24 March 2010 20:28 [Source: ICIS news]
HOUSTON (ICIS news)--The potential for new Middle East and Asian ethylene crackers to flood the market and weaken downstream ethylene glycol (EG) prices in the second quarter is already affecting trader activity, a trader said on Wednesday.
Buyers, expecting EG prices to slide in the coming weeks, are beginning to buy only as much product as they need.
“No one wants to be long on supply when prices begin to slide,” the trader said, adding that it was only a matter of when and by how much prices would weaken, and not if they would weaken.
Through the first quarter of 2010, EG prices were well supported on tight feedstock ethylene supply amid a number of planned and unplanned outages and production issues. However, traders said the April price-hike proposals of 2-cents/lb ($44/tonne, €33/tonne) could be the last for some time if new capacity floods the global market.
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In the Middle East, new Sabic Basic Industries Corp (SABIC) plants - Sharq 4 and Yansab in Al Jubail, Saudi Arabia - had just gone to or were about to be moved to online status, a trader said.
“It’s about to get skinny over here” for US producers, the trader said, explaining that domestic prices would soon be at the floor of the market.
Domestic price weakening was not a sure thing, however, a reseller noted. A number of SABIC plants were scheduled for maintenance in the second quarter. The production loss will offset at least some of the capacity from the new facilities, the reseller said.
“When those plants are taken down for maintenance, it could help keep the legs under the market for a while longer,” the reseller said.
Truck and railcar fibre-grade ethylene glycol (EGF) prices at the end of March were 50-52 cents/lb, according to global chemical market intelligence service ICIS pricing.
US EG suppliers include Equistar, Huntsman, MEGlobal,
($1 = €0.74)
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