C O N T E N T S

PROPYLENE AND
DERIVATIVES

Acrylic Acid Phenol

Acrylonitrile Polymethyl Methacrylate

Butanediol Polypropylene

Isopropanol Propylene

Methyl Methacrylate Propylene Glycol

Oxo-alcohols Propylene Oxide

 S&D Outlooks - Propylene and Derivatives
ACRYLIC ACID
Q4 2018 - Market Review
Supply
EUROPE
Supply in the European acrylic acid (AA) and acrylate
esters market was mixed in the fourth quarter. There
were a number of maintenance stops that came to an
end during this time, which boosted supply. There were
some production problems for BASF at Ludwigshafen,
linked to critically low water levels on the river Rhine.
Demand
EUROPE
Demand softened in the fourth quarter, as is traditional
for the end of the year. Coatings demand normally falls
during the colder months, and there was also an
element of end-of-year de-stocking in December.
Q1 2019 - Market Outlook
Supply
EUROPE
Supply is well balanced in the market, with producers
managing output towards the end of 2018. Players will
continue to closely monitor water levels on the river
Rhine, with some issues remaining for BASF linked to
this.
Demand
EUROPE
There is traditionally an uptick in demand in the first
quarter, as players replenish stocks. There remain
uncertainties over the economy, and this could impact
growth in 2019. Players may use the first quarter as an
opportunity to build stock, before the upstream
maintenances in spring.
ASIA
Supply in Asia remained ample in Asia amid weak
demand and prices were largely on a downtrend. The
operation of regional producers were steady in Q4.
There was some turnarounds in China but there was no
supply shortage due to weak demand. With
competition from suppliers of various origins keen to
sell cargoes, Asian spot prices were under pressure.
ASIA
Demand for most acrylate grades remained slow and
there was no significant improvement in October, which
is usually the peak season. Demand for glacial acrylic
acid was good, supported by downstream superabsor-
bent polymer sectors during winter, but other
downstream applications like paints and coatings
slowed down. Buying sentiments in Asia took a hit with
volatility in upstream crude and propylene prices, and
uncertainty in global economy. The Diwali holiday in
India also resulted in a slow-down.
ASIA
A northeast Asian producer planned a turnaround at its
plants in February, while another southeast Asia plant
may have a turnaround in end Q1/early Q2. The
operation rates in China might be curtailed due to
winter and Lunar New Year.
ASIA
Some replenishing activities may occur following
buyers’ destocking activities in end of Q4 2018.
However, market activities are expected to slow down
as Lunar New Year, widely celebrated in Asia,
approaches in early February. Some end-users may shut
their production during the holiday.
US
US acrylic acid supply was ample to longer during the Increase
fourth quarter of 2018, mostly on seasonally softer
buying interest. The market saw a free-market contract
decline of 8 cents/lb ($176/tonne), driven lower late in Constant
the period by sharply lower November propylene,
which plummeted by 10 cents/lb amid falling upstream
costs and increasing supply. Transportation logistics
Decrease
problems continued, forcing feedstock suppliers and
acrylates producers to adjust the timing of orders and
delivery lead times.
Mixed
US
Demand was seasonally slower, as usual during the
year’s final quarter, and the major Christmas and US
Thanksgiving holidays substantially reduced business
days during the quarter. Despite downward price
pressure from November propylene and the desire by
producers to reduce year-end inventory to lessen their
ad valorem tax burdens, volumes moved were not
heard to have increased during the period. Customers’
downstream markets were also steady to slower during
the typically softer holidays and seasonal slowdown.
US
US acrylic acid supply is expected to be steady during
the first quarter of 2019. Some US customers said late in
2018 that producers were seeking out new buyers in an
effort to move more volume. Lower-priced December
propylene may heighten early-year acrylic acid
production.
US
While some pent-up US acrylic acid demand is likely
from hurricanes and California wildfire damage in 2018,
an early projection predicts only a moderate increase in
2019 volume versus the previous year. Forecasts of a
broadly milder winter this year, however, may
strengthen demand as the paint-blending season gets
underway in the first quarter.
 ACRYLONITRILE
Q4 2018 - Market Review
Supply
EUROPE
European acrylonitrile (ACN) spot prices fell dramatically
throughout the fourth quarter of 2018 due to improved
supply, dwindling downstream demand and steady
price drops in the more liquid Asian spot market.
Supply in Europe improved through the quarter after
being structurally short through most of 2018 due to a
few unplanned plant closures, including a force majeure
at INEOS’s Seal Sands UK unit. A few turnarounds took
place in the fourth quarter of the year, but that did not
result in a shortage of product.
Demand
EUROPE
Demand for European ACN dropped in the last quarter
of 2018 due to poor performance in the downstream
acrylic fibre (AF) and acrylonitrile-butadiene-styrene
(ABS) markets.
Demand for AF was particularly poor, which led to
downstream producers cutting production rates to an
estimated overall average of 70-80% in Q4 2018.
Spot prices lost $800/tonne between the beginning of
October and the end of December, which was partly the
result of falling demand.
Q1 2019 - Market Outlook
Supply
EUROPE
The European ACN market is likely to be better
balanced in the first quarter of 2019 after a very volatile
2018. Product was tight through most of the year, which
led to steady price increases and, in turn, encouraged
buyers to cut their production rates. Some of these
production cuts will continue into the start of 2019,
which is expected to keep the market balanced.
Demand
EUROPE
Demand for ACN will depend largely on the
performance of the downstream acrylic fibre (AF) and
acrylonitrile-butadiene-styrene (ABS) markets. Demand
for both applications dwindled in 2018. The AF market
suffered on the back of competitively priced alternative
products, while ABS was affected by a sharp decline in
the European automobile industry. AF demand is likely
to remain unchanged, while ABS demand could
increase amid hopes that the automotive industry will
pick up at the start of 2019.
