FocusEurope ethanolamines destocking will not hit pricing - traders

29 November 2012 10:34  [Source: ICIS news]

ICIS (LONDON)--Ethanolamines contract prices are not expected to be hit by year-end destocking, as feedstock costs remain steady-to-firm and the market will close the year on a balanced note, market sources said on Thursday.

Even prior to the feedstock ethylene contract price settling at a rollover for December, buyers and sellers of ethanolamines were not expecting prices to change dramatically.

 “The market was a little bit quieter this week. I think everybody was waiting for ethylene to settle. In December I don't expect a lot of activity – maybe some in the first seven to eight days, but there will be no changes on price,” one importer to Europe said.

Looking ahead to January, the importer expects demand to pick up, adding: “Generally speaking January is normally a good month, and demand picks up."

“[Demand] might slow by March, but quarter one will be better than quarter four. Much will depend on the economic situation, although ethanolamines are really recession-proof,” he concluded.

A second importer to Europe described its demand as stable, but confirmed that the market was experiencing “a year-end effect”, adding: “Supply is also curbed by INEOS, so the market is pretty balanced and there is no oversupply.”

The seller said that it was increasing its prices, particularly for diethanolamine (DEA), adding: “DEA is demand-driven and we are seeing demand out of line. We know there is lower demand overall in Europe than there is production. But if you know there is a surplus in a region why would an importer bring it in?

“[For] DEA we are driving it up to €1,300/tonne [$1,688/tonne]  FD [free delivered] NWE [northwest Europe]. DEA [prices are] getting closer to MEA [monoethanolamine] prices].”

A European producer echoed what its rival sellers said in terms of demand and pricing.

“We’re keeping an eye on year-end and everything running smoothly. I am expecting some higher demand in January, but this is mainly due to restocking,” the producer said. “There is no reason why demand should go up significantly, but there is no reason why it should decrease.”

“Reducing prices by €50-100/tonne in December will not generate any new demand and we will keep prices the same,” the producer added.

On the buying side, a consumer purchasing all grades of ethanolamines said its demand was very low.

“There is no demand for December. If customers come to us they need it straight away. There is no reason for purchase spot material, but I think some traders will be trying to get rid of material,” the buyer said.

Traders confirmed that December looked like a very quiet month in terms of demand.

“There is not so much going in at the moment. Ammonia is still expensive and producers will not put numbers down because it will not cause demand,” said one trader.

A second added: MEA and [triethanolamine [TEA] is balanced and DEA is a little short, but the markets are generally quiet and I don’t expect prices to come down in December. What will happen in quarter one will depend on so many things.”

Ethanolamines can be used for applications such as agrochemical production, surfactants, personal care and construction.

MEA is produced by reacting ethylene oxide (EO) with ammonia. The chemical reaction also produces DEA and TEA. The ratio can be controlled by changing the stoiciometry of the reactants.

($1 = €0.77)

By: Julia Meehan
+44 20 8652 3214

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