Germany, (Hamburg): During the last week of March 2024, Ethylene Oxide prices experienced muted activity as the month drew to a close and some derivative market players closed early in the wake of the Easter holidays. According to market sources, demand for Ethylene Oxide from the downstream industry has been quite low over the past few weeks, which weighed down the prices of Ethylene Oxide in the European market.

Apart from this, low-cost support from feedstock has further bolstered the prices to follow a downward trend across the regional market. Market participants expect softer Ethylene Oxide prices in the forthcoming weeks, citing a tepid demand outlook, not to mention the impact of the nearing holiday. Prices of Ethylene Oxide have decreased by USD 20/ MT in the German market. The feedstock Ethylene prices have been observed on the lower end amid weak demand, leading to lower production costs of Ethylene Oxide within the domestic market.

However, the supply of Ethylene Oxide remained tight as operating rates have remained under pressure in the domestic market ahead of average demand. As per market sources, Germany's Manufacturing Purchasing Managers' Index again remained in the contraction zone (i.e., below 50), reflecting a strong deterioration in manufacturing conditions. Nonetheless, it had a limited bearing on the prices of Ethylene Oxide. Weak production costs coupled with flat downstream demand have caused Ethylene Oxide manufacturers to reduce their price hike goals across the domestic market.

Additionally, demand for Ethylene Oxide from the downstream Monoethylene glycol industry has remained weak in the domestic market as consumption from the end-user sector has softened amid macroeconomic headwinds, leading to bearish market sentiments among Ethylene Oxide manufacturers. Furthermore, spot activity has also been flat over the past week amid weak buying trends among terminal firms, which consequently negatively impacted the demand for Ethylene Oxide. However, market participants report inquiries from ethoxylates have been steady in the domestic market.

On the other hand, INEOS Oxide, a major producer of Ethylene Oxide, reported that the fourth quarter of 2023 EBITDA was Euro 451 million compared to the previous quarter. Elevated inflation and interest rates, along with persistently high energy costs in Europe, have led to reduced demand levels and weak margins. As a ripple effect, Ethylene Oxide prices were settled at USD 1450/MT on a FD Hamburg basis on 29th March 2024.

Looking ahead, ChemAnalyst anticipates prices of Ethylene Oxide might decline across the European market as demand from the downstream derivative industry is not likely to recover in the coming weeks. However, the supply of Ethylene Oxide is expected to remain tight in the first half of April despite a slight increase in operating rates, but it might be insufficient to drive the price realization of Ethylene Oxide at the high end.