Market
Activity in the European butanediol (BDO) market is muted this week as the majority of players are on summer holidays. Offtake is softer as is usual during August, but underlying demand is still healthy.
Supply remains limited, and most plants are running on low inventories.
There are concerns in the market regarding the economic downturn, but sources are adopting a wait-and-see stance, and believe the situation can only be properly assessed once business resumes in September.
There are few volumes available on the spot market. One source said it had received an offer at €3,300/tonne FD NWE.
Production
The force majeure at Germany's BASF remains in place and will run into September. Its customers are now on a 60% allocation quota.
A fire at a precursor plant at the facility on 30 May damaged its feedstock acetylene plant, and the producer declared force majeure on 31 May.
BASF's 190,000 tonne/year plant is located in Ludwigshafen.
Upstream
Europe methanol was turbulent last week, with spot prices gaining €13-15/tonne FOB Rotterdam through the week before losing €11/tonne with a flurry of deals on Friday afternoon. The reason for the increases was primarily supply concerns, with particular reference to the 1.7m tonne/year Atlas plant in Trinidad, which went down unexpectedly over two weeks ago.
On the European propylene market last week, sentiment improved on the back of events in Asia. A fire at Taiwan’s Formosa Group petrochemical complex in Mailiao tightened supply and boosted price ideas in the region.
The extreme oversupply situation of the past couple of weeks had dissipated as export opportunities had arisen. However, sources stressed that the unplanned derivative issues that had plagued the market in the latter part of July had not been fully resolved and therefore underlying bearish pressure was still apparent.
Pricing activity was still thin in the North American BDO market during the week, as trade participants focus on feedstocks, global demand, and economic uncertainty in light of the recent US credit downgrade by Standard and Poor’s (S&P).
Trade participants said it may be too early to tell what kind of impact the US credit downgrade may have on the BDO market.
One producer said it would need to see how the downgrade would impact the automotive and spandex markets first, while buyers said it may have little to no impact the BDO market.
Although supply has been described as globally tight, North American BDO consumers have not had any issues in obtaining material.
North American BDO producers have also not announced any upcoming turnarounds for the remainder of 2011.
Market participants said they did not expect much activity for the next month, and that it was too early regarding any outlook for fourth-quarter BDO contracts.
In feedstocks, prices were up slightly from a week earlier.
Methanol spot prices were at 116-119 cents/gal, down from the low-end of 120-122 cents/gal a week earlier.
Refinery-grade propylene (RGP) spot prices were at 68 cents/lb, down from 69-72 cents/lb the previous Tuesday.
In industry news, a US district court will allow Invista to proceed with a trade-secrets lawsuit against Frontech, a Houston-based firm which is competing with Invista in China's BDO) market, the company said during the week.
Invista, sued Frontech in June 2010, accusing the company of stealing trade secrets that covered Invista's process of making BDO. Invista and Frontech compete in licensing BDO manufacturing technology in China.
Invista accused Frontech of using its technologies for at least two projects – the Shaanxi Delin Chemical Industry project and the Yunnan Yunwei project.
Frontech denied that it stole Invista's technology, and filed a counter-claim, accusing Invista of filing the lawsuit solely to harass Frontech. Frontech alleged that the lawsuit was part of a smear campaign intended to make it less likely to win business in China.
($1 = €0.70)
This week on ICIS ( www.icis.com):
09/08/2011 12:20 European chems shares rocked by major sell-offs in global markets
09/08/2011 06:25 Asia petrochemical stocks tumble as US crude slumps below $80/bbl
09/08/2011 11:09 Crude slumps as fears of double-dip recession build
08/08/2011 20:44 Obama says US credit is still triple-A, plans deficit cuts
04/08/2011 22:38 US Invista can proceed with BDO trade-secrets lawsuit – court
