US EG moves higher in February on tight feedstock supplies

17 February 2012 21:27  [Source: ICIS news]

BOGOTA (ICIS)--US industrial-grade ethylene glycol (EGI) February contract pricing rose by 1 cent/lb ($22/tonne, €17/tonne) on the low end of the range in the wake of tighter feedstock supplies, sources said on Friday.

The EGI February contract range was assessed at 53-55 cents/lb. The upper end of the range was unchanged.

Antifreeze-grade ethylene glycol (EGAF) FOB (free on board) barge prices were discussed in the mid 40’s cents/lb range. The barge market was said to be quiet, but some market participants said the price could move up 1 cent/lb in the next few weeks.

US fibre-grade ethylene glycol (EGF) export contract pricing for February was assessed higher on the low end of the range last week by 1.5 cents/lb, as the contract price is based on an average of the month’s nominated Asian contract prices, minus estimated freight.

US ethylene is tight and expensive due to Flint Hills’ unplanned cracker outage and has put pressure on EG margins, a producer said.

Flint Hills Resources had shut down its 621,000 tonne/year Port Arthur cracker in Texas as a result of a steam disruption. Market sources said the unit could be off line for two weeks.

EG supply out of the US Gulf (USG) into Asia is ample, but demand in the region was subdued, according to a producer.

However, a buyer said demand out of the USG was steady, with sellers shipping regularly in anticipation of higher ethylene and ethylene oxide (EO) prices, which they view as inevitable.

Tightness in the feedstock EO supply continues as a result of the force majeure (FM) on EO at BASF’s Geismar plant in Louisiana, which is in effect through February.

BASF polyol and derivatives from EO at Geismar have depleted stocks and back orders should keep the EO market tight for a while longer after they start up following repairs, a trader said.  

BASF said this week the 220,000 tonne/year EO plant at Geismar is not involved in a 30-day maintenance turnaround at the complex.

There was talk that EG for March pricing was down 1 cent/lb amid lagging demand.

February is normally the slowest month for anti-freeze applications, as blending to make antifreeze happens before winter sets in and rises again about a month before the summer driving season starts.

Weather in the northern US recently turned colder after being unseasonably warm, a trader said. 

Demand is also down in the polyethylene terephthalate (PET) sector. The sector was said to be between seasons, with the holidays concluded and summer coming in the next few months, the trader said.

Major EG producers in the US include LyondellBasell, Huntsman, MEGlobal, Old World, SABIC and Shell.

($1 = €0.76)

By: Leela Landress
+1 713 525 2653

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