the personal care market, helping suppliers like Nouryon that offer milder, sulfate-free products. Natural, safe, mild, sustainable, concentrated and easy-to-use solutions are in demand at Stepan. European customers are particularly interested in not only sustainability-advantaged products, but also those that meet a variety of regulatory requirements, explained Terri Germain, business development manager, consumer products. “These trends present a large opportunity to provide cost-effective technology with a sustainable advantage. As such, Stepan considers not only the form and performance of our products, but also the origin of our raw materials, the environmental impact and mildness of our products,” she said. To meet the desire for natural, sustainable and “free-from” products, Lubrizol offers several sulfate-free products which are plant-based with high renewable carbon index numbers. Lubrizol’s surfactant portfolio also has many sulfate-free, bio-based blends which offer all the foaming and mildness properties consumers expect. The company has also transitioned to more environmentally friendly and safer preservative packages. “Lubrizol’s commitment to developing products that are safer for the environment is exhibited in many corporate-wide global initiatives around sustainability and safer chemicals, including Ecocert, EcoVadis, RSPO, and others,” said Sharie Moskaluk, global product manager, surfactants. “Additionally, Lubrizol Home Care has advanced the use of safer chemicals through participation in and support of CleanGredients.” Griffiths of Innospec noted that the general push for more natural products continues to grow as well as product transparency as consumers seek more information about the beauty formulas that they consume. According to Univar, the top two criteria for most of its customers are efficacy and economics. Customers continue to formulate with petroleum-derived materials where they create high-performing formulas at a competitive price. According to Cathryn Estes, product marketing director, surfactants, natural products pique a lot of interest, but only end up in formulas when they have a premium or niche application which can command better economics. “Customers are now looking at innovation in terms of both formulating and processing. Suppliers are moving up the value chain to create blend concentrates of multiple surfactants,” said Dejana Drew, director of technical solutions, Univar. “These offer simplified formulas to customers and likely a reduction in overall costs, as many of these are compatible with cold processing. Innovation is also, to some degree, driven by changes to our environmental regulations and restrictions. Customers are paying attention to sustainability trends such as water conservation, fair trade materials, and minimizing waste in both manufacturing and packaging.” Kelly Gilroy, business director, beauty and personal care, Univar, added that customers are interested in products that perform and provide a unique sensory experience. “Some of the rheology modifiers on the market build special and luxurious emulsions, or even multiple phases during the customer interaction,” she explained. “On the other hand, solids remain interesting with the waterless sustainability trend, and more personal care products are being formulated into a powder, bar, or stick format.” Getting Personal Acme-Hardesty’s Rishabh Shah, director, technical services-personal care, notes that customers want next generation ingredients that are efficacious, free of non-preferred ingredients and represent alternatives to traditional surfactants systems. “Technologies that are derived from sugar, alternative vegetable sources, fermentation derived materials are of interest,” he said. “With the waterless trend, powder, needle and granular surfactants are preferred and are being evaluated in anhydrous cleansing systems. Croda executives also point toward the growing demand for waterless formats, not only in the surfactant market, but also the personal care industry as a whole. “Consumers want to live sustainably, and a big part of that is water conservation,” observed Donna Petretti, North American marketing manager-personal care, Croda. “Companies are tasked with finding ways to use less water in formulation development and some popular waterless formats we feel meet this need are bars, balms and powders.” In response, Croda has developed a variety of waterless formulation prototypes such as, cleansing sands, makeup remover oils, as well as shampoo and conditioning bars. To meet demand for more natural and plant-based ingredients, Nouryon is introducing a group of amidoesterquats, which provide a better aquatic toxicity and (aerobic and anaerobic) biodegradability profile compared to the current industry benchmark. Massard said “palm-free” and “RSPO Mass Balanced” are criteria being requested frequently. For formulators wanting to steer away completely from petroleum-derived materials, he said Vantage has been