Negative PA margins could contribute to sharp drop in US imports from Italy

US imports of phthalic anhydride from Italy through September dropped by 86% on the year, International Trade Commission data showed, and negative production margins could be contributing to the drop.

Volumes from Italy from January through September dropped to 1,375 mt from 10,052 mt in the corresponding period a year ago. Unsaturated polyester resin producer Polynt traditionally has obtained much of its intermediate PA supply in the US from its own plant in Italy.

Globally, feedstock orthoxylene supply has been tight, with refiners prioritizing higher-margin gasoline blending over chemical production, amid lackluster global demand for downstream plasticizers and UPRs.

In addition, new OX-based PA capacity is coming online in India, increasing demand for the feedstock.

South Korea's Aekyung Petrochemical also aims to start its new 70,000 mt/year PA plant in China in the first quarter of 2024, according to a source close to the company. The OX feedstock will be sourced mainly from the Chinese domestic market, a source in the region said.

On top of this there will be at least 210,000 mt of new PA production capacity starting up in China in 2024, but using naphthalene as feedstock, other sources said.

In Europe, OX contract prices have been above PA spot prices since February, creating negative production margins.

The Northwest Europe OX contract price was assessed for November at $1,240/mt (56 cents/lb), while PA flake prices were assessed at $1,115/mt FOB ARA Nov. 10, according to Platts data.

This, in addition to reduced downstream demand, likely has discouraged PA production in Italy, which could contribute to the sharp drop in export volumes, a US source said.

In comparison, CFR China OX prices were last assessed Nov. 9 at $990/mt and CFR Southeast Asia OX was at $1,000/mt. Those prices were about $5 above than CFR PA flake prices in the region, Platts data showed.

This could also encourage interest in PA flake moving from South Korea to Europe, a second Americas market source said.

Total US January-September 2023 PA imports tumbled by 67% from year-ago levels, according to the ITC data released Nov. 7.

Although volumes from most countries dropped year on year, South Korea's decline was much less pronounced. Volumes from Taiwan and Turkey, however, rose 23% and 14%, respectively.

Two-thirds of the January-September 2023 imports originated in either South Korea or Mexico.