Europe PA market uncertain amid limited OX, falling crude prices

LONDON (ICIS)–European phthalic anhydride (PA) industry is cautious about making any moves until it is clear how feedstock orthoxylene (OX) will develop later in the month, sources said on Friday.

OX availability has recently been limited, with at least two producers experiencing technical issues and two plants out for maintenance shutdowns. PA sellers said they have managed to secure sufficient amount of OX despite the tightness.

One producer said OX was difficult to get and it expects some delivery delays, but depending on demand, it might have secured enough material until the end of the year.

“The situation changed dramatically in the last two weeks – I hope we have managed to secure OX for the full quarter, but you never know,” said the producer.

Other sources too said PA producers managed to get a sufficient amount of OX, albeit with some difficulty.

One trader said: “OX can be an issue, but so far only in talk, the real numbers are still ok, it is difficult but finally everybody manages to get everything – no one is really in trouble, there might have a  reduced input, but overall PA is getting more and more balanced.”

PA demand is expected to go in a low season after the end of November. However, if the weather in Europe remains good in October, potential pickup in demand could cause trouble to PA producers if OX remains limited.

Despite the tightness, some PA sources expect a decrease in the November OX price especially after Brent crude prices fell sharply on Tuesday evening. By Wednesday morning they were trading below $84/bbl, from over $90/bbl in early October. Naphtha prices have seen a similar slip.

PA liquid spot prices decreases, following the October contract price drop.