ASIA
Asia’s acrylonitrile (ACN) supply tightened in October
and November due to several plant shutdowns in China,
South Korea and Taiwan, but the availability of supply
increased in December amid the completion of the
above turnarounds in coupled with the inflow of
deep-sea cargoes at year-end. Most suppliers were
committed to their contract supply and very limited
spot cargoes were heard to be sold as producers were
sitting at the low stocks amid the above maintenance.
Prices fell by 35% in the fourth quarter because of the
falling feedstock and sluggish demand.
ASIA
Demand from downstream acrylonitrile-butadiene-sty-
rene (ABS) and acrylic fibre(AF) sectors was slowing
down in the last quarter of the year amid the year-end
seasonal lull. Most downstream end-users in China were
covered by their term cargoes and had no interest to
procure additional spot cargoes amid poor sales caused
by the ongoing trade war between China and the US.
China’s exporters of finished goods including home
appliance producers were hit hard by the trade war, and
have cut their purchased of raw materials such as
chemicals.
ASIA
Asia’s acrylonitrile (ACN) supply is expected to remain
ample in the first quarter of 2019 as there is only one
plant maintenance in the quarter -- Formosa Plastics
Corp’s turnaround starting in mid-February for 25-26
days. ACN prices may follow feedstock propylene trend
in 2019 given sufficient availability and relatively weak
demand.
ASIA
Downstream demand may not increase ahead of Lunar
New Year holiday, which falls in early February. The
manufacturers of finished goods may have longer
holidays this year due to the slowing economy and
lacklustre sales. Demand may gradually pick up after the
holiday on the back of the restocking activities.
US
US acrylonitrile (ACN) supplies increased in the fourth
quarter amid seasonal downturn in downstream
markets. Demand for acrylic fibres (AF) weakened,
including in the key China market, significantly
dampening demand for US material. Production levels
also improved amid fewer turnarounds, supporting an
increase in supply. Despite healthier supply and
demand fundamentals, US supplies remained
constrained amid an overall small supply deficit and
expectations of increased demand in the first quarter.
US
US ACN demand decreased amid weaker demand in
global downstream markets. Demand for acrylic fibres
(AF) weakened, including in the key China market, amid
seasonal downturn, discouraging demand for US
material. Demand for downstream acrylonitrile-butadi-
ene-styrene (ABS) also decreased. At the same time,
supply in Asia improved, further dampening demand. In
the US, meanwhile, demand for downstream carbon
fibres and acrylamide remained healthy. Decreased
demand for AF and ABS, however, largely weighed
down prices over the quarter.
US
Supply is expected to remain snug-to-balanced owing
to lingering constraints from 2018 and incremental
increases slated for 2019. Although the global
turnaround schedule is lighter, Cornerstone Chemical Increase
Company will go on turnaround at its Fortier site in
Louisiana for two to three weeks in the second half of
March. Constant
Decrease
Mixed
US
Demand in major downstream sectors such as
acrylonitrile-butadiene-styrene (ABS) and acrylic fibres
(AF) is likely to increase in the first quarter and grow in
line with GDP growth, while more niche markets such as
carbon fibres and acrylamide are expected to see
significant growth.
 BUTANEDIOL
Q4 2018 - Market Review
Supply
EUROPE
The quarter started with balanced market conditions
while European producer LyondellBasell conducted
planned maintenance in October. Meanwhile, Rhine
water levels reached historically low measurements,
causing disruption for logistics and production rates to
decrease at some German plants. One European
polybutylene terephthalate (PBT) producer carried out a
scheduled turnaround in November which led to lower
demand towards the end of the year. This, in addition to
healthy European supply and early end of year
de-stocking led to lengthy supply conditions.
Demand
EUROPE
Demand was healthy to begin with and was met by
balanced supply at the start of the fourth quarter.
Demand declined in November when one European
polybutylene terephthalate (PBT) producer conducted
planned maintenance which lasted one month.
Additionally, there were signs of early de-stocking in
November, which surprised some sellers. De-stocking
continued in December, which is typically expected
before Christmas as players reduce inventories in
preparation for the New Year.
Q1 2019 - Market Outlook
Supply
EUROPE
European butanediol (BDO) supply is likely to be
balanced this quarter, with no planned turnarounds
expected. Though demand is expected to increase as
the first quarter progresses, supply conditions were
lengthy in late 2018 and therefore surplus volumes are
likely to be consumed early on in the year as players
prepare for peak demand season in the second quarter.
Demand
EUROPE
An uptick in demand typically takes place in January,
while the end of the first quarter should be fairly busy as
players prepare for peak demand season from the
automotive industry in the second quarter. Rhine water
levels will be watched closely as disruption to logistics
could lead to higher demand, if water levels fall below
average as they did in late 2018.
ASIA
Supply in China fell as several local producers had either
shut their plants for maintenance or were running their
plants at reduced rates amid suppressed butanediol
(BDO) prices due to lacklustre demand. A Taiwanese
producer was operating its plant at reduced rates due to
cost pressure from firm butadiene (BD) prices, although
BD prices has since corrected from its peak. Other
feedstocks such as propylene, propylene oxide (PO) and
maleic anhydride (MA) are also being used by BDO
producers outside China.
ASIA
Demand in Asia weakened in Q4 2018 as buyers
preferred to keep their inventory levels lean with the
approach of the year end. Buying interest for import
cargoes in China was especially subdued due to the
widening gap between domestic and import prices.
Domestic prices had been on a steady downtrend since
mid-2018 amid poor market sentiment. Faltering
demand of downstream polybutylene terephthalate
(PBT) in the year end further suppressed demand for
BDO.
ASIA
Overall supply from Asian producers are expected to
stay largely flat in Q1 2019 as producers are not under
pressure to cut production following the declines in
prices of different feedstock used by various producers
outside China, including BD, propylene and PO.
ASIA
Demand is expected to remain sluggish in January
ahead of the Lunar New Year holiday in early February.
Downstream plants in China and Taiwan will be shut for
at least two weeks from H2 January onwards. Demand
will likely start to pick up only from mid-February at the
earliest.
