OUTLOOK ’19: US H1 oxo-alcohols demand anticipated strong amid softer pricing

Larry Terry

08-Jan-2019

HOUSTON (ICIS)–US oxo-alcohols demand is expected to be resurgent beginning in the first quarter, but buyers and sellers say the outlook beyond solid buying interest is less certain.

At the very end of 2018, demand and prices were poised to fall precipitously, mostly on seasonality and weaker November propylene. Downward pressure on December propylene,  is likely to push January  2019 oxo-alcohols prices sharply lower as well.

Market participants, however, attribute broader softness to uncertainties surrounding US/China tariffs, which are beginning to disrupt trade flows.

“Regions we have not typically seen as interested to supply are now reaching out to gauge our interest,” a buyer said. “I can only assume this is due to material flowing from China into their region.”ICIS Editorial Chart goes hereAlso different, the buyer said, is that US producers that do not typically supply him product are aggressively soliciting his business.

Heightened demand next spring – some of it pent up, stemming from wildfires in California and several hurricanes in 2018 – is likely, especially with expectations of a mild winter.

The National Oceanic and Atmospheric Administration’s (NOAA) Climate-Prediction Center has forecast above-average winter temperatures through February across the northern and western US, Alaska and Hawaii.

While intermediates such as  oxo-alcohols and acrylates should see buying interest escalate from the architectural coatings markets, as well as from adhesives used in construction,  volume-growth projections for 2019 from a couple of paint and coatings makers are moderate.

For the foreseeable future, domestic petrochemical markets will continue to experience transportation constraints as trucking shortages strain raw material and finished-product deliveries.

A buyer said he does not expect that to affect demand significantly, but added that “companies are mostly just adjusting to the new state of the industry.”

It is not yet clear whether constraints on the oxo-alcohols and derivative acrylates markets in late 2018 will heighten European demand for US imports. Demand for 2-EH used in paints and coatings typically peaks by the second quarter.

In the downstream plasticizers market, logistics issues will continue to exert additional pressure well into 2019. In these markets as well, European production issues may reduce supply, and Chinese tariffs will continue to weigh on the market.

Upstream propylene demand is likely to strengthen in the first quarter of 2019, but inventories may continue stable to elevated on strong production from refineries and crackers.

NBA is used as a solvent and to produce butyl acrylates for the coatings and adhesives industries. Smaller-volume uses are in acetate and glycol ether formulations.

Among the major uses for 2 ethylhexanol (2-EH) are as a feedstock for chemicals used in the production of paint, automobiles, adhesives and plasticizers, and in building and construction markets.

US oxo-alcohols producers include BASF, Dow Chemical, Eastman Chemical and Oxea.

Focus article by Larry Terry

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