Europe EO July contracts roll over from June

Europe EO July contracts roll over from June

19 July 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European ethylene oxide (EO) July contract prices rolled over from June, in line with upstream ethylene, buyers and sellers said on Friday.

"It is absolutely following the development of ethylene," a producer said, echoing comments made by other market players.

July contract prices were assessed at €1,302-1,469/tonne ($1713-1,933/tonne) FD (free delivered) NWE (northwest Europe) and €1,357-1,514/tonne FD Med (Mediterranean).

The price represents 82% of the upstream July ethylene contract plus an "adder".

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

"Demand is pretty strong and expected to be strong in second half of the year. Particularly surfactants," a second seller said.

Ethanolamines and ethers are also preforming relatively well, according to another player.

A buyer countered that overall demand for surfactants is "quite balanced", although there was evidence of a summer lull.

Requirements for EO from the downstream surfactants sector has proven largely resistant to the economic downturn, whereas the automotive and construction industries have struggled in recent years.

Pressure is mounting for higher prices to appear in August as the value of ethylene is talked up.

The European ethylene market remains well-balanced on the whole, although a slightly tighter situation persists in the Mediterranean because of some supply constraints. Spot levels are quite firm, largely on the back of a firmer upstream market. August contract price discussions will get under way next week. Sources are expecting an increase on the basis of higher costs.

($1 = €0.76)

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By: Caroline Murray
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