OUTLOOK ’18: Asia ethanolamines seen buoyed by upstream, short supply in Q1

27 December 2017 03:26 Source:ICIS News

SINGAPORE (ICIS)--Asia ethanolamines markets could be buoyed by strong upstream ethylene and ethylene oxide (EO) values, as well as short supply, in the first quarter of 2018.

Recent spot prices of monoethanolamines (MEA), diethanolamines (DEA) and triethanolamines (TEA) for drummed cargoes have been on the rise across Asia on the back of rising feedstock prices.

MEA import prices in China were at $1,175/tonne CIF (cost, insurance & freight) China on 20 December, 31% higher than the $900/tonne CIF China seen in July.

Domestically, spot prices were at yuan (CNY) 11,100/tonne EXWH (ex-warehouse) in late December, compared with the CNY 8,550/tonne EXWH in July, ICIS data showed.

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Likewise for India, MEA prices were assessed at $1,265/tonne CIF India on 20 December, marking a 17% climb from the half-year low of $1,080/tonne CIF India in early August, according to ICIS data.

In southeast (SE) Asia, MEA prices rose 13% to $1,280/tonne CIF SE Asia on 20 December, from the half-year low of $1,135/tonne CIF SE Asia in July, according to ICIS data.

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These increases tracked strong gains in upstream markets such as ethylene and EO since the July period.

Ethylene spot prices increased to $1,335/tonne CFR NE Asia on 15 December, around $400/tonne higher than the prices for the same region in late June, according to ICIS data.

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Downstream EO prices remained at an 8-month high of CNY 10,600-10,800/tonne EXWH, according to data compiled by ICIS on 20 December. Between March and October, spot EO were transacted at lower prices in the range of CNY 8,600-9,800/tonne EXWH, according to ICIS data.

Amid the EO supply tightness and a healthy demand for other EO derivatives, sellers and buyers were of the view that amines supply could stay restricted in early 2018 especially if feedstock costs climb further.

Additionally, some recent planned shutdowns and unplanned outages, as well as low operating rates in the region may pose as challenges for various ethanolamines market players in the new year.

Producers expect to focus on fulfilling backlogs and current orders, and increasing inventory levels for the time being. On the buying side, consumers may find it slightly harder to secure spot volumes in the near term.

Sadara's new plant in the Middle East should provide some gradual downward pressure on the market, sources said.

New volumes have been transacted in Asia, especially in the northeast, according to market players.

Some sources expected to see some impact on spot prices in late 2017 following the plant’s start-up but said that the actual impact seemed to be limited thus far.

Separately, the more balanced situation in Europe may indirectly weigh down global spot prices in time to come, following Dow's lifting of its force majeure on ethanolamines in early November.

On the other hand, overall buying interest is likely to be stable in Asia, although there may be fluctuations prior to holidays, such as the Lunar New Year break in February.

“I would probably continue getting similar amounts as before, to cater to my customers’ orders,” a buyer in southeast Asia said.

“Demand should be reasonable in early 2018, given that buying activity was quite strong in December, a time [at which] we normally expect the market to be quieter,” a trader in northeast Asia said.

Meanwhile, certain factors may cause the amines markets to remain slightly stifled in 2018, some participants said.

In China, an anti-dumping duty (ADD) investigation commenced in early November and is expected to last for about a year. The probe is understood to be conducted on imports from Malaysia, Saudi Arabia, Thailand and the US.

In India, the local currency ban and implementation of the Goods and Services Tax (GST) could keep buying interest weak, amid cautious market sentiment.

Ethanolamines are used to make personal care and household products, detergents and herbicides.

By Kheng Wee Loy