For the Quarter Ending June 2021
The regional Phthalic Anhydride supplies were negatively impacted as turnaround at several facilities imbalanced the supply-demand scenario in early Q2. Market supplies witnessed an improvement in the latter half of the quarter as the producers ramped up production with surging demand. Several spot buyers were seen stocking up their inventories ahead of the turnarounds to keep the production in downstream industries smooth. The prices followed an uptrend throughout the quarter with FOB Louisiana prices touching USD 1390 per tonne in June. Market participants also pointed at raw material Ortho-xylene shortages which resulted in cost pressures for phthalic anhydride manufacturers.
The market outlook of the Asia Pacific region witnessed mixed sentiments, during the first half as the prices observed a constant downfall with the producers fearing setback of the demand erosion as COVID cases erupted in several parts of Asia. Many market participants remained anxious over the demand outlook as the key importer India was badly impacted with the second wave of COVID restricting its industrial and commercial activities for more than a month. Prices in India retreated after a historic surge in Q1. In May, Indian producers raised concern over increasing Phthalic Anhydride imports from China, Indonesia, South Korea and Thailand. CFR prices in India dropped to USD 1235 per Mt due to overall market slowdown.
Phthalic Anhydride production remained capped in the first half of Q2 as one of the key players in Europe conducted a catalyst change routine in their reactor. Enquiries from the downstream plasticizers industries surged amidst production-related hinderances and limited Phthalic Anhydride supply while the demand from the paints and coating sector remained stable. Downstream Unsaturated Polyester Resin (UPR) sector noted improved enquiries but lacking supplies of the raw materials remained the key concern of the producers.
For the Quarter Ending March 2021
The supplies of Phthalic Anhydride in the North American region were tight due to reduced imports. The market witnessed nearly 50% fall in its Phthalic Anhydride imports on Y-o-Y basis due to high shipping freight cost and limited product availability. Several plants operated normally without disruption despite freezing weather which hit the USA Gulf region. However, demand was sluggish as offtakes by plasticizer manufacturers declined as the region faced shortage of other key raw materials in February, followed by the disrupted automotive sector. However, it is observed that several key players in the region restocking their inventories ahead of planned turnaround in the next quarter which surge the prices of Phthalic Anhydride in the region. Phthalic Anhydride FOB Texas prices for March deliveries were assessed at USD 1210/MT.
The Asian Phthalic Anhydride market was balanced to tight during the first quarter of 2021, as Thai Continental petrochemical plant was on a turnaround, compounded by delayed cargoes from China due to the Lunar New Year holidays. High shipping freight charges further tightened the market situation. Demand was balanced throughout the quarter due to better offtakes from other Asian plasticizer consumers. In India, Phthalic Anhydride prices witnessed an enormous surge in March as compared to the February due to sturdy demand and material shortage. CFR JNPT prices hiked by USD 382/MT on m-o-m basis in March.
The European Phthalic Anhydride supplies were tight during the first quarter of 2021, owing to reduced imports from Asia and USA. The Suez Canal blockage in March added to high shipping freight worrying several importers. Extreme cold weather in the northwest Europe further created the transportation hinderance and delay in supplies of the key feedstock of o-xylene and naphthalene. Demand improved during the quarter due to better offtakes from the downstream automotive and construction sector.
For the Quarter Ending September 2020
As several plants that were earlier under turnaround resumed production, supply for Phthalic Anhydride (PA) considerably improved with respect to the previous quarter. The domestic demand in China took a positive turn by the end of September, while exports from the country viably reduced as manufacturers were keen towards catering to the local downstream demand. Traders expressed optimism over the mega infrastructure campaign organized by the Chinese government to revive the looming construction industry, which is expected to contribute well for surging the demand for PA by the end next quarter. As the demand fundamentals were steady, around 1000 tonnes of the material from Northeast Asia was sold to China. PA cargoes from the Northeast Asia were sold at USD 600 per tonne in the late-September to early October period. With the permanent shutdown of Korea’s LG Chemical PA unit in August, the region suffered a loss of 60 tonnes per year production capacity that in long run is anticipated to create a considerate demand-supply gap in Asia.
Supply of Phthalic Anhydride in the US remained sufficient with respect to the regional demand. Although supply of feedstock Orth-Xylene was disrupted by the maintenance at the key trade route of Illinois river which started in July and is expected to last till late October. This did not hamper the production of PA immediately as majority of manufacturers had already stockpiled enough cargoes of feedstock till the year end. Demand from the paint and coatings segment appreciably picked up with increase in number of remodeling and construction projects during the indefinite lockdown period. However, offtakes from the automotive industry remained dampened amid consistent increment in unemployment rate and reduced expenditure on consumer goods.
Lockdown induced in the second quarter continued to weigh over the market fundamentals of the European Phthalic Anhydride till mid of July due to high inventories of PA. In August, the condition marginally improved with a long maintenance turnaround in a large-scale PA plant. By the end of September, regional Phthalic Anhydride market witnessed much needed revival, supported the strong downstream demand form the UPR segment. After the slow crawl in July-August period, PA demand recovery was fast pace, far above the market expectations.