US
US BDO producers began 2018 with tighter supply but
ended the year with plenty of material. Supply
tightened considerably in the first three quarters of the
year after BASF declared a force majeure in January Increase
because of fire and weather conditions at its plant in
Geismar, Louisiana. The producer lifted that declaration
in early May but maintained a sales control for a few Constant
months. All those issues were resolved by the end of
the third quarter, and the year ended with plenty of
material available.
Decrease
Mixed
US
BDO demand remained stable, in line with a generally
healthy US economy, and the lure of the fashion sector
and specifically the yarn-apparel business prompted
Shandong Ruyi, China’s largest textile producer, to move
toward buying US-based INVISTA’s apparel business.
That deal was supposed to have closed by mid-year
2018 but industry sources said the trade war between
the US and China has slowed down the closing.
US
US butanediol (BDO) supply should remain balanced or
possibly even slightly long in early 2019, with no
planned maintenances expected. Buyers say US BDO
supplies are ample, to the point that producers are
seeking more volume from buyers, and there are no raw
material shortages that would prompt production
issues.
US
January often sees an uptick in demand from the winter
ski season and the end of the first quarter also usually
generates an increase in activity. However, concerns
over the US-China trade war and softening conditions in
the auto sector have tempered expectations for the
American butanediol (BDO) market in 2019.
 ISOPROPANOL
Q4 2018 - Market Review
Supply
EUROPE
Supply of European isopropanol (IPA) was affected in
the last quarter of 2018 by the critically low levels of the
river Rhine, which disrupted deliveries and resulted in
higher freight costs for alternative transportation. Apart
from the logistical constraints, availability of the
product was healthy through the quarter with no
planned or unplanned closures taking place in Europe.
Demand
EUROPE
Demand for IPA was fairly strong in the last quarter of
2018, which was partly due to delays and disruptions
caused by the low Rhine levels. Producers and
distributors not situated in the affected region noted
increasing spot orders from buyers that do not regularly
purchase volumes. There was no significant slowdown
in demand at the end of the year as the product is used
in winter applications, such as de-icing agents.
Q1 2019 - Market Outlook
Supply
EUROPE
The supply of European isopropanol (IPA) is set to be
better in the first quarter of 2019 than it was in the last
quarter of 2019. This is mostly due to improving
logistics as the water levels of the river Rhine increased
in December following historic lows. Transportation
fees are also set to gradually come down to previously
seen norms.
Demand
EUROPE
European IPA demand has been strong in the second
half of 2018 in most of Europe and is expected to
remain so in the first quarter of 2019. Demand in the UK
was subdued in the last quarter of the year due to
economic uncertainty surrounding Brexit negotiations.
This is too expected to continue into the first months of
2019.
ASIA
Owing to a number of scheduled plant turnarounds in
the last quarter of 2018, supply was slightly tightened
and acetone-based IPA went on allocation. The situation
was further compounded by the extended unplanned
shutdown of a major Chinese exporter who only
restarted late December. The shutdown of most Chinese
propylene-based IPA plants saw little impact in the
market as most consumers switched to acetone-based
IPA because the latter was more competitively priced.
ASIA
Demand for acetone-based IPA continued to be
stronger than propylene-based IPA because of the wide
gap between upstream acetone and propylene prices.
However, buyers who were regular patrons of
propylene-based IPA suppliers still continued to secure
their cargoes from their suppliers, with some buying
less due to poor downstream demand, and higher
prices. Other market players skipped buying for a
month on weak downstream demand, preferring to
monitor the market situation as upstream crude and
acetone values fall.
ASIA
With most acetone-based plants back running after
scheduled maintenance in Q4 2018, supply is likely to
remain long for the most part of Q1. Also, the market
closes early in anticipation of the Lunar New Year
holidays in early February, which most of Asia
celebrates.
ASIA
European IPA demand has been strong in the second
half of 2018 in most of Europe and is expected to
remain so in the first quarter of 2019. Demand in the UK
was subdued in the last quarter of the year due to
economic uncertainty surrounding Brexit negotiations.
This is too expected to continue into the first months of
2019.
US
Supply of US isopropanol (IPA) was readily available for
buyers throughout the fourth quarter of 2018. While the
US is a net exporter of IPA, year-to-date exports have
fallen by 10% year on year, and imports have risen by
2%.
US
Demand for US isopropanol (IPA), which has some
downstream uses in paints and resins, showed some
decline in the fourth quarter of 2018, primarily on
end-of-year de-stocking and the end of the peak
summer construction season. Demand was healthy at
the start of the quarter, boosted by a strong US
economy. IPA prices began to fall toward the end of
quarter, tracking softer upstream propylene, which led
some buyers to hold off purchasing material in
anticipation of additional declines.
US
Supply of US isopropanol (IPA) is expected to be good
into the first quarter of 2019, as there are no planned
turnarounds at any of the North American plants. The
market will be watching upstream supply of propylene, Increase
which is an essential feedstock in IPA production, to
gauge overall supply.
Constant
Decrease
Mixed
US
Demand is expected to remain steady into the first
quarter of 2019. There is some demand for IPA as a
de-icer, which could lead to a bump in demand
depending on how severe the winter is. There is mixed
sentiment on how cold temperatures will be this winter.
 METHYL METHACRYLATE
Q4 2018 - Market Review
Supply
EUROPE
European methyl methacrylate (MMA) market
lengthened in Q4 due to lower-than-expected demand
and higher imports. Overseas producers looked to
manage inventory and increased exports to Europe as a
result. Overall production in Europe ran well, although
Evonik ran its plant at a lower rate because of low water
levels on the river Rhine.
Demand
EUROPE
Demand was surprisingly low in Q4, associated with
worries about the European economy, heavy industry
de-stocking and the colder weather. Coating demand is
usually poor during the winter.
Q1 2019 - Market Outlook
Supply
EUROPE
The market is expected to remain well supplied in Q1,
with local production running well and increased
imports. Higher imports are exerting pressure on spot
prices, with decreases expected.
