Gustav aftermath could discontinue decline in EG prices; DEG, PO may also to get affected

08-Sep-08

The decline in the ethylene glycol (EG) prices during the past few weeks owing to the lower crude prices may discontinue as a result of the shut downs and disturbances led by the Hurricane Gustav battering Louisiana recently. As per sources, two plants of MEGlobal in Taft and one plant of Shell Chemical were close down due to electricity outages caused by the tropical storm which strike the Louisiana coast. However, there was no mechanical damage at these facilities. Also, delays in transportation and a hindrance in utilities caused a brief inaction in MEGlobal's ethylene oxide (EO) and higher glycols operations and shipments. Shell Chemicals and MEGlobal had declared force majeure to keep up with the terms and conditions of supply with its customers due the sudden outages caused by hurricane Gustav. This situation could also affect the supply of diethylene glycol (DEG), propylene oxide (PO) and downstream products. The duration of outages and disruptions caused at the EG facilities will be a significant factor having bearing on the recently falling EG prices due to dipping oil prices.