OUTLOOK ’18: Europe PA players expect healthy demand, eye overseas markets

LONDON (ICIS)–The European phthalic anhydride (PA) market anticipates good growth in 2018 as demand into the polyester polyol market is estimated to increase by around 10%, according to some sources.

The European plasticizers market, meanwhile, is expected to post low single-digit growth year on year in 2018.

Players in Europe will keep an eye on overseas demand as well as the settlements in feedstock orthoxylene (OX), which according to some sources take too long compared to other petrochemical markets.

“Growth for us was 4-6% in 2017 and [we] expect it will continue in 2018 – the unsaturated polyester resins [UPR] side of the market segment outlook is good,” one buyer said.

However, this demand growth is not expected to be felt by some until the end of the first quarter, with European demand traditionally reaching its healthiest period in Q2.

One seller added that some plants in China are expected to be closed due to air purity improvement measures, stating that this would help curtail material in the market amid a strong consumption period.

“2018 is a worry for a lot of markets for buyers,” one consumer said, fearing further cost impacts due to supply constraints.

There will be the usual planned maintenance work taking place during the year, but nothing that seemed to concern market players.

One of the key discussion points at the end of 2017 was the surcharges being proposed to PA on top of the full pass-through cost of feedstock orthoxylene (OX).

However, the higher transport costs in particular are the main reason behind the move.

Other sources have said higher energy costs are also putting pressure on the producing side of the market.

“Producing PA is an energy-intensive production process,” another seller said.

Most estimated increases will be at a minimum of 3% over the feedstock costs, or €10-15/tonne.

Given that each agreement is very much dependent on location of the consumer, there are likely to be a range of agreements made.

There is an underlying concern for some too about the availability of trucks and trains due to the lack of drivers.

Producers are keen to see swifter settlements for OX in 2018 as there have been a few months at the end of 2017 when settlements have stretched well into the month.

In the most pronounced cases, settlements were not agreed until the end of the third week of the month.

“These talks need to be quicker,” one source said.

“Lots of other feedstock markets settle promptly, so why not OX?,” it added.

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