Updated to mid-August 2009
Asian market review by Salmon Aidan Lee, ICIS pricing
Monoethylene glycol (MEG) spot prices in Asia reversed a downtrend started in early May by June, recovering from $530-535/tonne CFR (cost and freight) China in mid-May to around $595/tonne CFR China by the end of June.
Market conditions in the downstream polyester sector was growing increasingly bullish, as the Chinese textile markets recovered from the global economic meltdown and boosted by the economic stimulus package by the Chinese government.
As outages in various parts of the world, most notably in the key production base of the Middle East, emerged, prices hit $700/tonne CFR China by the middle of July. And by August, demand remained strong and supply was still tight, spurring prices to rise to $760/tonne CFR China at the beginning of the month.
European market review by Caroline Howard, ICIS pricing
In May, the European MEG contract price settled up €28/tonne to €530/tonne FD (free delivered) NWE (northwest Europe). After lengthy deliberation the June price was finalised at a €10/tonne decrease, alongside a €55/tonne increase for July business. August looked set to shift up by another €40/tonne to €615/tonne, sources said.
Manufacturers were continuing their quest to improve margins but the economics remained very poor and none were satisfied with the results.
Following a lengthy period of strong competition from the Middle East where MEG was being produced more cheaply, production problems there and higher prices in Asia had prompted a lack of imports into Europe. This, coupled with output being cut back in Europe, resulted in a tight local market where producers were able to pull spot prices up by over €100/tonne from May to land around €550/tonne CIF (cost, insurance, freight) NWE in August.
US market review by Gene Lockard, ICIS pricing
US ethylene glycol (EG) contract and spot prices were expected to move up to about 35 cents/lb ($772/tonne) in August amid tightening supply. By contrast, mid-May EG contract prices averaged about 27 cents/lb, while spot values averaged about 22 cents/lb.
Prices of EG moved up in June, and again in July, when domestic supply holders began taking advantage of an open arbitrage window and exported to other regions, particularly Europe.
A reduction in operating rates at production facilities in the US was also behind the tightened domestic supply, thus providing the impetus for the rise in spot and contract prices.
A contract price proposal of 42 cents/lb was already heard for September, and the coming antifreeze season was expected to prompt other producers to announce September increases as well.
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Ethylene Glycol, Mono
Uses and Outlook
Monoethylene glycol (MEG) is the most important of the commercially available ethylene glycols, accounting for 90% of production. Diethylene glycol (DEG) and triethylene glycol (TEG) are produced as byproducts in the manufacture of MEG.
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Ethylene Glycol, Mono
Process Technologies
Ethylene glycol used to be manufactured by the hydrolysis of ethylene oxide which was produced via ethylene chlorohydrin but this method has been superseded by a direct oxidation route. The EO is first produced by the oxidation of ethylene in the presence of oxygen or air and a silver oxide catalyst. A crude ethylene glycol mixture is then produced by the hydrolysis of EO with water under pressure. Fractional distillation under vacuum is used to separate the monoethylene glycol from the higher glycols.
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