Europe November EO contracts down €12/tonne on ethylene decrease

16 November 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European ethylene oxide (EO) contract prices for November were assessed down by €12/tonne ($15/tonne) from October on Friday, based on the €15/tonne fall in the November ethylene contract.

November EO contract prices were assessed by ICIS at €1,363–1,530/tonne FD (free delivered) NWE northwest Europe) and €1,403–1,560/tonne FD MED (Mediterranean).

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

Freely negotiated contracts now represent only a small proportion of the market, and most of these have tracked formula-based contracts closely throughout the year.

Sources said that demand is softening as market participants begin their seasonal destocking. No production problems were heard this week.

Offtake levels vary greatly from one sector to another, with surfactants and agricultural products continuing to outperform applications that are heavily dependent on the construction industry.

A producer said it expects these trends to last into 2013, with EO demand for consumer products increasing while offtake for industrial applications remains flat or declines.

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.

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

($1 = €0.78)


By: Samuel Weatherlake
+44 20 8652 3214



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