US March phthalic anhydride (PA) contract prices declined on the back of softer feedstock orthoxylene (OX) contract pricing in February, market sources confirmed on 4 March.
PA contract prices for March dropped by 1.5 cents/lb ($33/tonne) to 74.5-79.5 cents/lb free on board (FOB) molten and 75.5-82.5 cents/lb delivered (DEL) flake.
OX contracts had settled down by 1.5 cents/lb in February from the previous month. Monthly US PA contract prices typically settle on the delta of the previous month’s OX contract.
Some market players in the US PA market are being cautiously optimistic about demand in the near term. There are some expectations for good demand levels in the summer on the back of what could be pent-up demand in the downstream polyols sector following the bad weather during winter, a market player said.
Polyols are used in roofing insulation and are a smaller outlet for PA, compared to plasticizers and unsaturated polyester resins (UPR). Some market players anticipate that the run of bad weather has caused damage to buildings, including roofs, and are waiting to see how construction activity picks up in the summer for roof repair, which would boost demand for PA in polyols.
At present, demand is as expected for this time of year, sources said. One player said that his demand is flat compared to what it was this time last year, and he expects that his usage will remain the same. The PA peak season typically runs from March to June.
Looking long-term, PA is being challenged by newer technologies and government involvement that are pushing towards more environmentally friendly and safer products that use non-phthalate-based components.
At least one PA buyer has significantly reduced its usage of PA over the years to the point that it now only uses one-third the volume of PA it once used in the mid 1990s. Yet, despite the fact that this buyer is using only a fraction of the PA it once used, its PA business is doing well overall, the source said.