OUTLOOK ’17: Oxo-alcohols and plasticizers market set to hold firm on supply limitations

By Jane Massingham

LONDON (ICIS)–The outlook for the oxo-alcohols and plasticizer markets remains firm into 2017 on the back of supply restrictions, buyers and sellers concur.

For oxo-alcohols, a force majeure declaration remains in place at BASF’s nbutanol (NBA) and isobutanol (IBA) site in Ludwigshafen, Germany.

The unit has a nameplate capacity of 450,000 tonnes/year NBA and 50,000 tonnes/year IBA and, given reports that the propylene pipeline will not be fully functional until mid-2017, supply constraints for NBA and to a lesser extent IBA are expected to remain.

Perstorp will no longer produce NBA from its Stenungsund, Sweden, site in 2017 as it no longer produces the plasticizer dioctyl phthalate (DOP).

Along with the supply issues, there are also upstream constraints expected from propylene in Europe due to a number of planned turnarounds and higher prices are expected for contracts on propylene. However, US and Asia availability is said to have better supplies and there was talk therefore that globally propylene should be balanced.

Indeed, the January settlement for propylene in Europe at plus €45/tonne resulted in NBA and IBA price increase targets of between €30-40/tonne, depending on the player.

2-ethyl hexanol (2EH) has not seen the same amount of upward pressure in the latter part of 2016, as it was not impacted as much by the production problems.

However, it is still considered a balanced to firm market, with targets in place for Q1 and an expected healthy level of demand moving into its traditionally strong period of consumption in Q2.

Downstream acrylate esters are expected to remain firm and tight into 2017. Glycol ethers were also said to be starting the year on a strong note, with higher targets posted and possible export opportunities in place.

On plasticizers, given that DOP is such a small percentage of the European plasticizer market and used mainly in niche areas in medical sector, there appears to be greater stability moving forward, and customers have not been faced with the same surging prices felt for other plasticizers in Q4.

Due to legislative issues, many have moved away from traditional phthalate plasticizer DOP.

Dioctyl terephthalate (DOTP), diisononyl phthalate (DINP) and di-propyl heptyl phthalate (DPHP) have all seen significant increases in Q4 on the back of the supply issues arising from a combination of unexpected production issues for both plasticizers and upstream phthalic anhydride (PA) in Europe.

Into 2017, DINP, DPHP and DOTP are all expected to remain tight for at least the first quarter. While BASF remains on force majeure there are small volumes of DINP being produced and delivered to customers.

However, there are other producers still building stocks following unplanned production issues, which were a result of unexpected issues at upstream phthalic anhydride (PA) plants. Added to this are logistical issues with deliveries due to low water levels on the River Rhine.

Upstream, orthoxylene (OX) pricing is expected to remain tight for the short term, with jumps expected for January prices of between €40-70/tonne.

Additional upward pressure is likely to come from propylene in the first half of 2017 as the market remains snug in Europe on the back of planned turnarounds.

Turkey launched an anti-dumping duty (ADD) investigation against South Korean DOTP. The intention to investigate Korean DOTP imports was published on 23 November.

“Exports from Korea to Turkey have risen a lot,” said a producer in the region, “so we are going to the government for protection.”

The announcement of the investigation could lead to less Korean material being imported to Turkey, as importers could face higher duties.

Although there is no formal timeframe for this, news is expected around March/April 2017. This latest investigation into plasticiser imports follows one already started in June, on Korean imports of phthalate DOP. An outcome to this has not yet been reached. 

There were also reports that US producer, Eastman, has filed an extra petition in the US with the aim of imposing duties on DOTP imports, a distributor said.

In addition, potential news on environmental issues with regards to the usage of phthalate plasticizers in certain applications could see further switches in the future. However, most sources feel the changes that need to occur in the short-term have already done so within Europe, with further shifts unlikely in 2017. 

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