Houston (ICIS)-As the winter storms have cut off power for millions of people and businesses and threatened water supply, most of the US ethylene glycol (EG) production capacity is reducing interest rates or shutting down.
According to the ICIS supply and demand database, nearly 4 million tons/year of US EG production capacity was affected by the storm. This accounts for 85% of the total US EG capacity.
As the region returns from the Lunar New Year holiday, production cuts have caused Asia's MEG prices to soar by 11%.
The United States is a major exporter of MEG to Europe, and exports to Asia are limited.
The affected US factories are as follows (as of this writing):
A separate force majeure statement has been made-Lyondell Basel announced force majeure this week, and Formosa Plastics has made a statement due to raw material issues-while other suppliers are allocating sales and evaluation options.
According to a source familiar with the company's operations, MEGlobal is conducting sales control with ordinary customers and is discussing options.
"The raw material supplier has a problem, so I don't know when it will be resolved," the source said.
Regarding Sasol’s situation, a company spokesperson said, “As we are still evaluating the situation, no statement has yet been made.”
Tight supply has always been a problem in the chemical market, including related products, butanediol (BDO), which can replace DEG in the manufacture of polyester polyols, and phthalic anhydride (PA), which can be used in combination with DEG Saturated polyester resin (UPR)).
A procurement source said: "After being affected by the fourth quarter, many supply chains are still trying to recover, so this round of FM is unbearable."
Efforts to achieve rebalancing Before the storm, the production of monoethylene glycol and diethylene glycol (MEG, DEG) had been struggling to catch up with the large-scale power outages in September and October.
In late August, Hurricane Laura closed the plant in southwestern Louisiana and planned maintenance to shut down other plants-all of which affected two-thirds of North American production in late summer/early fall 2020.
Downstream polyethylene terephthalate (PET) production has been unable to meet the strong demand related to the pandemic, but it has been restricted due to a shortage of MEG.
Although all factories restarted in late October, the pent-up and current demand consumed all available quantities. Contract customers have been able to obtain the required quantity, but spot goods are extremely limited, pushing prices up to the 2020 shortage level.
The MEG spot in February began to appear after a few months of out of stock, but the spot DEG is still difficult to find.
The co-product DEG only accounts for about 9% of the EG yield, while the MEG yield is about 90%. Therefore, DEG supply is more prone to sudden shortages and long-term rebalancing.
Triethylene glycol (TEG) has also been affected, although it only accounts for a small portion of the market, and its typical winter demand season is coming to an end.
The consumption of MEG remains strong, and the production of PET in the Americas cannot meet demand, especially in the packaging industry. Imports filled the gap, and the increase in freight was passed on to buyers.
DEG demand continues to remain healthy, especially residential construction drives the consumption of polyurethane (PU) in durable goods and UPR, which has numerous end uses for construction and renovation.
MEG is an intermediate in the production of polyester fiber and polyethylene terephthalate (PET) bottle resin, and can also be used as an antifreeze for automobiles.
DEG applications include deicing fluids, surface coatings, UPR and polyester polyols.
The co-product TEG is used as a dehydrating agent in gas pipelines to prevent the gas from freezing. It is also used in the oilfield sector to help extract natural gas.
U.S. ethylene glycol producers include Dow, Eastman Chemical, Formosa, Indorama Ventures, Lotte Chemical, LyondellBasell, MEGlobal, Sasol and Shell Chemical.
Focus articles by Antoinette Smith
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