OUTLOOK ’19: Steadier road ahead for Europe plasticizers in 2019, supported by new output

LONDON (ICIS)–Is there a steadier road ahead for supply of plasticizers in Europe 2019, compared to the twists and turns of 2018?

There are clearly global uncertainties making it difficult for some to give a concrete expectation for 2019, but other sources anticipate a steadier pattern of supply.

Recent months have been marked by both planned maintenances and unplanned production issues resulting in force majeure declarations.

More recently, the lifting of force majeure from Evonik in December 2018 amid improved water levels on the Rhine may have brought some relief to consumers who are set to build inventories in January.

“We close on 20 December, production-wise, with no goods in or out from 17 December to 7 January, so it allows time for producer inventories to catch up,” one buyer said.

There has been limited talk about January pricing, with 2018 ending on a largely steady note.

Demand wise, 2019 is expected to either plateau or grow close to GDP at around 1.2%.

Those involved with the  automotive industry are particularly concerned, but there seems to be a rather more positive outlook, at least for the first half of 2019, from those moving end product into the construction industry.

The bearish crude oil markets are doing little to abate concerns about an economic downturn.

“From 2008, we are learning what to do differently and will prepare and put more care into our position,” one producer said.

In 2019, an additional 175,000 tonnes/year of dioctyl terephthalate (DOTP) capacity are due to come online: 100,000 tonnes/year from SIBUR in Perm, Russia; 60,000 tonnes from Oxea in Germany and 15,000 tonnes from Grupa Azoty Zak in Poland.

Grupa Azoty Zak has stated it is on track for volume to be available to the market in the first quarter of 2019.

SIBUR is expecting to start up in the second quarter, and approximately a third of the capacity is for export, though the destination will vary depending on market conditions.

The situation from Oxea is less clear, with some sources stating they do not expect material available from the manufacturer in 2019.

There are other investments taking place for non-phthalate plasticizers. Perstorp is embarking on its production of its branded Prevalen, which has the potential to be produced from renewable/recycled raw materials.

In 2019, the company is launching the first grades of partially renewable material out of its 50,000 tonne/year plant in Stenungsund, Sweden.

UPSTREAM CONCERNS
Upstream, there is some concern about the availability of propylene in the second and third quarter of 2019 due to the heavy cracker shutdowns scheduled.

The feedstock phthalic anhydride (PA) market was expected to be largely steady for 2019, but the transport and shipping costs are another big impact influencing PA contract talks for 2019.

The usual pass-through cost of orthoxylene (OX) will remain, but some have been looking to increase premiums by 5-10% due to higher energy and transport costs.

While some have said this had been successful, other said there was a rollover from 2018 to 2019.

The debate over the longer-term outlook of phthalate plasticizers and credible alternatives is bubbling away in the background, though there are expectations that this will not truly impact the European market for another five to 15 years.

Plasticizers are used in plastics or other materials to impart viscosity, flexibility, softness, or other properties to the finished product.

PA is used as a chemical intermediate in the production of phthalate plasticizers, as well as in unsaturated polyester resins (UPR).

Focus article by Jane Massingham

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