Price indications for August
Focus in the European ethylene oxide (EO) market is on the €30/tonne increase in ethylene feedstock costs in August, which will translate into a rise of around €25/tonne for EO-formula-related contracts.
For freely negotiated EO business, sellers expect a similar move to formula accounts in August, if not slightly higher, supported by ongoing good demand, despite the summer holidays. Customers’ views on freely negotiated business in August, however, anticipate a similar, if not lower increase or a rollover, on the back of good supply and lower offtake during the summer holidays.
EO market fundamentals
EO consumption is holding up reasonably well, said sellers, although a slight slowdown is expected in August, particularly in the Mediterranean. Buyers, however, report more of a pronounced summer lull in demand.
Sellers maintain that the EO market is fairly balanced and a few suppliers said they do not expect to cutback operating rates in August, despite the height of the summer holidays, due to continued better margins for derivative monoethylene glycol (MEG) and the need to build stocks, ahead of the approaching winter season in the downstream anti-freeze sector.
Buyers stress that material is readily available, due to generally good production in the industry and seasonally lower demand. However, one customer said that there is no glut in supply, stating that the seaasonal slowdown in demand, has been mitigated by upstream cracker cutbacks and possibly for derivatives as well.
Production news
BASF’s EO/MEG operations at Antwerp, in Belgium are scheduled to shut down for maintenance in September for around three weeks. The plant has a nameplate capacity of 500,000 tonnes/year for EO, according to ICIS data.
Clairant’s EO/MEG facility at Gendorf, in Germany is due to undergo planned maintenance in October/November for approximately two weeks. Nameplate capacity for EO equivalents at the site is rated at 240,000 tonnes/year, according to the company.
Upstream
The European ethylene contract settled at €1,120/tonne FD NWE for August, up by €30/tonne from July. The increase was driven by firm feedstock and a better-than-expected outlook for demand. Spot numbers are rising and have reached the low €1,000s/tonne on the pipeline.
Downstream
Suppliers of monoethylene glycol (MEG) are targeting increases for August contracts because they see the market tightening. Bulk spot prices are moving up and have reached €935/tonne CIF NWE T2.
($1 = €0.70)
This week on ICIS: ( www.icis.com ):
29 Jul 11 13:30 Europe August propylene fully settles after second number emerges
28 Jul 11 06:35 Germany’s BASF second quarter net profit up 23% to €1.45bn
27 Jul 11 17:17 Europe August ethylene fully confirmed at €1,120/tonne
