Ethanolamines makers to cut offers further on poor China demand

Focus article by Felicia Loo

SINGAPORE (ICIS)–Ethanolamines producers may continue cutting selling indications to buyers in the key China market, where demand is sluggish and supply ample amid an economic slowdown, market participants said on Friday.

Chinese end-users are being deterred from restocking on prospects of further price declines ahead of the Lunar New Year, which will be celebrated in the second half of February.

“Demand is really, really poor. They [the end-users] have enough stocks and are only buying on a need-to basis,” said one market participant.

Downstream demand remains bearish and some factories have ceased operations in the weeks leading to the New Year, market participants said.

Instead, end-users are relying on their bloated inventory as demand in the downstream segments is still weak.

A selling indication for southeast Asia-origin monoethanolamines (MEA) in drummed packaging for delivery in February was quoted at $1,000/tonne CIF (cost, insurance and freight) China. The offer is equivalent to $940/tonne CIF China after normalisation to a 6.5% import duty.

Buying ideas for both MEA and DEA, on the other hand, stood at $900-950/tonne CIF China, or the equivalent of $850-890/tonne CIF China., on prospects of further crude-driven price declines.

Meanwhile, bookings of separate southeast Asia-origin MEA were concluded at $980/tonne CIF China – or the equivalent of $1,000/tonne CIF China after price normalisation to a zero antidumping duty (ADD) and a 6.5% import duty basis.

Previously, the selling indication for southeast Asia-origin MEA in drums stood at $1,250/tonne CIF China, or the equivalent of $1,170/tonne CIF China after normalisation to a 6.5% import duty.

For January-delivered MEA, offers were quoted at $1,200/tonne CIF China – the equivalent of $1,230/tonne CIF China after price normalisation to a zero ADD and a 6.5% import duty basis.

On the diethanolamines (DEA) front, drummed cargoes of southeast Asian origin were booked at $980/tonne CIF China – equivalent to $1,000/tonne CIF China after price normalisation to a zero-ADD and a 6.5% import duty basis.

Separately, a selling indication for drummed DEA of southeast Asian origin was quoted at $1,000/tonne CIF China, or the equivalent of $940/tonne CIF China after price normalisation to a 6.5% import duty basis.

The offers fell sharply from the previous levels in tandem with the overall declines in crude and naphtha prices.

Previously, offers for drummed DEA of southeast Asian origin were quoted at $1,200/tonne CIF China, or the equivalent of $1,230/tonne CIF China after price normalisation to a zero ADD and a 6.5% import duty basis.

Selling indications for separate southeast Asian cargoes in drums were previously pegged at $1,260/tonne CIF China, or the equivalent of $1,180/tonne CIF China after price normalization to a zero ADD.

On triethanolamines (TEA), a selling indication for southeast Asian material in drummed packaging was quoted at $1,150/tonne CIF China, or the equivalent of $1,080/tonne after normalization to a 6.5% import duty basis.

The TEA offer level from a separate southeast Asian producer was lowered to $1,200/tonne CIF China, or the equivalent of $1,230/tonne CIF China after normalization to a 6.5% import duty basis as well as to a zero ADD.

Before the cuts in offers, the selling indication of southeast Asian material in drums was quoted at $1,350/tonne CIF China – or the equivalent of $1,380/tonne CIF China after price normalisation to a zero ADD and a 6.5% import duty.

The previous offer level from a separate southeast Asian producer was at $1,350/tonne CIF China, or the equivalent of $1,260/tonne CIF China after normalization to a 6.5% import duty basis.

Meanwhile, prices of feedstock ethylene oxide (EO) in China have remained on a downtrend, dragging down ethanolamine values.

On 21 January, EO prices in eastern China fell to CNY7,000/tonne EXWH (ex-warehouse), down from CNY7,500/tonne EXWH in the previous reporting week, according to ICIS.

EO prices have fallen by as much as CNY3,800/tonne EXWH from 12 November 2014, the data showed.

($1 = CNY6.21)

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