Unplanned Plant Turnarounds Fume Global Ethylene Glycol Prices

Triethylene Glycol (TEG) prices have hiked globally owing to planned and unplanned plant shutdowns across North America, Europe, and the Asia-Pacific region. As demand for Monoethylene Glycol (MEG) and Diethylene Glycol (DEG) weakens due to the disappointing performance of downstream plasticizer and PET industries in the second quarter of 2023, key market players in the Ethylene Glycol market have reduced production to prevent prices of MEG and DEG from depreciating any further.

Prime manufacturers in the Ethylene Glycol (TEG) market have reported plant shutdowns across the United States, China, and Germany. Poor performance of the plasticizer industry and weak demand for the downstream automotive industry have compelled Dow Chemicals to shut down a major production plant of MEG at Taft, Louisiana. Likewise, major production sites of ethylene oxide and Ethylene Glycol of Indorama at Port Neches, Louisiana, having a capacity of 1 million tonnes per year, have announced a force majeure, and it’s another major plant at Clear Lake, Texas, having a production capacity of 550 KT per year is currently undergoing a maintenance turnaround. Additionally, Formosa has reported a turnaround of its Ethylene Glycol (MEG, DEG, and TEG) plant, having a production capacity of 800 KT per year at Point Comfort, Texas. Furthermore, key ethylene glycol production sites of BASF located at Ludwigshafen and Antwerp, having combined production capacities of 845 KT per year in Europe, have reported a turnaround in July 2023 for maintenance as demand for Ethylene Glycol is unlikely to recover before the peak winter season in the month of December 2023 or January 2024. Massive fire at the Dow Chemical plant at Plaquemine, Louisiana, which produces ethylene oxide and has a production capacity of 320000 MT per year as upstream of Ethylene Glycol, including TEG, is further likely to undermine supplies of TEG.

Because of the planned and unplanned shutdown of Ethylene Glycol, including TEG plants at key production sites across the world, prices of TEG have skyrocketed by an average of almost 10% globally. Price hikes are likely to continue as production of MEG and DEG are likely to diminish as the off-season duration of DEG continues as the major application of DEG is being used as an antifreeze and deicing agent. Recovery of the downstream automobile industry was also insufficient, reporting a sales decline over an average of 7% across the United States, China, and Germany, further diminishing the demand for DEG as an antifreeze. Likewise, the disappointing performance of the plasticizer industry across the world, with recessionary conditions prevailing across Europe and having a high probability of extending towards the fourth quarter of 2023, has made it possible for production levels not to be at optimum levels at the end of this year. Currently, prices of TEG in Europe were assessed to be at USD 1485/MT CFR Hamburg in July and appreciated to USD 1552/MT in August, thereby inclining by a further 5%. Similarly, prices of TEG in North America were assessed to be at USD 987/MT FOB Houston in July and appreciated to USD 1031/MT in August, thereby recording a further inclination of more than 4%.

The prime cause of price hikes for TEG is attributed to the healthy demand as a dehumidifier for the natural gas processing industry, as consumption of natural was recorded to be high in the household industry. This demand for TEG was consistent throughout the second quarter of 2023 in the face of shortage in the supplies of TEG due to planned and unplanned turnarounds, which kept the market situation largely bullish and prevented prices of TEG from depreciating.