Stable Ethylene Oxide prices in European market amidst Moderate Demand, Firm Cost Pressure

Hamburg (Germany): Heading into the first week of May 2024, Ethylene Oxide prices have shown an upward trend across the European market. The recent increase in Ethylene Oxide prices can be primarily attributed to rising feedstock prices and limited inventories within the regional market. Additionally, demand from the downstream derivative industry has been moderate, prompting manufacturers to slightly raise their Ethylene Oxide prices in the region. Market players are preparing for another significant price increase in the coming weeks.

According to the latest data from ChemAnalyst, prices of Ethylene Oxide have seen a marginal increase of USD 10/MT in the German market. Strong support from feedstock Ethylene prices has contributed to the bullish market sentiments for Ethylene Oxide among manufacturers. Moreover, the recent rise in oil prices following the production cut decision by OPEC+ members has added to the market challenges regarding inflation direction and the appropriate level of interest rate increase to maintain market balance.

Market reports indicate that operating rates have remained under pressure in the domestic market due to weak economic conditions. German industrial production, for instance, dropped by 0.4% in March month-on-month, leading to limited material availability to meet downstream demand. Furthermore, increased wage demands have exacerbated tight labour conditions in the domestic market.

Currently, demand for Ethylene Oxide from the downstream Monoethylene Glycol and ethoxylates industry is moderate in the domestic market, as consumption from the end-user sector remains relatively stable. However, spot market transactions have improved this week, with most buyers shifting their interest to spot buying rather than contractual volumes. Consequently, Ethylene Oxide manufacturers have slightly adjusted their offers within the domestic market, with prices of Ethylene Oxide FD Hamburg settling at USD 1405/MT during the week ending May 3, 2024.

On the other hand, major Ethylene Oxide producer BASF, Germany, reported first-quarter sales of 2024 amounting to €17.6 billion, €2.4 billion below the figure for the prior-year quarter. The decline in sales was primarily attributed to significantly reduced prices, influenced by lower feedstock and energy prices, particularly crude oil and natural gas, across nearly all segments. Additionally, lower prices for precious metals in the Surface Technologies segment contributed to this decline.

The short-term outlook for Ethylene Oxide is expected to remain firm due to high feedstock and energy prices. Demand for Ethylene Oxide from downstream derivatives, notably the Monoethylene Glycol and Surfactant industry, is anticipated to pick up ahead of seasonal demand, leading to increased Ethylene Oxide prices. Moreover, supply is expected to remain restricted until June 2024.