FocusEuropean ethylene derivative customers unfazed by shutdowns

19 February 2010 19:41  [Source: ICIS news]

By Heidi Finch, Amandeep Parmar and Caroline Murray

LONDON (ICIS news)--European ethylene oxide (EO) and ethylene diamine (EDA) customers are taking recent ethylene derivative plant maintenance projects in stride - along with cracker and production issues - due to good planning, expected stock-building and the influx of ethylene derivative imports, sources said on Friday.

Sellers, however, maintained that supply was tight, due to the combination of plant maintenance and robust-to-improving demand for EO and ethylene amines in the surfactants, agro-chemical and downstream anti-freeze sectors. The latter has been particularly strong this season due to the harsh winter across Europe.

Recent EO/monoethylene glycol (MEG) plant maintenance for INEOS Oxide and BASF was likely to be “offset by derivative imports” to a certain extent, according to one EO customer, who said that it had seen some competitively-priced ethoxylated imports from the US.

A few buyers said the EO market was balanced to short, adding that contracts were covered, but volumes above forecast were difficult to obtain.

One of the buyers said it had secured 1,000 tonnes of additional EO in February with difficulty, but had managed to spread it over several suppliers. However, one of the sources added that, “with good planning, there are no problems.”

One EDA customer said there was some uncertainty about supply into quarter two due to the series of plant maintenances and improving demand.

The source noted, however, that global capacity was set to increase due to the new Huntsman ethylene amine capacity in the Middle East.

That could offset problems with facilities such as INEOS Oxide’s EO/MEG plant at Lavera, France, which went down at the end of January for regular maintenance and was expected to last for approximately five weeks.

In addition, BASF’s EO/MEG facility at Antwerp, Belgium, was scheduled to go down over the weekend and is due offline for around three weeks. The company’s ethylene amine unit also at the site was also expected to go down for routine maintenance at a similar time, according to company sources.

“I still see the European [EO/MEG] market as balanced - it could be more tight with two shutdowns of INEOS Oxide and BASF over March," the seller said.

Previous reports also suggested that Dow Chemical’s ethylene amine unit at Terneuzen, the Netherlands, would enter into a planned outage in March, but that was not confirmed. Dow had previously experienced some production issues at its Dutch and US sites in January, but they have since been resolved.

The INEOS Oxide EO/MEG French plant has a rated nameplate capacity of 220,000 tonnes/year of EO and 15,000 tonnes/year of MEG, while BASF’s Belgium facility manufactures 450,000 tonnes/year of EO and 360,000 tonnes/year of MEG, according to the ICIS plants and projects database.

Also at BASF’s Antwerp site, the ethylene amine nameplate capacity is estimated at 45,000 tonnes/year, as previously stated by a company source. Capacity details for Dow’s ethylene amine facilities were not available at the time of publishing.

European EO prices were assessed in February between €1,048-1,120/tonne ($1,416-1,514/tonne) FD (free delivered) NWE (northwest Europe) and €1,088-1,150/tonne FD Mediterranean.

This represented increases of €57-69/tonne from January, driven by firm feedstock costs and strong market fundamentals. One producer said that spot prices were trading above contract, in the mid €1,100s-€1,200/tonne FD, although that was not confirmed.

Looking to March, EO players said they were waiting for further direction from the upstream ethylene market.

Meanwhile, the MEG market was torn between traders and a few buyers, who said there was March availability in the trader system. However, producers along with other customers and resellers insisted that supply was strained and the market would remain firm.

MEG supply into Europe, a net importer, was finely balanced - even tight, some said - following cutbacks from the Middle East, according to sellers. The imminent shutdowns mentioned above would only serve to hinder the situation, sellers said.

An initial European March MEG contract price was agreed at €899/tonne FD NWE, up €59/tonne from February. The buyer and seller involved also reported agreeing to €840/tonne for February, which was originally settled between two other parties earlier in the month.

Other players said they had yet to start discussions in earnest. Initial expectations for the March European EDA contract prices were pegged between €2,300-2,450/tonne FD. This reflected a rollover for low-end business, but a drop of €50/tonne for the upper end of the spread from the previous quarter.

Earlier in February, BASF said it would increase its ethylene amine prices by €50/tonne, with immediate effect, or as contracts allowed. This resulted from the recent uptrend in feedstock costs and tightening supply, the company said.

However, as most current contracts were valid for the rest of the quarter, there was no market confirmation.

(€1 = $1.36)

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By: Heidi Finch
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