28 January 2010 17:54 [Source: ICIS news]
LONDON (ICIS news)--Dow Chemical's closure of its ethylene oxide (EO)/ethylene glycol plant at Wilton in the UK has left customers unruffled, despite current tight European supply, as they have had ample time to come up with contingency plans, they said on Thursday.
“We started sourcing alternative [EO] supplies [from mainland ?xml:namespace>
“There is enough EO to be sourced by
The same customer was keen to point out that the current limited supply flexibility in the European EO market was not caused by the Wilton closure, but was the result of strong demand in the downstream monoethylene glycol (MEG) sector, cracker issues and EO plant maintenance.
“We already positioned ourselves elsewhere, [prior to the actual plant closure] and our sites are running with no limitations,” said another EO buyer, who added that its contracts were fully covered.
EO customers said Dow's closure would mean higher freight costs for imports from mainland
For the sell-side there were concerns, particularly for EO. “If all European EO production is running, supply will be ok, but when there are issues, there will be no additional buffer," said one seller, added that the closure had not caused the EO market tightness but it would mean the market would be tighter during shutdown periods.
Another said EO/MEG producer said the loss of MEG production there would mean
A purchaser of MEG agreed, stressing that the future of Europe was in imports, particularly if production costs remained so much lower in the Middle East.
“Sooner or later imports will fulfil...European demand. It is just a question or time,” he said.
MEG was tight in January because of a lack of imports and contract prices shot up by €125/tonne from December, to €785/tonne ($1,106/tonne) FD (free delivered) NWE (northwest
Dow confirmed that it had halted its EO and MEG production at its
The closure was brought about by poor profit margins, which had been exacerbated by the economic downturn.
Dow's EG capacity at
($1 = €0.71)
With additional reporting by Caroline Howard
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