08 March 2013 23:59 [Source: ICIS news]
LONDON (ICIS)--European ethylene oxide (EO) March contract prices were assessed by ICIS at an increase of €41/tonne on Friday, bringing the high end of the assessed ranges for northwest Europe and the Mediterranean to a record high level.
March contract prices were assessed at €1,429-1,596/tonne ($1,880-2,100/tonne) FD (free delivered) NWE (northwest Europe) and €1,484-1,641/tonne ($1,953-2,159/tonne) FD Med (Mediterranean).
The price increases represent 82% of the €50/tonne rise in the March ethylene contract.
The vast majority of EO contracts are formula-based, with price movement comprising 80-85% of the change in the monthly ethylene price; 82% is taken as an average for assessment purposes.
The previous record highs of €1,585/tonne FD NWE and €1,615/tonne FD Med were reached in April 2012.
Higher conversion fees that came into effect at the beginning of 2013 are reflected in the assessed price ranges. These represent an average increase of €25/tonne for northwest Europe and €40/tonne for the Mediterranean.
The principal focus of the market this week was the upcoming slate of planned turnarounds at European EO plants.
Producers emphasised that this will tighten the market considerably. One said that a lot of swaps are taking place, and noted that logistical difficulties prevent buyers from importing tonnes from outside Europe.
Buyers said they are confident that they will be able to cover their needs from domestic sources.
A buyer confirmed that demand for surfactants remains strong, and added that it does not expect this to change as long as EO prices remain close to their current level.
Another buyer noted that the peak demand season for the agrochemicals industry will end next month.
The second quarter is usually when activity picks up in the construction sector, but demand from this and other sectors – such as automotive – has been severely impacted by macroeconomic weakness in Europe.
($1 = €0.76)
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