Phthalic anhydride

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

Uses



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.

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Supply/demand



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.

Pricing



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.

Technology



PA is manufactured predominantly by the OX route which has largely superseded naphthalene-based technology.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.

Health and safety



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.

Outlook



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.

EUROPEAN PHTHALIC ANHYDRIDE CAPACITY, '000 TONNE/YEAR



Company Location Capacity
Angarsk PCC Angarsk, Russia 15
Atmosa Schwechat, Austria 45
Atofina Chauny, France 90
Avdeevsky Koksokhimichesky Zavod Avdeevka, Ukraine 24
BASF Feluy, Belgium 92
Ludwigshafen, Germany 120
Tarragona, Spain 16
Bayer Uerdingen, Germany 70
Cepsa Algeciras, Spain 30
Destilacifa Dova Teslic, Bosnia-Herzegovina 2
ExxonMobil Botlek, Netherlands 70
Fitalis Istanbul, Turkey 2
Ftalevik Omsk, Russia 40
Kamtex Khimprom
Perm, Russia 75
Kemiplas Kopar, Slovenia 32
Koksno Komb Boris Kidric
Teslic, Bosnia-Herzegovina 16
Koppers/Bitmac
Totton, UK 7
Krasitel Rubezhansk, Ukraine 60
Lonza* Bergamo, Italy 80
Firenze, Italy 30
Neste Oxo Nol, Sweden 30
Nitrokemia Fuzfogyartelep, Hungary 31
Orgachim Russe, Bulgaria 20
Petkim Aliaga, Turkey 30
Petrobrazi Brazi, Romania 36
Platifay Kimya Istanbul, Turkey 12
Proviron Ostend, Belgium 100
Rutgers VFT Zelzate, Belgium 20
Salavatnefteorgsintez
Salavat, Russia 15
Slovnaft Bratislava, Slovakia 38
Ural Chemical
Urals, Russia 7
Zaklady Azotowe Kedzierzyn
Kedzierzyn,Poland 30
ZSMK Novokuznetsk, Russia 11


*being sold to PPM VenturesSource: DeWitt





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