Weak demand may curb price uptrend in China amines market

Focus article by Felicia Loo

SINGAPORE (ICIS)–Domestic prices of monoethanolamines (MEA), diethanolamines (DEA) and triethanolamines (TEA) in China may expect curbs on their current  uptrend as consumption remains sluggish, market participants said.

Constricted supply has been driving up prices but end-users are being deterred from stocking up on inventory by uncertain demand outlook, they said.

The domestic prices of the homologues in China rose in knee-jerk reaction to the spike in values of feedstock ethylene oxide (EO) by yuan (CNY) 900/tonne during the week ended 22 April to CNY9,900/tonne EXWH (ex-warehouse).

An explosion at Yangzi Petrochemical’s production site in Jiangsu province last week has triggered concerns about tightening supply of EO and consequently, of amines.

“The price hike in the local ethanolamines markets is EO-driven. Supply tightness of the amines also drove up prices,” said one distributor in eastern China.

Local MEA discussions and trades were assessed at CNY10,500-11,000/tonne EXWH during the week ended 29 April, up by an average of CNY750/tonne from the previous week, according to ICIS.

For DEA, domestic prices were assessed CNY850/tonne higher from the previous week at CNY11,100-12,000/tonne EXWH, while TEA price discussions increased by CNY750/tonne to CNY11,000-11,500/tonne EXWH over the same period, the data showed.

“Granted, supply is really tight. But in stark reality, demand is weak. End-users are not keen to stock up as downstream demand is poor. They only procure cargoes on a need-to basis,” said another market participant.

During the week ended 29 April, EO prices in eastern China were assessed stable at CNY9,900/tonne EXWH. EO prices have been firming up since early March as supply of feedstock ethylene is being constrained by a slew of cracker turnarounds in China.

Demand wise, ethanolamines end-users have largely adopted a wait-and-see attitude and buying has been mediocre-to-weak amid soaring prices of the material.

TEA was facing the weakest demand across the homologues amid a slowing Chinese economy and dismal prospects in the construction, cement and property sector.

An overall weakness in the Chinese economy has dampened buying interest despite the current supply squeeze triggered by a slew of turnarounds, both in China and overseas.

The Chinese economy posted a first-quarter growth of 7.0%, the slowest annual pace recorded in six years, with the pace of expansion in industrial output decelerating to 6.4% from 8.7% in the same period last year.

Within China, Taiwanese producer Oriental Union Chemical Corp (OUCC) is expected to shut its 40,000 tonne/year ethanolamines plant at Yizheng in Jiangsu province for scheduled maintenance from 20 May. The turnaround will take place for three weeks, after which, OUCC is poised to commission its new 400,000 tonne/year EO plant at the site, a company source said.

AkzoNobel is operating its 100,000 tonne/year ethanolamines plant in Ningbo at Zhejiang province at half capacity, and may cut production further amid soaring feedstock costs, market sources said.

BASF-YPC Co Ltd was scheduled to shut its 76,000 tonne/year ethanolamines plant in Nanjing for up to 45 days from 1 April, market sources said. The company could not be reached for comment. The company shut its 740,000 tonne/year naphtha cracker at the site for maintenance on 1 April, as planned, with the facility expected to resume operations during 18-20 May, a company source said.

Meanwhile, South Korean producer Lotte Chemical has increased the run rates at its 50,000 tonne/year ethanolamines plant at Jiaxin city in China to 70% from 50-60% previously, to plug a domestic shortfall, a source close to the company said.

In Malaysia, PETRONAS Chemicals Group (PCG) plans to shut its 140,000 tonne/year EO unit and its 75,000 tonne/year ethanolamines unit in Kerteh for a month from 5 May, said a market source familiar with the situation.

In South Korea, KPX Green Chemical has taken off line its 25,000 tonne/year ethanolamines unit in Daesan. The scheduled turnaround started on 17 April and would last through the end of May, a company source said.

Upstream, ethylene was assessed at $1,400-1,450/tonne CFR NE Asia during the week ended 24 April, up from $1,230-1,270/tonne CFR NE Asia four weeks ago, with demand backed by the healthy performance of several downstream sectors while supply remains tight.

“The [amines] market is supported mainly by the spike in raw material prices. Fundamentally, demand is sluggish. The price gains are definitely scaring off buyers,” said one market participant.

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