European maleic anhydride (MA) third-quarter contracts have finalised at a reduction of €75/tonne, settling to a pre-discounted level of €2,025-2,105/tonne FD NWE.
Third-quarter contract negotiations were prolonged because of a wide gap in starting positions between buyers and sellers. Buyers had been targeting reduction of €100/tonne because of improved supply in the third quarter following the resolution of production problems in the second quarter and the approach of seasonal slowdowns in August.
Producers had been targeting a rollover, arguing that demand remains healthy and feedstock costs have been rising during the second quarter.
Some producers added that if negotiations were to begin now, instead of a few weeks ago, they would not have accepted reductions of €75/tonne because of to expectations that feedstock benzene and n-butane costs will rise in the third quarter, which was not anticipated during early contract negotiations.
There are also fears that the US debt crisis will lead to higher feedstock costs, as upstream n-butane is purchased in US dollars.
The US has been set a deadline of 2 August to raise its debt ceiling or risk defaulting on its debts. The US is in danger of a ratings downgrade from its current triple A bond status, which would increase the cost of US borrowing. If the US does default on its debt or suffer a downgrade of its bond rating, this would be likely to drive away investment and weaken the value of the US dollar.
Consumption has begun to slow, particularly in southern Europe, because of the approach of traditional end-user outages in August.
Weakening macroeconomic conditions in southern Europe are also weighing on demand in the region. MA demand is heavily linked to GDP.
Spot prices are stable at €1,600-1,700/tonne FD NWE, because of unchanged fundamentals. Spot activity is limited as some European producers are building stocks ahead of August outages.
MOL will halt production at its 16,000 tonne/year MA plant in Szazhalombatta, Hungary, for two weeks of planned maintenance, a company source confirmed. The outage will begin on 8 August. The shutdown coincides with traditional end-user holiday outages in Europe and is not expected to affect the overall European MA supply/demand balance. MOL is currently stockpiling material to take it through the outage.
Material remains available from Asia priced as low as €1,400/tonne FD NWE, but this is not seen as representative of the bulk of spot trades in the European market.
($1 = €0.70)
This week on ICIS ( www.icis.com):
29/07/2011 11:26 MOL to shut down Szazhalombatta MA plant in August for maintenance
25/07/2011 23:48 US MA producer plans two-week turnaround in August
25/07/2011 13:54 China’s Shanxi Sanwei plans maleic anhydride project – Conser
