HOUSTON (ICIS)--US maleic anhydride (MA) is facing steady supply and demand fundamentals, with the lack of volatility not moving the markets significantly in either direction heading into this year’s International Petrochemical Conference (IPC).
Supply has been healthy due to a seasonal slowdown in activity from the downstream unsaturated polyester resin (UPR) sector during the first quarter.
But that is likely to change in the second quarter with the start of the peak season. Market players are monitoring upcoming demand and the impact it could have on inventory levels.
Barring any unforeseen production issues, supply should be able to meet demand.
Demand is expected to pick up as US economic growth rates remain healthy, compared to other parts of the world. Demand could receive a boost from strong housing and auto markets.
The extension of a truce in the trade dispute between the US and China should also boost optimism and remove some of the gloom regarding sentiment.
The housing and construction market is a key consumer of chemicals, driving demand for a wide variety of chemicals, resins and derivative products.
Meanwhile, feedstock butane costs have moderated in March. In general, they have defied the usual trends this winter and instead have moved in sync with crude.
Butane prices tend to be elevated during the winter season as demand is stronger during this time. It is used as an octane additive in winter gasoline blends and for home heating.
Butane prices are expected to remain subdued toward the end of the first quarter as warmer weather reduces demand for home heating products, and further moderate in the second quarter as fuel blenders transition to summer gasoline blends.
MA is primarily used in the manufacture of UPRs, which are used in applications such as recreational boats, bathroom fixtures, automobiles and pipes.
Major US MA producers include Ashland, Flint Hills Resources, Huntsman and LANXESS.
Focus article by Tarun Raizada