Amid Tepid End-use Demand European Ethoxylates Price Settles Lower, Braces for Early 2024 Bearishness

Hamburg, Germany: Throughout the year 2023, the prices of Ethoxylates have remained under pressure in the European market. The European Ethoxylates industry continues to face considerable challenges due to the outcomes of Russia's war against Ukraine. This, coupled with diminished demand, escalating energy prices, increasing interest rates, and inflation, persistently impacts the sector. The EU27 chemical industry experienced a significant decline in production, with a 10.6% drop reported from January to September 2023, marking the third-largest decrease. Additionally, capacity utilization in the EU27 chemical industry declined to 74.1% in the Q3 of 2023.

Amid a sustained downturn in demand from the downstream Personal Care industries, the prices of Ethoxylates have been consistently declining for the past few weeks. The ChemAnalyst database has shown that the prices of Ethoxylates have plummeted by USD 20 per ton in the week ending 5th January 2024. The year-end holidays and the destocking season traditionally led to reduced industrial activity and lower demand for raw materials such as Ethoxylates. This has resulted in manufacturing firms either slowing down or temporarily halting operations, leading to decreased ethoxylate demand. Additionally, companies have been reducing their inventory levels due to the destocking season, further dampening ethoxylate offtakes from the terminal markets. Consequently, the overall market sentiment for Ethoxylates has stayed subdued, preventing positive price developments.

Meanwhile, as per market sources, China's chemical production reached record highs, with output steadily increasing since June 2023. Compared to the previous year, chemical production in China was 9.2% higher from January to September 2023. However, there are concerns that Chinese companies might aim to boost their global competitiveness by ramping up exports, which could potentially impact global markets negatively.

On the other hand, the president of the German Chemical Industry Association stated that the industry will continue to face challenges from high energy and raw material prices, as well as a lack of orders. As a result, companies are compelled to reduce costs by means such as shutting down production plants, exiting certain business segments, or redirecting investments to overseas markets. This move would further compel the Ethoxylates market to remain bearish across the regional markets.

According to the pricing intelligence of ChemAnalyst, the weak offtakes from the downstream Personal Care industries are likely to persist in the first quarter of 2024, leading to a bearish trajectory of upstream raw materials, including Ethoxylates. Nevertheless, due to the ongoing uncertainty in the economic and political spheres, it is premature to ascertain the sustainability of the positive development in the price realizations of Ethoxylates. The chemical confidence indicator remains low, and there are no indications of a robust recovery in the forthcoming weeks in the European markets.