Price and market trends: Europe oxo-alcohols producers seek July margin improvement

12 July 2013 09:29  [Source: ICB]

Producer complains of an unacceptable margin compression and will seek to recover this because of improving demand

Some European oxo-alcohols producers are targeting improved margins in July, market sources said on 3 July.

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.

On 28 June Oxea announced 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 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. 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 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 the 2-EH market in the region is well supplied, with an unusually large number of offers of material sourced from China and Korea.

European market players had previously described good availability for NBA and IBA as a result of lacklustre demand.

Author: Sam Weatherlake

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