Ethylene Oxide Prices Inches Lower in the US and Europe; Dow Chemical Announced Force Majeure in Plaquemine

Ethylene Oxide prices have gained a downtrend across the US and European markets during the second week of July 2023, backed by persistent lackluster demand and sufficient stock in the region. Tight monetary policies, volatile energy prices, and weak feedstock prices have all played a key factor in the succeeding price realizations of Ethylene Oxide. In addition, the production rates of manufacturing firms have been reducing amid gloomy downstream demand. At the same time, Dow Chemical has announced a force majeure on Ethylene Oxide following a fire and explosion in Louisiana. Meanwhile, in the Asian market, Ethylene Oxide remained unchanged, compared with the previous week's pricing trend, because of sufficient inventories and weak demand.

Since the start of Q3, Ethylene Oxide prices were showed minimum changes in the Chinese market. The cost pressure from the feedstock was also insufficient, as reported by market participants. Although market players speculated that demand for Ethylene Oxide would increase after the Dragon Boat Festival holiday due to weak consumption from the Monoethylene glycol and Ethoxylates industries, demand for Ethylene Oxide decreased in the domestic market. In addition, the operating rates remained stable as manufacturers hesitated to build up excessive stock. Despite this, the availability of finished stocks of Ethylene Oxide was sufficient to cater to the overall downstream demand. Thus, as a result, Ethylene Oxide Ex-Shanghai prices were settled at USD 845/MT during the week ending July 14th.

However, Ethylene Oxide prices have inched lower in Europe's largest economy, Germany. The inquiries from the downstream Monoethylene glycol and Ethoxylates were observed to be lighter, limiting the market fundamental of Ethylene Oxide among the manufacturers. Despite a continuous effort by the European Central Bank (ECB), the still mounting inflationary pressure in the domestic market has directly affected the performance of key manufacturing industries. Market players reported that terminal firms were unwilling to purchase the finished goods even though the price fell amid subdued demand and increasing inventory pressure. In addition, the oversupplies of feedstock Ethylene have limited the positive impact of Ethylene Oxide in the domestic market. Therefore, Ethylene Oxide FD Hamburg prices were assessed at USD 1440/MT with a week-on-week decrement of USD 20/MT on July 14th.

Similarly, in the US market, Ethylene Oxide prices have declined by USD 15/MT as feedstock Ethylene prices have decreased. Furthermore, high inflationary pressure and persistent hike in interest rates have impacted the consumer's sentiments. In addition, a major Ethylene Oxide Dow Chemical manufacturer in Plaquemine, Louisiana, caught fire on July 14th and experienced multiple explosions, forcing about 350 households nearby to shelter inside and for La. 1 to be shut down, as reported by market participants. The Event took place in Dow's Glycol 2 Unit, where the production and handling of the highly flammable and explosive chemical Ethylene Oxide occurred. As a result, Dow Chemical has announced a force majeure (FM) on Ethylene Oxide (EO). Although, it had not impacted the supply of Ethylene Oxide at a very broader level as demand from downstream Monoethylene glycol and Ethoxylates has been negatively impacted by shifting consumers' spending habits. Thus, Ethylene Oxide FOB US Gulf prices were settled at USD 1215/MT during the same time frame.

According to ChemAnalyst, Ethylene Oxide prices are expected to increase slightly in the global market due to further expectations of improving downstream demand. On the other side, cost pressure from upstream is projected to rise in the upcoming weeks, which may positively impact the downstream commodities, including Ethylene Oxide.