17 January 2013 19:51 [Source: ICB]
US solvents producers will be aided by snug supply in some markets, but after a slow start, demand is expected to pick up after the first half of 2013, sources said.
Similar conditions will continue to exist in the US methyl isobutyl ketone (MIBK) market, which will also contend with limited supply from domestic sources, and some pricing designed to discourage sales from product-limited producers.
The supply strains in those markets prompted sales controls through the end of 2012, with some sources suggesting that supply limits may continue in the first quarter.
Although US methyl ethyl ketone (MEK) supply and demand was steady, a series of unplanned cracker outages threaten to exert upward feedstock-related price pressure on the market as 2013 gets under way, sources said.
Talk of consolidation in the IPA market surfaced late in the year but was not confirmed, and an MIBK buyer said that the market continued to see supply constraints.
"Celanese vacated storing material in the US," an MIBK buyer said, "so that has created tightness for us It used to be our largest supplier. I think the current supply situation will linger until well into first quarter."
Two US solvents producers have differing outlooks on the immediate future. But both see reason for optimism about 2013.
Eastman Chemical's chief marketing officer Mark Costa said in mid-December that the company's ability to replace acrylic and clearcoats for automotive paint was a huge opportunity.
"We can lower the VOC emissions relative to acrylic, and we can lower the applied cost because polyester is a more affordable product than acrylic, and so a great opportunity to grow is in there as well," Costa said.
Costa added that solvents had been a key contributor to the company's earnings growth last year, aided by the shale gas advantage in the US.
US IPA suppliers include Dow Chemical, Exxon, Haltermann, LyondellBasell, Sasol and Shell. US MEK suppliers include Exxon, Sasol and Shell; and US MIBK suppliers include Celanese, Dow Chemical, Haltermann and Sasol. Major US butac producers include Dow Chemical, Eastman and Oxea Group. Major US etac producers include Celanese and Eastman.
Additional reporting by Lane Kelley
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