Deluge of European PA production issues subside, feedstock tightness now a concern

LONDON (ICIS)–Seven European phthalic anhydride (PA) producers have experienced production issues over the past five months, but market concern is now focused on availability of feedstock orthoxylene (OX), producers said on Friday.

The European market has seen a plethora of production issues for PA since the fire at BASF’s site in Ludwigshafen, Germany, on 17 October.

Five producers declared force majeure since this time, some resulting from unsuccessful restarts following planned maintenance and others due to unexpected problems.

The force majeure declarations came from BASF in October, Lanxess and Deza in November, then Atmosa and CEPSA in January. All manufacturers, with the exception of BASF, have now lifted the status and production is returning to normal rates.

While there is some output at the BASF site, this is for captive use to allow for some small volumes of downstream plasticizers to be produced. All PA production at this site is traditionally used captively.

Two other producers, Polynt and Ostend Basic Chemicals (formerly Proviron), also had scheduled maintenance periods at some point during the November to January timeframe.

These outages, and a consequent need to build stocks at a time when demand has been healthy, have meant that for many sellers only contract volumes that can be honoured.

At least one producer commented that it has been unable to source additional volume of OX and one manufacturer said, “It is all a bit frustrating as we could have been running at higher rates.”

Another added “There are no [OX] molecules on the spot market.” A third said, “[We] will be trimming back PA as OX is tight and there is a problem getting the volume we need.”

The OX markets have been described as tight since the start of the year due to supply restrictions.

Total’s Gonfreville, France, site was in force majeure for much of January. Israel’s Gadiv unit also commenced some planned maintenance from mid-January, which has been followed by a scheduled outage in March/April at Shell’s Wesseling, Germany site.

There is also less Russian material heard on offer in the European arena and market talk of additional production issues from others sites, though these could not be verified.

The start of the year was also impacted by logistical issues due to the low water levels on the River Rhine.

Spot prices for PA have as a consequence seen some large moves over the past few months, with demand on the spot market remaining healthy.

Prices have risen by around 25% since mid October for liquid, but a heftier 40-45% increase has been absorbed by those customers taking flake material.

Production data according to ICIS plants and projects.

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Focus article by Jane Massingham