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Rapidly increasing raw material costs and strong demand boost the product's floor price.
ETHYLENE GLYCOL producers are pushing for further price increases for antifreeze-- grade (EGAF), industrial-grade and diethylene glycol (DEG). For Fiber-grade glycol (MEG), producers have announced a $55 per ton price increase for Asia, effective April 1, which will take the March price of$570 up to $625. In the US, producers are calling for increases of 3 to 6 cents per pound for EGAT for April, on top of 2 cents announced for March.
Producers have also announced increases of 3 to 6 cents per pound for industrial grade (EGI) and DEG. An analyst notes that although global demand remains strong, upward pressure on pricing is being driven by feedstock costs, with ethylene now at 29 cents per pound for March, and crude oil reaching $34 per barrel last week.
"We are looking at the highest ethylene prices in recent history," says Doug Rightler of Guildford, UK-based PCI Consulting. He notes that ethylene last surpassed its current level, reaching 32 cents, in 1989 and 1990.
"When that happened, glycol prices were double what they are today," he says. A producer adds that current raw material costs have eliminated margins. "They are basically zero. We have a new cost floor."
For April contracts, Shell has announced 5 cents per pound for EGAF, and 3 cents for EGI, DEG and ethylene oxide. Huntsman has announced 3 cents for EGAF, EGI and DEG. Carbide has announced a 6 cent increase for EGAF and EGI, as well as a 3 cent hike for DEG.
An analyst says that producers came out unusually early for April announcements, indicating a determination to secure the increases.
"Producers as a whole didn't have to announce until mid-month, since they only have to give 15 days...