Dow US Louisiana EO unit fire could cause significant shortages of MEA, DEA, TEA

HOUSTON (ICIS)–As a result of the recent fire at Dow’s Plaquemine, Louisiana, ethylene oxide (EO) unit, and subsequent force majeure on EO, significant shortages for EO derivatives could occur.

According to market participants, repairs on the EO unit could take as long as six months to finish. As a result of this, EO derivative supply shortages could be significant, specifically for ethanolamines.

The EO unit transports EO via pipeline to an ethanolamines producer. This ethanolamines capacity accounts for roughly 25% of monoethanolamines, (MEA), diethanolamines (DEA) and triethanolamines (TEA) capacity in the US, according to the ICIS Supply & Demand Database. With demand solid for fracking and MEA triazine for sulphur scavengers, supply shortages could be imminent for the market.

However, downstream surfactants supply is not expected to be negatively impacted by this fire and subsequent production disruption. Surfactants demand is down 10-20% year over year, according to market participants.

The majority of EO contracts are formula-based, and price movement comprises 80% of the change in the ethylene price and an additional conversion fee, or adder.

Like ethylene, EO contracts are settled at the beginning of the month for the previous month’s price.

EO is largely used to make monoethylene glycol (MEG), a key feedstock for polyethylene terephthalate (PET). EO’s secondary outlet is in surfactants.

Other EO derivatives include glycol ethers, polyols for polyurethane systems, polyethylene glycols and polyalkylene glycols.

EO producers in the US include BASF, Dow, Eastman Chemical, Formosa, Indorama Ventures, Lotte Chemical, LyondellBasell, Sasol and Shell Chemical.