leading the way for bio-ethoxylated ingredients in the cosmetic industry. “These ingredients demonstrate the performance of ethoxylated materials, but are entirely derived from sustainably sourced, non-GMO corn; a breakthrough in the surfactant category,” Massard added. No Place Like Home Care Many Coast Southwest customers are using mild and sulfate-free products such as Endinol MILD B-SF65 sulfate-free performance concentrate in home care products such as light duty dish and hard surface cleaner formulations. There is an ever higher demand for products with lower levels of problematic by-products and components, according to Smith Butz. “We continue to see growth in bio-based surfactants and in non-sulfate anionic surfactants (and) a decline in the use of harsh surfactants,” Smith Butz explained. “Even in home care formulations, formulators are looking for surfactants that are gentle for consumers to use.” Derek Dagostino, global marketing manager, cleaning solutions, Evonik, noted that changes in consumer habits toward less intensive cleaning and the higher use of professional cleaning services in addition to the reformulation of over-engineered products with cheaper ingredients have muted growth in the home care market. “Our customers are requesting green surfactants that are both functional and compatible with other ingredients in formulations,” he explained. Evonik has launched RewoFerm SL One to meet this need; the product is a sophorolipid-based biosurfactant that offers excellent cleaning performance, environmental compatibility, mildness to skin, and production from renewable raw materials. “End users in the I&I market continue to seek specialty chemistries and formulated solutions to replace formulations with solvents or controversial ingredients including nonyl phenol ethoxylates for application-specific needs,” Dagostino added. Recent Supplier Additions With so many of the world’s economies now in their tenth year of expansion, Ajinomoto is investing in its lineup of amino-acid derived, eco-friendly, highly biodegradable surfactants, notes Namjoshi. “Given the growing demand of surfactants and how Ajinomoto’s surfactants fit the industry needs and trends, we are in the process of building a brand new surfactant factory in Brazil.” The company also added two amino acid derived anionic surfactants—Amisoft ECS-22W, Amilite GCK-12H. Lubrizol Life Science has invested in additional assets at its Bowling Green, OH, surfactant plant to meet growing surfactant demand. “We continue to expand our global footprint with a manufacturing facility outside Rio de Janeiro, Brazil, which is now equipped to produce various surfactant chemistries,” added Moskaluk. Vantage recently finalized the acquisition of Leuna-Tenside GmbH (LTG), a manufacturer of specialty surfactants sold throughout Europe and around the world. Located in Leuna, Germany, the company is focused on small volume, niche products supported by flexible manufacturing capabilities. LTG’s product portfolio includes anionic and nonionic surfactants, and emulsifiers that are based on naturally derived ingredients. This diverse offering will open new opportunities for Vantage in the fast-growing development of sulfate-free and soap-free formulations in personal care. “The acquisition of LTG is a transformational deal for Vantage that provides us with a strategic manufacturing footprint in Europe,” commented Tiffany Kyllmann, chief strategy officer, Vantage. “LTG’s production facility is attractively located in Germany with products and chemistries that are similar to those of Vantage. The synergistic combination of LTG with Vantage will bring enhanced value for our customers through a broader technology portfolio with expanded global manufacturing capacity and customer service.” Pilot has invested in a new pilot scale sulfonation plant at its Middletown, OH facility, which will be commissioned by the end of 2019. “(It) will enable us to explore new chemistries with faster iterations to bring products to market in a quick and nimble fashion,” explained Rehg, who noted that Pilot continues to invest in innovation and technology, opening a dedicated innovation center in 2018 and expanding Pilot’s technology center for the beginning of 2020. These moves will add R&D resources to Pilot and are part of the company’s strategy to focus on innovation and fulfill the needs of customers and markets, he added. BASF has been growing its production capacity with two production expansion projects at sites in Cincinnati, OH, and Jinshan, China. According to a company spokesperson, with these projects BASF aims to better serve North American and Asian customers from regional supply points while reducing cross-regional volume flows and shortening lead times. This year, Stepan introduced Stepanquat Helia, billed as a a modern hair conditioning agent that is better for hair and the environment. It provides soft, manageable hair without the typical toxicity or safety concerns associated with traditional