Phthalic anhydride

06 September 1999 00:00  [Source: ICB]

After a dismal start to the year, the road to recovery is far from smooth

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Supply/demand

European production of phthalic anhydride (PA) dropped to 780 000 tonne last year from 810 000 tonne in 1997, and exports were down 4000 tonne to 60 000 tonne in 1998, according to consultancy DeWitt. Operating rates, which averaged 86.6% in 1998, are around 90%. Low production levels were the result of poor demand, orthoxylene supply limitations and 2-EH shortages, which restricted downstream plasticiser production. Demand has recovered a little in Europe and Asia. Exports of PA and dioctyl phthalate (DOP) to Asia have also resumed. Production restrictions from May to late August tightened PA supply with low stocks at many producers. Producers lost margin in the months to May because they were unable to pass on the rapid rise in OX prices. There has been a slight margin claw-back, but further hikes are expected.

Uses

PA is used principally to produce phthalate esters. DOP refers to a group of related phthalate esters which are used widely as plasticisers in polyvinyl chloride. Major end use is in the construction and transportation industries. Alkyd resins containing PA are used in solvent-borne protective coatings. As paint technology increasingly utilises water-borne technologies, many PA-based alkyds have lost out to alternative raw materials.

Technology

PA is manufactured predominately by the orthoxylene route which has superseded naphthalene-based technology. The orthoxylene is catalytically oxidised in a fixed-bed reactor and the reactor effluent containing PA vapours is cooled and sublimated in condensers. The crude PA is purified in a distillation system. Licensors of PA technology include BASF, Lonza and Sisas/Conser.

Health & safety

PA is a white solid with a musty odour that can irritate the lungs. Contact may burn the skin and eyes while longer exposure can cause skin and lung allergies. PA is a combustible solid producing poisonous gases in a fire.

Pricing

PA is available in flake or molten form; flake prices usually hover about DM50/tonne below molten prices. In a tight market flake numbers are higher (they are now around DM50/tonne higher). European PA prices have almost doubled since disastrous levels early this year when they were about DM600/tonne. Third quarter contract levels for medium-sized buyers were about DM1.15/kg (DM1150/tonne) for molten and DM1.20/kg (DM1200/tonne) for flake. By August, monthly contract levels had moved up to DM1200-1225/tonne for molten in NWE and DM1300-1350/tonne in the Mediterranean. Some spot shipments from Asia and the return of Russian suppliers to the market has led to increased spot availability, but producers claim spot PA prices are still DM50-60/tonne above contract. The surge in crude and orthoxylene prices has been fundamental in lifting PA numbers. Orthoxylene spot prices of $200/tonne fob in February/March leapt toward $400/tonne fob in July/August.

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