Upcoming US EG prices could see-saw - trader

09 May 2008 19:50  [Source: ICIS news]

HOUSTON (ICIS news)--The upcoming US ethylene glycol (EG) market could be subject to opposing forces, a trader said on Friday.

The supply of EG continues to be tight amid recent plant outages, with the most notable being the unplanned shutdown that occurred at SABIC’s Al-Jubail facility in Saudi Arabia in August 2007.

While the plant was said to have returned to optimum rates earlier this year, SABIC was building inventory before moving its supply to the market.

Offsetting the snug supply situation was the lacklustre US economy that was expected to affect buying decisions for customers of downstream consumer goods this summer.

 “We’re starting to see what looks like just-in-time ordering on the part of domestic retail outlets this summer. No one wants to have huge inventories of unsold goods,” the trader said.

Sluggish demand prompted producers to drop May contract prices 3-5 cents/lb or $66-110 (€43-72)/tonne, putting the price of fibre-grade EG (EGF) at 56-58 cents/lb, according to global chemical market intelligence service ICIS pricing.

However, another unplanned shutdown at a large production facility could provide sufficient price support to send prices up, the trader said.

 “It seems like whenever prices begin to slide, an outage or turnaround somewhere tightens supply and sends prices up again,” the trader noted.

US EG suppliers include Equistar, Huntsman, Old World, SABIC and Shell.

($1 = €0.65)

For more on EG visit ICIS chemical intelligence

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By: Gene Lockard
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