OUTLOOK ’19: European MA market could be headed for another volatile supply period in Q1

LONDON (ICIS)–Just when European maleic anhydride (MA) consumers thought more stable supply conditions would dominate in 2019, the year looks set to start with some uncertainty from one of the larger producers.

Polynt’s 66,000 tonne/year plant in Ravenna, Italy shut down on 26 November and force majeure was declared on 5 December.

Added to this, there are constraints from ESIM’s smaller line in Linz, Austria, while Bosnia’s GIKIL is unable to export product as it has been awaiting export papers since 7 December. If this is not resolved it will result in production shutting down for the first half of January.

Along with this, there are suggestions of some other production hiccups, and this, suppliers say, has tightened the market.

While many are not feeling the impact at year end, due to reduced buying patterns, January could be a challenge for some.

“I think increases [for January] on the back of Polynt is a bit of fake news,” one buyer said.

A reseller said: “If I was a buyer, I would just worry about it after Christmas, but if [Polynt] don’t start in January, there could be problems.”

One key producer said: “In the past week and months, the market has not been long. When talking in October, we could already see the situation was not long. It is a balanced market situation and then producers have technical issues and unforeseen circumstances, which reduces production.”

There is still some optimism from buyers that fewer price hikes will be seen and some more stable supply conditions will prevail.

“There is some likelihood that 2019 is a switch to a buyers market as 2018 had so many turnarounds – and heavy ones too – in the US and Europe. So, from an availability point of view, 2019 will be much more relaxed and negotiations will be easier for buyers,” one major consumer said.

The feedstock cost is still something that sources are keeping an eye on.

N-butane demand is normally at its peak in the cold winter conditions, but given the milder temperatures seen in much of Europe, supply is balanced and prices have followed some of the downtrend on overall energy prices.

Global uncertainties also make it difficult for sources to be committed to a clear 2019 direction.

Demand-wise, consumption is not expected to grow much more than GDP for many sources, though there will be a shift in volumes for some sources given the mergers that have occurred.

In August, AOC and Aliancys announced the official creation of AOC Aliancys, a leading global supplier of polyester and vinyl ester resins and other material for the composites industry.

In November, INEOS Enterprises announced plans to acquire the entire composites business from Ashland Global Holdings Inc, a deal  that is expected to be completed in the first half of 2019.

Early in December, INEOS Enterprises also completed its acquisition of US producer Flint Hills Resources. The new combined company known as INEOS Joliet will manufacture MA at its facility in Chicago, Illinois.

Following the Polynt/Reicchold merger in 2017, sources comment that suppliers that are not backward integrated into UPR’s are now in the minority.

Europe is essentially still reliant on imports, and while some product comes from the US, more is expected from Asia.

Asian material is on the water, but the arrival time of February does not allay some of the concerns certain players have for January availability.

Nevertheless, one supplier said: “Everything depends on demand and supply, as long as we are struggling in terms of production and Asia takes time to get here.

“If we are short [when demand picks up] a lot of consumers cry for help early on, then you have dilemma once [Asia product is] here.”

It remains to be seen when Polynt will lift force majeure, how demand will pan out for Q1 and how much Asian product finds its way onto the spot market.

Looking further ahead, SIBUR announced it has begun construction of its 45,000 tonne/year MA plant at Tobolsk, Russia. It will be the first MA production unit in Russia, as the country currently relies on imports and is due to come onstream in 2021.

Hungary’s MOL is also expected to be on the verge of announcing an increase in its nameplate capacity for 2021.

MA is mostly used in the manufacture of unsaturated polyesters resins (UPRs) used in the production of boat hulls, bathroom fixtures, automobiles, tanks and pipes. Other outlets include 1,4- butanediol (BDO), tetrahydrofuran (THF) and gamma-butyrolactone (GBL).

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