Editor Heidi Finch, heidi.finch@icis.com

 NOTE: For full details on the criteria ICIS pricing uses in making these price assessments visit www.icispricing.com and click on “methodology”.

Both buyers and sellers agreed that ongoing healthy demand and some overlap in plant maintenance meant that there was limited room to manoeuvre in the European ethylene oxide (EO) market.

This was further exacerbated by Shell’s upstream supply constraints, following the force majeure declaration on ethylene at its Moerdjik cracker, the Netherlands earlier this week. A company source said that the FM on its ethylene supplies at the Moerdjik site had not extended to EO at the time of going to press. 

Customers said that contract volumes were covered for March, but that any requirements above forecasts would be difficult, if not impossible to obtain. One buyer said it had maximised its contract volumes for March, but was unable to go above this.

Looking to pricing, market players focussed on news of the rollover in the ethylene contract price for March, which would translate into stable prices for EO formula business. For freely negotiated volumes, sellers were expected to go for increases on the back of limited supply flexibility. Precise targets were not yet disclosed.

Sources were satisfied with demand from the surfactants and agro-chemical sectors in Q1. One buyer said that consumption was healthy and better than expected. The agro-chemical sector was currently living up to peak season expectations, according to another source.

By contrast, there were some signs of slowdown for anti-freeze applications from the downstream mono ethylene glycol (MEG) market, as the winter season was drawing to a close amid milder weather in parts of Europe.

One customer said that EO consumption for anti-freeze applications was declining, as blenders were keen to avoid carrying substantial stocks until the next winter season. One EO producer, however, said it had not seen any slowdown in seasonal anti-freeze activity.

In manufacturing news, BASF’s EO/mono ethylene glycol (MEG) unit at Antwerp, Belgium was currently in routine maintenance. The facility went down at the end of February and was expected to last until the second week in March.

In related news, there was some market speculation earlier in the week in the downstream polyols market that BASF was experiencing some polyols availability issues due to upstream EO feedstock limitations. However, the company was not prepared to comment on this.

INEOS Oxide said that it was preparing the imminent restart of its EO/MEG facility at Lavera, France. The plant went down at the end of January for routine maintenance and was expected to be offline for approximately five weeks.

Upstream, Europe ethylene settled for March at a rollover of €940/tonne FD NWE. Earlier expectations of a decrease were superseded by fears of firmer feedstock naphtha because of the refinery strikes in France. Additionally, contract participants talked of maintaining stability for those derivatives still needing to recover margins from increases in January and February. Spot activity was minimal this week and prices continued to be assessed in the low €800s/tonne FD on the pipeline.

Downstream, the March MEG contracts were confirmed at €899/tonne FD Europe, up by €59/tonne from February. Derivative markets greeted the timely settlement positively, having suffered from late agreements through much of 2009 and early 2010.

In the European ethanolamines market, demand was said to be fairly stagnant, with no sign of any notable improvement for March as yet. Contract customers were, according to some sellers, still only taking minimal contract volumes. MEA and tri-ethanolamine (TEA) were considered balanced and DEA long.

($1 = €0.74)

This week on ICIS news: www.icis.com:

26-Feb-10 13:51 Bayer upbeat about 2010, plans to increase sales by 5% - Wenning

25-Feb-10 18:54 European MEG March contract price receives positive feedback

25-Feb-10 12:01 NewsFlash Shell Chemicals declares force majeure on Moerdijk styrene

 24-Feb-10 10:00 Shell declares forces majeures on Moerdijk ethylene, propylene