OUTLOOK ’14: US EG increase anticipated at start of new year

30 December 2013 16:00  [Source: ICIS news]

NEW YORK (ICIS)--US ethylene glycol (EG) contract prices are poised to rise in January on the back of producer-led price increases.

Indorama, LyondellBasell, MEGlobal and Shell separately announced price increases for monoethylene glycol (MEG) and diethylene glycol (DEG), effective 1 January.

Eastman announced a price increase for triethylene glycol (TEG) for January contracts as well.

Market sources said they anticipate January being a stronger month for EG pricing, following a steady-to-down price trend in Q4 2013.

Demand for MEG is expected to remain stable, though slow, as the major downstream polyethylene terephthalate (PET) and anti-freeze sectors are at a seasonal lull.

However, some sources have said that mid-winter buying in the anti-freeze sector is a possibility, but is dependent on the weather. If winter is particularly cold this season, MEG demand could have a spike in buying activity from anti-freeze makers.

MEG and DEG demand in downstream unsaturated polyester resins (UPRs) will be dependent on how well the economy performs, as UPRs are widely used in an assortment of products including sinks, shower stalls, pipes, tanks, boats, buses, trucks trailers and automobiles.

Throughout much of 2013, UPR demand in the US has been poor, market sources noted.

As well, DEG demand in the downstream polyester polyols sector has been weak. Polyester polyols are used in roofing insulation.

In comparison, TEG demand is at its peak, though demand during the winter season is dependent on the weather. A colder winter will mean stronger demand for TEG, which is used in natural gas dehydrogenation.

During Q4 2013, TEG demand was strong, as is typical that time of year. Sources said there has not been enough supply during the 2013 fourth quarter to meet demand in the US market. Seasonal demand was the sole driver of TEG price hikes throughout the fourth quarter.

Meanwhile, market sources anticipate that feedstock ethylene oxide (EO) availability will return to normal. The expected restart of the Evangeline Pipeline in early 2014 will return the flow of upstream ethylene, which was disrupted when the pipeline was damaged over the summer.

Participants had been experiencing an unusual tightness in EO in certain regions of the US market during the 2013 fourth quarter as a result of the pipeline being down for repairs, and from the residual effects of EO being sold out earlier in 2013 during and following major producer plant turnarounds.

RECENT PRICES

EO-EG prices


By: Feliza Mirasol
+1 713 525 2653



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