Updated to mid-November 2009
Asian market review by Jeremiah Chan, ICIS pricing
Monoethylene glycol (MEG) spot prices in Asia experienced a slight downturn from August to September, as fears that additional capacities in the Middle East and a slump in Q4 downstream demand could weigh on prices. Prices fell from around $740-750/tonne CFR (cost and freight) China in mid-August to around $660-665/tonne CFR China prior to the extended China holidays.
However, stronger than expected post-October holiday demand from the downstream polyester sector pushed up prices. The market has been rendered extremely sensitive to any bullish impetus due to prior efforts to reduce inventory levels to a minimum, with prices surging to $720-730/tonne CFR CMP (China Main Port) by end-October.
The bull run continued into November, with prices breaking through the psychologically important $800/tonne CFR CMP mark. Discussions in mid-November were hovering at around $820/tonne CFR CMP and poised to rise further.
European market review by Caroline Howard, ICIS pricing
European MEG contract discussions from August to November were difficult with neither buyers nor sellers particularly satisfied with the results, they said.
Contract prices moved up by €40/tonne in August to €615/tonne FD (free delivered) NWE (northwest Europe). Bulk spot MEG prices soared, reaching the mid €600s/tonne CIF (cost, insurance and freight) NWE. Supply was tight because domestic operating rates had been turned down and importers were more attracted to firming Asian prices. Production costs also rose with upstream ethylene increasing by €10/tonne to €795/tonne.
September prices continued to rise, with MEG contracts jumping up by €55/tonne to €670/tonne alongside a €80/tonne hike in the cost of ethylene to €875/tonne. Spot MEG, however, bucked the trend and began its downward journey with more business concluded in the €500s/tonne, as Asia too, started to fall.
There was a brief surge in Asian prices following the Chinese holiday in October. Subsequent lower prices there helped to pull down European MEG spot and contract numbers further. After lengthy discussions, the October contract eventually settled at €670/tonne, down by €30/tonne, while bulk spot slipped to as low as €500/tonne. Ethylene also experienced a drop of €27/tonne to €833/tonne.
November MEG began with no real view of where contracts would settle and spot remained in the low €500s/tonne.
US market review by Gene Lockard, ICIS pricing
The US ethylene glycol (EG) market strengthened early in the mid-August to mid-November period, with actual selling prices for industrial-grade EG (EGI) reaching about 40 cents/lb ($882/tonne, €591/tonne) FOB, up from prices in the mid-30s cents/lb late in the preceding reporting period. In November, however, EG prices slid to about 37 cents/lb.
Steady ethylene prices and snug supply provided a support floor for the EG market early in the period. Antifreeze demand also increased, exacerbating the tight supply situation. However, later in the period, demand waned, in part because of the upcoming end-of-year holidays and the tax on inventory. That led to the November price cut.
The EG outlook through year’s end is for prices to continue weakening. However, feedstock ethylene prices were only a few cents/lb under the price of EG, thus making significant erosion of EG prices unlikely before year’s end.
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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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