AFPM ’19: US OX/PA, plasticizers outlook seen steady

HOUSTON (ICIS)–US orthoxylene (OX) supply is likely to remain sufficient to meet expected steady demand growth in the second quarter as the market approaches the high season in the warmer spring and summer months ahead, heading into this year’s International Petrochemical Conference (IPC).

There are no turnarounds slated to impact the market, which will keep supply stable.

Demand typically increases alongside growth in the construction sector.

Highers US spot mixed xylenes (MX) buoyed by growing gasoline demand during the spring and summer gasoline seasons are likely to push contract prices higher in the coming months.

ExxonMobil and Flint Hills Resources are the major producers of OX in the US.

Phthalic Anhydride

Stable US phthalic anyhydride (PA) supply-and-demand fundamentals in the first quarter are largely expected to carry over into the second. There have been no production issues to affect supply levels, which will likely remain sufficient to meet anticipated steady demand for the product.

While there may be a slight pickup in demand when construction season begins, the uptick is unlikely to be substantial according to one market participant. In addition, construction season has been delayed somewhat amid continued cold weather throughout much of North America.

ICIS methodology bases PA pricing on prior-month movements in feedstock OX, plus an adder. As such, PA pricing for April is under upward pressure, as March OX settled up by 5 cents/lb, amid tightness in upstream materials.

PA is used to make phthalate plasticizers, which accounts for over half of production; unsaturated polyester resins (UPR); and PA-based alkyd resins.

Stepan and Koppers are the two US PA producers who sell to the market, while ExxonMobil produces PA for captive use.

Plasticizers

Market conditions for dioctyl phthalate (DOP), dioctyl terephthalate (DOTP) and di-isononyl phthalate (DINP) are heading into the second quarter with a clearer, stabilised outlook compared to early 2019.

Economic uncertainty, particularly surrounding US-China trade talks weighed heavily on markets, leading to some buying hesitation.

While trade talks were still ongoing, uncertainty has eased somewhat as market participants characterise demand as solid going into April.

Market sentiment indicated spot prices were likely to remain stable for the near term on the back of steady market conditions.

Spot prices across all three plasticizers are largely driven by supply-and-demand fundamentals, although feedstocks, including PA, contribute to some degree.

BASF, Eastman and ExxonMobil are the three major plasticizer producers in the US.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Manar Hindi and Lucas Hall