Chemical Profile: Europe isopropanol

06 June 2014 10:07 Source:ICIS Chemical Business

IPA is mainly used as a low-cost solvent for industrial and consumer purposes. The most important downstream industries for the product include de-icers, paints and resins, pharmaceuticals, foods, inks, thinners for wood finishing and adhesives. Cosmetics and personal care products are also created using the cosmetic grade.

In addition, IPA is used in motor oils, as a solvent for oils and gums, to manufacture fishmeal concentrates, as a cleaning and drying agent in the creation of electronic parts and metals and as a coupling agent and preservative. It is also used in the manufacture of acetone and methyl isobutyl ketone (MIBK).

Isopropanol’s use as a raw material for acetone production is declining as acetone production as a by-product in phenol production has increased.

In capacity, the IPA market in Europe has an adequate supply of product available to meet consumers’ needs. Over the past year there have been local shutdowns and delays in receiving product from overseas for some producers, which have created periods in which availability has been reduced in the market.

Demand for IPA has been largely flat over the past year, remaining average in Q1 2014. Seasonal downstream markets such as de-icers caused little increase in usage over the warm winter period. The overall upward trend in prices from the beginning of the year has largely been driven by feedstocks and low availability rather than higher downstream usage.

IPA is used in the paints and solvents industry and is expected see an uptick in demand as the summer construction season gets underway. It may also see an increase in downstream usage as a result of improvements in the downstream construction and automobile industries this year.

In late May, IPA was trading at €1,090-1140/tonne for technical grade and €1,190-1,240/tonne for cosmetic grade, with prices over the first quarter of 2014 broadly trending ­upwards due to lack of availability from ­producers and seasonal restocking.

Around early April 2013, IPA prices fell as a result of decreasing feedstock propylene prices. However, beginning around mid-July prices began to trend upwards, driven by producers’ efforts to recover margins with the increase in the price of feedstock propylene and outages and shortages. Prices fell again over Q4 destocking but picked up in Q1 2014 due largely to lower availability and increases in feedstock prices.

Feedstock propylene has experienced some tightness in Europe since the beginning of the year due to a combination of factors including reduced rates at crackers, light feedstock cracking and better than expected performance of propylene derivatives, which led to an upward trend in both spot and contract prices. This increase in feedstock prices is another factor which has put upward pressure on the price of IPA and reduced producers’ margins.

There are two main routes to producing IPA commercially. One method is based on the indirect hydration of refinery-grade propylene, which uses sulphuric acid to form isopropyl sulphate. This is then hydrolysed with steam to form sulphuric acid and IPA. The crude IPA is distilled to the desired purity.

Another route is the direct hydration of chemical grade (90+%) propylene, which avoids the need for sulphuric acid.

France’s Novapex uses a method of producing IPA involving the hydrogenation of acetone, which has similar cost effectiveness.

Improving macroeconomic growth in Europe this year is expected to drive increased usage in IPA’s downstream industries such as autos and construction.

In April, The Bank of Tokyo-Mitsubishi’s European industry report anticipated a 5% growth in registration of vehicles in Europe during the first half of 2014.

INEOS Enterprises completed the acquisition of Sasol Solvents Germany at the beginning of June, including their Herne and Moers sites which have a capacity for IPA production of 85,000 and 155,000 tonne/year respectively, according to ICIS data. It is not known if the takeover will affect production at these sites.

By Chris Barker