PA and MA players plan industry consolidation

21 February 2000 00:00  [Source: ICB]

Consolidation in the phthalic anhydride (PA) and maleic anhydride (MA) sectors is imminent with major producers discussing the sale of various production assets across Europe.

Sisas denies that its 110 000 tonne/year PA unit in Feluy, Belgium, is for sale but admits it is in discussions with a major NWE producer for the sale of its on-site MA and plasticiser units with the view of finalising a sale before the summer. The Feluy site has capacity to produce 220 000 tonne/year MA, 100 000 tonne/year MA derivatives, 100 000 tonne/year plasticisers, and 12 000 tonne/year formalic acid. A BASF source confirmed the company was negotiating to buy the Sisas MA and plasticiser units but insisted it had no interest in purchasing the PA unit which is not back-integrated.

The European MA sector would welcome such rationalisation. There are 11 MA producers in Europe but Sisas exiting the MA business will mean one less player. The European MA market is oversupplied with the latest capacity addition a 40 000 tonne/year plant brought onstream mid-1999 in Moers-Meerbeck, Germany, by Huntsman-Condea.

Meanwhile, the other Sisas PA unit in Ostend, Belgium, is also under the spotlight with talk of a possible sell-off, although the Italian producer has again denied the rumours.

Market players believe that if the Ostend unit was to be sold, the new owners would most likely close the 100 000 tonne/year PA unit as it too is not back-integrated. There is also an on-site 80000 tonne/year plasticiser unit. Rumours abound of an orthoxylene feedstock (OX) supplier to the Ostend unit being roped in by a NWE producer to buy the PA plant to avoid securing a majority share of the PA market but no further details were available.

Also, BP Amoco is said to be close to selling its 80 000 tonne/year PA unit in Hull, UK, although the company has said there are no potential buyers at present. BASF, which was thought to be one of the possible contenders, said it is no longer a contender, adding that BP Amoco's offer was too high for it to meet.

Last year, BP Amoco announced it would dispose of chemical assets worth $2.5bn and cut petrochemical costs by $400m/year as part of a $10bn asset disposal programme (ECN 19 July 1999).

In southern Europe, there is also speculation that the Spanish PA producer Cepsa is considering buying Driftal's 18 000 tonne/year unit in Lisbon, Portugal. Further details were unavailable.

Meanwhile, European PA producers failed in attempts to increase monthly contracts for molten in February and prices settled lower at DM1.10-1.15/kg FDNWE, a drop from the January range of DM1.15-1.20/kg FD NWE. Producers blamed oversupply as an overriding factor for the weaker prices.

In March, suppliers will attempt a price target of DM1.20/kg FD NWE, despite failing to achieve this in February.

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