Europe May EO contracts fall in line with ethylene decrease

17 May 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European ethylene oxide (EO) May contract prices were assessed by ICIS on Friday at a decrease of €82/tonne from April.

May contract prices were assessed at €1,298-1,465/tonne ($1,664-1,878/tonne) FD (free delivered) NWE (northwest Europe) and €1,353-1,510/tonne FD Med (Mediterranean).

The price decreases represent 82% of the €100/tonne fall in the May ethylene contract.

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.

There were indications earlier in the month that some freely negotiated contract prices could fall by a smaller amount, but no such outcomes were confirmed.

A major buyer said that its freely negotiated business was concluded in line with its formula-based contracts.

The heavy slate of scheduled turnarounds at European EO plants is ongoing, but there appears to have been little impact on the market balance. The buyer suggested that this could be taken as an indicator of the current market environment.

Other consumers concurred that demand is lacklustre, with peak season for the agrochemicals sector having ended last month. A buyer in the sector observed that volumes during the season had been slightly lower than expected.

A third buyer noted that applications linked to the paints industry are performing poorly, which has been widely attributed to the unseasonably cool weather in recent months.

A buyer in the surfactants sector said that end-user demand was slightly weaker than it had expected, but remained at an acceptable level.

($1 = €0.78)

By: Samuel Weatherlake
+44 20 8652 3214

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