Europe oxo-alcohol, plasticizer markets wait for propylene price

29 January 2014 23:59 Source:ICIS News

LONDON (ICIS)--The conclusion of February propylene contract price negotiations is keenly awaited by participants in the downstream oxo-alcohol and plasticizer markets, sources said on Wednesday.

A rollover or similar outcome is widely expected on propylene as weaker naphtha is offset by tight market fundamentals. Propylene price movement is a key determinant in downstream price direction.

Oxo-alcohols spot prices were assessed stable by ICIS on Wednesday at €1,120-1,160/tonne FD (free delivered) NWE (northwest Europe) for n-butanol (NBA), €1,000-1,060/tonne FD NWE for isobutanol (IBA) and €1,390-1,440/tonne FD NWE for 2-ethylhexanol (2-EH).

A producer reported stable spot prices at €1,100-1,110/tonne FD NWE for NBA and €1,080-1,090/tonne FD NWE for IBA.

Most market participants indicated prices above this level for NBA and significantly below this level for IBA.

A second producer said it plans to target February price increases of €10-20/tonne for NBA and 2-EH. Demand is steadily improving, the source said, and it has strong expectations for February.

In contrast, a reseller said it feels that prices are likely to roll over or decrease slightly, based on lower-than-expected offtake.

A buyer said it had managed to cover its January 2-EH requirements at a price that was a little lower than in December.

In most cases, the €20/tonne increase in the January propylene contract was passed onto oxo-alcohols consumers.

In the plasticizers market, one dioctyl terephthalate (DOTP) producer has already said it is aiming for stable prices next month.

The producer said it does not anticipate any resistance to its efforts to maintain prices at January levels, as demand is likely to be strong in February and March following a slow start to the year.

The late arrival of imports resulted in a tighter market in January, the source observed, which in turn highlighted the importance of having domestic sources of supply.

Structural demand for DOTP continues to grow, the producer added, with the flooring industry being a notable consumer.

A second DOTP producer also described good demand this week, and said it hopes this trend will continue into February as dioctyl phthalate (DOP) availability diminishes ahead of the planned closure of Arkema's 70,000 tonne/year DOP plant in Chauny, France.

The source said that a slight increase is possible for the February propylene contract, and it would aim to pass any rise onto customers.

A UK-based consumer of DOTP said that an Asian supplier is targeting increases of £15/tonne for February citing good demand. Another UK buyer said its DOTP and DOP prices had increased by €20/tonne in January. The source confirmed that demand is strong.

A reseller of DOTP and diisononyl phthalate (DINP) said that prices are likely to roll over or decline slightly next month on weak demand. A DINP producer described a balanced market with good supply and fair demand.

A DINP and dipropyl heptyl phthalate (DPHP) consumer said it does not expect any significant changes in offtake next month, but noted that colder weather could erode demand to some extent.

Buyers may have opted to postpone some orders to February in the hope that feedstock costs will be lower then, the source suggested.

January plasticizer prices were mostly agreed at rollovers and minor changes from December, although larger movements in both directions were recorded in the case of DOTP.

Spot prices were assessed unchanged by ICIS on Wednesday at €1,510-1,540/tonne FD NWE for DOP, €1,530-1,570/tonne for DINP, €1,585-1,615/tonne FD NWE for DPHP and €1,500-1,550/tonne FD NWE for DOTP.

By Samuel Weatherlake