OUTLOOK '18: US EG expected to remain steady at start of year

08 January 2018 16:00 Source:ICIS News

HOUSTON (ICIS)--US ethylene glycol (EG) contracts are expected to remain steady early next year as supply levels are healthy, while downstream demand is slow on seasonality.

Exports to Asia will likely keep the US markets balanced though and create a floor for prices.

Export opportunities to Asia are available, as prices there remain elevated due to higher crude and feedstock values, along with healthy demand.

This follows a mixed price trend in the fourth quarter of 2017. October saw prices move up due to constrained supply following Hurricane Harvey. However, prices softened after that as the markets recovered and the holiday season approached.

Demand for monoethylene glycol (MEG) is overall likely to remain slow, as the downstream polyethylene terephthalate (PET) sector is at a seasonal lull, while the antifreeze/deicing sector has been taking off with the onset of colder weather.

PET resin and bottle demand will pick up over the summer as the weather warms up and consumption of bottled beverages increases.

Mid-winter buying in the antifreeze sector is a possibility, but is dependent on the weather. If winter is particularly cold, MEG demand could see a spike in buying activity from antifreeze makers.

MEG and diethylene glycol (DEG) demand in downstream unsaturated polyester resins (UPRs) will depend on how well the economy performs, as UPRs are widely used in an assortment of products including sinks, shower stalls, pipes, tanks, boats, buses, trucks trailers and automobiles.

DEG demand in the downstream polyester polyols sector is expected to remain healthy. Polyester polyols are used in roofing insulation.

Demand could get a boost in 2018 from post-Hurricane Harvey reconstruction activity in the housing sector.

In comparison, triethylene glycol (TEG) demand is better, though demand during the winter season depends on the weather. A colder winter will mean stronger demand for TEG, which is used in natural gas dehydrogenation.

Thailand-based petrochemical manufacturer PTT Global Chemical Plc (PTTGC) intends to make the final investment decision for the construction of an ethane cracker and petrochemical site in Belmont, Ohio by early 2018.

The company has said previously that the planned ethane cracker complex will have an ethylene capacity of 1m tonnes/year and will produce 500,000 tonnes/year of MEG and 100,000 tonnes/year of ethylene oxide (EO).

Sasol is making steady progress at its US Lake Charles Chemicals Project (LCCP) in Louisiana, with start-up remaining on track for the second half of 2018 and despite delays and additional costs caused by Hurricane Harvey, according to the South Africa based chemicals and energy major.

LCCP consists of a 1.5m tonne/year ethane cracker, as well as six downstream chemical production facilities, including a 300,000 tonne/year crude EO unit.

Uncertainty remains regarding the future of Mossi & Ghisolfi's (M&G) PET plant under construction in Corpus Christi, Texas, or its plant in Apple Grove, West Virginia, which ceased operations in late October.

A US subsidiary of M&G filed a motion in bankruptcy court to begin the sales process for some of its assets in the US, including its PET plants in Texas and West Virginia.

It is possible that the MEG that was allocated for its plants in the US will end up being exported to other regions, as all of it cannot be consumed domestically.

Major glycol producers in the US include Eastman Chemical, Huntsman, Indorama Ventures, LyondellBasell, Nan Ya Plastics, Shell Chemical and MEGlobal.

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By Tarun Raizada