OUTLOOK '14: US oxo-alcohols, plasticizers face market shift

26 December 2013 17:00 Source:ICIS News

HOUSTON (ICIS)--The US oxo-alcohols and plasticizers markets are enjoying accelerating growth heading into 2014 as a rebound in housing and construction activity pushes downstream demand for polyvinyl chloride (PVC), paints and coatings and a wide number of consumer and other products that demand flexible plastic and transparent film.

Next year will start off with the industry facing price increase initiatives from producers for oxo-alcohols averaging 8 cents/lb and for plasticizers averaging about 5 cents/lb based on increased costs for feedstock propylene. It’s an annual seasonal phenomenon, market sources said. But producers and buyers will be watching propylene closely going into 2014 for further price cues.

Supporting the price initiatives are rebounding economies in North America, measured recovery in parts of Europe and organic economic growth in the BRIC (Brazil, Russia, India and China) countries. Those markets are expected to push the global sales for plasticizers to $19.5bn by 2020, according to an independent assessment by Ceresana Research.

For 2014, market participants for these chemicals will be watching particularly the price of propylene and the market prospects for phthalate plasticizers, tainted by suspected ill effects on health and the growing variety of plasticizers developed as replacements for them.

They will also be watching for signs of economic recovery in those parts of the world where growth markets are considered likely and demand for downstream products are likely to grow.

The oxo-alcohols tracked by ICIS are largely produced from propylene, usually along with with n-butyraldehyde.

N-butanol (NBA), the oxo-alcohol produced in the largest volumes, is mainly used to make acrylates for the paints, coatings and adhesives industries. Smaller volumes go to the manufacture of glycol ethers and acetates or are used directly as solvents.

About half of 2-ethylhexanol (2-EH) production goes to the manufacture of phthalate plasticizers, used to add flexibility to polyvinyl chloride (PVC) products. PVC pipe is a brittle white plastic. But plasticizers can be used to make vinyl floor-covering, film cover for food packaging and medical devices, including blood bags for transfusions.

Other volumes of 2-EH go to make acrylate esters used in coatings, including acrylic paints. Still other uses include as a fuel additive to raise the cetane level of diesel fuel to reduce emissions.

2-EH is losing some market because of health concerns over the phthalate plasticizers, especially dioctyl phthalate (DOP) and di-isononyul phthalate (DINP). Those plasticizers are facing restrictions in Europe, and many plasticizers manufacturers are creating formulations to replace the phthalates.

BASF ended DOP production in Germany several years ago. BASF PETRONAS has announced that it will stop the sale of DOP at its Malaysian site by the end of 2014. Arkema has announced that it will cease DOP production in March at its plant in Chauny, France, by March. Eastman Chemical is the only producer of DOP left in the US.

These seismic shifts come after several toy and flooring manufacturers have said they will stop using phthalates in their products on health recommendations from health authorities in Europe, the US and elsewhere.

Tarkett, a global flooring producer that no longer uses phthalate products in North America and Sweden, has announced it will ban phthalates throughout Europe in 2014 and will follow that with a global ban, although a timeline has not been announced.

However, producers in Latin America and China are still using phthalates and demand for 2-EH continues to rise on their demand.

In 2013, Chinese producers expanded oxo-alcohol capacity. Tianjin Soda Phase II added 140,000 tonnes of annual NBA capacity, 85,000 tonnes of 2-EH and 25,000 tonnes of isobutanol (IBA). Likewise, Wison Nanjing added a total capacity 250,000 tonnes/year combined of all oxo-alcohols.

Oxea this year will expand capacity at its Bay City plan by 25% during a maintenance turnaround scheduled for April-May.
Meanwhile, Eastman, Dow Chemical, BASF, ExxonMobil and others continue to add to their lineups of non-phthalate plasticizers.
Eastman alone this year has announced three new variants of its Eastman 168 non-phthalate plasticizer, itself a variant of DINP. 

The company, a leader in non-phthalate variants, has said that it will increase capacity at its Bay City plant by 15% by mid-2014.
Oxea, which produces plasticizers in Germany, carries an Oxsoft line of non-phthalates and operates a blog tracking phthalate issues and market trends.

RECENT US N-BUTANOL PRICES

Oxo-alcohols face challenges despite rising demand

By Bill Bowen