OUTLOOK ’19: US plasticizer pricing direction unclear; OX, PA to track demand seasonality

HOUSTON (ICIS)–US plasticizers market direction is uncertain heading into 2019, stemming from trade tensions and potential demand decline from the automotive industry amid plant closures.

Conditions follow a period in which the market remained in flux in the latter half of 2018.

Prices rose toward year’s end tracking feedstock cost increases and supply tightness in other regions that affected import supply and remain elevated heading into 2019.

However, the late-year plunge in crude prices caused a ripple effect downstream, sending feedstock costs lower.

Plasticizer prices have not yet followed suit as supply remains snug in Europe and tariffs have created trade tensions with China.

Market players state that demand and subsequently supply may decrease if the auto industry continues to decline although the pricing outlook for 2019 is unclear. Low crude prices are expected to keep costs low, encouraging strong production.

Some believe that supply may tighten because of weather-related outages as in 2018. Another issue is that no new plasticizer capacity is scheduled to come on stream anytime soon, and many plants are aging. The market expects an increased number of unplanned outages due to issues at older plants.

“You are looking into a very cloudy crystal ball,” one source stated regarding the uncertainty of the plasticizers market into 2019 while some sources have seen orders placed for Q1 2019.

Market participants stated that low business morale persists in the market due to the conflict between the US and China and that it will continue into 2019.

In the US orthoxylene (OX) market, supply and demand are expected to remain balanced in 2019, with demand seasonally strongest in the summer and weakest in the winter.

No major changes are expected to disrupt OX availability in 2019 and prices are expected to track movements in US spot mixed xylenes (MX).

The US phthalic anhydride market (PA) is expected to follow the demand cycle of OX in 2019 with market participants expecting prices to rise in the summer and decline in the winter following the seasonality of demand.

Plasticizers are additives that increase the plasticity or fluidity of the material to which they are added. Globally, about 96% of plasticizers are consumed in flexible polyvinyl chloride (PVC) applications, including cables, PVC films, roofing, flooring and wall coverings. In the US, 80-90% of plasticizers are used in PVC applications.

Eastman, BASF, and ExxonMobil are the three major plasticizer producers in the US.

Focus article by Alex Snodgrass

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