Chemical Profile: Asia maleic anhydride

08 February 2013 09:55  [Source: ICB]

Maleic anhydride (MA) is mostly used to make unsaturated polyester resins (UPRs), which account for more than 50% of total consumption. UPRs are used in a wide range of applications including pleasure boats, bathroom fixtures, automobiles, tanks and pipes.

The second-largest outlet for MA is 1,4 butanediol (BDO). Other uses are in derivatives tetrahydrofuran (THF), gamma-butyrolactone, plasticizers, surface coatings, agrochemicals, lubricants, fumaric acid and malic acid.

In the fourth quarter of 2012, the MA market had tight supply due to a few plant turnarounds. 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.

The company restarted operations at the plant in January 2013. This will ease the tight supply conditions for the rest of the region, market players said.

A few producers are planning to conduct plant maintenance in April-July 2013, so supply is likely to be tighter during that period.

Market players have been anticipating the start-up of 60,000 tonnes/year of MA capacity in Mailiao by Taiwan's Nan Ya Plastics since the start of 2012. Nan Ya Plastics is in the last phase of testing, according to market sources. The latest estimate for the start of commercial production is March 2013. The additional capacity, if operated at full capacity, could result in a supply overhang, market players said.

Demand from the major downstream UPR and BDO sectors was stable-to-weak in 2012 because of lower end-user demand in the weak global economic climate, and this is set to continue in 2013.

Demand from smaller applications of MA, such as the conversion into THF and tetrahydrophthalic anhydride, is expected to be slow but stable.

In 2012, Asia's MA prices fluctuated largely, in line with feedstock benzene and butane prices.

In the fourth quarter of 2012, tight supply due to plant turnarounds supported MA price increases. The outage at Nippon Shokubai's Himeji MA plant in end-September 2012 further tightened regional supply and boosted MA prices in October and November.

For 2013, MA prices are expected to fluctuate in line with feedstock benzene costs, but the prevailing tight supply is likely to keep prices stable-to-firm in the first half of 2013.

To a lesser extent, the price of alternative feedstock butane may affect MA prices, but as production costs are usually higher, most market players look at benzene prices instead.

MA prices were assessed at $1,870-1,920/tonne CFR SE Asia on 1 February, largely stable since the start of the year. Prices are high compared with previous years, supported by high butane and benzene prices. When Nan Ya Plastics' MA plant starts commercial production MA prices may soften, market players said.

MA is produced commercially by the oxidation of benzene or butane. The latter is considered to have superior economics and is the preferred route used by most producers. Butane-based MA production uses either the fixed-bed or fluidized-bed processes.

The fluid-bed process has some advantages over the fixed-bed route, such as lower air-to-hydrocarbon concentration in the feedstock and no need for premixing. Disadvantages include abrasion of the catalyst, conversion rates and by-product formation.

In the fixed-bed route, air is mixed with superheated butane and fed to a reactor containing a catalyst that consists of vanadium phosphorous oxide supported on silica.

Asia's MA prices are likely to follow the direction of feedstock benzene and butane costs in 2013, but current supply dynamics are expected to keep prices stable-to-firm for the first six months of the year, market participants said.

One producer said: "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."

By: Hazel Goh

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