Since the 4th quarter
of 2009, and continuing annually ever since, we have seen an almost
perfect storm of events all of which continue to affect the SAP
supply around the world. These events, mostly unforeseen
production problems for the primary raw material, glacial acrylic
acid (GAA), have caused the market supply to tighten faster than
anyone predicted. Following is a brief summary of market
conditions in each region as we are seeing and being told.
As far as the petrochemical industry is concerned, Asia is driving
the trends in the world today. This includes all aspects
of materials production, prices, and growth. The Asian
GAA supply has been tight and remains tight with prices increasing
weekly in spot markets.
Also, SAP production capacity in Asia has been at 100% for over 10 +
years now. Most makers are now reporting to be in an oversold
position by 10% - 15% of current capacity. Newer capacities
came on in 2022 and added less than 5% of new SAP capacity to the
Plus, there were production problems, with nearly all Asian makers
shutting down plants and systems for maintenance, as is their custom
every summer. (Not to mention the possible production
breakdowns that can unexpectedly occur.) All these factors are
putting tremendous pressure on already strained systems.
SAP makers are pushing through with plans to expand their
capacities. Still, if ground is broken today it will
take ~2 years before significant new SAP capacity can be realized.
Any new SAP capacity must also be accompanied by a supporting GAA
2. North America:
Here is where most of the perfect storm hit and this time it was
not a hurricane in the gulf. Domestic SAP supply had started
to tighten just before the 4th quarter of last year. Still, GAA was
fairly available, but the market was feeling some upward price
pressure from increasing propylene feedstock pricing used for acid
Once again the market
is set for a possible SAP shortage coming by mid-2024.
1. SAP imports from Asia started to
pull back from the NA market.
2. One US SAP maker started to have
reactor system problems, reducing their production output.
3. American Acryl plant in Baytown,
TX caught fire and its GAA production was effectively destroyed.
This effectively shut off supply of GAA to Nippon Shokubai Company,
Chattanooga SAP plant.
4. Dow chemical announced that they
too had an acrylic acid unit down and had to reduce shipments to
This further reduced the SAP production to at least 2 domestic SAP
5. In a private disclosure to
customers, Dow declared force majeure on GAA contracts and
allocation, affecting US SAP production capacity.
SAP shipments have been delayed going into 2024
and beyond for several customers.
With these events the SAP supply is
falling very short of current demand. The duration is
not known, but industry managers feel that once Dow fixes their GAA
production, and American Acryl is back in production, the SAP supply
situation can return to ~100% of capacity.
However, with no real new capacity coming on stream anytime soon,
the NA market may well experience SAP shortages for several years
even with capacity at 100%.
3. European Union:
The EU market is tracking in parallel to the NA and AP market.
As they entered 2023, some GAA & SAP supplies were available.
But as they entered the 2nd quarter, SAP demand was said to be at
100% and about to be in short supply. Possibly some of
this is due to NA and Asia problems. We know that Middle
Eastern companies, shorted by Asian supply of SAP, are turning to
the EU. Likewise, NA customers and US SAP makers are
pulling from the EU plants to regain some lost capacity here.
Unless the Euro weakens more against the USD, this situation will
remain spotty and long-term. Still, the fact is that extra SAP
volumes, once available in the EU, will likely not be there in 2025.
How long it will continue and how deep the short supply will be is
uncertain for the EU at this point. We continue to
monitor the situation.
4. Market Summary:
Global demand for SAP continues to increase almost without regard to
the current situation.
Conservative numbers put demand growing at 20% annually, but in fact
the growth being realized is closer to 35%.
The major brand diaper producers seem to be moving forward with
plans to increase SAP usage in all global markets rather than
conserve given the current shortage. This condition is
affecting the availability of SAP supply to smaller and more
specialized users. Capital investment in petrochemicals,
which has been in decline the past few years in NA & the EU, is key
to any significant future SAP expansion. In the current
economy, the future NA & EU expansions can really only be driven by
major purchase commitments.
Few if any companies will build a plant on faith that the customers
will come… the risk is too great. The capital requirements for
the integrated supply chain are prohibitive for new blood to enter
the markets, except maybe in China, India and the middle East.
Still, it will take time to get the production in place.
So at least for the near term, customers will be chasing dwindling
supplies of SAP in all markets.
From these events and market conditions, we see a very tight and
short supply for SAP for the foreseeable future. How
long will it last? We are not sure, and cannot
speak for producers' plans, but the conditions are right for it to
last at least through 2025. There are no real, newly
announced, large-scale capacities for SAP coming on the horizon.
Even when it comes, the GAA/SAP production stream must be there and
compete for a tight propylene supply with the larger demand of
polypropylene and other polymers. So, SAP expansions
could be limited for the next few years depending on several
downstream supply factors.
What does all this mean and why am I telling you now?
The short answer is… so that you can be aware of the market
conditions and incorporate the information into your planning.
We will continue to do the best we can to supply customers with
However, the larger market today is conniving against all of us, and
it will take a strong effort to keep plans on course.
Communication is key to keeping on top of developments and changes
We also urge all customers to seek out more information from other
sources to verify this information and not just take our view.
Our goal, as always, is to work with and support our customers to
the best of our ability.
I echo my colleague’s comments relative to sharing this information
Please consider this information as you navigate 2024 and beyond.
Do not hesitate to contact WaterGel Crystals with any questions or