Europe PA spot prices stable, orders from construction, UPR sector increase

Source: ICIS News

2019/04/15

LONDON (ICIS)--European phthalic anhydride (PA) spot prices are stable despite slow increases in orders from the unsaturated polyester resins (UPR) and construction downstream sectors.

As demand gathers momentum, supply restrictions were unchanged week on week, and sources said there is tightness on flake PA and a bit less on liquid PA.

Much of the attention has turned towards feedstock orthoxylene (OX) monthly contract settlements, but the negotiations were still ongoing by the end of last week.

PEAK SEASON
Demand is expected to continue picking up at a slow pace over the months to come, as the market enters peak season.

Expectations of demand increases for the second quarter are mixed, however.

While most agree on an incremental increase in orders, no market participant has shown any expectations of a substancial pick-up in demand.

Clearer movement up is expected by some in May.

The OX shortage is easing due to fresh imports from Russia and east Europe.

Given the slow reflection of contract price upticks by the spot market in March, market participants expect a similar picture in April.

WATCHING THE PRICE GAP
One trend which some market participants have been following is the price gap between prices in Europe and in the US, where values have increased.

Some participants in markets on the outskirts of Europe have been taking advantage of the arbitrage window, but it remains to be seen whether a trend picks up or not among European producers.

While selling to the US could be very profitable, producers in Europe are however struggling to cover contractual obligations in the region due to tightness.

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PA is used as a chemical intermediate in the production of phthalate plasticizers, as well as in UPRs.

Pictured: A construction site in Germany; PA demand from the construction industry has improved
Picture source: Jochen Tack/imageBROKER/REX/Shutterstock