Demand
EUROPE
There is traditionally an uptick in demand in the first
quarter, as players replenish stocks after the Christmas
break. There was extensive industry de-stocking in
2018, as players bought on a hand-to-mouth basis in
anticipation of further price drops. There will also be
some inventory build up ahead of Brexit, with players
increasing safety stock for the transition.
ASIA
Methyl methacrylate (MMA) supply in Asia was ample.
Certain manufacturers were under pressure to reduce
stocks and attract orders while others preferred to
adjust operating rates. There was limited impact on
supply from the extended turnarounds and facility
hiccups heard. The weak China markets and sharp
Chinese yuan depreciation compelled some players to
export cargoes towards the rest of Asia. Saudi cargoes
also were reshipped from China to other regions.
ASIA
Methyl methacrylate (MMA) demand was broadly
subdued, owing to sustained losses in the Chinese
domestic markets and prior fluctuations in the Asian
spot markets. Trading uncertainty in Asia stemmed from
the US-China trade war and devaluation of Asian
currencies. Some users opted to cut their high
inventories at the end of the fiscal year or focus on
contract discussions. Other consumers were open to
cargoes at low prices and engaged in spot deals.
ASIA
Methyl methacrylate (MMA) supply in Asia is seen as
varied. While the market could be inundated with
cargoes from China and imported Middle East material,
upcoming turnarounds and production adjustments
could exert some supply counterbalance. New players
are anticipated to actively sell their cargoes and
compete for market share.
ASIA
Consumer demand for methyl methacrylate (MMA) in
Asia is foreseen to be down. Buyers are more inclined to
keep low stocks and take time to consider the various
supply options. The outlook will hinge on downstream
performance and cost competitiveness for end-users,
on top of any macroeconomic changes.
US
Supply of US methyl methacrylate (MMA) remained
tight in the fourth quarter of 2018, as the market is still
recovering from 2017, when Lucite’s two plants
operated under force majeure from late January Increase
through November. Turnarounds by producers Dow
Chemical (at its Deer Park, Texas plant) and Lucite (at its
plant in Beaumont, Texas) did not further tighten Constant
supply, as some had expected, in part because producer
Evonik rescheduled its turnaround from November until
March.
Decrease
Mixed
US
Demand for US methyl methacrylate (MMA) remained
strong throughout the fourth quarter of 2018. Demand
has been healthy in the plastics sector, but has surged
in the coatings sector, as many paint manufacturers are
turning to more acrylic formulations. There was some
de-stocking seen in December, as end-users looked to
limit their tax liability. Taxes are often assessed based on
supply on hand at the end of the year.
US
US supply of methyl methacrylate (MMA) is likely to
remain tight throughout the first quarter of 2019, as the
market has been short for most of the previous year.
Supply could tighten further near the end of the quarter
as Evonik has its turnaround at the 160,000 tonnes/year
plant in Fortier, Louisiana in March.
US
Demand for US methyl methacrylate (MMA) is expected
to remain strong into the first quarter of 2019 as
consumption from the coatings sector is expected to
remain high because of the strong US economy. Orders
for January delivery were abundant.
 OXO-ALCOHOLS
Q4 2018 - Market Review
Supply
EUROPE
The quarter began steadily, but low water levels on the
Rhine resulted in a force majeure declaration from BASF
on n-butanol (NBA) isobutanol (IBA) at the end of
October. Oxea declared force majeure on NBA and 2
ethyl-hexanol (2-EH) at the end of November due to
unexpected issues at its precursor syngas unit. In
addition, INEOS was out of production for a couple of
weeks at its Lavera, France site due to feedstock
restrictions resulting from its planned 60-day cracker
turnaround.
Demand
EUROPE
Demand was steady at expected levels for October and
November. Although supply restrictions prompted
some to look at alternative sources, demand was
covered. During the period, there was talk of economic
constraint in much of Europe, and this impacted on
buying patterns in some industries, notably the
automotive sector. The traditional slowdown took place
at the end of the year, with downstream sectors closing
with low inventory levels.
Q1 2019 - Market Outlook
Supply
EUROPE
BASF remains on force majeure at the start of Q1, but all
other European producers are said to be operating as
planned. Supply is expected to improve compared with
Q4, even with the ongoing force majeure declaration.
There are regular outages scheduled for 2019, but
supply is expected to be steadier provided that
manufacturers prepare for the heavy cracker schedule
due in spring.
Demand
EUROPE
Buying patterns are unclear, although the year has
begun slowly. Traditionally, consumption starts to rise in
the peak period from March onwards. The general state
of the global economy is expected to be closely
monitored as the European chemicals sector is forecast
to see slow growth.
ASIA
The supply of 2-ethylhexanol (2-EH) and n-butanol
(NBA) in Asia was generally stable during Q4. Deep-sea
cargoes were available in the latter part of the quarter
as some suppliers outside of Asia cleared stocks before
the end of the year. Some Chinese producers exported
during Q4 as low Chinese domestic prices prompted
them to sell abroad.
ASIA
Regional demand in the fourth quarter was largely
stable apart from in China. Chinese domestic spot prices
were low, meaning that Chinese importers did not need
to import cargoes. Lower domestic prices also saw an
increase in Chinese exports which dampened market
sentiment in the region and caused spot prices to fall,
which resulted in more cautious trading as the quarter
progressed.
ASIA
N-butanol (NBA) supply in northeast Asia could start the
year on the low side after Taiwan’s Formosa Plastics
Corp (FPC) shut its NBA unit for maintenance in Q4.
Although the 250,000 tonne/year unit was restarted in
December, the producer was also carrying out works on
the jetty, which resulted in limited exports.
ASIA
Chinese downstream markets could see some
uncertainty due to the ongoing US-China trade war. As
demand from the butyl acrylates and plasticizers
sectors is unclear, it could mirror developments in the
upstream propylene market.
US
US oxo-alcohols supply was steady-to-longer during Q4
2018 amid seasonally softer buying interest and
typically thin conditions. The markets saw a free-market
contract decline of 7 cents/lb ($154/tonne) late in the
period. Values were pressured by lower November
propylene, which plummeted by 10 cents/lb amid
falling upstream costs and increasing supply.
