Ethylene Oxide prices have been dragged down across the European market during the last week of November 2023. The European market has been grappling with persistently sluggish market conditions and declining raw material prices. With international crude oil prices experiencing volatility and subdued demand, several commodities, including Ethylene Oxide, are facing immense pressure.

According to ChemAnalyst's latest database, Ethylene Oxide prices have declined by USD 30/MT in the German market. Since the beginning of the fourth quarter, the international crude oil prices have been wavering, with the chemical industry feeling the effect of this instability. On 23 November, Brent crude oil futures dropped by 0.93% to $81.12 per barrel, representing a decline of $0.76. The recent fall in oil prices can be attributed to the delay in the OPEC+ meeting and the divergence of opinions among member countries. On the other side, market participants reported that the feedstock Ethylene prices have experienced a downward trend, resulting in the low manufacturing cost of Ethylene Oxide in the domestic market, leading to weak market sentiments of Ethylene Oxide among the manufacturers.

Apart from this, manufacturing firms have been operating at low rates since the third quarter amid weak consumption of Ethylene oxide from the downstream industry. Operating rates might be expected to improve in the second half of Q1 of 2024 due to further expectations of improving downstream demand. On the supply side, current material availability was enough to cater to overall downstream demand, and market players in the given time frame reported no supply chain bottlenecks or port congestion.

On the demand front, the inquiries from downstream Ethoxylates and Monoethylene Glycol industries have remained bearish within the domestic market amid dull buying trends among end-users. The spot market transactions of Ethylene oxide were also light as the enthusiasm of terminal firms to enter the market was not strong. Moreover, market players reported that the overall weakness in demand has yet to indicate any significant improvement, as downstream manufacturing activity has remained in the doldrums. Buyers have still tackled the market with a cautious wait-and-see-attitude, leading to a slow pace of destocking and keeping suspicions over tepid demand intact. As a result, Ethylene Oxide FD Hamburg prices were settled at USD 1485/MT during the week ending 24 November 2023.

Furthermore, a major producer of Ethylene Oxide INEOS reported that the Oxide business revenue decreased in the three months ending 30 September 2023 as compared to the Q3 of 2022, driven by lower volumes and lower prices. Sales volumes were approximately 23% lower in the Q3 of 2023 as the business experienced bottom-of-cycle market conditions. The high energy costs and higher inflation have led to consumer uncertainty and weaker market conditions in the third quarter of 2023, with several customers closing units due to a lack of demand. In addition, volumes were also adversely impacted in the quarter by an incident on a supplier pipeline at the Plaquemine, Louisiana, site. Lower demand and competition from cheaper imports have put product pricing under considerable pressure, especially for commodity products. This has led to a significant drop in prices, including Ethylene Oxide.

Looking ahead to December 2023, prices of Ethylene Oxide might further decline in the European market, as estimated by ChemAnalyst. The feedstock Ethylene prices are likely to decline, which might ease the manufacturing cost of Ethylene Oxide in the regional market. In addition, demand from the downstream derivative industry is not expected to improve amid year-end holidays.