09 November 2012 11:33 [Source: ICB]
Phthalic anhydride (PA) is produced in two grades: flake (white solid) or molten (clear liquid). It has a characteristic, irritating odour, is slightly soluble in hot water, hydrolysing to phthalic acid, and is soluble in alcohol and carbon disulfide. It reacts with strong oxidants and also reacts violently during heating with copper oxide or sodium nitrite, posing an explosion hazard.
The major outlet for PA is in the manufacture of phthalate plasticisers, which accounts for just over half of production.
The main plasticiser in which it is used is dioctyl phthalate (DOP), which goes into polyvinyl chloride (PVC). The second-largest outlet is in unsaturated polyester resins (UPR), which are usually blended with glass fibres to produce fibreglass-reinforced plastics. The third-largest outlet is PA-based alkyd resins, which are used in solvent-based coatings.
Principal end-markets for PA are the construction, marine and transportation industries, and architectural, machinery, furniture and fixture applications.
Small-volume uses for PA include dyes, pigments, detergents, herbicides, insecticides, fire retardants and saccharin.
Supply and demand in the US PA market was in balance during the month of October 2012, market participants said, following a slight softening of demand in September. The market slowed down during the summer months because of a seasonal lull in the downstream plasticiser industry.
The seasonal lull in the summer is based in part on extended shutdowns during those months by many moulders and composites companies, according to a major PA buyer.
Following the slowdown this past summer, US PA supply saw no constraints, even after the arrival of Hurricane Isaac on the US Gulf coast, market sources said.
No major changes are expected to US PA supply and demand during the fourth quarter, other than year-end inventory reductions.
US PA volumes are steady. Demand is expected to drop off going into winter because of the seasonality of some of its end-markets.
Other sources said that in the US there is more capacity than demand. It is therefore only a matter of the producers maintaining production rates to ensure they meet customer requirements based on their market knowledge for the fourth quarter.
US PA contract prices for November have rolled over, based on the rollover in the feedstock orthoxylene (OX) contract price. PA's monthly contract prices are dictated by the previous month's OX contract settlement because OX is the principal feedstock.
November contract prices for US PA are at 83-90 cents/lb ($1,830-1,984/tonne, €1,427-1,548/tonne) FOB (free on board) molten and 84-91 cents/lb DEL (delivered) flake. The October PA contract settled up by 2 cents/lb, after the September OX contract settled at a 2 cents/lb increase.
Looking forward, US OX producers nominated an 8 cent/lb contract increase for November to 75 cents/lb, compared with 67 cents/lb for October.
Earlier PA prices in June, July and August decreased, following lower OX prices, but rebounded in September when the August OX contract settled higher. September PA contracts were assessed up by 6 cents/lb at 81-88 cents/lb FOB molten and 82-89 cents/lb DEL flake.
PA was first made through the oxidation of naphthalene in concentrated sulphuric acid and in the presence of mercury sulphate. A catalytic vapour-phase oxidation of naphthalene later replaced this route. The latter process is done in air and in the presence of a vanadium oxide catalyst.
Today, naphthalene provides only about 16% of feedstock needs, because OX has superseded naphthalene as the feedstock. In the US, all production of PA is from OX feedstock.
The process technology has changed little, although catalysts have a longer life of three years and yields have improved.
One developmental improvement was the lowering of the air-to-OX weight ratio to 9.5:1, allowing energy savings and reduced capital costs.
US PA producers include BASF, ExxonMobil, Stepan and Koppers Industries. Koppers is the only US producer that makes flake grade PA. Not many PA users in the US consume flake material; most use molten.
There are no PA plant expansions planned in the US, and prices are projected to continue to follow feedstock OX contract prices.
The supply and demand picture is expected to remain in balance, with no disruptions anticipated, market sources said. In addition, no manufacturing fee increases have been announced in September or for the subsequent months.
Meanwhile, in the Asia-Pacific region, Chinese PA buyers slowed down at the end of September into early October as China celebrated its week-long mid-autumn and national day holidays.
In Europe, an initial OX November contract settled down by €20/tonne over the previous month's contract on an FD (free delivered) NWE (northwest Europe) basis.
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