04 February 2002 00:00 [Source: ICB]Restructuring last year kept European markets fairly balanced despite weak demand. Future prospects for demand growth lie in developing economies
Phthalic anhydride (PA)'s major outlet, accounting for about half of global production, is in the manufacture of phthalate esters, mainly dioctyl phthalate (DOP), used as plasticisers in polyvinyl chloride (PVC). Other major uses are in unsaturated polyester resins, which consume about 22% of output, and alkyd resins. However, the latter, used in solvent-based coatings, is declining as water-borne technologies take over. PA can be supplied in molten or flake form.
European production is estimated by consultancy DeWitt to have fallen to 600 000-650 000 tonne in 2001, from 730 000 tonne in 2000 (Cefic's estimate). The drop reflects two plant closures (BP in Hull, UK, and Driftal in Portugal), production interruptions at Sisas during its divestment process, and weak demand. BASF bought Sisas' Feluy, Belgium, unit and Proviron took the Ostend, Belgium, facility. Low production rates have also been partly due to the lack of export demand to Asia. However, DeWitt says Russia is now exporting to China, replacing Korean exports: Russia benefits from a 50% reduction in import duty and VAT.
Europe is still oversupplied and further plant closures are a possibility, particularly if prices remain so low. More rationalisation could also happen, but the west European market is fairly concentrated with just six players holding 84% of capacity, notes DeWitt. It believes there is much more scope in eastern Europe where there are several small players. Lonza announced last month it has sold its polymer intermediates business to PPM Ventures, the private equity arm of Prudential.
European monthly contract prices fell in the first quarter of 2002 to reflect the E34/tonne drop in orthoxylene (OX) feedstock. January is quoted at E570-600/tonne delivered for molten material. Prices held fairly steady for most of 2001, although they started to slip again in quarter four. Margins have been under pressure during 2001 and remain slim.
PA is manufactured predominantly by the OX route which has largely superseded naphthalene-based technology. OX 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 vacuum distillation system. Research efforts centre on developing and improving catalysts. Newer catalysts reduce the air to OX ratio, resulting in lower capital investment and energy costs.
PA is a white crystalline solid or clear molten liquid with an irritating odour. It reacts with moisture to form phthalic acid which can corrode metals and also reacts strongly with strong oxidants. It is combustible and PA dust may form explosive mixtures with air. It is irritating to the eyes, skin, nose and throat and excessive exposure can cause sensitisation and asthma. Contact with molten product will burn the skin.
Global demand growth is forecast at 2-3%/ year, although developing markets in Asia, eastern Europe and the Middle East will see higher rates. The European plasticisers sector is growing at about 1-1.5%/year, but because of the shift in production for all stages of the chain to Asia, DeWitt forecasts a decline in European production of about 1%/year over the next five years.
The health issue surrounding phthalates has given some impetus to the shift from DOP to diisononyl phthalate (DINP), but this has no real implications for PA as, although less PA is used in DINP, the amount required in the plasticiser is higher. Taiwan's Nan Ya Plastics will commission a second 100 000 tonne/year plant in Mailiao this quarter. Iran's National Petrochemical has cancelled plans by subsidiary Esfahan Petrochemical to build a 21 000 tonne/year plant in Esfahan, Iran.
|Angarsk PCC||Angarsk, Russia||15|
|Avdeevsky Koksokhimichesky Zavod||Avdeevka, Ukraine||24|
|Destilacifa Dova||Teslic, Bosnia-Herzegovina||2|
|Koksno Komb Boris Kidric|
|Neste Oxo||Nol, Sweden||30|
|Platifay Kimya||Istanbul, Turkey||12|
|Rutgers VFT||Zelzate, Belgium||20|
|Zaklady Azotowe Kedzierzyn|
*being sold to PPM VenturesSource: DeWitt
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