OUTLOOK '11: Uncertain but strong 2011 for Europe plasticisers

03 January 2011 11:00  [Source: ICIS news]

By Libby George

LONDON (ICIS)--After a boom year in 2010, plasticiser industry sources are divided on the outlook for 2011, but most agree that demand will remain at high levels for the next 12 months.

The only unknown, sources said, is the impact of European rules surrounding dioctyl phthalate (DOP), which was categorised as a substance of “high concern” under the EU's Reach regulations.

“DOP is a complicated issue. It’s a complicated project,” one seller said. “What’s going to happen in the next year is not clear at all.”

While some industry sources believed that usage of the chemical – and thus prices – would decrease precipitously in 2010, quite the opposite happened.

Demand remained steady-to-high through most of the year, and lower levels of supply than in 2009, due to plant closures and consolidations, were not enough to meet it.

As a result, prices increased steadily through the year to €1,550-1,630/tonne ($2,062-2,168) FD (free delivered) NWE northwest Europe by late December – a 70% increase from the start of the year.

Despite some concern over the potential for further regulation of DOP, most buy and sell sides believed that demand was likely to remain strong in 2011, as there are not enough suitable alternatives.

“One buyer told me he wouldn’t buy DOP, because its buyer didn’t want it. But then they came back and are buying 200 tonnes/month,” a seller said. “Customers who do no longer want to use DOP any longer have already said so. But others go on.”

While at least one DOP seller disagreed with this view, buyers agreed with the more optimistic assessment.

“It’s true that there is a lot of pressure to replace DOP – not only that, but all the phthalates,” one buyer said. “But I don’t think the sunset date for DOP could be before 2014, 2015. The problem I see is whether there will be enough of other products to cover the current DOP needs.”

The outlook for fellow plasticiser di-isononyl phthalate (DINP), however, was less ambiguous: another tight, turbulent year in 2011.

“Worldwide, if the demand is normal, there will be a shortage,” a trader said of DINP. “There is not enough supply to meet all the demand. It’s nothing compared to what it should be.”

The trader attributed the shortage at least partly to lacklustre supply of DINP feedstock isononanol (INA).

Others said it was due to the fact that demand had grown at a faster clip than supply. No matter the reason, sellers said prices, which in 2010 grew by 83% to reach €1,800-1,900/tonne FD NWE, would stay steady at those levels in 2011.

While buyers agreed that high prices and short supply were likely to persist in 2011, they disagreed over the reasons why.

“They [sellers] are claiming the market will remain short in 2011. I think they will export to make that happen,” one buyer said. “They would like to keep prices where they are now.”

(€1 = $0.75)

For more on DINP and DOP visit ICIS chemical intelligence
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To discuss issues facing the chemical industry go to ICIS connect

By: Libby George
+44 208 652 3214

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