OUTLOOK '18: Europe ethanolamines demand to grow in line with GDP, strongest growth for MEA

Source: ICIS News


LONDON (ICIS)--European ethanolamine demand is expected to grow in line with GDP in 2018, with the largest growth likely for mono-ethanolamines (MEA) because of strong pulls from multiple end sectors.

Underlying demand has been healthy in Europe during 2017, buoyed by economic recovery and there is some expectation that this positive trend in ethanolamines demand in Europe is to continue into 2018, provided that economic conditions in Europe remain favourable.

Out of all the homologues, sources pinpointed mono-ethanolamines (MEA) as having the strongest growth potential in 2018, driven by several end sectors.

Some sources said that MEA demand from the downstream liquid detergent sector is robust in 2017 and they expect demand for MEA into this sector to be stronger in 2018.

One ethanolamine producer said it has indications that volume requirements for MEA in 2018 are likely to rise significantly from some main liquid detergent players, believed to be because of some re-formulation reasons.

However, the latter has not been confirmed in the wider market at the time of writing.

Other players maintain that there is strong growth potential for MEA into the liquid detergent sector, which they suggest may be due to a stronger trend towards liquid detergent applications over powder forms.

Growth potential for MEA is likely to come from the downstream shale gas drilling sector, provided that crude values and economics are supportive of this.

One producer said it has seen an increased buying interest and tenders for 2018 from the shale gas/oil drilling applications, which it said it has not seen for some time.

Sources also suggested that MEA demand is likely to see ongoing strong pulls from the derivative ethyleneamines market, particularly into the agrochemical sector, although one buyer suggested that growth potential was likely to be largest for a main MEA related agrochemical application in emerging markets such as India.

There is some expectations that the Dow/Saudi Aramco joint venture Sadara, which came on stream in mid-2017, will provide greater supply flexibility for one supplier during 2018.

“There will be more MEA consumption compared to tri-ethanolamines (TEA) and di-ethanolamines (DEA). DEA is the most difficult one. The balance will be a difficult thing for producers to manage, It will be an interesting year,” said a trader.

It went on to say that while ethanolamine producers have some flexibility to adjust ratios to some extent, depending on homologue performance, it acknowledged that any room to manoeuvre is limited.

One buyer said it expects a balanced market for TEA in Europe in 2018, estimating that demand for TEA is likely to be healthy and grow in line with GDP, but it suggested that this is likely to be sufficiently aligned with capacities in Europe and the new Sadara capacity.

While the future of glyphosate, an outlet for DEA, in the EU has been uncertain for most of this year, the decision to re-approve glyphosate in the EU for the next five years was finally reached in November.

This came after a positive opinion about the project was received from the Appeal Committee regarding the Commission’s proposal to renew glyphosate for five years and a qualified majority was also received from member states, who voted in favour of the Commission’s proposed renewal.

Ethanolamine players are mindful, however, that while a decision had been agreed on glyphosate at EU level for the next five years, ethanolamine players are keen to see how this will play out in the individual member states.

Looking to the first quarter, initial discussions suggest a firmer price sentiment for cost-related reasons and based on expected restocking activity, post-holidays.

There is some talk of an interest among certain players in favour of more formula-related, rather than freely-negotiated, pricing in 2018, in view of the price rises during the third and fourth quarters of 2017 on supply constraints.

Ethanolamines are used to make personal care products, detergents and herbicides.