China domestic amines prices on decline amid crude collapse

Focus article by Felicia Loo

SINGAPORE (ICIS)–China’s domestic prices of ethanolamines may continue falling in the wake of a collapse in oil prices and declining values of naphtha and ethylene, market participants said on Thursday.

Discussions and trades for monoethanolamines (MEA) were quoted in the range of yuan (CNY) 10,000-10,400/tonne ($1,634-1,699/tonne) EXWH (ex-warehouse) during the week ended 22 October, down by CNY100-200/tonne in the previous week, according to ICIS.

Local prices of diethanolamines (DEA) weakened by CNY200/tonne at the lower end of the  range to CNY10,500-11,300/tonne EXWH over the same period, ICIS data showed.

Meanwhile, price discussions for triethanolamines (TEA) were unchanged at CNY11,600-11,800/tonne EXWH over the same period. TEA prices were overall weaker compared with CNY12,000-12,500/tonne four weeks ago.

“The market is expecting prices to slide further given what happened to crude and ethylene,” said one participant.

Crude prices were in choppy trading this week, after Brent crude slumped to four-year low levels last week.

NYMEX WTI crude futures fell towards $80/bbl at the close of US trade on Thursday in response to the weekly supply statistics from the US Energy Information Administration (EIA) that showed the second consecutive large build in crude oil inventories.

On the first session for the December crude contract as spot month, the market also responded to a sell-off in the stock market and the US dollar rising against the euro.

The EIA report also showed gasoline stocks falling more than expected and distillate inventories rising contrary to expectations of a drawdown. 

Owing to the crude price collapse,  market participants in the amines market were wary in committing to trades.

The decline in upstream naphtha values also weighed on the downstream markets, as ethylene prices tumbled last week.

Ethylene spot prices in northeast Asia fell by $70-80/tonne during the week ended 17 October to $1,360-1,400/tonne CFR (cost and freight) NE (northeast) Asia, ICIS data showed.

Spot ethylene prices in southeast Asia plunged by $85/tonne to $1,340-1,360/tonne CFR SE (southeast) Asia over the same period, it stated.

A slowing Chinese economy was a cause for the bear market, with most market participants expecting demand weakness to deepen further.

China’s economy expanded at a slower annual pace of 7.3% in the third quarter, compared with the 7.5% increase posted in the previous three months.

On a quarter-on-quarter basis, the world’s second biggest economy posted a 1.9% growth.

In the first nine months of 2014, China’s GDP growth averaged 7.4%, lower than the official full-year target of 7.5%, data from the country’s National Bureau of Statistics (NBS) showed.

Meanwhile, producers will be more enticed to generate higher ethanolamines output instead of monoethylene glycol (MEG), the prices of which suffered a sharp decline.

MEG prices fell by $37-38/tonne to $784-804/tonnne CFR CMP (China Main Port) during the week ended 17 October, ICIS data showed.

Meanwhile, DEA cargoes of Middle Eastern origin were booked at softer level of $1,350-1,420/tonne CIF (cost, insurance and freight) China for delivery in October.

Selling ideas for Mexican TEA were quoted at $1,550/tonne CIF China, against buying indications at $1,510/tonne CIF China.

Buyers were not keen to take up the Mexican offers amid a bear market.

The pressure on the Chinese producers is felt keenly as feedstock ethylene oxide (EO) prices remain unchanged especially as a major EO plant has been taken offline.

China’s Shanghai Jinshan Petrochemical shut its 200,000 tonne/year EO unit for routine maintenance from 22 October, the market participants said.

The turnaround of the Sinopec-owned facility will last 40 days, they said.

($1 = CNY6.12)

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