Transportation logistics problems continued, forcing
feedstock suppliers and oxo-alcohols producers to
adjust the timing of orders and delivery lead times.
US
Demand was seasonally slower, as is usual during the
final quarter when Thanksgiving and Christmas
substantially reduce business days. Despite downward
price pressure from November propylene and
producers' desires to reduce year-end inventories to
lessen their ad valorem tax burdens, volumes moved
were not heard to have increased during the period. The
downstream markets were also steady to slower during
the seasonal slowdown.
US
US oxo-alcohols supply is expected to be mostly steady
during Q1 2019. The year began slowly after the usual
Q4 slowdown in downstream architectural-coatings
markets. Lower priced December propylene may
increase early oxo-alcohols production ahead of what is Increase
expected to be a marginally stronger 2019 paints and
coatings season.
Constant
Decrease
Mixed
US
Although some pent up US oxo-alcohols demand from
downstream architectural coatings is likely from
hurricanes and California wildfire damage in 2018, an
early projection only predicts a moderate increase in
year-on-year paint demand. However, forecasts of a
broadly milder winter may strengthen oxo-alcohols
demand as the paint-blending season gets underway in
Q1.
 PHENOL
Q4 2018 - Market Review
Supply
EUROPE
The European phenol market was tight in 2018, as
demand was high and co-product acetone was lengthy.
Sources said suppliers adjusted operating rates to
reflect the fundamentals in both markets. In October,
however, INEOS Phenol’s force majeure at its 650,000
tonne/year Gladbeck and 680,000 tonne/year Antwerp
facilities shortened supply further. The Swiss-headquar-
tered seller declared force majeure following low water
levels on the Rhine and feedstock cumene supply
issues.
Demand
EUROPE
Strong demand for European phenol persisted into Q4.
Production difficulties at the end of October led to a
jump in purchasing interest for some participants. There
was also a planned maintenance at a downstream
facility owned by Hexion Pernis, the US seller of
bisphenol A (BPA). The scheduled shutdown at the
120,000 tonne/year unit occurred in November and
limited phenol consumption to a certain degree.
Q1 2019 - Market Outlook
Supply
EUROPE
Europe phenol supply should grow in Q1 after INEOS
Phenol lifted its force majeure from Antwerp and
Gladbeck in December. The Swiss-headquartered seller
declared the force majeure at the 650,000 tonne/year
Gladbeck and 680,000 tonne/year Antwerp units in
October. However, co-product acetone supply will also
be crucial.
Demand
EUROPE
Weak global macroeconomic conditions at the end of
Q4 led market participants to suggest that European
phenol demand could fall in the first few months of
2019. Not all participants were able to secure the
volumes they require for 2019.
ASIA
Phenol supply in Q4 was reduced following
turnarounds in China. Trade friction between the US
and China resulted in a fall in offers for US-origin
cargoes.
CFR CMP prices peaked at $1,460/tonne on 2 November
before sliding to $1,090/tonne CFR CMP on 21
December. CFR India prices slipped to $1,065/tonne CFR
India on 21 December.
ASIA
Phenol demand was higher in Q4 as players sought
imports after domestic Chinese production was hit by a
slew of turnarounds. Availability was further reduced
after US-origin phenol was slapped with an additional
10% import duty following the trade war between
China and the US. As production is traditionally
dedicated to fulfilling contractual obligations, spot
volumes were rare and could only be secured at high
prices.
ASIA
Phenol supply in Q1 is expected to be ample after
plants in China restarted following maintenance.
Although turnarounds are expected outside of China,
supply is estimated to be ample based on forecast
demand.
ASIA
Phenol demand in Q1 is likely to be subdued ahead of
the Lunar New Year in early February. Although some
re-stocking activity is likely following the festivities,
recent volatile price movements in upstream benzene
and propylene are likely to keep players to the sidelines.
US
US phenol supply levels were snug during the fourth
quarter of 2018 amid production disruptions in the US
and Europe. A major US plant was on planned
turnaround, while Rhine River-related issues caused
outages and force majeure in Europe, further tightening
an already snug global landscape. Producers who were
Increase
operating ran at high rates to meet demand. Little
domestic material was available for spot market buyers
through most the quarter amid demand from other
Constant
regions.
Decrease
Mixed
US
US phenol demand remained robust in the fourth
quarter of 2018 across end-use sectors and in export
markets. Demand from epoxy and phenolic resins was
strong. Amid attractive export margins, phenol
producers asked buyers if they could take less material
in order to push phenol into export markets. High
export margins pushed producers to raise adders for
contract buyers. The increases took hold across the
board in the fourth quarter. Demand waned somewhat
toward year’s end.
US
US phenol supply is expected to remain sufficient to
meet demand in the first quarter of 2019. Production
issues have been resolved. Market sentiment is that
producers may reduce operating rates despite strong
demand due to losses associated with co-product
acetone. Supply levels will largely be affected by how
acetone margins weigh on overall margins.
US
US phenol demand is expected to remain strong in the
first quarter of 2019 both domestically and in export
markets. However, export margins are under some
pressure on bearish sentiment in other regions.
Downstream polycarbonate (PC) markets are
particularly sluggish in Asia. Epoxy and phenolic resins
demand should remain strong barring an economic
downturn.
 POLYMETHYL METHACRYLATE
Q4 2018 - Market Review
Supply
EUROPE
Supply for European polymethyl methacrylate (PMMA)
was well balanced in the fourth quarter. Upstream
supply lengthened, which helped to ease any lingering
constraints in the market. Lower demand also
contributed to this, with many players managing
inventory before the end of the year.
Demand
EUROPE
Demand in the fourth quarter fell, with activity lower
towards the end of the year. Players managed inventory,
with further price decreases widely expected at the
start of 2019.
Q1 2019 - Market Outlook
Supply
EUROPE
Supply is expected to remain well balanced in the first
quarter, with the continued arrival of imports from Asia
and the Middle East. Production is running well in the
region, and upstream supply is plentiful.
