11 May 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--European May ethylene oxide (EO) contract prices were assessed down by €16/tonne ($21/tonne) by ICIS on Friday, based on the €20/tonne fall in the May ethylene contract.
Market participants confirmed that the great majority of EO contracts had decreased by this amount.
May EO contract prices were assessed at €1,402–1,569/tonne FD (free delivered) NWE (northwest Europe) and €1,442–1,599/tonne FD MED (Mediterranean).
Ethylene is the main feedstock for EO, and formula-based EO prices usually comprise 80–85% of the change in the monthly ethylene price, with 82% taken as a representative average.
Freely negotiated EO contracts comprise only a small percentage of the European market. These prices tracked formula-based prices closely during the first quarter, but were heard settling slightly higher for April in some cases.
For May, some prices were heard settled in the mid-€1,300s/tonne FD NWE, but market sources said that most freely negotiated prices had followed the lead set by formula-based contracts.
EO availability remains good, in spite of recent production outages. The second quarter is usually weak in terms of EO demand, but offtake this year is described as being below the levels seen in previous years.
The peak season for agrochemicals production has ended, and poor macroeconomic trends continue to undermine activity in the construction sector.
Relatively strong EO demand for surfactant applications has helped to compensate for this weakness in recent months. However, a buyer noted this week that low offtake from the automotive industry is contributing to the bearish market trend.
European EO producers include Shell, INEOS Oxide, BASF, Clariant, Sasol, Dow, IQA, PKN Orlen and AkzoNobel.
$1 = €0.77
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