FocusEurope oxo-alcohols producers seek July margin improvement

03 July 2013 23:59  [Source: ICIS news]

By Sam Weatherlake

LONDON (ICIS)--Some European oxo-alcohols producers are targeting improved margins in July, market sources said on Wednesday.

The conclusion of the July propylene contract price at a rollover means that feedstock costs for European oxo-alcohols are essentially stable month on month.

However, producers indicated that they would seek modest price increases to improve their margins. Buyers, on the other hand, expected little change in their prices for July.

Oxea announced on Friday that it would increase off-list prices for n-butanol (NBA), isobutanol (IBA) and 2-ethylhexanol (2-EH) by €20/tonne ($26/tonne) with effect from 1 July, or as contracts allowed.

A company official explained that the producer had experienced an unacceptable compression of its margins, and intended to take advantage of improving demand to re-establish a margin level that would provide satisfactory returns.

Another producer described a very tight market and said it was about to impose sales controls on NBA in response to depleted inventories and good demand.

The source said it would raise its prices by €20/tonne for new business on NBA and 2-EH this month, adding that it has received additional enquiries from eastern Europe.

The seller felt that this was probably the result of the planned two-week turnaround at the Kedzierzyn-Kozle oxo-alcohols plant, owned by Poland’s Zaklady Azotowe Kedzierzyn (ZAK).

The Kedzierzyn-Kozle site has a combined nameplate capacity of 205,000 tonnes/year for NBA, IBA and 2-EH. The outage began on 23 June, and a company source said that it was scheduled to last until 10 July.

A third producer said it was receiving many enquiries for 2-EH, reflecting strong demand in what is usually the peak consumption season.

Buyers indicated a largely stable pricing situation for July. One said its 2-EH contract prices had rolled over in line with upstream propylene.

The source said that both supply and demand were adequate, although June offtake had been lower than that seen in the first two months of the second quarter.

A second buyer said it had not seen any impact on 2-EH prices as a result of tighter supply. The source said it had purchased spot tonnes in June at just under €1,390/tonne FD (free delivered) NWE (northwest Europe), and had received an offer for July delivery at the same price level.

The source added that it would hold annual maintenance at its plant in August. Many European buyers follow a similar timetable, which typically lowers demand in August.

A Turkish buyer said that the 2-EH market in the region is quite well supplied, with an unusually large number of offers of material sourced from China and Korea.

European market participants had previously described good availability for NBA and IBA as a result of lacklustre demand. This no longer appears to be the case, partly as a result of recent and current planned turnarounds.

Spot prices were assessed by ICIS on Wednesday at €1,070-1,130/tonne FD NWE for NBA, €1,010-1,080/tonne FD NWE for IBA, and €1,390-1,460/tonne FD NWE for 2-EH.

In the downstream plasticizers market, sources said that July prices would be unchanged or slightly weaker, following the settlement of the July propylene contract at a rollover.

The July orthoxylene (OX) contract price has not yet been concluded, but stability or a moderate decrease were considered the likeliest outcomes. OX is the feedstock for phthalic anhydride (PA), used to make plasticizers.

A plasticizers producer said it would target rollovers for July, and described demand as normal. The source noted that some Italian buyers were seeking extra volumes ahead of the August holiday season.

Another producer said it also expected prices to roll over for July, but slight decreases for some accounts might be unavoidable. The source anticipated stable demand this month.

A third producer said it was not seeing any improvement in underlying demand this month, and prices had rolled over. The source noted that many customers will cease operations for two to three weeks in August, which will undermine demand.

A fourth producer described steady prices and demand for dipropyl heptyl phthalate (DPHP), while a fifth said that the plasticizers market is flat with stable pricing in southern Europe. The source noted that prices in the region are in line with those assessed for northwest Europe.

A dioctyl terephthalate (DOTP) seller said that demand is not especially strong, and indicated DOTP prices in line with the assessed range for dioctyl phthalate (DOP).

Buyers offered a slightly more bearish view of the plasticizers market. One said it had settled its July diisononyl phthalate (DINP) and DPHP prices at rollovers and decreases of €20/tonne, explaining that sellers were competing for market share at a time of weakening demand at the start of the summer holiday season.

Another buyer said that demand had fallen short of forecast levels, and while some improvement had been seen for July, offtake was still not good. The source said this could justify a small price reduction for July.

Spot prices were assessed on Wednesday at €1,520-1,560/tonne FD NWE for DOP, €1,550-1,590/tonne for DINP, €1,590-1,630/tonne FD NWE for DPHP, and €1,530-1,580/tonne FD NWE for DOTP.

($1 = €0.77)

By: Samuel Weatherlake
+44 20 8652 3214

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