FocusChina amines may extend falls on weak EO costs, dull demand

06 November 2013 04:31  [Source: ICIS news]

By Felicia Loo

Amines are used in monopolyethylene glycol (MPEG), which is largely used in the construction sector.SINGAPORE (ICIS)--China’s amines prices are likely to continue falling in the coming weeks, following recent declines in the cost of feedstock ethylene oxide (EO), and as the approaching winter is dampening demand from downstream sectors, industry sources said on Wednesday.

Domestic prices of monoethanolamines (MEA), diethanolamines (DEA) and triethanolamines (TEA) in China have deteriorated recently because of falling EO prices, according to market participants.

On 30 October, MEA price discussions and trades were at yuan (CNY) 11,100-11,500/tonne ($1,820-1,885/tonne) EXWH (ex-warehouse), down by CNY500/tonne at the high end of the range from the previous week, according to ICIS data.

Price discussions for DEA were at CNY11,400-12,000/tonne EXWH, down CNY100-500/tonne over the same period. Meanwhile, TEA price discussions edged lower by CNY500/tonne at the high end to CNY12,000-12,500/tonne EXW in the week ended 30 October, the data showed.

Feedstock EO prices in eastern China fell by CNY200/tonne during the week ended 30 October to CNY10,400/tonne EXWH, according to ICIS.

The Chinese market is now being inundated with EO supply because of expanded capacity, market sources said.

“There is surplus EO supply and the downstream demand chain for EO has weakened, so there is a lot of feedstock supply available for amines,” said one market participant.

Demand, which is mainly from the monopolyethylene glycol (MPEG) sector, will slow down in December.

MPEG is largely used in the construction sector, which typically enters its seasonal lull in demand from December to February.

Cold weather during these months, especially in northern China, hampers construction projects.

Chinese factories have started reducing the number of days of operation with the approaching winter, the market participants said.

“The selling indications of imported amines are too high at this stage. We can’t possibly make any profit in such dismal market conditions,” said a trader in eastern China.

Compounding the situation is the weakness in the Chinese economy that dulls the downstream derivative demand for amines, market participants said.

Demand for all three amines grades remained lacklustre, and the market is overall facing an oversupply situation, they added.

($1 = CNY6.10)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Felicia Loo

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