Dow announces FM following fire at Plaquemine, Louisiana, US EO unit

HOUSTON (ICIS)–Dow has announced a force majeure (FM) on ethylene oxide (EO) following a fire at its Plaquemine, Louisiana, unit.

According to the company, the fire was extinguished on Sunday; however, it will take several weeks before the unit restarts.

Currently, demand for EO has been weak as downstream ethylene glycols (EG) and surfactants demand has been negatively impacted by shifting consumer spending habits.

As a result of low demand, it is unlikely market supply will be negatively impacted.

The majority of EO contracts are formula-based, and price movement comprises 80% of the change in the ethylene price and an additional conversion fee, or adder.

Like ethylene, EO contracts are settled at the beginning of the month for the previous month’s price.

EO is largely used to make monoethylene glycol (MEG), a key feedstock for polyethylene terephthalate (PET). EO’s secondary outlet is in surfactants.

Other EO derivatives include glycol ethers, polyols for polyurethane systems, polyethylene glycols and polyalkylene glycols.

EO producers in the US include BASF, Dow, Eastman Chemical, Formosa, Indorama Ventures, Lotte Chemical, LyondellBasell, Sasol and Shell Chemical.

Thumbnail shows ethylene oxide. Image by Al Greenwood.