EPCA '18: Europe glycol ethers market uncertainty led to low demand in Sept

Source: ICIS News

2018/10/11

VIENNA (ICIS)--European glycol ether demand missed expectations for the September uptick with sources suggesting uncertainty around global market dynamics could be the main cause.

“Demand has been low for the past two months”, said a European producer on the sidelines of the 52nd annual European Petrochemical Association (EPCA) meeting.

Market conditions remain balanced, with butyl di-glycol (BDG) tighter in comparison to butyl glycol (BG).

Glycol ether supply was mostly stable for the third quarter with European production maintaining smooth operations.

Following the traditional summer lull players expected increased demand in September, which did not meet expectations.

One source suggested that political tensions and changes in trade regulations could have contributed to the lack of buying appetite in recent months.

“[There is a] lack of trust, and uncertainty in the market regarding the US-China tariffs.”

The increased anti-dumping duties (ADDs) on glycol ether imports of US and European origin to China caused a stir in the market earlier this year.

From 12 April BG and BDG of European origin is subject to 10.8-43.5% ADD rates, while US product is subject to 37.5-75.5% ADD rates.

In April, Dow Chemical stated it would shift its usual trade flows in order to avoid paying the highest tax rate of 75.5% on US exports to China.

Since then, European players have noted stability in the market, with little impact from the increased ADDs and no major disruption to trade flows.

In China, BG spot prices spiked following the announcement, but gradually fell between May and August.

For the European market it has been business as usual, however the threat of escalating trade tensions remains on the mind of market players.

European sellers targeted a mixture of rollovers and increases for October spot prices.

Though the European ethylene contract reference price for October firmed by €10/tonne, so far sellers have not been able to pass on this increase to the glycol ether market.

Prices remain stable at €1,150-1,200/tonne for BG, and €1,420-1,480/tonne for BDG, on a FD (free delivered) NWE (northwest Europe) basis.

“As we targeted a rollover we saw demand pick up this month”, said a producer.

There have also been concerns over fourth-quarter supply as a number of ethylene oxide (EO) turnarounds are scheduled to take place.

INEOS’s planned maintenance on glycol ethers and EO has begun at Lavera, France, according to sources.

The producer has lifted its sales controls which were in place last month.

European producer Sasol is also said to be carrying out planned maintenance on glycol ethers and EO at Marl, Germany.

At present, European glycol ether market conditions remain balanced, however players are tentative for the remainder of the fourth quarter.

Divided in E-series and P-series, depending on whether they are made from EO or propylene oxide (PO), glycol ethers are mainly used as a solvent for domestic and industrial applications such as paints and coatings.

The annual EPCA meeting ran in Vienna from 8-10 October.

Focus article by Eashani Chavda