European chemical profile: Maleic anhydride

30 August 2010 00:00  [Source: ICB]

Maleic anhydride (MA) is mostly used to make unsaturated polyester resins (UPRs), which account for more than 50% of total consumption. UPRs are used in a wide range of applications including pleasure boats, bathroom fixtures, automobiles and pipes.

The second-largest outlet for MA is 1,4 butanediol (BDO) and derivatives tetrahydrofuran (THF) and gamma-butyrolactone (GBL). Other uses are found in plasticizers, surface coatings, agrochemicals, lubricants, fumaric acid and malic acid.

MA is available as liquid (molten) or solid (flake): the liquid form dominates and accounts for 90-95% of the market as it is not easily transported.

Supply in Europe has stayed tight since the fourth quarter (Q4) of 2009, mainly because of the closure of a 115,000 tonne/year plant in Feluy, Belgium, by Germany's BASF. The chemical major cited poor profit margins and failed restructuring attempts for the decision.

The shutdown has meant that Europe is now structurally short of MA until additional capacity starts up for Sasol-Huntsman in Germany. The 45,000 tonne/year expansion at Moers is due to come on stream in January 2011. Until then, European markets are expected to stay tight, bolstering prices.

Players say imports from the US have risen significantly this year because of the closure. Data from the US International Trade Commission (ITC) showed that year-on-year exports from January to May 2010 nearly tripled over 2009 levels. In Europe, the main recipients were Belgium, Italy and Germany.

Italy's Polynt restarted a second benzene-based reactor at Bergamo in late 2009.

Demand in Europe has improved this year, with early forecasts pointing to an overall growth for 2010 of 5-10% versus 2009, when demand was estimated to have dropped by 25-30% as the crisis impacted the dominant UPR sector.

European prices have increased steadily since mid-2009 as low stocks from production problems in late 2009 and then BASF's closure kept supply short.

Q2 contracts jumped by €200-250/tonne, then Q3 contracts rose by another €75-100/tonne, taking the prediscounted range to €1,770-1,825/tonne FD (free delivered) NWE (Northwest Europe). Spot trading in mid-August was thin and numbers were stable at €1,500-1,700/tonne for liquid and flake.

Margins were poor in 2009 and suffered because of upstream price volatility, but have been healthier this year, said a major producer.

MA is produced by the oxidation of benzene or butane. The latter is preferred because of its superior economics. MA can be made from butane in either fixed or fluid-bed processes, with the fluid-bed process having advantages over the fixed-bed route.

High growth rates for BDO have driven the development of integrated butane-to-BDO technologies. Japan's Mitsubishi Chemical and the UK's BOC Gases have developed Petrox, which allows low butane conversion to maximize selectivity and yield.

European growth has traditionally been at GDP rates. The main issue for producers is the timing of a full recovery in demand and the fears of a double-dip recession. Players are cautiously predicting that the market will see a continuous improvement in 2011.

No more investment is proposed in Europe, with new projects confined to Asia. Russia's Acrylat suspended plans in 2008 for a 25,000-30,000 tonne/year plant. More could close in Europe, with underperforming plants particularly vulnerable once Sasol-Huntsman's new capacity starts up, taking Europe to a more balanced position. Global growth is forecast to average 5.7%/year to 2013, then slowing to about 2.5%/year.

Profile last published September 17, 2007

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