2-EHN Imports From Asia Likely to Go Expensive for the USA Amidst High Demand

The market situation for 2-Ethylhexyl Nitrate (2-EHN) is expected to witness a bullish situation in the US market in November 2023, despite prices of feedstocks and 2-Ethylhexyanol (2-EO) being expected to witness a bearish situation in the exporting Southeast Asian markets. Commercial Crude Oil stock climbed up to 8.9 million barrels as demand for gasoline declined by 4 million barrels for the week ending November 27, 2023. Current refinery run rates are recorded at 3% below normal, further indicating a subdued market for 2-EHN.

Prices of 2-EHN are expected to witness an increment of approximately 1.2% in November in the importing US market due to a healthy demand from another South Korean market, which consequently inclined the prices of 2-EHN in the US market despite a moderate demand.

The prime reason for the increase in the prices of 2-EHN by more than 1% in the South Korean market is primarily due to increased run rates of refineries in the 4th quarter of 2023, where this product finds its prime application. South Korean refineries SK Innovation plans to increase the current run rates of its refineries by 4% as compared to the 3rd quarter, further increasing the demand from refineries. This demand for 2-EHN is further supported by anticipation of jet fuel outperforming other types of diesel-based fuels as the service sectors across the East Asian markets, namely Singapore, Seoul, and Tokyo, are anticipated to witness a resurgence as travel demand increases further, adding pressure to the existing inventories of 2-EHN. Furthermore, South Korea's national airline, Korean Air, indicated plans for expansion of its operations across China, Japan, North America, and Australia to meet the resurging travel demand because of the festive holidays.

Currently, SK Innovation has no plans to shut down its Crude Distillation Unit (CDU), which indicates that demand for 2-EHN is unlikely to witness a softer downturn during the festive holidays. Moreover, run rates of refineries of SK innovation averaged 81% in Ulsan and 86% at Incheon complexes, up from 77% and 81%. Furthermore, SK Innovation commenced the production of Crude Oil at China's Block 17-03, which would pump up to 29500 b/d, further increasing the demand for 2-EHN.

Overall, prices of 2-EHN are expected to witness a bullish market situation in November and December as demand from refineries across South Korea is not likely to subdue. With the current financial conditions of SK Innovation remaining strong, the positive outlook may extend towards the 1st quarter of 2024, with the production of crude oil also anticipated to remain constant from the Block 17-03 site.