23 April 2012 00:00 [Source: ICB]
MEA's major use is in ethylene amines and imines (mainly captive production), and personal care and detergents. DEA's primary demand is in herbicides, followed by detergents and personal care, and refining/gas treatment. A large portion of TEA goes into detergents and personal care, followed by engineering/metal working and concrete manufacture.
European demand is stable but at a fairly low level because of weakness in the overall European economy. This is especially noted in southern Europe, where countries such as Spain, Italy and Portugal have been hardest hit by the eurozone debt crisis.
Players estimate that consumption is down by 80% in northern Europe and has fallen by up to 50% in the south compared to 2011 levels.
Supply is ample, with imports from the US, Latin America, Russia and Asia attracted to Europe because of the higher prices seen on the domestic front, particularly for MEA.
European producers have been looking to raise prices because of record high costs of feedstock ethylene, which hit €1,345/tonne ($1,760/tonne) FD (free delivered) NWE (Northwest Europe) in April 2012.
However, lackluster demand and the availability of cheap material from Asia and Mexico - especially on MEA - has hampered these initiatives, leading to a wide price range opening up between low-cost imports and dearer domestic product.
MEA is selling between €1,400/tonne and the low-€1,500s/tonne FD NWE, with TEA 99% seeing a €30-50/tonne premium.
Meanwhile, DEA values are €1,050-1,150/tonne FD NWE. DEA is structurally long, as European players have little use for it. Prices are therefore much lower than for the other two main ethanolamines.
Ethanolamines are produced by adding ethylene oxide (EO) to ammonia when the ammonia is either in an aqueous or gaseous state. Excess ammonia is removed in the first column and recycled, before water is removed and the homologues are separated. The product mix can be varied, from an MEA content of around 70% to a TEA content of about 50% and any combination in between. Recycling of the various products to produce more DEA or more TEA can vary the end-product mix.
European demand is expected to grow in line with GDP, which is to say very slowly. Forecasts average around 0.5-1.0% growth in 2012 and 2013.
While annual demand growth in developing regions such as South America and Asia is predicted to be much stronger, at around 5-7%, European suppliers will find themselves under downward price pressure on the domestic front as additional capacities come online in the Middle East, and US manufacturers benefit from much lower feedstock costs.
Saudi Kayan, a subsidiary of Saudi Arabia's SABIC, has started up its 100,000 tonne/year plant in Al Jubail, Saudi Arabia, this month and aims to achieve on-spec production in the coming weeks, according to a SABIC source.
About 40-50% of the plant's ethanolamine production will be exported to China, particularly DEA and TEA. China accounts for 65% of demand in Asia and one-fifth of global consumption of the chemicals.
In addition, US manufacturers are able to harness reserves of shale gas - as opposed to using higher-priced naphtha-based feedstock - to produce ethanolamines for much less.
Domestic producers have already lodged a request with the European Commission to renew anti-dumping duties on material originating from the US.
Duties in some form have been imposed on US manufacturers since 1994 and were most recently renewed in January 2010 at a rate of €59.25/tonne on Dow Chemical, €69.40/tonne on INEOS Americas and €111.25/tonne on Huntsman and all other companies.
These were due to expire in January 2012, but Germany's BASF, Switzerland-headquartered INEOS Oxide and Sasol Germany - which together comprise 50% of European ethanolamine production - argued that lifting them would lead to dumping, as US prices are generally around €100/tonne lower than in Europe. The investigation should be concluded within 15 months, during which time these duties will remain in place.
However, in April 2012, the EU announced it will review the anti-dumping measures at the request of Dow Chemical, which argues that it has raised its export prices for ethanolamines consistently and over a long period of time.
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