E Asia 2-EH at 19-month high; tight supply to keep prices firm

SINGAPORE (ICIS)–Spot 2-ethylhexanol (2-EH) prices in east Asia hit a 19-month high and are likely to be supported at these levels by tight supply, market sources said on Tuesday.|

On 17 February, prices were assessed at $1,000/tonne CFR (cost and freight) east Asia, up $10/tonne from the previous week. Prices have been on a two-month uptrend, with cumulative gains pegged at 17.3% from 2 December 2016, according to ICIS data.

Most producers in north and southeast Asia were not able to make regular spot offers due to recent planned and unplanned shutdowns at their facilities, market sources said.

“Between February [and] March, I don’t think there will be too many exports from Japan. One Japanese producer can only export sometime in May,” said one trader.

Domestic demand for 2-EH in Japan was said to be stable.

A northeast Asian producer refrained from making spot offers last week, citing that its inventory remained low.

Demand for 2-EH is at normal levels currently, and typically peaks in March and April.

Amid the tight supply in Asia, buyers have been trying to secure deep-sea cargoes. But deep-sea cargoes are also in short supply, as upcoming cracker turnarounds in Europe will limit production of propylene, a key feedstock of 2-EH, market sources said.

Prices of feedstock propylene in the Asian market are also on the rise, which is another key factor driving up 2-EH prices in the region.

Producers of 2-EH are facing strong cost pressure as spot propylene prices in southeast (SE) Asia surged 50.4% over a two-month period.

Propylene spot prices were assessed at $1,030/tonne CFR SE Asia on 17 February according to ICIS data.

Some 2-EH producers were forced to reduce production to focus solely on contractual obligations, putting the squeeze on an already tight spot market.

Meanwhile, the downstream dioctyl phthalate (DOP) market has also been strong since late last year, providing producers in northeast Asia the incentive to channel more 2-EH into captive use, further reducing spot volumes available to the merchant market.

DOP gained some 13.2% since the end of October 2016 in the CFR east Asia spot market, according to ICIS data.

Focus article by Joson Ng

Picture (top): Container port in Qingdao, China (Source: REX/Shutterstock)