Europe glycol ethers low demand likely to continue in February

LONDON (ICIS)–The outlook for European glycol ether demand is likely to remain slow in February largely due to ample supply.

European competition is healthy and, as such, sellers are struggling to hold on to margins for some grades.

Dow’s joint venture Sadara Chemical Company is scheduled to undergo a planned turnaround at Al Jubail, Saudi Arabia over three weeks starting in late January.

Though European buyers receive imports from this plant, the shutdown is not expected to have a major impact on market dynamics due to the current supply length.

Additionally, European production continues to run at a normal rate and no other planned turnarounds have been reported.

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January demand was low and spot prices fell by €30/tonne for both grades earlier in the month due to this as well as upstream ethylene losses.

One European producer resisted lowering spot prices to this level and found buying appetite dampened further as a result.

European butyl glycol (BG) spot prices were assessed as stable on 25 January at €1,070-1,120/tonne FD (free delivered) NWE (northwest Europe), and butyl di-glycol (BDG) was assessed at €1,350-1,420/tonne FD NWE.

As a result of decreases earlier this month, the margin between ethylene oxide (EO) and BDG has tightened.

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Meanwhile, the margin between EO and BG has increased, making it the more attractive grade for producers to sell at present.

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This has its drawbacks, however, due to the ongoing supply length of BG.

One trader mentioned expectations that BG spot prices could plummet next month if demand remains too low to meet current supply levels.

However, there are some expectations that demand could increase as the quarter progresses due to the paints and coatings industry peak demand season approaching in the second quarter.

This will rely on a number of factors, including European weather conditions.

If Europe faces another long winter, as it did in 2018, demand may not pick up until April or May.

Sellers targets for February will be announced next week and will likely be influenced by the upcoming ethylene settlement as well as glycol ether market dynamics.

A mixture of price targets between sellers are expected next month, depending on the starting point, with some looking to adjust their prices in order to remain competitive.

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

Pictured: Sadara Chemical’s facilities in Saudi Arabia; the producer is due to undergo maintenance
Source: Sadara Chemical Company

Focus article by Eashani Chavda