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Updated to Q1 2020
Supply for plasticizers was tight in Q1, with DOTP, DOP and DINP suppliers hampered by a shortage in feedstock, particularly INA and 2-EH. Some producers were also forced to lower their production due to high feedstock costs. Supply was also curtailed significantly as two major regional suppliers in Taiwan – UPC Technology and Nan Ya Plastics – shut down their respective plants unexpectedly.
Demand for plasticizers in Asia was mixed in Q1. Downstream demand remained strong, amid limited spot supply as some producers lowered their operating rates due to waning margins and lack of feedstock. However, some buyers purchased on a need-to basis as plasticizers surged to multi-year highs during the quarter. Demand for DOTP remained stable amid a protracted recovery from the coronavirus pandemic, while demand for DINP rose on the back of a global shortage.
Spot supply tightened throughout Q1 as unplanned supply disruptions added further pressure to inventories. There was little relief from imports as material was tight globally. DOTP was the tightest at the start of the quarter, but DINP saw two force majeure declarations – from BASF in early March and for one week from Evonik. By the end of March, Perstorp also made the declaration for DPHP.
Demand for spot material for all grades was healthier than anticipated and it increased throughout the quarter. Tight supply pushed players to look ahead. Some sellers were sold out for extended periods as many buyers sought to secure material months in advance. Buying appetite was largely driven by fundamental demand with very few reports of stockpiling.
US supply of plasticizers during Q1 tightened on continued import delays, extremely short 2-EH and other precursors, as well as a mid-February winter storm that prompted plant shutdowns and severely disrupted the chemical supply chain in the central and southern US. Buyers continued to face volume allocations and extended lead times as production continued to normalise late in the period.
Because of tight supply, US plasticizers demand from the automobile and construction sectors was generally steady during Q1 despite some mid-quarter slowdowns in those markets caused at least partially by the winter storm. But given plasticizers and feedstock shortages, demand continued to outpace supply. Month-on-month housing starts were down in February, as were sales of existing homes and new single-family homes. Demand from the automobile coatings sector also was stymied by a global shortage of semiconductors.
Updated to Q1 2021
Supply of plasticizers is expected to remain tight in Q2, with major regional suppliers UPC Technology and Nan Ya Plastics not expected to see their respective plants come back online until towards the end of Q2. However, some supply is expected to loosen slightly, as other producers in Asia start to increase their run rates on the back of improved feedstock availability and lower feedstock costs.
Demand for DOTP, DOP and DINP are likely to increase in Q2, with downstream demand expected to pick up during the quarter due to a seasonal increase in industrial activities. The ongoing roll-out of coronavirus vaccinations worldwide is also expected to lift market sentiment, with the key automotive, construction and packaging sectors in Asia likely to continue to gather growth momentum.
Supply is not expected to fully recover in Q2 although there is some optimism the situation will begin to improve later in the quarter. Q2 is expected to stay tight as supply disruptions in previous quarters have cut inventory. There is also some planned maintenance due from Grupa Azoty in Poland. Upstream availability of feedstock is likely to continue restricting supply although it has improved for some players. It is unclear when BASF will lift its force majeure.
Demand is expected to remain healthy throughout Q2. Plasticizers are likely to receive strong demand from the DIY and flooring industries as restrictions on travel and socialising create strong interest in home improvements. Plasticizers also have stable demand into industries such as pharmaceuticals. Q2 is traditionally the peak consumption period for plasticizers.
US supply of DOP, DOTP and DINP during Q2 is expected to continue lengthening as the storm-inhibited supply chain continues to recover. Especially crucial will be supply of precursor 2-EH. Order controls are likely to continue for the near term, but some normalised supply may be achieved later in the quarter. Snug supply may also ease as refinery rates continue to tick upward, making more chemical feedstock available for plasticizers production.
US demand for DOP, DOTP and DINP in Q2 is expected stronger because of pent-up demand as well as expected heightened buying interest typically seen from automobile makers and construction during Q2 and Q3 each year – if housing numbers begin to tick upward and US GDP forecasts are accurate. The Federal Reserve and economists are making upside revisions as the economy opens up amid ongoing coronavirus vaccinations.
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Plasticizers are chemical compounds or additives that are added to polymer material to alter the physical properties to achieve certain characteristics such as flexibility and durability. These are applied in various types of products in every industry from synthetic fabrics to plastics packaging and automotive. Plasticizers are categorized into different families falling under phthalates or non-phthalates.
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