conditioning agents, according to the company. Derived from sunflower oil, Stepanquat Helia is a very mild, naturally-derived cationic surfactant ideally suited for hair conditioners and skin care products. It provides excellent wet and dry combability on hair in addition to excellent detangling and a soft, conditioned feel. In skin care applications, it provides a unique, soft, conditioned skin feel. It is a 95% active ingredient that can help reduce shipping costs and emissions by shipping less water. Stepan also introduced Bio-Soft DR-13, a versatile, nonionic surfactant that qualifies for use in US EPA Safer Choice-certified products and meets its stringent direct release screen. Bio-Soft DR-13 can be used for a variety of indoor and outdoor cleaning applications, and is a reflection of Stepan’s commitment to the development of safe and sustainable products. This nonionic surfactant is a strong degreaser with versatility to meet a variety of outdoor cleaning needs, including vehicle and boat cleaning, deck cleaning, power washing, all-purpose cleaning and engine cleaning, according to Stepan. Shah said Acme-Hardesty is evolving with value-driven solution selling, expansion of its warehouse footprint in North America, and hiring technology-focused sales force, marketing and technical talents. “Additionally, we have invested significantly in enhancing our presence via social media channels, working closely with industry experts and consultants, and a new technical experience center based out of our headquarters at Blue Bell, PA,” he added. Moreover, during the past year, Acme-Hardesty has partnered with key principals and introduced multiple products that are value driven and innovative. “Our primary objective is to service customers efficiently and help provide a complete solution,” Shah explained. Croda recently released new information about its Synperonic PE series, a group of nonionic, tri-block copolymer surfactants, suitable for a wide range of applications. This included a refresh to the product literature and an updated presentation. “Along with the new materials for Synperonic PE series, we’ve released new formulations to complement these products,” added Petretti. “An example is the Quick Rinse-Off Micellar Shampoo that gently cleans the hair and scalp with Synperonic PE/L 64 and Synperonic PE/F 68.” Moraes told Happi that the Brazilian market has remained stable for the past three years and no investments have been required. “At Chemyunion, we are focused in specialties and as consequence in niche markets which so far has not demanded investment,” he said. “However, we keep investing in R&D and innovation in attempt to generate new disruptive ways of making products waterless and more in line with the sustainability and natural trends that lead the market. In January 2019, Nouryon launched a more sustainable, water-miscible defoamer, Ethylan TB345, that helps household and industrial cleaning formulators meet growing customer need for environmentally safe and cost-effective products that do not compromise on performance. Foam can be a big problem in certain household and industrial cleaning operations, with consequences ranging from reduced cleaning performance to downtime of production processes. Holt told Happi that Ethylan TB345 defoamer is an excellent alternative to what is currently on the market while being inherently biodegradable, non-persistent and label-free. Drawing on its longtime experience in the personal care and industrial cleaning markets, Coast Southwest has developed an innovative line of surfactants and unique surfactant blends. “These products address the contemporary preferences for formulators for alternative preservatives, and of consumers for new technology such as sulfate-free or DEA-free options,” explained Smith Butz. Endinol MILD B-SF65P is a complete sulfate-free surfactant package based on vegetable-derived, mild and gentle surfactants which can be easily diluted into natural formulations to achieve exceptional foaming and feel. It is preserved with phenoxyethanol and contains no ingredients or by-products with Proposition 65 warnings and no formaldehyde-donors or isothiazolinones. Endinol B-DLM is a fully formulated DEA-free surfactant blend optimized for maximum cleaning and foaming performance. This mild and gentle ingredient is easily diluted into personal care cleansing and household cleaning products. Endipearl PK3 is an easy-to-use, highly efficient, cold pearl blend that allows the easy formulation of pearly shampoos, body washes, and hand soaps. Endipearl PK3 is formaldehyde- and sulfate-free. Obviously, surfactant suppliers are moving forward with their expansion plans while the world waits for US-China trade talk tensions to subside, the UK to exit the EU, and Hong Kong’s “one-country, two-systems” to play out. Clearly, the world can be a messy, dirty place, and that means surfactants will be in demand no matter what happens!
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