Corrected: US EG prices expected to inch up in fourth quarter

16 September 2010 23:14  [Source: ICIS news]

Correction: In the ICIS news story headlined “US EG prices expected to inch up in fourth quarter” dated 16 September 2010, please read in the sixth paragraph … A Gulf EG price-hike of 2 cents/lb ($44/tonne, €34/tonne) … instead of … 4 cents/lb ($88/tonne, €68/tonne) …. A corrected story follows.

HOUSTON (ICIS)--US ethylene glycol (EG) prices are likely to trend higher in the last quarter of the year amid tightening supply and steady demand, a trader said on Thursday.

The tightened supply situation was coming from a number of outages - planned and unplanned - and a conversion of Dow’s Taft 1 ethylene oxide (EO) and EG unit to purified EO only, the trader said.

Unless demand was less than expected in the coming weeks, the imbalance was likely to continue until December, when demand typically drops due to the end-of-year tax on inventory, the trader said.

“A drop in EG exports will help the market balance, but not enough to keep supply from becoming tighter,” the trader said, adding that when the arbitrage window was open, it was only open a small amount.

Huntsman, LyondellBasell and Old World all had scheduled turnarounds for August-September.

A US Gulf EG price-hike of 2 cents/lb ($44/tonne, €34/tonne) was proposed for October, and proposals of 3-10 cents/lb were proposed for September. The 10-cent increase called for a temporary voluntary allowance (TVA) of 6 cents/lb, producing a likely effective rate of 4 cents/lb.

While supply was snug-to-tight, demand was steady due to antifreeze demand, sources said.

US Gulf EG FOB (free on board) prices through August were 37-41 cents/lb, as assessed by ICIS.

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

($1 = €0.77)

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By: Gene Lockard
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