European DOP operating rates face major cuts

22 November 2011 16:29  [Source: ICIS news]

LONDON (ICIS)--Operating rates in the European dioctyl phthalate (DOP) market are to be cut to 50% towards the year-end because of low demand, suppliers said on Tuesday.

“Everyone is producing only what is necessary,” a producer said. 

The long-term negative sentiment caused by European environmental restrictions and the gradual shift of demand to alternative REACH-friendly compounds has been exacerbated by depressed conditions in the downstream polyvinyl chloride (PVC) and construction sectors.

The annual market trend points towards further lengthening, as PVC trade tends to slow down in December and January in line with a fall in activity in the downstream construction sectors.

Several producers are due to carry out maintenance work during this period. Italian chemical firm Polynt will shut down its plasticisers facilities at San Giovanni Valdarno, near Florence, on 20 December for a 10–14 day turnaround, a company source said on Tuesday.

So far, producers’ attempts to prevent further erosion of margins by reducing operating rates has been frustrated by week-on-week decreases, which have brought Europe’s DOP spot values down to a 20-month record low.

In northwest Europe, price ranges are in the low to mid-€1,300s/tonne FD (free delivered) NWE (northwest Europe), while in the southern, eastern and central European markets some business is done in the €1,200s/tonne ($1,620–1,760/tonne) FD – values not heard since April 2011.

Although European DOP capacity is estimated at 200,000 tonnes/year, consumption has been reduced year on year to around 100,000 tonnes/year in 2011, according to market sources.

($1 = €0.74)

For more on DOP, visit ICIS chemical intelligence
Click here to find out more on the European margin reports

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By: Abache Abreu
+44 2086523214

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