VINACHEM

Europe’s consumption of propylene oxide (PO) and its derivatives has been sluggish through H2, due to high energy costs, the economic downturn, and shifting consumer patterns.

No demand recovery is envisaged for the whole value chain in the near term.

European PO output has been constrained through recent weeks by planned shutdowns, high energy costs, and unplanned production issues.

However, availability has remained more than adequate amid poor offtake.

“Demand is still relatively weak [in] the market. Therefore, EO [ethyelen oxide] and PO is well available,” commented one buyer.

At least three PO producers have trimmed run rates to reflect poor offtake and sources do not expect European output will to return to normal levels in the near future.

LyondellBasell and Covestro will idle the joint venture PO/styrene monomer (SM) plant in Maasvlakte, the Netherlands, in November and December, due to the high energy costs and weaker European demand.

Players through PO chain are prepared for buying interest to soften further in December as customers typically run-down inventories before the year-end.

However, initial discussions for December in the downstream mono propylene glycol (MPG) market have revealed an even poorer demand picture than sources anticipated.

“The worst part of it is that I don’t think December will be the worst month, I think January will be the worst part of it,” said one MPG producer.

The outlook for Q1 is similarly downbeat.

POLYOLS WEAKNESS

Softness in the polyols market outlook is particularly painful for PO sellers as around 60% of PO in Europe goes into the production of polyether polyols.

The consumption of polyols has been dampened by inflation, weaker activity in the flexible foam and automotive industries, and shortages of toluene diisocyanate (TDI), which is jointly used to make polyurethanes (PU).

Sources are unsure when flexible foam demand could pick up but it is not expected to recover in the near term.

Many purchases of comfort products were made in past years during lockdown and such products have a long lifespan.

In the MPG market, at least four European producers have trimmed run rates to reflect weak offtake and high energy costs.    – ICIS –