Raw Material Feed Stocks The EAA tackles the supply chain at its Spring Meeting. The Eastern Aerosol Association (EAA) convened in Mahwah, NJ for its Spring Meeting. The topics were divided into two specialized areas of specialty: Raw Materials Feed Stocks and Regulatory (for Regulatory, see p. 26). Steel George Buckland of DS Containers, Inc. presented Steel Supply Chain. The major suppliers of steel globally are ArcelorMittal (India), Baosteel (China), Tata Steel / Corus (India), Posco (Korea), JFE / Nippon (Japan), Severstal (Russia) and U.S. Steel (U.S.). Steel has major markets that dominate the landscape. Four major arenas are the BRIC nations: Brazil, Russia, India and China. BRIC countries must be highlighted when discussing global supply as their decision making impacts many areas including estimated growth or loss, stockpiling of raw materials, strength of position, production capacity analysis, et al. The supply of finished goods at the raw material level is often influenced by natural disaster, economic events, scrap input, ocean freight, exchange rates and benchmark timing. Steel can be broken down into the components of coking coal, iron ore and scrap input. Sources of raw material include BHP Billiton (Australia), Vale (Brazil), Rio Tinto (Brazil), Fortescue Metals (Australia) and self mining operations, such as ArcelorMittal. Brazil is the largest supplier of iron ore and coking coal, followed by Australia. Source information locations include Singapore Merchantile Exchange (SMX), Metal Bulletin Iron Ore Index (MBIOI) and London Metals Exchange (LME). Ethanol Linda Marrillia, Product Director, UnivarUSA, explained that many countries beside the U.S. produce ethanol for their domestic need. There are two types of ethanol: synthetic and fermentation; fermentation makes up the largest supply in the U.S. Corn is the main source of ethanol and the price driver in U.S., and weather is the main driver for the cost of corn, followed by supply and demand. A large corn crop is projected for 2013. Oil, Gas, Methanol & Fluorspar Bill Auriemma, President, Diversified CPC, presented How Crude Natural Gas liquids (NLGs) & Related Markets Affect Petrochemical Supply Chains. Total global crude oil production is 88.89 million barrels per day, with an estimated 90 million barrels for 2013. Consumption is 88.83 million barrels per day for 2013, with an estimated 89.70 million barrels for 2013. North American aerosol industry annual propellant consumption is 83 million gallons (Hydrocarbons, DME, 152A, 134A); this excludes CO2 and nitrogen. Crude affects the aerosol industry, as it is the source for gasoline 18 Spray June 2013 (the U.S. consumes 382 million gallons of gasoline per day), diesel, ink, plastic resins, aerosol propellants, liquefied petroleum gas, all transportation and lubricants. Nations that supply the most imported crude and petroleum products are Canada (26%), Mexico (12.2%), Saudi Arabia (11.2%), Venezuela (10.1%), Nigeria (9.1%) and various others (31.1%). The Persian Gulf accounts for 33.6% of imported crude. The Keystone Pipeline and a modest increase in U.S. production will continue to lower this number. Imports continue to trend lower than the previous years, as refiners cut back on inventories. Non- OPEC producing countries, such as Russia, Mexico and Venezuela, have had lower output over the last year. Canadian and U.S. production is up due to shale gas. The forecast for crude oil costs in 2013 is $90–$115 a barrel. A mild winter created excess reserves of natural gas, which softened pricing in the short term. Several utilities (and refineries) are coming off-stream earlier than normal for routine maintenance. NYMEX futures contracts are flat. World methanol prices are driven by China, whose methanol demand by 2015 is expected to equal the rest of the world combined. This is due in part to China’s economic expansion and increased methanol use in the LPG fuel blend DME, and the direct blending into gasoline. However, millions of tons of capacity that feed the market are considered unreliable or uncertain, said Auriemma. China’s domestic producers employ coal-based methanol plants requiring regular shutdowns for maintenance. Methanol supplies from Russia are also considered unstable. Fluorspar prices into North American ports have risen significantly from about $100/tonne in 1995 to $400/tonne currently. Although Mexico is cheaper, China’s volumes are much higher, implying the global price more closely follows their price trend. China’s high price is driven largely by a 15% export duty on fluorspar, which was put in place to ensure that the domestic market supply is adequate. Aluminum Charles Herrmann, VP of Sales at CCL Container presented Aluminum: Pure & Natural. The inherent malleability of aluminum creates many unique design options. Aluminum is a globally traded commodity with transparent material costing. Its chemical and rust resistance makes it a suitable choice for many personal care product formulas, sun care products and products used in wet environments. The base price of aluminum is comprised of three factors: the cost of smelted ingots; the premium charged to transport/store metal; and the cost to transform raw aluminum into slugs capable of being impact extruded (conversion cost). Aluminum can sizes range from 22mm-76mm in diameter and up to 260mm in height; most common aerosol sizes are 35-38-45- 53-59- and 66mm. The base metal cost typically represents 25-45% of the finished aluminum can cost depending on size, for example, 35/38mm containers are usually less than 30%, while 76mm can exceed 45%. Most aluminum pricing is tied to escalator/de-escalator based on changes published in the London Metal Exchange. Polymers Ray Buckwalter, Pinnacle Polymers, presented North American Polymer Market Overview. Significant new areas in North America will provide a boom in natural gas and tight oil production. Many of these areas are in regions that had little or no energy production and lack infrastructure. By 2040, shale gas and tight gas will account for well over half of North American production, while Marrilla Auriemma
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