Ethylene Oxide Prices Rise in the US and European Markets Amidst Elevated Feedstock Costs

Ethylene Oxide prices have continued to rise across the North American and European markets during the final week of September 2023. The volatile energy prices and high raw material costs have supported the prices to follow the uptrend in the regional market. However, demand for Ethylene Oxide from the downstream industry has become weak, and downstream procurements were mainly based on a need-on-demand basis. Market players reported spot transactions were also average, and it was insufficient to drive the prices of Ethylene Oxide at the lower end.

According to ChemAnalyst's latest database, prices of Ethylene Oxide have increased by USD 30/MT in the German market. The feedstock Ethylene prices have continued to rise over the past couple of weeks amid strong Naphtha prices, resulting in the high production cost of Ethylene Oxide in the domestic market. Conversely, international crude oil prices have increased amid a supply deficit caused by extended production cuts from Saudi Arabia and Russia. Brent crude oil prices have remained above the $ 90/barrel mark for several weeks, further escalating the production cost of several commodities, including Ethylene Oxide. However, feedstock Ethylene prices have unexpectedly declined this week, and it is anticipated that the production cost of Ethylene Oxide might ease in the forthcoming weeks. On the demand front, the demand for Ethylene Oxide from the downstream Monoethylene Glycol industry has slowly improved in the domestic market. However, inquiries from other sectors, such as Ethoxylates, have remained tepid as Western markets were grappling with economic contractions and concerns of a looming recession, which weakened the buying sentiments of consumers. In addition, manufacturing firms were operating at reduced rates as manufacturers were cautious to build up excessive inventories in the domestic market. Despite this, the level of inventories was sufficient to cater to overall downstream demand. As a ripple effect, Ethylene Oxide FD Hamburg prices were settled at USD 1500/MT during the week ending 29th September.

On the other hand, in the US market, Ethylene Oxide prices have witnessed a bullish rally due to tight supply following the July Dow Plaquemine incident. The plant is expected to be out for another 6 months, as reported by market players. Furthermore, the recent uptick in the feedstock Ethylene prices has raised the production cost of Ethylene Oxide in the domestic market. In addition, the ongoing labor dispute in Australia's major LNG facilities has caused a drop in Natural gas shipments, resulting in a substantial increase in Natural gas prices in the US. However, demand from the downstream Monoethylene glycol and Ethoxylates industry has remained tepid as end-user consumption has not yet improved in the domestic market. Therefore, Ethylene Oxide FOB US Gulf (contract) prices were assessed at USD 1360/MT with a week-on-week increment of 1.5% during the same time frame.

As per ChemAnalyst estimation, prices of Ethylene Oxide are anticipated to drop in the US and European markets due to further expectations of a decline in demand from the downstream Ethoxylates and the Monoethylene Glycol industry. In addition, feedstock Ethylene prices will likely fall amid weak demand from the other terminal market.