Ethylene Oxide Prices Increase in the US and Asia While Remain Steady in Europe

Prices of Ethylene Oxide have showcased an increasing pattern across the US and Asian markets during the second week of August 2023 on account of the rise in upstream prices. At the same time, Ethylene Oxide prices have shown downward stagnancy in the European market backed by stable feedstock prices. Furthermore, the Chemical industry faced a challenging second quarter as it struggled with the impact of mounting inflation. Eurozone demand for chemicals was hampered while China strained to stimulate its economy. As a result, several companies within the industry have restored to plant shutdown and cost-cutting measures despite declining sales and earnings.

The ChemAnalyst database has shown that the prices of Ethylene Oxide have increased by USD 15/MT in the Chinese market. The cost pressure from feedstock Ethylene was sufficient as its prices settled on the higher end, which in turn led to high prices of Ethylene Oxide in the domestic market. However, demand for Ethylene Oxide from the downstream Ethoxylates, which is the raw material for surfactants as well as from Monoethylene Glycol (PET), remained bleak amidst sluggish buying trends, but it did not lead to a decrease in the price realizations of Ethylene Oxide in the domestic market. Furthermore, there are concerns over China's severe weather situation, which diminished the emerging demand recovery in the domestic markets. The nation has seen a recent situation of synchronized floods and droughts, resulting in power outages, with fears of manufacturing operations being hit. Therefore, Ethylene Oxide  Ex- Shanghai prices were settled at USD 860/MT during the week ending 11th August.

Similarly, Ethylene Oxide prices have also settled on the higher end in the US market as demand from the downstream Ethanolamine has increased in the domestic market. Although, demand from the other sectors, including Ethoxylates and Monoethylene glycol industries, has remained inactive in the domestic market. Furthermore, the availability of finished stock of Ethylene Oxide remained inadequate amidst the closure of the Dow Chemical plant. On the upstream front, feedstock Ethylene prices have also increased, which led to a rise in the production cost of Ethylene Oxide in the domestic market. Thus, Ethylene Oxide  FOB US Gulf prices were assessed at USD 1230/MT with a week-on-week increment of 1.2%.

On the other side, the financial results of the Q2 released by one of the leading manufacturers of Ethylene Oxide, Dow Chemicals, stated that "net sales were $11.4 billion, down 27% versus the year-ago period. All operating segments' decline reflected lower demand and prices due to slower macroeconomic activity. Sales were down 4% successively, as volume gains were more than offset by lower local prices."

However, Ethylene Oxide prices have shown stagnancy, with a marginal decrement of 0.7% in the European market. The inquiries from the downstream Ethoxylates and MEG industries have remained subdued as consumers are focused on survival and avoiding discretionary spending on manufactured goods. At the same time, the inventories were sufficient to cater to the overall downstream demand. On the other side, BASF, a major Ethylene Oxide producer, reported its Q2 sales in the Chemical segment decreased by 38.4% compared with the prior-year period and amounted to €2.7 billion. The decline in the prices was attributed to lower raw material prices, massive excess of supply, and weaker demand, leading to lower prices in both operating divisions. In addition, EBIT before special items declined by 76.3% to reach €202 million.

According to ChemAnalyst, Ethylene Oxide prices are anticipated to increase but at a slower pace across the Global market on account of the rise in upstream values. Although, demand from the downstream sectors is anticipated to remain sluggish in the upcoming weeks.