Demand
EUROPE
Demand traditionally increases in the first quarter, with
players building up inventory after Christmas. There any
some general concerns over the economy, and
uncertainty over growth for the year. Players are also
waiting for further pricing drops before purchasing.
ASIA US
Spot availability of polymethyl methacrylate (PMMA) in No US Report.
Asia edged up. High inventories and restricted run rates
were observed, despite some turnarounds occurring in
the quarter. Manufacturers and traders sought to
minimise inventories towards the year end, boosting
volumes available on the market. The significant inflow
of fresh cargoes from the two new facilities in Saudi
Arabia, coupled with highly attractive prices, also raised
supply sentiment among players.
ASIA US
Buying interest for polymethyl methacrylate (PMMA) No US Report.
was slow, due to the depreciation in Asian currencies
and economic uncertainty amid the US-China trade
truce. Recent steep declines in spot prices, combined
with weak downstream offtake, also affected market
confidence. As such, many end-users preferred to buy
small amounts and reduce their stocks towards the end
of the fiscal year. Drastic falloffs for plastic-related
polycarbonate (PC) markets prompted spot players to
adopt a cautious mood.
ASIA US
Regional supply for polymethyl methacrylate (PMMA) is No US Report.
poised to be fairly stable. New Middle East suppliers are
projected to aggressively push cargoes further in order
to gain market share, while integrated manufacturers in Increase
Asia could switch accordingly and raise methyl
methacrylate (MMA) production instead, depending on
the profitability for PMMA. Constant
Decrease
ASIA US Mixed
Buying appetite for polymethyl methacrylate (PMMA) is No US Report.
expected to be poor. Consumers would remain guarded
and consider competitive options, especially in China
where feedstock methyl methacrylate (MMA) costs are
cheaper. Re-stocking activity may occur after the
year-end lull, but the Lunar New Year holidays in
February could dampen some appetite.
 POLYPROPYLENE
Q4 2018 - Market Review
Supply
EUROPE
Polypropylene (PP) supply in Q4 2018 was ample. There
was no great length of any particular grade, and no
shortages. Imports remained relatively low in volume,
and some sources described the market as balanced, in
spite of lower-than-expected demand. Some PP
production was affected by low water levels on the
Rhine, but overall this had little impact on the market.
Demand
EUROPE
Polypropylene (PP) demand was disappointing for some
sellers but the picture was mixed. Buyers ensuring
end-year volume rebates continued to buy from their
regular suppliers, whereas spot sellers had a different
view. Lower crude and naphtha prices led to
expectations of a drop in propylene – and hence PP –
contracts, so buying was done on a hand-to-mouth
basis. Uncertain economic conditions throughout
Europe have also affected demand.
Q1 2019 - Market Outlook
Supply
EUROPE
A series of planned cracker maintenance outages is
expected to curtail propylene supply into 2019. Several
producers have made precautionary provision for extra
propylene supply, but some reduction in polypropylene
(PP) is also expected. Most buyers are relaxed, however,
and do not expect any interruption in supply. Quarter
one is not expected to feel much of the effect of the
shutdowns, which are expected to impact the second
quarter mostly.
Demand
EUROPE
Polypropylene (PP) demand was disappointing for some
sellers in December, but there was some nervousness
over 2019 supply (see supply), so this was expected to
have a positive impact on demand, and some stocking
was expected to take place. Adversely this could affect
demand in the second quarter if no supply issues
emerge.
ASIA
Lengthened availability of duty-exempted ASEAN origin
cargoes as the market continues to grapple with fresh
supply with recent start-ups in Vietnam and Malaysia.
The price gap between dutiable and non-dutiable PP
cargoes in SE Asia has grown increasingly narrow as a
result. Some Indian suppliers cut offers sharply in order
to offload as much stock as possible ahead of the
year-end. Meanwhile, availability of competitive-
ly-priced South Korean origin materials added further
pressure on the spot market.
ASIA
Buying momentum was in southeast Asia was weak as
the year-end seasonal lull for polymer resins set in.
Trade tensions between US and China stoked volatility
in the region, and for most of Q4 2018 demand was in
the doldrums. Volatile upstream crude values and
Chinese futures prices further weighed on sentiment.
Buyers refrained from building stocks amid uncertain
global trade conditions, and instead, focused on
keeping inventories lean toward the end of the year.
ASIA
The price gap between dutiable and non-dutiable PP
cargoes is likely to remain narrow with the recent
regional start-ups. Spreads between homopolymer and
copolymer grades could be maintained, at least in the
near term, as the bulk of the fresh start-ups have been
mainly focused on homopolymer grades.
ASIA
The bulk of converters were holding on to relatively low
inventories, having procured cargoes on a
hand-to-mouth basis for most of Q4 2018 and hence,
many have room to stock-up on resins should they
chose to. How buying momentum in Q1 2019 fares
hinges on sentiment in the upstream markets, as well as
demand in China.
US
Supply for polypropylene (PP) significantly improved in
North America during the fourth quarter as plant issues
that had restricted supply earlier in the year were
mostly resolved, while inventories for feedstock Increase
propylene rose to multi-year highs. Import availability
was good as many buyers had sourced foreign cargoes
as North American material was not competitively Constant
priced relative to several other global regions.
Decrease
Mixed
US
PP demand was mostly steady in the fourth quarter.
Some buyers began to shift orders from import to
domestic material late in the quarter as significant
declines in prices in November and December brought
North American PP prices closer into line with global
averages. Healthy economic growth in the US economy
supported healthy levels of PP consumption.
US
High inventory levels for feedstock propylene indicate
that PP supply will continue to improve in the first
quarter. Import availability will stay long in the early
months of the quarter as previously purchased cargoes
will arrive in the US in January and February. Plant
issues which plagued the market in 2018 have largely
been resolved.
US
Demand is anticipated to remain largely constant in the
first quarter with better demand for domestic material
and the resumption of export activity working to
balance out seasonal sluggishness during the winter
months. Economic growth is expected to remain solid in
North America while global growth may slow.
