OUTLOOK ’14: Asia ethanolamine market bleak on weak demand, supply

By Felicia Loo

SINGAPORE (ICIS)–Asia’s ethanolamine prices may be subdued in 2014, owing to weak regional demand, while supply remains healthy given the abundance of ethylene oxide (EO) production in China, market sources said.

Drummed ethanolamine prices in China – the world’s second-biggest economy – fell in late November, compared with four weeks earlier, according to ICIS data.

Chinese domestic prices had succumbed to pressure from ample cargo availability within the local market, which in turn prompted some producers to operate their plants at half the capacity, sources said.

“It is an oversupplied situation and this will persist into the brand new year. There is more room for [amines] prices to fall,” said one market source in eastern China.

In the domestic Chinese market, monoethanolamine (MEA) prices were at yuan (CNY) 10,800-11,400/tonne ($1,773-1,872/tonne) EXWH (ex-warehouse) in the week ended 20 November, compared with CNY11,100-12,000/tonne EXWH four weeks ago, ICIS data showed.

The prices of diethanolamines (DEA) weakened to CNY11,300-11,600/tonne EXWH from 11,500-12,500/tonne EXWH over the same period, the data stated.

Meanwhile, triethanolamine prices largely fell to CNY12,000-12,300/tonne EXWH, compared with CNY12,000-13,000/tonne over the same period, according to ICIS data.

“The market is expecting EO prices to fall, given the oversupply of EO in China,” the source said.

EO is one of the most important indexes for end-users and traders to determine the price trend for China’s ethanolamines. The volatility of EO prices has led to major up and downs in ethanolamine prices, according to ICIS data.

Besides, with the Lunar New Year commencing in late January next year, some downstream factories are likely to shut down following 1 January 2014.

Manufacturing activity will only pick up after the Lunar New Year, market participants said.

Demand from downstream sectors, including surfactant, cement, glyphosate, pharmaceutical and metal/water treatment industries, normally improves after the Lunar New Year holiday.

The supply glut for EO will persist in 2014 owing to expanded capacity and that would further dampen ethanolamine prices, market sources said.

The nameplate capacity of EO in China expanded to 300,000 tonnes/year in 2013 from 200,000 tonnes/year in 2012, they added.

Meanwhile, the ethanolamine capacity in China remained stable at 400,000 tonnes/year.

“Already, the ethanolamine prices are sliding. It will be worse next year,” said one market participant.

The signs of a weakening Chinese economy are evident, which would likely to depress the downstream segments’ demand for ethanolamine, according to market participants.

Meanwhile, in southeast Asia, ethanolamine consumption will remain stagnant, as continuous high raw material costs are deterring buyers from procuring much of the amines, other sources said.

In this region, MEA and DEA are one of the key raw materials, together with palm oil derivatives, in making surfactants.

“The [amines] demand will be slow and weak [in southeast Asia] due to high palm [oil] prices and other raw materials,” said one source.

Separately, in India, the currency fluctuation and bearish economy are factors behind the likelihood of subdued buying needs for ethanolamines next year.

“The buying [activity] is expected to be cautious and the market will not be short of supply,” said one distributor.

($1 = CNY6.09)