Europe June EO prices down by €98/tonne on ethylene drop

15 June 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European June ethylene oxide (EO) contract prices were assessed down by €98/tonne ($124/tonne) by ICIS on Friday, based on the €120/tonne fall in the June ethylene contract.

June EO contract prices were assessed at €1,304–1,471/tonne FD (free delivered) NWE (northwest Europe) and €1,344–1,501/tonne FD MED (Mediterranean).

Most EO contracts in Europe are formula-based, and price movement represents 80–85% of the change in the monthly ethylene price, with 82% taken as an average for assessment purposes.

Freely negotiated contract business comprises only a small percentage of the European market.

Since the beginning of the year, there has been little divergence between formula-based and freely negotiated contracts, and this applies to June settlements as well.

The EO market remains well supplied and demand is persistently weak.

A buyer said that at least one European producer has increased its EO output at the expense of monethylene glycol (MEG) production in response to lower MEG prices.

A producer said that demand for EO derivatives is stable and buyers have shown no interest in increasing their surfactant stocks.

EO offtake is significantly lower than in previous years, on account of the poor performance in downstream sectors, which have been undermined by macroeconomic concerns.

The construction and automotive industries have been cited as the weakest, but surfactants have also been affected to some extent.

Many EO end-users have adopted a just-in-time purchasing strategy.

European EO producers include Shell, INEOS Oxide, BASF, Clariant, Sasol, Dow, IQA, PKN Orlen and AkzoNobel.

($1 = €0.79)

By: Samuel Weatherlake
+44 20 8652 3214

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