Chinese EO Price Increased on Tight Supply ( Dec 1-7, 2017)

1. Chinese EO Market

The Chinese ethylene oxide (EO) market was range-bound. Up to December 7, the EO price in Sinopec Shanghai was RMB 10,600/mt, which was same as the price last week. The EO price in Central China was RMB 10,800/mt, which was up RMB 200/mt. The output of EO from PetroChina Maoming usually supplied Central China in previous period. As the EO unit in PetroChina Maoming operated on a low workload, the supply in Central China became tight. So factories in Cetral China increased prices. The EO prices in other areas were stable and players showed a wait-and-see attitude to the Chinese EO market. In general, the supply of EO maintained a tight balance. However, as the downstream demand decreased, players held less interest in the market. The Chinese EO market was mainly range-bound. Furthermore, the operating rate of Chinese EO units was in the range of 70%-80% and the supply was quite tight.

2. Forecast

The Chinese EO price maintained an increasing trend for half a year, which was an unprecedented break in the EO market. The tight supply of EO will not be release. However, as the downstream demand will decrease, the procurement will become slow. It is predicted that the Chinese EO market will be range-bound in the short term. Players should pay attention to factories’ guidance and downstream demand.