Ingevity to close Louisiana pine chemicals plant

Faced with growing competition for its main raw material, the chemical maker Ingevity is closing its pine chemical plant in DeRidder, Louisiana, in the first half of 2024.

CTO is rich in fatty acids that Ingevity and other companies have been separating and upgrading for over a century. But biobased feedstocks like CTO are in increasing demand as a raw material for transportation fuels as companies move away from petroleum to lower their greenhouse gas emissions.

“CTO was in surplus. Now it’s short,” says Dan Dunleavy, managing director of Ingevity’s Renewable Ventures unit. At the same time, demand is shrinking fast for rosin, a major fraction of CTO that isn’t easily made into fuels. The DeRidder plant makes rosin into ingredients for the inks and papers used to print magazines, for example, a market that has been declining.

Jeffery Yost, a consultant specializing in pine and oleochemicals, says CTO has historically traded at about $450 per metric ton. Earlier this year it got up to $2,250 per metric ton, and is currently around $1,100, Yost says. “It’s not going to get better. If anything, it’s going to get worse.” For legacy markets built on cheap CTO, “this is a wrecking ball,” he says.

Government incentives are a major driver of changes in the CTO market, according to Matthew Stone, managing director of the market research firm Prima. At the Alternative Fuels and Chemicals Coalition’s recent conference in Washington, DC, Stone told attendees that US tax credits from the Inflation Reduction Act of 2022 are “turbocharging the supply side for future fuels.”

Likewise, mandates from the European Union’s Renewable Energy Directive are creating demand for biobased diesel and other biofuels in the EU. As a result, Dunleavy says, US pulp and paper mills are exporting more than five times as much CTO to Europe as they used to.

Dunleavy says Ingevity gets its CTO under long-term contracts with pulp and paper mills in the US Southeast. He says that despite the draw from biofuels, Ingevity plans to redirect the feedstock used in DeRidder to its other pine chemicals plants, which make higher-margin chemicals such as battery materials and aerospace lubricants.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts