OUTLOOK ’13: Asia MA to be stable-to-firm on rising feedstocks

31 December 2012 03:39  [Source: ICIS news]

Maleic Anhydride- MA is used to make sailing yachts (source X-Yachts)SINGAPORE (ICIS)--Asia’s maleic anhydride (MA) prices are expected to fluctuate in line with feedstock benzene costs, but the prevailing snug supply is likely to keep prices stable-to-firm in the first half of 2013, market participants said.

Feedstock benzene prices were assessed at an average of $1,488/tonne (€1,131/tonne) FOB (free on board) Korea in the week ended 28 December 2012, up by $493/tonne or 50% from the average assessed price in the week ended 8 June, ICIS data shows.

Benzene prices firmed as a result of tight supply and speculative trading, according to market participants who said this uptrend is likely to continue through to the first quarter of 2013.

To a smaller extent, the prices of alternative feedstock butane may impact MA prices, market participants said, but as the production costs of benzene-based MA are usually higher than that of butane-based MA, most look at benzene prices for an indication of MA price trends.

Feedstock butane contract prices rose by $330/tonne or 53% from $620/tonne FOB Ras Tanura in July to $950/tonne FOB Ras Tanura in December this year, according to market sources.

As a result of the rising feedstock prices, MA prices firmed during the same period. MA prices were assessed at an average of $1,905/tonne CFR (cost & freight) southeast (SE) Asia in the week ended 21 December, a 29% or $430/tonne increase from the average assessed price of $1,475/tonne CFR SE Asia for the week ended 6 July 2012.

Feedstock benzene prices are expected to be stable-to-firm in the first quarter of 2013, so MA prices are expected to follow suit.

In the fourth quarter of 2012, tight supply due to a few plant turnarounds supported MA prices. An outage at Nippon Shokubai’s Himeji MA plant in end-September 2012 caused some Japanese traders and buyers, who usually buy from the domestic market, to look at imports. This further boosted MA prices in October and November.

Details of when Nippon Shokubai can resume operations at its MA plant are not immediately available, but it is estimated by market players to be in mid-January 2013.

A few producers are planning to conduct plant maintenance in April-July 2013, according to market sources, so supply is likely to remain snug during that period.

Demand from the major downstream unsaturated polyester resin (UPR) sector is expected to be largely steady on the back of stable end-user demand from the construction sector.

Other downstream applications of MA, such as the conversion into butanediol (BDO), tetrahydrofuran (THF) and tetrahydrophthalic anhydride, are smaller applications of MA and demand from these sectors is expected to be slow but stable. 

However, many say the price outlook is uncertain as MA is largely used to manufacture coatings for buildings, boats and automobiles, so market sentiment is greatly influenced by the state of the three major economies of China, Europe and the US.

China plans to roll out new policies intended to stabilise its economic growth at 7-8%, while Europe is still coping with its debt and the US is managing an impending fiscal cliff.

In addition, some are concerned that the start-up of 60,000 tonnes/year of MA capacity in Mailiao by Taiwanese producer Nan Ya Plastics will offset the balance and that this may lead to a slight softening of prices.  

Nan Ya Plastics is in the last phase of testing for its new MA plant, according to industry sources. The additional capacity it will add to the market is expected to ease the prevailing tight supply and cause MA prices to soften.

Market participants estimate that Nan Ya Plastics will commence commercial production at its MA plant in the first quarter of 2013. However, this could not be confirmed with the producer.

“Although the MA market used to be balanced [in terms of] supply and demand, or slightly oversupplied, Taiwan’s UPC Technology supply suspension since 2011 to relocate its plant from Kaohsiung, Taiwan, to Zhuhai in China; the recent outage at Nippon Shokubai’s MA plant and plant maintenance by other producers caused supply to become tight,” a MA producer said in Mandarin.

“The start-up of Nan Ya Plastics’ MA plant, which has a substantial capacity in this considerably small MA market, will turn the supply condition around from snug to oversupply. Hence, some market players are concerned when the plant will start up,” the producer added.

($1 = €0.76)

By: Hazel Goh

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