OUTLOOK ’18: US oxo-alcohols market anticipated balanced-to-long

HOUSTON (ICIS)–US oxo-alcohols markets are anticipated to be balanced-to-long early next year,  and steady following months of volume-control constraints stemming from Hurricane Harvey.

Those constraints, which included force majeure declarations and sales controls, largely originated with Harvey, which struck the US Gulf coast in late August 2017.

Varying degrees of market balance have been restored in the four months since that storm flooded thousands and homes and businesses in the region.

“Each product is expected to behave a bit differently,” a producer said, “but most should be balanced-to-long, depending on how plants run and how others get through turnarounds in the spring.”

In December, the market began to see a belated seasonal downturn and only a moderate gain in November feedstock propylene.

Barring unplanned operational outages, supply is expected to remain mostly steady-to-long through the first half of next year, which will encompass the US spring paint and coatings season in the second quarter.

Some supply pressure, however, is likely from pent-up demand for paint and coatings after Harvey, storm damage in Florida and other southeastern states from Hurricane Irma, and wildfires in California.

Each is expected to heighten construction demand early next year, sources said.

Pricing is generally expected to follow feedstock trends, unless turnarounds are extended.

Although demand softened in December, buying interest will remain strong well into 2018 on continued storm-recovery efforts. While many renovations have begun, repainting is likely to see a strong surge in the first half of next year, which encompasses the spring paint and coatings season.

While storm-related transportation problems have all but dissipated, the logistics issues chemical makers and buyers faced before Harvey persist.

“Suppliers are still requesting lead times of 7-10 days versus one to three days in the best of times,” a buyer said.

“Truck transport was problematic even before Harvey because there were too few drivers,” the buyer said, “and that is not going to really improve any time soon. Although there seem to be plenty of trucks on the road, there are still not enough. So producers are keeping long lead times in place.”

NBA is used as a solvent and to produce butyl acrylates for the coatings and adhesives industries. Smaller-volume uses are in acetate and glycol ether formulations.

Among the major uses for 2-EH are as a feedstock for chemicals used in the production of paint, automobiles, adhesives and plasticizers, and in building and construction markets.

US oxo-alcohols producers include BASF, DowDuPont, Eastman Chemical and Oxea.