Maleic anhydride (MA) is mostly used in the manufacture of unsaturated polyesters resins (UPRs), which are used in a wide range of applications, including pleasure boats, bathroom fixtures, automobiles, tanks and pipes.
Other outlets for MA include 1,4- butinediol (BDO), tetrahydrofuran (THF) and gamma-butyrolactone (GBL). MA is available in liquid (molten) and solid (flake) forms.
Liquid is by far the larger market, accounting for around 90-95% of all material sold.
The market has been balanced to long in the last 12 months, which has kept price sentiment bearish. Producers in Europe have largely been producing normally. Despite demand improving notably from last year, availability has been surpassing it.
In May 2016, producer Polynt and buyer Reichhold announced a definitive agreement to merge their businesses. MA players are still assessing any effects on the merchant market from the deal.
In late 2015, there was increasing interest from Asian suppliers in the European market. However, this faded in 2016 when prices in Asia improved considerably.
According to statistics agency Eurostat, imports in May were up by 30% and up by 10% in April compared to the same months in 2015. However, imports were down in January and March and stable in February.
A coupled of producers have planned maintenance closures in the third quarter, which is not likely to affect the market significantly. Many buyers close or reduce rates in the summer period, particularly in southeast Europe.
In 2015, MA prices in Europe were under pressure from a combination of upstream price drops and ample availability.
There were some sharp decreases in the quarterly contract price, such as €120/tonne down in Q1 2015 and a further €120-130/tonne down in Q4. There were some minimal price hikes in the second and third quarters – a result of producers attempting to improve margins in the higher season.
There was a small hike of €30/tonne in the first quarter of 2016, which was followed by a rollover in the second quarter.
This came despite the price of feedstock n-butane going up. There was talk from sellers about minor hikes on some of their smaller accounts, but overall sources from both sides of the market agreed that a rollover was a representative settlement for their deals.
Producers noted squeezed margins following the upstream price hikes, but also admitted the third quarter is usually quiet as summer lull kicks in.
Sellers had been separately targeting higher increases after the substantial drops in 2015, but the market length has been preventing them from succeeding.
Spot prices have been following the contract developments, and have been largely stable since May.
The liquid MA spot range was assessed at €960-1,020/tonne FD (free delivered) NWE (northwest Europe) with sources noting the contract price is at a similar level.
Spot prices for flake MA have been assessed at €1,060-1,100/tonne FD NEW.
Butane-based MA production can be done by either the fixed-bed or fluidized-bed processes. The fluid-bed process has some advantages over the fixed-bed route, such as lower air-to-hydrocarbon concentration in the feedstock and no need for premixing. The disadvantages include abrasion of the catalyst, conversion rates and by-product formation.
In the fixed-bed route, air is mixed with superheated butane and fed to a reactor containing a catalyst that consists of vanadium phosphorous oxide supported on silica.
MA players in Europe await further clarity on the merger of Polynt with Reichhold and any potential merchant market shifts it may bring.
At this stage, the transaction is subject to requisite regulatory approvals and customary closing conditions, and is expected to be completed in the second half of 2016.
Sources have said they do not expect significant changes in the supply/demand pattern but rather some reshuffling of volumes.
Producers are likely to look for hikes in attempt to regain lost margin, but their success will depend on the balance of the market more than on upstream developments.
Some players have noted intentions to switch to monthly contract deals as this could facilitate following volatile upstream markets. However, the bulk of the market is still looking to negotiate on a quarterly basis.