Hamburg, (Germany): The modest recovery seen in European Ethylene Oxide markets proved short-lived as prices reversed direction amid tepid fundamentals during the fourth week of May 2024. Manufacturers of Ethylene Oxide have faced the challenges of heating competition in response to declining demand versus the high production costs across the regional market. On a positive note, the supply of Ethylene Oxide has been enough to meet the downstream demand. Participants are currently deliberating whether recent declines will stimulate sales during a month shortened by holidays.

According to ChemAnalyst database, prices of Ethylene Oxide have demonstrated a decrement of USD 20/MT in the German market. Unsupportive supply-demand dynamics were blamed for the current price trend, with accumulating stock levels putting pressure on sellers. However, the overall production cost of Ethylene Oxide has been strong as raw material Ethylene prices have increased in the given timeframe. But currently, it was insufficient to drive the price realization of Ethylene Oxide at the lower end in the domestic market as the demand centre took the stage across the domestic market.

Market participants report demand for Ethylene Oxide from the downstream Ethylene Glycol was slower than expected, defying seasonal patterns while converters continued to report insufficient order entries. The spot market transactions were also muted as the eagerness of terminal firms to enter the market was not strong. As a result, manufacturers of Ethylene Oxide have reduced prices of Ethylene Oxide in order to boost sales. Several participants anticipate demand from the downstream derivative industry might further drop amidst the summer holiday lull which may put a strain on the Ethylene Oxide market in the near term.

On the other hand, a major producer of Ethylene Oxide, INEOS Group has reported EBITDA for the first quarter of 2024 was €260 million, down compared to €381 million reported in the same period last year (Q1 of 2023) but up from €149 million reported in the fourth quarter of 2023. In the second quarter of 2024, INEOS expected higher interest rates may hinder economic recovery, while excess capacity in the petrochemicals, including Ethylene Oxide might further delay a meaningful recovery in demand.

Looking ahead, ChemAnalyst anticipates Ethylene Oxide market may see a gradual softening under the pressure of weak downstream demand. Additionally, buyers expect to receive further discounts during negotiations, which adds to their waiting stance. Even end-user buyers expect a reduction in Ethylene Oxide prices. Furthermore, raw material Ethylene prices are likely to decrease which might ease the overall production cost of Ethylene Oxide in the near term. Moreover, the supply of Ethylene Oxide is anticipated to remain sufficient amid the expectation of a decline in new orders which will further weigh down the prices of Ethylene Oxide.