In the past few months, strong demand has been seen in phthalic anhydride, supported by strong construction industry, with good downstream demand in plasticizers as well as insulation, as housing starts have been at high levels as the world recovers from the global pandemic.
Following the winter storm that hit the US in February this year, orthoxylene capacity was temporarily idled. As orthoxylene is the main feedstock in phthalic anhydride, the shortage caused by the storm caused some issues as orthoxylene became tough to source for several months. This has eased for the most part but orthoxylene supply is still on the tighter side and is expected to remain that way for the rest of the month.
While there are supply issues in the US at the moment, this is expected to begin to return to normal in early Q3. The expectation is that demand will remain robust with strength from all sectors through Q3. One situation that may impact phthalic anhydride demand in the future is lumber shortages in the US. Housing starts have been rising in 2021, consuming phthalic anhydride for insulation and other construction-related uses. In recent weeks, it has been reported that the lumber shortages in the US are resulting in lower housing start numbers. While this has not yet affected phthalic anhydride demand, it is a possibility in the coming months.
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