Petrochemicals used to make medical devices see price hikes as coronavirus spreads

Demand for these intermediate chemicals is pulled by companies that produce finished products, which in turn face such a high number of orders that distributors were told they would remain unattended due to the urgent need to directly supply the healthcare and government response.

Image courtesy of 3M.

Prices for chemicals that are used to make medical supplies such as syringes, catheters, beds as well as protective garments have surged amid overwhelming demand related to the coronavirus spread.

Even in cases where manufacturers of finished goods may choose not to increase prices, costs of medical devices will likely rise as intermediaries along the chain may raise prices on their own.

Some producers of fluoropolymers, key for the production of medical devices, had in some cases already hiked prices, 20% or more, a couple of months before the outbreak of the coronavirus.

Eastman Chemical increases alcohol prices

Eastman Chemical Co. said on Feb. 28, 2020 it raised prices on alcohols used as plasticizers effective March 15 in both North and Latin America.

It said that 2-Ethylhexanol prices, for all packages and grades, rose $0.05/lb while 2EH acid prices would also gain by the same amount, where contracts allow. It did not give any outright price.

Nearly all 2-Ethylhexanol manufactured is used as a precursor for the synthesis of the Diester bis(2-ethylhexyl) phthalate (DEHP), a plasticizer key for the production of medical devices.

DEHP is found in medical tubing and blood bags, according to the U.S. National Library of Medicine. It is the most common phthalate plasticizer in medical devices like intravenous tubing, catheters, and nasogastric tubes.

The 2-Ethylhexanol comes from propylene, which is a co-product of ethylene obtained through the steam cracking of ethane. Another route for propylene is through propane gas dehydrogenation.

As for 2EH acid, it can be used in adhesives, laboratory supplies and rubber-like products. It is also a catalyst for polyurethane foaming, according to the U.S. National Library of Medicine.

Polyurethane foam is what mattresses are made of, including hospital beds, among other uses.

This price increase came despite ethane price declines in previous months. Ethane prices fell nearly 40% during 2019.

BASF increases prices for BDO and derivatives

BASF Corp., the U.S.-based subsidiary of Germany´s BASF, said on Feb. 28, 2020 that effective on April 1, or as existing contracts permit, prices in North America for 1,4-Butanediol (BDO) and derivatives will increase.

Prices for 1,4-Butanediol (BDO) will increase by 6 cents/lb while those for Tetrahydrofuran (THF) will gain 8 cents/lb. In addition, N-methylpyrrolidone (NMP) will gain 6 cents/lb and polytetramethylene ether glycol (polyTHF) will rise 8 cents/lb. It didn´t give any outright price.

“BDO and its derivatives are used for producing engineering plastics, polyurethanes, solvents and elastic spandex fibers,” the company said.

In addition to hospital bedding, other medical applications of polyurethanes include catheter, general purpose tubing, surgical drapes and dressings as well as injection molded devices.

One of the most common use for devices made from BDO are short-term implants. Medical uses of spandex yarn include bandages, hand gloves and surgical hosiery.

BASF, with more than 18,800 employees in North America, had sales of $18.4 billion in 2019. It has traditionally processed BDO from acetylene, which in turn it obtains from natural gas.

Daikin America hiked prices ahead of outbreak

Daikin America, a supplier of fluoropolymer and fluorochemical products for the medical industry, had increased prices in September for Polyflon and Neoflon products, as contracts allowed, “by up to 20% or more.” The price increase for September was announced in a July 2019 press release.

Daikin fluoropolymers are used to manufacture medical devices like catheter and tubing applications for purposes including intravenous drug delivery to patients. They are also used to make pharmaceutical cap liners in medicine containers.

The company said at the time the increases were implemented five months ago that they were necessary to “justify both continued and new investment.”

Fluoropolymers are used “in surgically-implantable medical devices to increase the lifetime of implants, reducing the likelihood of infection and invasive surgery,” according to the ACC.

Besides guide wires and filters they are also used in medical pumps, it said.

About $100 million in economic activity related to “medical care and first responders” depends on fluoropolymers, according to information by the American Chemistry Council on March 11.

The downstream employment provided by fluoropolymers allows as many as 356,000 people to be involved in work activities related to the manufacture of medical devices.

Surging demand for finished medical supplies

3M is one of the companies reporting that they expect demand for medical supplies “to outpace supply for the foreseeable future.”

According to a 3M press release on March 19, 2020, its Aberdeen, South Dakota plant is working around the clock to make N95 respirators.

“While we have not changed the prices we charge for 3M respirators as a result of the coronavirus outbreak, we cannot control the prices other dealers or retailers charge,” 3M said.

Its production capacity is dedicated to supplying the “healthcare and government emergency response.” As a result, distributors have been informed that hospitals are being prioritized.

Similarly, DuPont Corp. has said that current demand for medical products such as protective garments have led to efforts “around the clock in all parts of the world to increase capacity.”

According to a statement issued March 16, DuPont is “prioritizing the needs of healthcare workers” and also providing supplies directly.

The increases in chemicals are coming at a time when crude oil prices have plunged. WTI second-month futures traded on March 20 at about $25 per barrel, down from nearly $60 per barrel at the end of 2019.

Petrochemical prices for products like plastic resins have historically showed correlation to hydrocarbon prices. Pricing for specialty chemicals is more dependent on demand for products they help make.

The coronavirus has clouded the outlook for plastic resin markets.

By Renzo Pipoli