 PROPYLENE
Q4 2018 - Market Review
Supply
EUROPE
European propylene supply was lengthy during the
fourth quarter largely because of the impacts of the low
water levels on the Rhine on product flows for
derivatives production, while a couple of issues at large
consuming units added to the situation. There were
some pockets where supply was tighter mainly because
of the ongoing technical issues at a couple of crackers
and planned maintenances and restart delays at other
sites. Overall, supply lengthened throughout the
quarter but showed signs of re-balancing once Rhine
levels started to get back to normal in early December.
Discounts - sometimes double digits - against the
prevailing contract reference prices persisted for spot
volumes throughout.
Demand
EUROPE
European propylene demand was soft during the fourth
quarter. For most of the quarter this was mainly due to
the logistics challenges impacting product flows in and
out of derivative units in the Rhine area. Later, a weaker
upstream market, the traditional year-end working
capital considerations and bearish sentiment, on the
back of the US-China trade war uncertainties, all had a
reducing effect on demand. Despite all of this, the
underlying view was that demand levels were relatively
healthy.
Q1 2019 - Market Outlook
Supply
EUROPE
European propylene supply is expected to tighten up
during the first quarter. Demand levels traditionally
improve following the usual year-end slowdown. There
could be additional demand as derivative producers
catch up with volumes lost as a result of the Rhine
issues in view of the constraints on output as a result of
the 2019 spring cracker maintenance season. Pricing
developments will determine whether European
domestic supply reductions are mitigated by import
volumes from the US, Middle East and even potentially
Asia.
Demand
EUROPE
European propylene demand is expected to pick up in
the first quarter as is usual following the year-end
de-stocking period but players are a little cautious,
largely on the back of the general uncertainty
surrounding the impacts of the US-China trade war.
Preparations to cover a fairly heavy cracker turnaround
season could heighten demand as could some catch-up
on volumes lost as a result of the Rhine issues.
Bottom-line demand is regarded as being relatively
healthy, particularly compared with that for ethylene.
ASIA
Supply in northeast Asia was gradually lengthening in
the final quarter of the year as major producers in
northeast Asia concluded their respective turnarounds.
For example, Japan’s JXTG Nippon Oil & Energy
restarted its fluid catalytic cracking (FCC) unit on 20
December following planned maintenance work. In
South Korea, LG Chem restarted its olefin conversion
unit (OCU) in early December. The unit was shut
previously for regular maintenance work in late
October.
ASIA
Demand in the final quarter was largely on need-to
basis in China. As spot prices experienced hefty losses in
the quarter, some buyers were spooked and stayed on
the sidelines or opted to buy from domestic suppliers
instead. In Taiwan, demand for import cargoes was
weak as domestic supply was ample until the final two
weeks of the year after CPC suffered an unplanned
outage at its residue fluid catalytic cracker (RFCC) in
Dalin.
ASIA
Supply in the first half of Q1 could be ample in South
Korea and Japan although Hyosung’s planned
maintenance work at its 350,000 tonnes/year propane
dehydrogenation (PDH) unit in South Korea could help
shorten the length. Late Q1 could see preparation
works to the start of the turnaround season in 2019.
ASIA
Demand could be stable at the start of the year on
cautious trading and start to increase closer to the
Lunar New Year on re-stocking activities. Demand could
be weak immediately after the long holiday as certain
downstream units could take some 15-30 days to restart
in China.
US
US propylene supply expanded in the fourth quarter as
refinery rates increased following autumn turnarounds
and as production from crackers increased following a
drop in costs for heavier cracker feedstocks which
produce more propylene when cracked. Production
from other sources, like propane dehydrogenation
(PDH) units also was good. Propylene inventories rose
to their highest level in more than three years by the
end of the quarter after recovering from historic lows in
the previous quarter.
US
US propylene demand fell in the fourth quarter
following sustained high propylene prices in the third
and early in the fourth quarters. As propylene prices
moderated mid-way through the quarter, demand
increased slightly as US derivative exports became more
competitive. Late in the quarter, demand was slowed by
seasonal factors amid downstream year-end
de-stocking. Demand is expected to pick up in early
2019 as inventories are rebuilt and this effect may be
bolstered by recent declines in upstream costs.
US
US propylene supply is expected to be steady to
stronger as refinery production rates remains strong
and as new crackers start-up. Refinery rates are
Increase
expected to remain high due to strong demand for
diesel amid new regulations and for US fuel exports.
Several new crackers expected to start up in early 2019
also should expand propylene production. Refineries Constant
and crackers are the largest source of propylene
production in the US.
Decrease
Mixed
US
US propylene demand is expected to increase in the
first quarter as downstream inventories are rebuilt
following late 2018 year-end de-stocking. Recent
declines in propylene pricing is likely to bolster demand
as it encourages further inventory building and
increases competitiveness for US propylene derivative
exports. Recent declines in upstream costs and
increases in propylene production may keep propylene
prices low which could keep demand good through the
quarter.
 PROPYLENE GLYCOL
Q4 2018 - Market Review
Supply
EUROPE
The European mono propylene glycol industrial grade
(MPGI) spot market was largely balanced to well-sup-
plied during the fourth quarter of 2018. The general
good availability during the fourth quarter was despite
a few constraints linked to low river Rhine levels and
maintenance work during this period, because these
were being offset by demand that was reasonable but
not strong.
Demand
EUROPE
European mono propylene glycol industrial grade
(MPGI) spot demand was largely ticking over during the
fourth quarter of 2018, but it was not strong. While the
downstream de-icer and anti-freeze sectors were
buying volumes, in preparation for the winter season,
there was no real seasonal pick-up in activity, amid
relatively mild conditions.
Q1 2019 - Market Outlook
Supply
EUROPE
European mono propylene glycol industrial grade
(MPGI) spot availability in the first quarter of 2019 will
depend heavily on to what extent winter season
demand picks up. If a surge in demand from the
downstream de-icer and anti-freeze sectors were to
occur because of a prolonged cold period, this would
impact stock levels. However, any possible winter
season effect on supply also needs to be weighed
against existing de-icer and anti-freeze stocks that are
already in place. There may be some re-stocking activity,
post Christmas/New Year holidays which could also
have a bearing on supply.
