Europe aromatics plagued by volatility – Bayer executive
BRUSSELS (ICIS)–High volatility and low predictability has plagued the European aromatics market for the last two years, one major European aromatics consumer said on Wednesday, making it difficult to pass on higher raw material costs to end users amid macroeconomic uncertainty.
Speaking at the 12th ICIS World Aromatics and Derivatives conference in Brussels, Christian Buhse, head of procurement at Bayer MaterialScience, said it has been the high complexity of the market that has proven frustratingly difficult to forecast.
“Oil prices have been relatively stable for the last two years, but benzene has still been volatile so clearly this is not the only factor,” said Buhse.
Buhse argued that the growth seen in 2010 among end user markets was largely the result of inventory restocking, also supported by various government stimulus packages. However, with no fundamental recovery forthcoming, 2012 and 2013 saw many players simply running inventory down.
With benzene essentially a by-product of the refining process and on-purpose production such as hydrodealkylation (HDA) economically unviable, this has also helped create a volatile pricing environment.
Longer term, Buhse expects that there will be sufficient benzene supply in Europe, however, with the increase of trade flows between regions and several derivative shutdowns helping redress the balance.
Despite the bearish outlook among many for derivative markets such as polycarbonate (PC), Buhse remains optimistic about newer applications in the automotive industry for PC as well as continued use of optical media in markets such as India.
Looking ahead, Buhse compiled a “wish list” of reduced availability, improved predictability and better global availability, with suppliers to ideally play a more active role in helping balance the market through trade flows.
“We also need prices that do not kill downstream demand,” he added.
Asia will start to drive global pricing direction on benzene, Buhse added, with the new paraxylene (PX) capacities coming online in 2014 creating more availability, although he expects prices to remain volatile nonetheless.