Viewpoint: US maintenance to limit EO, derivatives

Spanish Market: Petrochemicals
31/12/24

Multiple ethylene oxide (EO) and derivative turnarounds may limit US supply in the first half of 2025.

At least six producers of EO and derivatives are expected to be down for maintenance in February-June. Some are just two weeks while others are 30-45 days.

Most US EO producers are integrated to produce derivatives such as monoethylene glycol (MEG), diethylene glycol (DEG) and triethylene glycol (TEG). This dynamic has market participants anticipating the derivatives will feel the supply squeeze in the first half of the year.

The producers with planned maintenance have the capacity to produce over 3mn metric tonnes (t) of ethylene glycol during the five months of turnarounds, according to Argus data. These supply limitations are expected to tighten the spot market more than the contracted volumes, as the US is a typically a net exporter of MEG, DEG and TEG. Any delays in restarts or unplanned outages could quickly change the US ethylene glycol supply picture.

Additionally, multiple steam-cracker maintenance projects are planned for the first quarter of 2025, which will limit supply of feedstock ethylene and likely raise feedstock costs in the short term.

Some market participants see the US entering the heavy turnaround season at minimum inventories. The US is still rebuilding stocks of EO derivatives such as MEG, DEG and TEG after constraints in September and October tightened supply.

Some planned and several unplanned outages occurred in September that were not resolved until mid-October. During this time, spot supply was harder to find but seasonal demand was starting to slow, according to market participants.

Despite these supply constraints, exports of MEG rose by 32pc to 312,800t in September compared to a year earlier. The US exported 317,900t of MEG in October, a 53pc increase on the year.

Overlapping turnarounds in the first half of 2025 could slow exports as the US is typically a net exporter of MEG, DEG and TEG. Market participants anticipate first-quarter demand to be similar to the last three months of the year with the addition of some restocking activity.

By Catherine Rabe

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