AFPM ’19: US oxo-alcohols partly tracking tepid coatings

HOUSTON (ICIS)–US demand for oxo-alcohols will gain momentum this spring, but only at the as-yet slow pace of peak-season paint and coatings buying interest heading into this year’s International Petrochemical Conference (IPC).

March pricing has been trending toward rollovers on adequate supply and moderate demand amid weather-delayed downstream architectural coatings buying interest that typically increases ahead of the spring paint season in April.

No efforts to increase free-market oxo-alcohols contract prices emerged this month, but weakness has not been expected, given some restocking usually seen within the first quarter.

Paint makers have spring orders on their books, but one smaller paint company said its sales are being delayed by this winter’s extreme cold as well as heavy snowfall and record-setting rainfall.

Warmer weather and a surge in paint demand may give some impetus to price-hike efforts later in the second quarter or early in the third quarter, but projections of year-on-year paint-demand improvement remain largely modest.

Paint blending could continue through mid-summer if the weather improves, but December 2018 – February 2019 already has been the wettest US winter on record, according to the National Oceanic and Atmospheric Administration (NOAA), and more rain is on the way.

While temperatures are forecast to be more moderate in April, May and June, the southern half of the US is expected to stay predominantly wet, therefore limiting coatings activity.

Demand for oxo-alcohols closely tracks paint and coatings markets in the second and third quarters, but it also draws heavily from the plasticizers markets, specifically demand for 2-ethylhexanol (2-EH).

From the coatings industry, oxo-alcohols tend to gain momentum late in the first quarter as paint makers prepare for heightened sales beginning in April when weather and the economy are conducive to home building and repaints of older homes or structures.

Even with anticipated rainfall and economic headwinds, planned maintenance beginning in April at Dow Chemical’s Texas City oxo-alcohols plant in Texas may tighten the domestic oxo-alcohols markets. The project is expected to last 30-40 days.

Another factor likely to exert upward pricing pressure as volumes increase is transportation.

Truck-driver shortages have been increasing, reaching crisis points after major events such as Hurricane Harvey, and worsening with the retirement of older drivers and fewer younger job applicants.

In February, the NBA free-market, small-buyer contract price range was 87-94 cents/lb ($1,918-2,072/tonne) DEL (delivered), as assessed by ICIS, and trending toward a rollover.

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, Dow Chemical, Eastman Chemical and Oxea.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-25 March in San Antonio, Texas.

Focus article by Larry Terry