European oxo-alcohols players lament as indications point to weak coatings season

Nicole Simpson


LONDON (ICIS)–European oxo-alcohols market participants are bracing for a slow coatings season as economic turmoil continues. EU construction output is forecast to contract and coatings volume discussions failed to materialise in March.

  • The coatings and construction seasons are likely to be weak and start slowly due to economic pressures
  • Soft demand and downward price pressure has defined the oxo-alcohols market since the third quarter 2022

The coatings and construction sectors are key demand benchmarks in the European oxo-alcohols market.

Both sectors normally have a seasonal peak in spring when temperatures are usually mild.

The coatings sector typically gains traction in March. However, offtake from coatings has been weak and stable through the first quarter of 2023.

Spot demand from the coatings sector is muted as buyers are widely covered by contractual volumes. At least one coatings buyer currently has a low production plan.

Sources do not have any clear indication of when coatings volume requirements will pick up.

Some are optimistic that discussions at the European Coatings Show (28-30 March) will lead to fresh spot interest.

“Maybe next week, after the coatings show, we can see some more trends for the coatings season and the order book and the way forward,” said one coatings buyer.

Other sources expect coatings the season will be even slower to start with some anticipating demand will not pick up until as late as the third quarter.

One coatings manufacturer does not expect to see improved order intake in the near term and will start a planned maintenance on one production line in April.

Whenever the coatings season does begin, it is not expected to be strong.

High interest rates and inflationary pressures will likely weigh on demand for architectural and automotive coatings through the second and third quarters.

“The major influence on demand in the near future will be inflation, and this is very likely to weigh on all end use sectors for oxo-alcohols,” said Gawaine Preston, ICIS polyolefin analyst.

EU construction output is forecast to contract 0.8% this year, according to Oxford Economics.

“When you see interest rates it is highly discouraging. No one wants to buy a house,” said one coatings buyer.

“Like construction, automotive demand hinges on interest rates or rates of borrowing. The current macro environment of increasing interest rates is leading to a certain level of demand destruction,” explained Jincy Varghese, ICIS analyst.

Participants in the NBA derivative markets are also closely monitoring coatings demand indications.

In the downstream acrylate esters market, sellers are keen to see coatings activity pick up in Q2 as many buyers are currently utilising their contracted volumes and being cautious when it comes to buying stock and building inventories.

“It’s very flat. It’s related to coatings demand and how the coatings market will evolve. We will need to wait until we see this pick up,” said one butyl glycol ethers seller.

The consumption of oxo-alcohols has been slow through the second half of 2022 and first quarter of 2023 due to economic pressures and high uncertainty among buyers.

Spot prices for all grades of oxo-alcohol have been steadily decreasing since the third quarter of 2022.

NBA is a solvent with more than half of its production used as an intermediate chemical in the production of butyl acrylate (butyl-A) for paints, coatings and adhesives, or acetates and glycol ethers. 2-EH is used to make plasticizers.

Focus article by Nicole Simpson

Thumbnail shows construction site of the Olympic athletes’ village in Saint Denis, outside Paris, ahead of the 2024 Summer Games (image credit: Aurelien Morissard/AP/Shutterstock) 


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