Prices flat through rest of year
By Staff -- Purchasing, 5/6/1999
Following a recent 2¢/lb increase in ethylene glycol contracts and spot tags, prices will remain relatively flat around 27¢/lb for contracts and 26¢/lb on the spot market for the remainder of the year, say buyers responding to Purchasing's monthly chemical price transaction survey.Limited supply due to unplanned production outages and seasonal demand recently prompted domestic producers of ethylene glycol to raise their prices for contract and spot transactions by 2¢/lb. This increase marked an end to a steady slide for ethylene glycol prices and has applied sufficient upward pressure to stabilize prices, say experts.
Demand for antifreeze and fluid products typically picks up in the fourth quarter as consumers prepare for winter. With limited supplies during the month of December, producers pushed for the 2¢/lb increase for ethylene glycol as well as diethylene glycol and triethylene glycol.
Producers also expect demand for ethylene glycol to pick up by the end of the first quarter. In which case, buyers may see a 1¢/lb price increase as bottle producers begin to gear up their production of polyethylene terephthalate (PET) to accommodate the demand for plastic bottles for the summer beverage season.
After that, industry experts and buyers alike expect prices to stabilize, as large quantities of new capacity from domestic and overseas producers are expected to come on line in the third quarter of this year.
According to data from Purchasing's monthly chemical transaction price survey, contract prices for ethylene glycol have fallen steadily from 30.5¢/lb in the first quarter of 1998 to their present position at about 27¢/lb.
Spot prices have fallen further than contracts. In the first quarter of last year, ethylene glycol cost an average of 30¢/lb on the spot market. Prices have now dipped to about 26¢/lb and are most apt to stabilize at that level, say buyers.
Petrochemical industry analysts pace Consultants, Inc., located in Houston, Texas, say demand for antifreeze-grade ethylene glycol is near the end of its modest seasonal upturn and demand for fiber-grade ethylene glycol continues to be soft with no recovery in sight. pace puts prices at about 20¢/lb for both contracts and spot tags, but their data is based exclusively on Gulf Coast prices. Purchasing's data takes an average of prices across the country.
Other markets for ethylene glycol include coolants and fluids used in the automotive industry, industrial hydraulic fluids and solvents.
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