Ethylene glycol

02 July 2007 00:00  [Source: ICB Americas]

DEMAND

2005: 5,805bn lbs. 2006: 5,880bn lbs. 2010: 6,365bn lbs., projected. Demand equals production plus imports (2005: 772m lbs. 2006: 636m lbs.) less exports (2005: 1,188m lbs. 2006: 1,261m lbs.). Sources: ICIS Chemical Business Americas USITC

GROWTH

Historical (2001-2006): 1.5%/year. Future: 2%/year through 2010. Source: ICIS Chemical Business Americas

PRICE

Historical (2001-2006): High, 65 cents/lb., aver. annual contract, industrial-grade, Gulf, tanks, f.o.b. low, 17 cents/lb., same basis. Current: 45-49 cents/lb., same basis. Source: ICIS pricing

USES

Polyethylene terephthalate, 67% (PET solid-state resins, 36% polyester fibers, 24% polyester film, 4% PET chip resin exports, 3%) antifreeze, 25% miscellaneous, including surface coatings, polyester and alkyd resins, and chemical intermediates, 8%. Source: ICIS Chemical Business Americas

MARKET PERSPECTIVE

New capacity additions in Asia and the Middle East that are coming online in the next few years will switch the US from net exporter to net importer of ethylene glycol. Nearly 3.75bn lbs. of new capacity will start up this year, 6.6bn lbs. next year and another 4.4bn lbs. in 2009. The Middle East projects will export to all global regions with their ethylene cost advantage. In recent years, more than half the US's exported EG has gone to China. This export stream is vulnerable to the new overseas capacity.

Pricing held steady for the first quarter, but has climbed 3 cents/lb. since April. This followed the trend in crude oil price increases for the same period. Meanwhile supply and demand appear balanced with the industry operating at over 85% capacity.

Ethylene glycol's strongest segments are PET solid-state resins and polyester fibers. Together these two account for 60% of demand and are growing at 3% annually.

Ethylene glycol consumption in virgin antifreeze, 25% of total demand, is declining slowly, as a result of antifreeze recycling and long-life coolants. Antifreeze recycling amounts to as much as one quarter of total antifreeze consumption. There is also a trend where more consumers are just topping off the coolant reservoir instead of flushing and refilling. And some original equipment manufacturers have switched to sealed radiator designs, which also reduce consumption of antifreeze. In addition, substitution of propylene glycol-based antifreeze, which is less toxic, will continue to take some market share from EG.

OUTLOOK

New overseas capacity, much with more-favorable raw material costs, will change the US from a net exporter to a net importer over the forecast period. Hence, domestic demand growth will be met with redirected export material and increased imports, without committing capital to capacity expansions. During this market shift, additional capacity rationalization could take place along the US Gulf Coast. Over the forecast period, EG demand growth in the US is projected to rise 2% annually.

US ethylene glycol capacity, million lbs./year

Company	Location	Capacity
Dow Chemical	Seadrift, Tex.	625
Dow Chemical	Taft (St. Charles), La.	1,700
Dow Chemical	Plaquemine, La.	550
Eastman Chemical	Longview, Tex.	230
Equistar Chemicals	Bayport, Tex.	580
Formosa Plastics	Point Comfort, Tex.	790
Huntsman	Port Neches, Tex.	890
Old World Industries	Clear Lake, Tex.	700
PD Glycol	Beaumont, Tex.	790
Shell Chemical	Geismar, La.	830
TOTAL		7,685

SOURCE: ICIS CHEMICAL BUSINESS AMERICAS

*Millions of pounds per year of ethylene glycol (EG), also known as monoethylene glycol or MEG. Commercial production is by the oxidation of ethylene in the presence of oxygen (or air) and a silver oxide catalyst to produce ethylene oxide. A crude ethylene glycol mixture is then produced by the hydrolysis of ethylene oxide with water under pressure. A typical production mix is 90% EG, 9% diethylene glycol and 1% and triethylene glycol. Fractional distillation under vacuum is used to separate the monoethylene glycol from the higher glycols.

Late last year Shell Chemicals closed its oldest EG line at Geismar, La., with 200m lbs. of capacity. The move reduced on-site capacity from 1,030m lbs. to 830m lbs.

Equistar Chemicals is a wholly owned subsidiary of Lyondell Chemical Company.

PD Glycol is a 50-50 partnership owned by Equistar and DuPont.

Profile last published October 18, 2004

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