Phthalic Anhydride

*Millions of pounds of phthalic anhydride (PA) per year. All U.S. production is based on orthoxylene, with Koppers having a modified process capable of operating either on orthoxylene or coal tar naphthalene. All producers have some captive requirements, with the exception of Koppers, which sells all of its material on the merchant market. The merchant market consumes about 55 percent of the total production.

Sunoco acquired Aristech Chemical in January 2001, from Mitsubishi Corp., including its phthalic anhydride interests at Pasadena Tex. In April of this year, BASF and Sunoco reached an agreement where BASF would acquire Sunoco’s plasticizer business, which included the Pasadena site. As of mid-October, the transaction had not been concluded.

Profile last published 2/25/02; this revision 10/20/03.

DEMAND

2001: 994 million pounds; 2002: 1,057 million pounds; 2006: 1,135 million pounds, projected. Demand equals production plus imports (2001: 28 million pounds; 2002: 17 million pounds) less exports (2001: 52 million pounds; 2002: 54 million pounds) 

GROWTH

Historical (1997 - 2002): 0.6 percent per year; future: 1.8 percent per year through 2006.

PRICE

Historical (1997 - 2002): High, $0.395 per pound, Gulf, contract, molten, tanks; low, $0.290, same basis. Current: $0.350, same basis.

USES

Plasticizers, 53 percent; unsaturated polyester resins, 23 percent; alkyd resins, 13 percent; miscellaneous, including polyester polyols, dyes and pigments, halogenated anhydrides, polyetherimide resins, and isatoic anhydride, 11 percent.

STRENGTH

PA is used in preparing unsaturated polyester resins (UPR), which are thermosetting and usually blended with glass fibers to produce fiberglass-reinforced plastics. The principal markets (construction, marine and transportation) are closely linked with the general economy. This growth is now slowing as major application areas become saturated, but will hold at a healthy 2.5 percent. UPR are particularly sensitive to economic conditions, but growth is now returned with the strengthening economy.

WEAKNESS

PA plasticizers are used to modify compounded polymers, primarily polyvinyl chloride (PVC) resins. Thus, consumption of plasticizers is largely dependent on the growth of flexible PVC, which is sensitive to general economic conditions; construction and automobiles being the principal drivers. In 2000 and 2001, PVC production dropped significantly, before recovering in 2002 to a level comparable to that reached in 1999.

PA derived alkyd resins are principally used in surface coatings for architectural, machinery, furniture and fixture applications. Demand for PA-based alkyds has been negatively influenced by clean air regulations limiting the level of volatile organic compounds (VOCs) in surface coatings. Substitute coating technologies, particularly powder coatings, are contributing to the negative 0.4 percent annual growth in this segment for PA.

OUTLOOK

U.S. demand for PA has gradually slowed from approximately 2 percent per year in the mid-1990s, to 1.8 percent annually, forecasted through 2006. During 2000 and 2001 with the softening of the economy, growth declined each year, 3 percent and 4 percent respectively. During that time, capacity utilization dropped to 80 percent, but utilization is now returned to the high 80s and should stay there for the forecast period. Imports are about half of what they averaged over the 1990s, and they continue to diminish – down 40 percent in 2003 compared to this same time last year. Meanwhile, exports are maintaining their historical levels. A large amount of new capacity, especially in China, will start-up over the next three years. This will not directly affect US exports, as 90 percent of exported PA from this country is sent to Canada.

HISTORICAL DATA