15 October 2010 14:28 [Source: ICIS news]
LONDON (ICIS)--INEOS Oxide's declaration of force majeure on supplies of ethylene and propylene derivatives from its Lavera site is likely to add to the short supply of product in several downstream markets, sources said on Friday.
INEOS Oxide declared force majeure on on ethylene oxide (EO), ethylene glycols, glycol ethers (and their esters), ethanolamines, oxo-alcohols and butyl acetates originating from its Lavera site in ?xml:namespace>
For oxo-alochols, this was the third declaration of force majeure to hit the market.
Arkema announced it had imposed a legal caveat on supplies of all its oxo-alcohols from Lavera on the same day. Polish major Zaklady Azotowe Kedzierzyn (ZAK) has had a force majeure in place since mid-August, and the company's plant at Kedzierzyn-Kozle is currently shut down to replace a catalyst.
“We are looking at allocation tables and trying not to get overwhelmed by the demand. It’s far from an easy cruise,” said one oxo-alcohols producer.
“The whole strikes situation – it’s creating a big mess,” the producer added.
Supply in the 2-ethylhexanol (2-EH) was critically tight even before the French strikes, forcing at least one downstream acrylates producer to reduce manufacturing rates and put plans in place to shut down the plant later this month.
Demand for n-butanol (NBA) and isobutanol (IBA) has been steadily increasing over the past week, due in large part to strong demand from the downstream acrylates sector.
In the mono ethylene glycol (MEG) market, one buyer said the strikes were likely to make supply tighter and that spot prices were expected to rise.
"It's already tight in the market. The impact will depend on allocation amount and how long they remain in force majeure," the buyer said.
The European MEG market was tight because Middle Eastern suppliers have been exporting material to Asia instead due to higher prices.
In addition, there has been strong demand from the downstream anti-freeze sector after buyers, which delayed purchases in anticipation of a fall in prices that never materialised, were forced to go into the market.
One trader said that “it will increase the tightness in the market. In
A second MEG consumer said the impact would be limited, as the Lavera plant was fairly small.
"[I] can't imagine it will have a big impact. Sellers will want to use it as an extra argument for price increases,” said the consumer.
In the ethylene oxide (EO) market, one consumer described the market as balanced-to-short, but with any shortage focused in
A second EO customer said it had managed to source product from elsewhere, but acknowledged that it was likely to tighten the market.
This view was also reinforced by downstream players in other markets.
Additional reporting by Mark Victory and Libby George
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