By Felicia Loo
SINGAPORE (ICIS)--Selling indications of ethanolamines in Asia are expected to remain high in response to rising ethylene (C2) prices and supply being diverted to Europe, where netbacks are stronger because of tight supply, market participants said on Friday.
A handful of Asian producers are keen to raise offers for monoethanolamines (MEA), diethanolamines (DEA) and triethanolamines (TEA), but end-users are resisting higher prices, citing underperformance in the downstream distribution chain.
Offers for Middle Eastern MEA in drummed packaging stood at $1,450/tonne CIF (cost, insurance and freight) India for March delivery, up by $50/tonne compared with bookings delivered in February. But buyers in India are not keen to take on such offers owing to ample inventories in the domestic market.
Separately, the selling ideas of southeast Asian DEA stood at $1,550-1,600/tonne CIF India for March delivery, $50-80/tonne higher than the February-shipment offers.
In China, the deals for southeast Asian drummed TEA cargoes stood at $1,600/tonne CIF China for March – equivalent to $1,640/tonne CIF China after normalising the prices to zero antidumping duty (ADD) and 6.5% import duty. A month ago, southeast Asia-origin TEA in drummed packaging was done at $1,570/tonne CIF China, or the equivalent to $1,610/tonne CIF China after price normalisation.
"Ethylene prices are up and [the amines producers] want to increase their selling ideas," said one market participant.
Ethylene spot prices in northeast Asia extended their gains in the week ended 7 March to $1,490-1,510/tonne CFR (cost & freight) NE (northeast) Asia, up by $10/tonne from the week ended 28 February, according to ICIS. Four week ago, ethylene prices stood at $1,470-1,500/tonne CFR NE Asia.
In southeast Asia, spot ethylene prices stood at $1,450-1,460/tonne CFR SE (southeast) Asia on 7 March, stable week on week but higher than $1,400-1,420/tonne CFR SE Asia four weeks ago.
Ethylene prices drew support from an even more active cracker turnaround from February to June, compared with the same period last year.
Amines offers have increased as supply could find demand outlets in the more lucrative European markets.
In Europe, limited imports and good demand are providing strong upward pressure on spot ethanolamine prices. DEA supply continued to be tightest, with the price pressure spilling over into other products which contain the chemical – particularly triethanolamine-85 (TEA-85). MEA is also seeing some upward price pressure with talk of €10-20/tonne increases.
Europe’s imports of US material continued to be limited, with demand said to be strong in North America.
Meanwhile, Russian product continued to be very limited, as the country's leading producer of ethanolamines, Sintez OKA, has had production problems at its Dzerzhinsk plant.
The plant with a total amine capacity of 45,000 tonnes/year came on stream this month and is operating at around 85% of normal capacity.
Availability of raw material ethylene oxide (EO) to the plant has improved, but Sintez’s export volumes to Europe are still low, with the situation is unlikely to change until the next round of quarterly contracts begin in April.
In China, EO prices remained stable for several weeks at yuan (CNY) 10,600/tonne ($1,726/tonne) ex-warehouse (EXWH), with no downward pressure seen even as related monoethylene glycol (MEG) market was mired in weakness, market participants said.
China’s economic slowdown is taking its toll on downstream demand, they said.
The country is the world’s second-biggest economy and the biggest petrochemical importer in Asia.
In February, manufacturing activities in China slackened, with the purchasing managers' index (PMI) for the month falling to an eight-month low of 50.2 – barely above the 50 threshold that indicates expansion.
"The domestic [ethanolamines] prices are on a downtrend. Demand is lacking," said one distributor in east China.
In the local Chinese market, MEA prices fell by CNY300/tonne at the low end of the price range in the week ended 12 March to CNY10,700-11,600/tonne EXWH east China. Prices stood at CNY11,000-12,000/tonne EXWH four weeks ago.
Meanwhile, DEA prices were down by CNY100/tonne at the low end of the range from the previous week to CNY11,200-12,200/tonne EXWH on 12 March, and lower by CNY200-300/tonne from four weeks ago.
At CNY12,000-12,500/tonne EXWH in the week ended 12 March, TEA prices have fallen from CNY12,300-13,000/tonne EXWH four weeks earlier.
($1 = CNY6.14)
Additional reporting by Rhian O'Connor in London