OUTLOOK '13: Europe oxo-alcohols to remain stable

27 December 2012 11:29  [Source: ICIS news]

By Glynn Garlick

LONDON (ICIS)--The European oxo-alcohols market has ended 2012 with low but stable demand, and players expect little change in 2013.

Poor macroeconomic conditions have continued to affect domestic demand, and a major pick-up is not expected next year.

“For 2013, we see much the same as this year,” said a producer. “We have budgeted for little change in the oxo markets. We anticipate a pick-up in January and H1 [the first half of] 2013, but with a steady increase to year-end. Same oil prices and exchange rates, therefore very similar oxo pricing. Other than this, it is difficult to say.”

The seller added that it was looking to increase prices in January to improve margins.

The market for 2-ethyhexanol (2-EH) is generally described as tighter than for n-butanol (NBA) and isobutanol (IBA). Prices for 2-EH have therefore held up better than those for butanols in 2012, although values for all three have decreased as year-end approaches.

A 2-EH buyer said the downstream plasticizer market remains soft, and heading into 2013 there was noticeable destocking.

“If this is not reversed in Q1 [the first quarter], then demand in this market will remain fairly bearish,” said the buyer.

With China slowing down and additional capacity in Asia, producers outside the EU are targeting business in Europe, added the customer.

“This is adding a little more length, and with prices at a lower level it will put pressure on EU producers to respond.

“Over the past few years, the balance has favoured the producers on the whole, but this may level things out. In general I think there will be more availability unless we see more FM [force majeure] situations.”

Producers have had little opportunity to use exports to offset poor domestic demand.

European competitiveness has been undermined by the high cost of propylene in the region and currency exchange volatility.

The NBA market is described as balanced, while IBA is said to be the longest, and this has put further downward pressure on IBA prices.

($1 = €0.76)

By: Glynn Garlick

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