Europe April EO contracts fall in line with ethylene decrease

12 April 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European ethylene oxide (EO) April contract prices were assessed by ICIS at a decrease of €49/tonne on Friday.

April contract prices were assessed at €1,380-1,547/tonne ($1,816-2,036/tonne) FD (free delivered) NWE (northwest Europe) and €1,435-1,592/tonne FD Med (Mediterranean).

The price decreases represent 82% of the €60/tonne fall in the April 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 start of the spring turnaround season has reduced supply, but buyers are not concerned, saying they are able to secure all necessary contractual volumes.

One described a stable market, but said it hoped that supply would be less stretched in May.

Producers had said that EO availability would be constrained during the next few months, and there might not be enough to satisfy all requests for material.

The market remains fairly balanced overall, with the effects of reduced output being alleviated by lacklustre demand in a number of sectors.

Unseasonably cold weather has delayed activity in the construction industry, which usually rises sharply towards the end of the first quarter.

As with the automotive industry, the sector has performed poorly in recent years because of macroeconomic weakness across Europe.

Demand for surfactants and agrochemicals has remained consistently high in recent months, although a buyer in the agrochemicals sector confirmed that peak consumption season for the latter comes to an end in April/May.

($1 = €0.76)

By: Samuel Weatherlake
+44 20 8652 3214

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