Demand
EUROPE
European mono propylene glycol industrial grade
(MPGI) spot demand could increase seasonally during
the first quarter of 2019, if there were to be a prolonged
cold snap. However, if winter conditions were to be mild
in the first few months of 2019, then MPGI demand is
likely to be fairly flat.
ASIA
Supply of mono-propylene glycol (MPG) was broadly
stable in the fourth quarter amongst regional producers
outside of China. There was no MPG plant turnarounds
during the period and production rate was healthy and
stable throughout. But in China, PGI output in
December tightened on the back of a wave of
maintenance shutdowns of dimethyl carbonate process
plants in China.
ASIA
Demand for monopropylene glycol (MPG) was not
robust in the quarter, in part due to a seasonal lull.
Buyers kept to puchases on need-to basis, and were
reluctant to buy for stock-building purposes, citing
uncertainties in the year forward for international trade
climate.
ASIA
Supply is expected to stay broadly stable, with no
forseeable plant turnarounds in the quarter. Import
availabilities from the US are expected to further
dwindle if punitive import tariffs rose as part of the
ongoing US-China trade feuds.
ASIA
Demand is expected to hold steady, with regional end
users still looking to buy regular amounts on a monthly
basis to sustain ongoing production. But additional
spikes in requirements are unlikely as there are no new
applications in sight for MPG, and existing users are
apprehensive about holding high MPG inventories due
to broader uncertainties about international trade.
US
Supply of US monopropylene glycol (MPG) in the fourth
quarter of 2018 was generally good, but not abundant,
amid planned turnarounds. One producer had to delay
its turnaround until later in the quarter because of an Increase
issue with a reactor. The market has essentially
recovered from supply disruptions in 2017 from
Hurricane Harvey, which brought record rainfall and Constant
flooding to the US Gulf coast region. There were no
supply issues with upstream propylene oxide, which is
used in the production of MPG.
Decrease
Mixed
US
Demand for US monopropylene glycol (MPG) in the
fourth quarter of 2018 was generally described as good,
as the arrival of colder weather leads to winter blends
being phased in for various chemicals, including
propylene glycols. Demand was slightly above average
in the anti-freeze sector, and strong in the de-icing
sector. Increased buying was seen in the de-icing sector
beginning in August, when buyers began procuring
supply, likely because inventories were drawn down
after an extended winter last year.
US
Supply of US monopropylene glycol (MPG) in the first
quarter of 2019 should be generally good as no issues
are anticipated to affect the production of propylene
oxide (PO), which is used in the production of MPG.
Barring impacts from any unplanned outages,
availability should be good over the near term.
US
Demand for monopropylene glycol (MPG) in the first
quarter of 2019 will likely rise and fall with the weather.
MPG is used in the winter as a de-icer for the aircraft
industry, as well as in anti-freeze. There is mixed
sentiment on how cold temperatures will be this winter.
 PROPYLENE OXIDE
Q4 2018 - Market Review
Supply
EUROPE
There were pockets of imbalance in the European
propylene oxide (PO) market during the fourth quarter
of 2018, because of low river Rhine water levels. It was
understood that some production may have been
adjusted to manage the logistics and supply situation.
Despite this, there was sufficient availability to meet
contractual requirements, probably because demand
was seasonally slower during the fourth quarter of 2018.
Demand
EUROPE
European propylene oxide (PO) demand was largely flat
to slowing during the fourth quarter of 2018, for
seasonal and inventory/working capital related reasons.
There were, however, a few instances of slightly higher
demand for certain players for market reasons or due to
additional downstream capacity requirements, but this
was not seen to reflect a general market trend
Q1 2019 - Market Outlook
Supply
EUROPE
European propylene oxide (PO) supply could decrease
during the first quarter of 2019, if re-stocking activity
occurs and there is a strong winter season demand pull
from the downstream de-icer sector. However, the latter
will also need to be weighed against existing stocks that
are in place. Preparation for spring cracker turnarounds
could also have a bearing on PO availability during the
first few months of 2019. However, downstream polyols
evolution will also remain a main consideration,
because if polyols demand does not pick-up in any
significant way during the first quarter of 2019, this
could mean a more relaxed PO supply situation.
Demand
EUROPE
European propylene oxide (PO) demand evolution
during the first quarter of 2019 will depend on to what
extent restocking activity occurs amid economic and
political uncertainty. PO demand will also depend on
whether downstream winter season demand kicks in in
earnest and whether polyols demand recovers and
preparation for high season takes place during the first
quarter of 2019.
ASIA US
The supply constraints seen in Q3 eased in the first half No US Report.
of Q4, as various plants in China that were shut earlier,
either for planned maintenance or for unexpected
outages, returned to production. Furthermore, in South
Korea, production from a new 300,000 tonne/year plant
stabilised in the quarter, bringing it to a position to
commence active export sales to China.
ASIA US
Demand remains lukewarm during the quarter, as the No US Report.
key downstream polyols sector failed to step up
purchases of feedstock propylene oxide, contrary to
earlier anticipations of a seasonal hike in polyols
production boom during Q3 and Q4. Polyols makers
kept up modest operating rates as off-take from
downstream foam makers in China, faced with
squeezed export markets in the US of their finished
products, scaled back operations.
ASIA US
Supply is expected to veer slightly on the tight side, as No US Report.
several plants in Middle East, amounting to more than
500,000 tonnes/year of production capacity, are likely to
shut for several weeks to a month during the quarter for
maintenance. In China, a few plants are also shut or
running at lower rates, due to various reasons such as
servicing or limitations from poor weather conditions.
Increase
Constant
ASIA US Decrease
Demand is expected to be muted, as the major outlet in No US Report. Mixed
China will shut for an extended period during the
quarter for the extensive Lunar New Year celebrations in
February. Downstream polyols makers are also cautious
with operating rates, as they watched anxiously how
the current US-China trade truce agreement may pan
out after its expiry in March 2019.