Europe glycol ethers peak demand season has a slow start in Q2

LONDON (ICIS)–The second quarter is traditionally peak demand season for both European E-series and P-series glycol ethers, but demand this year has not yet reached sellers’ expectations and some players wonder whether it will improve later in the period.

Ethylene glycol ethers (EGE) and propylene glycol ethers (PGE) demand has so far been too low to meet sellers’ targeted increases in spot prices during the second-quarter.

EGE market prices have been stable to soft over the last two months, while PGE prices have remained flat.

Availability has improved in both series in comparison to the first quarter.

The EGE market was tight at the start of the year, especially for butyl di-glycol (BDG), while supply constraints at a number of producers led to price increases during the first quarter.

EGE imports from the US were expected to be impacted by the force majeure declared by LyondellBasell in late January. Though the force majeure was lifted in early April, European players noted the market was not greatly impacted during the outage.

Meanwhile fewer imports from the Middle East were said to be reaching Europe in the first quarter, according to sources.

Dow Chemical imposed sales allocations for EGE between February and March.

Additionally, another European producer conducted a short planned maintenance in southern Europe in late March.

A third European producer was said to have supply constraints during the first quarter, according to sources.

Meanwhile, the European PGE market remained balanced with healthy supply during the first quarter.

European availability was undisturbed until Dow imposed sales allocations, due to shortages of propylene oxide (PO) which led to reduced PGE production rates between March and April.

A second European producer faced unplanned supply issues during March, and continued to build up its inventories in April once the issues were resolved.

A third European producer was said to be on sales allocations for PGE in April, according to market sources, however the producer refused to comment on its operations.

Currently, P-series supply remains balanced while E-series is balanced-to-snug, with BDG tighter in comparison to butyl glycol (BG).

Demand for both series have been steady or lacklustre, depending on the account. Some sellers described demand as healthy, whilst others note that it has not been as strong as last year when the market experienced volatility due to a number of outages which created shortages.

Sellers expected an uptick in demand in April, due to seasonality, however targeted spot price increases faced a backlash from the buy side of the market.

A number of distributors said they were forced to lower PGE prices, particularly for methoxy propanol acetate (PMA) in order to encourage sales.

However, the majority of the market settled at rollovers for PGE in April, though some producers achieved double-digit increases this was not reflected in the wider market. Methoxy propanol (PM) was assessed at €1,440-1,490/tonne, while PMA was valued at €1,790-1,830/tonne FD (free delivered) NWE (northwest Europe).

EGE April spot prices were stable to soft, due to improved availability and steady demand. BG was assessed at €1,120-1,180/tonne, and BDG at €1,390-1,480/tonne FD NWE.

Demand is expected to increase as the quarter progresses, particularly from the paint and coatings industry, though not at the level originally expected by sellers.

Upstream ethylene settled at an increase of €20/tonne for the May contract reference price, while propylene settled at an increase of €25/tonne. It is currently unclear whether this will pass through to glycol ethers given the current supply and demand dynamics.

At present, a mixture of rollovers and increases have been quoted by producers. Further feedback is pending.

Divided in E-series and P-series, depending on whether they are made from ethylene oxide (EO) or propylene oxide (PO), glycol ethers are mainly used as a solvent for domestic and industrial applications such as paints and coatings.

Pictured: Detergents in a supermarket, Germany (Source: Helmut Meyer zur Capellen / imageBROKER/REX/Shutterstock)

Focus article by Eashani Chavda