Europe October EO contracts down €8/tonne on ethylene decrease

19 October 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European ethylene oxide (EO) contract prices for October were assessed down by €8/tonne ($10/tonne) from September on Friday, based on the €10/tonne fall in the October ethylene contract.

October EO contract prices were assessed by ICIS at €1,375–1,542/tonne FD (free delivered) NWE (northwest Europe) and €1,415–1,572/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 contracts now represent only a small proportion of the market, and in nearly all cases, these have tracked formula-based prices closely through 2012.

Many buyers have followed a hand-to-mouth purchasing strategy this year, hoping to mitigate the impact of the large ethylene-driven price swings that have characterised the EO market in recent months.

Demand from many downstream industries has been undermined by macroeconomic weakness, particularly the automotive and construction industries.

The surfactants and agrochemicals sectors have shown more resilience, although the latter is highly seasonal.

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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