Haverhill shutdown will tighten US epoxy, BPA markets

Focus article by John Dietrich

HOUSTON (ICIS)–The Tuesday announcement that Haverhill Chemical will possibly shut down operations at its Haverhill plant in Ohio led downstream bisphenol A (BPA) and epoxy resins market players to some scrambling.

“This is going to blow my Tuesday,” an epoxy resin buyer said. “This is going to give a lot of people a lot of problems.”

Early on Tuesday, a letter was released stating that Haverhill would shut down the facility. Late on Tuesday, a company representative said the shutdown decision was not finalised.

Several market players said the US phenol/acetone sector was ripe for a plant shutdown because of current and projected market dynamics.

Haverhill is the only US BPA producer that is purely merchant, as it has no downstream capacity in the epoxy resin or polycarbonate (PC) markets.

All other BPA producers in the US have some internal consumption of the product.

“There was no other single-source merchant provider of BPA,” another epoxy resin buyer said. “This is going to make things difficult in a lot of places.”

The buyer added that bulk buyers of BPA struggle to import big enough volumes, as material is typically shipped via bags.

“If you have to load it into railcars or trucks, that requires opening the bags and emptying them into the delivery system,” the buyer said. “If you don’t need much, it’s not an issue. If you need a lot, it is.”

Sources said they expect that the rest of the US BPA producers — Bayer, Dow Chemical, Hexion and SABIC — to ramp up production to meet the shortfall from the Haverhill shutdown.

According to ICIS plants and projects, Haverhill’s 110,000 tonne/year BPA unit represented about 11% of the US total of 970,000 tonnes/year of BPA capacity.

However, several production issues at the plant led to utilisation rates below desired levels, so the long-term shortfall in BPA supply could be less than expected.

On the epoxy resin side, sources said one major US producer gets much of its BPA from Haverhill and could face feedstock issues if it is forced to turn to imports.

However, US buyers said that with the frequently open arbitrage window for epoxy resins from Asia to the US, supply is unlikely to be structurally tight.

“It’s sad to see a US chemical producer go down when the industry has been strong,” a US epoxy resin buyer said. “It opens things up to Asian material, although it helps the other US sellers as well.”

Sources said that the length and growing market share from Asia is likely to keep some downward pressure on US epoxy resin prices, even with the potential hit to production.

Most said they expect that all three major US epoxy resin producers — Dow Chemical, Hexion and Huntsman — will likely keep operating rates steady to hold on to market share.