Hamburg, (Germany): The European Ethylene Oxide market fades under a weaker sentiment post the summer, unable to maintain the gains achieved over the past two weeks. The Ethylene Oxide prices have been seesawing between soft demand and ample supplies. Participants have been exercising caution amid persistent economic challenges, with no recovery seen in post-summer holiday demand. Current weak market sentiments have pushed most sellers to lower their offers, with buyers prioritizing the restocking of immediate requirements. Conversely, in the US Ethylene Oxide prices have persistently increased due to a combination of tight supply and slight improvement in the demand dynamics. In addition, the rising upstream cost has put additional pressure on the prices of Ethylene Oxide.

During the third week of September, prices of Ethylene Oxide have witnessed modest decline of USD 10/MT in the German market. The demand for Ethylene from the downstream derivative industry has continued to remain subdued with limited instance of new orders reported during the week, leading a bearish market sentiment in the price realization of Ethylene Oxide. Furthermore, the ifo Business Climate Index dropped from 86.6 points in August to 85.4 points in September indicating German economic recovery hopes faded as sentiments falls again in September. However, several market players reported demand from the Ethylene Glycol has been moderate in the domestic market.

However, the sharply oscillating feedstock Ethylene price movements have kept buyers on tenterhooks with many preferring to adopt a wait-and-watch approach. In some cases, buyers have already purchased cargoes required for September in July- August. Most buyers have been witnessing a systemic decline across the value chains amid a prevailing bleakness in Europe’s industrial outlook. Meanwhile, buyers in the contract market were seen implementing caution while tracking developments in market fundamentals. Average demand prompted producers to make corrections to price increases announced early in the month. Thus, prices of Ethylene Oxide FD Hamburg were settled at USD 1410/MT during the week ending 20th September.

Nevertheless, Ethylene Oxide prices have remained on a firm note in the US market. The cost support from feedstock Ethylene was sufficient to Ethylene Oxide as its prices were observed on the higher end, keeping the prices elevated in the domestic market. In addition, the demand from the downstream Ethoxylates and glycol industry has improved albeit at a slower pace in the domestic market. Furthermore, the production of several commodities including Ethylene Oxide has been impacted by Hurricane Francine which led to supply shortage within the domestic market. On the other side, several Ethylene Oxide plants, notably Eastman Chemical in Longview, Texas, and Shell Chemicals in Geismar, Louisiana shut down the plant during the week which further affected the supply of Ethylene Oxide in the domestic market. Therefore, prices of Ethylene Oxide spot FOB US Gulf were settled at USD 1595/MT with a weekly increment of 3.2% on 20th September 2024.

On the other hand, some ports in the US remain congested due to order surges and container shortages. The master contract between the International Longshoremen's Association (ILA) and the USMX (United States Maritime Alliance) is set to expire on September 30, 2024. This contract covers the US East Coast and Gulf ports. If a new master agreement is not reached, the ILA is preparing to strike on October 1, 2024, it could disrupt U.S. supply chains and result in delays that may take weeks to resolve.

In the short term, ChemAnalyst expect prices of Ethylene Oxide might rise across the US and European market in the hope of a rise in upstream costs. The demand for Ethylene Oxide from the downstream derivative industry is likely to gain pace in the regional market and might keep the prices upward. In addition, the availability of Ethylene Oxide might remain tight due to regional production hiccups, logistic disruption as well as adverse weather conditions which may further escalate the prices of Ethylene Oxide.