OUTLOOK '14: DOP output to fall further as Arkema plans closure

27 December 2013 15:00 Source:ICIS News

By Samuel Weatherlake

LONDON (ICIS)--While the macroeconomic environment has remained unfavourable to the European plasticizers industry in 2013, producing a largely flat market, the process of replacing low-phthalate dioctyl phthalate (DOP) with alternative plasticizers has continued apace, and will be a major feature of the market in 2014.

French producer Arkema announced on 20 September that it would begin the process of closing down its 70,000 tonne/year plant in Chauny, with operations at the facility planned to end by March 2014.

The producer cited a decline in market demand for its products and what it identified as “substantial overcapacity” in Europe.

DOP has been included in the EU Candidate List and is likely to be phased out by February 2015 under the EU chemical regulation programme Reach (the registration, evaluation and regulation of chemicals).

The closure of the Chauny plant would represent the latest stage in a long-term rationalisation of DOP production capacity in Europe.

One participant in the plasticizers market described the closure as “the last nail in the DOP coffin”.

Poland’s Zaklady Azotowe Kedzierzyn (ZAK) operates a 60,000 tonne/year DOP plant in Kedzierzyn-Kozle, while Deza’s plant in Valasske Mezirici, Czech Republic, has a nameplate capacity of 50,000 tonnes/year.

In recent years, there has been a move away from consumption of low-phthalate plasticizers such as DOP towards more environmentally-friendly compounds such as dioctyl terephthalate (DOTP).

One producer noted that many customers have already switched to other plasticizers, and said the closure of the Chauny unit would not create a shortage of DOP, as there is sufficient domestic and imported supply to meet existing demand.

A reseller said that there is no future for DOP, and the remaining European producers are likely to switch to other plasticizers in an increasingly competitive market environment.

While the planned closure prompted little concern among most participants in the European DOP market, some suggested that the loss of Arkema’s production could be problematic for the medical products industry, which uses DOP to produce the flexible polyvinyl chloride (PVC) used in blood bags.

A producer of DOTP said that Arkema has a large presence in the medical products market, and emphasised that product quality is critical for medical applications.

Only high-quality DOP can currently be used for the manufacture of PVC blood bags, the source said.

BASF’s non-phthalate plasticizer Hexamoll DINCH (di-isononyl-cyclohexane-dicarboxylate) is a possible substitute product for this application, another source noted.

One buyer said it is moving away from consumption of diisononyl phthalate (DINP) in favour of DOTP, and this process will continue through 2014.

The source added that aggregate demand for plasticizers is increasing in Europe, with DOTP being the main beneficiary.

Some price erosion was noted for plasticizers in December, in accordance with usual seasonal trends.

Upstream oxo-alcohols prices were stable from November in most cases, with end-of-year destocking being counterbalanced by a €30/tonne increase in the feedstock propylene contract price.

Participants in the plasticizers market had fairly bullish expectations for January. Two buyers said they expect to see price increases, while a third said it had heard that some consumers were pre-buying on the assumption that further increases would be applied to feedstock costs.

By Samuel Weatherlake