The Acid Balance: Cost Optimization Strategies for Acetic Acid Production

Acetic acid (CH3COOH) is a clear, colorless liquid organic compound with a sour taste and a pungent odor. It is produced by the carbonylation of methanol and is also manufactured via bacterial fermentation. Acetic acid is extensively employed in the manufacturing of vinyl acetate monomer (VAM), purified terephthalic acid (PTA), acetic anhydride, and ester solvents, among others. It provides solvent effectiveness, chemically useful to use in syntheses, as well as utilization in the fabrication of polymers and resins. Moreover, acetic acid is also credited with being economically affordable, with a wide versatility, being easily renewable, an application in food preservation, as well as functionality as a laboratory reagent. According to an IMARC study, the global acetic acid market reached USD 12.5 Billion in 2024. Looking ahead, the market is expected to grow at a CAGR of approximately 5.3% from 2025 to 2033, reaching a projected size of USD 19.9 Billion by 2033. Acetic acid is being spurred by its extensive use across various industries, most notably for the manufacturing of vinyl acetate monomer (VAM) that finds uses in paints, adhesives, and coatings. Increased use of PTA (Purified Terephthalic Acid) for manufacturing polyester fibers and PET bottles is another important driver for the growth of the market. Expansion in the textile and packaging industries, particularly in the developing countries of India and China, is further enhancing demand. In addition, the application of acetic acid in food preservatives, pharmaceuticals, and solvents aids its market growth. The trend towards bio-based acetic acid because of environmental policies and green trends is also influencing the industry. Also, growing automotive and construction industries are boosting demand for coatings and adhesives, where derivatives of acetic acid are an essential component. But volatile raw material prices and strict environmental rules could be problems. Nevertheless, advances in manufacturing processes are anticipated to improve cost effectiveness and market sustainability.

Trending Insights on Acetic Acid: Latest News and Developments

• In November 2024, An MOU has been signed between INEOS Acetyls and Gujarat Narmada Valley Fertilisers & Chemicals Ltd (GNFC) to investigate the viability of constructing a new, 600kt, world-scale acetic acid factory at GNFC's location in Bharuch, Gujarat, India. The only company now producing acetic acid in India is GNFC, although INEOS Acetyls is one of the world's top producers. After nearly 30 years of technology collaboration, the two businesses will now form a new joint venture to oversee the project's launch, which is anticipated to happen in 2028.
• In September 2023, Eastman Chemical Company announced that it has reached a final agreement to sell its Texas City Operations to INEOS Acetyls, a multinational producer and supplier of acetic acid and related chemicals that is controlled by the INEOS Group.
• In May 2023, Sekab expanded its production of bio-based acetic acid, which can cut carbon emissions by as much as 50%. This project represents the industry's move towards environmentally friendly manufacturing techniques and is in line with the growing need for sustainable chemical solutions.
• In April 2022, Jubilant Ingrevia Limited declared the launch of its new food-grade acetic acid plant based on green ethanol at its production site in Gajraula, Uttar Pradesh. The food-grade acetic acid plant, which has a rated capacity of 25,000 tonnes per year, commenced operations on April 28, 2022.

Case Study on Cost Model of Acetic Acid Manufacturing Plant

Objective: One of our clients has approached us to conduct a feasibility study for establishing a mid to large-scale acetic acid manufacturing plant in South Central, Illinois, United States. We have developed a detailed financial model for the plant's setup and operations. The proposed facility is designed with a production capacity of 600 tons of acetic acid per day and will cover a land area of 125,000 square meter.

Manufacturing Process: The production of acetic acid through methanol carbonylation is a multi-step process that requires efficient production and high purity. The process starts with raw material supply, where carbon monoxide and methanol are stored in bulk. Methanol reacts with CO in the presence of a rhodium catalyst at high pressure (2.9 MPaG) and temperature (188°C) in the carbonylation reactor to form acetic acid. The unreacted gases are separated, and the liquid phase is treated further. The flash evaporator flashes off volatile material such as methyl iodide and water, which is sent to the pre-separation tower where entrained catalyst particles are scrubbed and recycled. The light component tower distills acetic acid from the lighter components. The drying tower removes water and traces of iodine to further purify crude acetic acid. The end product is warehoused in resistant tanks, quality checked, and then packed in drums, IBCs, or tankers for use in industries such as chemical production, textiles, and food processing.

