AFPM ’14: Sellers push for higher DEG, but MEG fate uncertain

29 March 2014 22:00 Source:ICIS News

HOUSTON (ICIS)--Some producers are pushing for contract price increases for US diethylene glycol (DEG) in April but did not announce what they will do with monoethylene glycol (MEG) prices for next month.

Market sources said that strong demand and continued tightness brought on by that demand are drivers for the near-term upswing in the US DEG market heading into this year’s International Petrochemical Conference (IPC).

Strong and stable demand from China’s solar-panel cutting solution and unsaturated polyester resins (UPR) sectors have contributed to tightness in the US DEG market as US sellers took advantage of a big arbitrage window in late 2013 and sold the material into China, where spot prices were higher at the time.

Demand from China pulled large quantities of DEG from the US market, sources said.

In addition, the start of spring and the onset of warmer weather mean a reinvigoration of the downstream housing and construction sectors in the US, which is expected to raise demand for DEG.

The fate of MEG contract pricing is uncertain at this time, following a rollover in March.

However, demand in downstream polyethylene terephthalate (PET) is expected to strengthen as that market ramps up for its peak season in March to August.

Meanwhile, demand for MEG in de-icing and anti-freeze applications in Canada is still strong as the cold weather persists there, said a market source.

The US MEG market is expected to tighten as Huntsman begins a six-week turnaround on its ethylene oxide (EO) operations at its Port Neches plant in Texas at the end of this month. The turnaround will significantly reduce output of its ethylene glycol (EG) as well as all of its EO derivatives.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place 30 March-1 April in San Antonio, Texas.

By Feliza Mirasol