09 January 2012 00:00 [Source: ICB]
Maleic anhydride (MA) is mostly used to make unsaturated polyester resins (UPRs), which are used in a wide range of applications, including pleasure boats, bathroom fixtures, automobiles and pipes.
The second largest outlet 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 in liquid (molten) or solid (flake) forms: the liquid form dominates, accounting for 90-95% of the market.
The European MA market started 2011 structurally short, dating from the fourth quarter of 2009 and caused by the closure of BASF's 115,000 tonne/year plant in Feluy, Belgium.
Germany-based producer Sasol-Huntsman was due to start up a new 45,000 tonne/year reactor at Moers, Germany, in January 2011, but the expansion was delayed until April because of technical problems.
A force majeure at Moers from March 4 to April 30, 2011, linked to the start-up, further tightened supply, driving spot prices to record highs of €1,800-2,000/tonne ($2,315-2,572/tonne) FD (free delivered) NWE (Northwest Europe) from March to early June for liquid and flake.
Once the extra Moers capacity was brought on line, giving a new nameplate capacity of 105,000 tonnes/year, supply gradually eased.
At the start of 2011, demand growth was predicted at around 15%. Growth expectations were revised down in October 2011, to between 0-5% because of weakening macroeconomic conditions.
Most of the demand growth in 2011 was seen in the first half of the year, before a fall in GDP in much of Europe. Producers were the most buoyant about growth figures, with expectations ranging from 2-5%.
Manufacturers of UPRs were the most bearish about the growth in consumption, estimating the change from 2010 from flat to a rise of 2%.
Uncertainty over general economic conditions led to heavier-than-usual destocking in the fourth quarter of 2011.
Fourth-quarter contracts settled at a pre-discounted level of €2,025-2,105/tonne FD NWE, a rollover from the third quarter as weaker demand was counterbalanced by increased upstream costs. Spot prices fell by €250/tonne during the fourth quarter, and in January were trading at €1,350-1,450/tonne FD NWE for liquid and flake. There was talk on the market that some fourth-quarter contract prices were revised downward on a net level during the quarter, but this could not be confirmed at source by the time of going to press.
First-quarter contract discussions have begun, but firm price targets are yet to be set. Producers are looking for increases based on firming feedstocks n-butane and benzene costs. Buyers are targeting a reduction because of falling spot prices during the fourth quarter and weak demand.
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 have developed Petrox, which allows low butane conversion to maximize selectivity and yield.
European producers are forecasting a recovery in consumption of 2-5% in 2012, based on expectations of improving conditions in the second half. However, buyers and some traders are forecasting lower demand.
Applications downstream of MA, such as automotive and construction, are heavily linked to GDP. As a result, growth will largely depend on macroeconomic conditions.
Buyers expect inventories to remain low in 2012, as economic fears override stock needs. Several sources caution that if low inventories are maintained, price spikes and temporary bubbles could become a feature of the market, leading to increased price volatility.
Because there are no reserves to draw on, some sources argue that if demand increases or there are production problems, the market will tighten very quickly - resulting in sharp price increases.
Producers are also expecting fewer imports into Europe in 2012. This is because of a combination of a strengthening US dollar against the euro, long lead times and forecasts of rising benzene prices in 2012, which will leave imports uncompetitive compared with European prices.
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