Europe September EO contracts up by €103/tonne on ethylene hike

28 September 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European ethylene oxide (EO) contract prices for September were assessed up by €103/tonne ($134/tonne) from August on Friday, based on the €125/tonne rise in the September ethylene contract.

September EO contract prices were assessed by ICIS at €1,383–1,550/tonne FD (free delivered) NWE (northwest Europe) and €1,423–1,580/tonne FD MED (Mediterranean).

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

Freely negotiated contract business represents a comparatively small percentage of the European market, with prices in 2012 not varying significantly from business concluded on an ethylene-based formula.

Looking ahead, the European ethylene contract price for October was fully confirmed on Friday at €1,290/tonne FD NWE, down by €10/tonne from September.

EO buyers confirmed that this would mean a slight decrease for October EO contracts.

One buyer described the market for purified EO as balanced, and said that demand is acceptable, but noted that the fourth quarter is usually a weaker period for the European EO market.

A buyer in the agrochemicals industry said that demand for related applications has picked up through September, in accordance with established seasonal trends.

A buyer in the surfactants sector confirmed that there are no supply constraints, and said that offtake was better than it had expected.

While it was a little too early to confidently assess fourth-quarter demand, the buyer said it had a positive outlook.

A producer described steady growth in demand for surfactant applications.

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

($1 = €0.77)

By: Samuel Weatherlake
+44 20 8652 3214

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