OUTLOOK '20: Europe etac and butac to be driven by structural length

Author: Nick Cleeve


LONDON (ICIS)--The European ethyl acetate (etac) and butyl acetate (butac) markets are likely to be defined by structural length in 2020, with levels of consumption a key concern for industry players.

The European market is expected to remain long in 2020.

Etac supply was lengthy for much of 2019 following the completion of the 100,000 tonne/year expansion project at INEOS’s Hull, UK site which resulted in a nameplate capacity of 335,000 tonnes/year.

New capacity is expected from Taco Chemical in Turkey. This could contribute to length in Europe, both by directly exporting to the region and by displacing imports which would otherwise be consumed in Turkey.

Turkey imported 60,000 tonnes of etac in 2018, according to statistics agency Turkstat, while 26,000 tonnes was exported from the EU28, according to Eurostat.

Material from the Prairie Catalytic site in Nebraska, US could also be a source of exports to Europe in 2020.

The plant produced on-spec material in June 2019 and is expected to have a capacity of 50,000 tonnes/year when fully operational, although it was shut in December pending a change of ownership.

The primary risk to European supply is the fact that 87% of EU capacity is produced at the INEOS site, leaving the market vulnerable to a shutdown at the plant. Britain's withdrawal from the EU is also a concern because a no deal Brexit could result in additional tariffs when product is exported from the plant and a further disruption to logistics.

On the other hand, any tariffs are unlikely to have a significant impact on European pricing, which is primarily driven by supply and demand rather than upstream costs.

The European butac market is likely to remain balanced-to-long in 2020.

Europe’s three largest butac producers – INEOS, BASF and Oxea – have an annual production capacity of 285,000 tonnes, and consumption in Western Europe is around 200,000 tonnes/year.

This structural length provides security to European supply because a production issue at a single major producer will have only a limited impact on the market.

Unlike etac, upstream costs play a significant role in butac pricing. Feedstocks n-butanol (NBA) and acetic acid directly impact on the derivative while upstream propylene is also influential.

Water levels on the Rhine are also a potential influence on butac, as logistics disruptions directly impact on BASF and Oxea and indirectly affect all players by putting pressure on route and transport availability.

Low Rhine levels heavily impacted the market in late 2018, but there was no disruption in 2019.

Players in both markets will also be keeping a close eye on seasonal demand from the key downstream coatings sector.

The traditional high season for coatings is between April and June, but only a limited seasonal increase was seen during this period in 2019.

However, a similarly mild peak season in 2020 could indicate another weak year for both etac and butac consumption.

Etac is used in coatings, pharmaceuticals and solvents.

Butac is mostly used as a solvent in paints and coatings or as a synthetic fruit flavouring in food products.