Mass Balance and Raw Material Required: The primary raw materials utilized in the acetic acid manufacturing plant include carbon monoxide, methanol, and other chemicals. To produce 1 ton of acetic acid, we require 0.5356 tons of carbon monoxide, 0.5380 tons of methanol, and 0.0002 tons of other chemicals.

List of Machinery:

The following equipment was required for the proposed plant:

• Reactor
• Flash Evaporator
• Pre-separation Tower
• Light Component Tower
• Drying Tower
• CO unit

Techno-Commercial Parameter:

• Capital Investment (CapEx): The total capital cost for establishing the proposed acetic acid manufacturing plant is approximately US$ 142.87 Million. Machinery cost account for 70.0% of the total capital cost, while civil works costs are estimated at around US$ 28.12 Million. The land and site development cost for acetic acid manufacturing plant constitutes a significant portion of the total capital cost, including the land registration charges, boundary development charges, and other development charges. This ensures a robust foundation for safe and efficient plant operations.
• Operating Expenditure (OpEx): In an acetic acid manufacturing plant, the operating cost for the first year of operations is projected at US$ 75.75 Million. This estimate includes the cost of raw materials, utilities, depreciation, taxes, packing cost, transportation cost, and repairs and maintenance. By the fifth year of operations, the total operational cost is expected to increase by 14.7% compared to the first year, driven by inflation, market fluctuations, and potential rises in the cost of key materials. Disruptions to the supply chain, rising consumer demand, and shifts in the state of the world economy are some of the factors causing this growth.

• Profitability Analysis Year on Year Basis: The proposed acetic acid plant, with a capacity of 600 tons of acetic acid per day, achieved an impressive revenue of US$ 103.71 Million in its first year. We assisted our client in developing a detailed cost model, which projects steady growth, with revenue reaching US$ 123.16 Million by year 5. Gross profit margins improve from 27.0% to 29.5%, and net profit margins rise from 6.6% to 14.5%, highlighting strong financial viability and operational efficiency.

Conclusion

Our acetic acid manufacturing plant's financial model was meticulously modelled to satisfy the client's requirements. It provided a thorough analysis of production costs including capital expenditures, manufacturing processes, raw materials, and operating costs. The model predicts profitability while accounting for market trends, inflation, and any shifts in the price of raw materials. It was created especially to satisfy the demand of producing 600 tons of acetic acid per day. Our commitment to offering precise, client-cantered solutions that ensure the long-term success of significant industrial projects by giving the client useful data for strategic decision-making is demonstrated by this comprehensive financial model.

IMARC's Financial Model Expertise: Helping Our Clients Explore Industry Economics

IMARC is a global market research company that offers a wide range of services, including market entry and expansion, market entry and opportunity assessment, competitive intelligence and benchmarking, procurement research, pricing and cost research, regulatory approvals and licensing, factory setup, factory auditing, company incorporation, incubation services, recruitment services, and marketing and sales.

Brief List of Our Services: Market Entry and Expansion

• Market Entry and Opportunity Assessment
• Competitive Intelligence and Benchmarking
• Procurement Research
• Pricing and Cost Research
• Sourcing
• Distribution Partner Identification
• Contract Manufacturer Identification
• Regulatory Approvals, and Licensing
• Factory Setup
• Factory Auditing
• Company Incorporation
• Incubation Services
• Recruitment Services
• Marketing and Sales

Under our factory setup services, we assist our clients in exploring the feasibility of their plants by providing comprehensive financial modeling. Additionally, we offer end-to-end consultation for setting up a plant in India or abroad. Our financial modeling includes an analysis of capital expenditure (CapEx) required to establish the manufacturing facility, covering costs such as land acquisition, building infrastructure, purchasing high-tech production equipment, and installation. Furthermore, the layout and design of the factory significantly influence operational efficiency, energy consumption, and labor productivity, all of which impact long-term operational expenditure (OpEx). So, every parameter is covered in the analysis.

At IMARC, we leverage our comprehensive market research expertise to support companies in every aspect of their business journey, from market entry and expansion to operational efficiency and innovation. By integrating our factory setup services with our deep knowledge of industry dynamics, we empower our clients to not only establish manufacturing facilities but also strategically position themselves in highly competitive markets. Our financial modeling and end-to-end consultation services ensure that clients can explore the feasibility of their plant setups while also gaining insights into competitors' strategies, technological advancements, and regulatory landscapes. This holistic approach enables our clients to make informed decisions, optimize their operations, and align with sustainable practices, ultimately driving long-term success and growth.