China amines prices fall with plunging feedstock EO

SINGAPORE (ICIS)–Amines prices in the yuan-denominated market in China tumbled on sharp losses in feedstock ethylene oxide (EO) prices, and could continue to fall, if buying remains slow, market participants said on Wednesday.

Monoethanolamies (MEA) were heard discussed east China at least CNY 700/tonne lower than a week ago, when this grade was assessed in the CNY 11,000-11,500/tonne EXWH range, according to ICIS data.

Diethanolamines (DEA) may lose even more grounds than MEA, given lower off-take from the usual DEA outlets like the pesticide sector where downstream demand has been significantly weaker in recent times than say the ethyleneamines sector, which is a major MEA application. 

DEA prices may dive below CNY 10,000/tonne EXWH this week, market participants said. Based on ICIS data, DEA settled on 22 March in the CNY 10,700-11,200/tonne EXWH range.

Recent EO slump is a key factor weighing down Chinese amines prices.

EO lost 15% within two weeks, closing at CNY 9,500/tonne ex-warehouse (EXWH) on 29 March, from a height of CNY 11,100/tonne on 15 March. 

EO prices may not have hit the floor yet, market sources said, considering that upstream values in the ethylene market are still declining.

In the event that EO suffers another round of cuts, amines prices in China are expected to dive further south.

Such a bearish pricing outlook in turn squeezes current demand for amines in China, as amines end-users continued to stay in the sidelines, holding back purchases in the hope that they would get to buy amines at even cheaper prices later.

The tepid off-take rate is taking a toll on amines makers in China.

Faced with rising inventories amid poor sales, a China-based trader said that amines producer may have to take more “drastic measures”, including production cuts and even suspension, to minimise surplus volumes and cut losses.

Indeed, there was talk among some market players that a 50,000 tonne/year plant in Jiaxing, China, may consider moving forward its scheduled maintenance shutdown from late April to earlier in the month.

The same plant had already started to cut operating rate in the meantime, from 80-90% to 60% of capacity in the last few days, according to sources familiar with the situation there.

Focus article by Ai Teng Lim