High temps could prop ethylene glycol
By Tom Stundza, Executive Editor -- Purchasing, 5/3/2006 6:00:00 AM
Supply could tighten and prices could jump for antifreeze-grade ethylene glycol (EG) in coming months because of weather forecasts calling for warmer-than-normal temperatures throughout much of the U.S. Antifreeze also is used as a coolant because of its anti-boiling properties.
Weather service AccuWeather has issued a long-range weather forecast predicting a hot, dry summer across the southern Plains, the interior Southwest and the Carolinas. The online weather network’s senior meteorologist, Joe Bastardi, says temperatures will be as much as 3 degrees Fahrenheit higher than usual this summer across most of the southeastern and southwestern states. Lower-than-expected storage inventories this past winter were offset by milder-than-normal temperatures across much of the country. So, antifreeze-grade EG spot prices in the U.S. held firm at 66¢/lb from November through March according to buyer surveys for Purchasingdata.com. However, ICIS news says contract prices recently began to slide, dropping from a 63¢ average to a 54¢ in early April—while spot tags dropped to 60¢ as temperatures moderated. However, ICIS news is reporting that strengthening demand and tightening supply in Asian ethylene glycol markets—which led all Asian EG producers to seek a 1¢/lb price increase on May 1—is expected to spill over to the U.S. EG market by month’s end. “Despite sustained weakness in the upstream ethylene and ethylene oxide sectors and plentiful availability in the U.S. EG sector through the end of April, forecasts for May have indicated consistently stronger demand and firmer prices,” writes ICIS news. The spill-over effect in the U.S. market that could result in an increase of as much as 2¢ if June demand is expanding as projected. However, the health of the auto industry is a large factor in the antifreeze market, and motor vehicle sales are sluggish right now. And, there are reports of additional supply coming online in the Middle East, which would exert downward pressure on prices.
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