Asian MPG prices under pressure on rising feedstocks
Asian monopropylene glycol (MPG) prices are assessed mixed this week, as the Chinese domestic market was described by most market participants as relatively stable as compared to the northeast and southeast Asian market.
Most producers were originally aiming to nominate a roll over for August. However, given that upstream propylene and propylene oxide (PO) prices were on the rise, many producers were said to be revising their price strategies now, and will be offering next week instead.
However buyers are still insisting for lower prices, because of the weak Chinese domestic values seen in recent months.
Trade in the Chinese domestic market was largely subdued, as demand was weak. Downstream end-users’ buying sentiment was affected as a result of China’s credit tightening measures.
Forward looking, many players said that prices might be expected to be stable-to-soft in August, and may firm starting from September, given that upstream prices are on the rise. Moreover, turnarounds at two Asian plants would also tighten supplu.
Industrial-grade propylene glycol (PGI)
Bulk PGI spot cargoes prices were stable this week, at $1,750-1,800/tonne CFR NE Asia this week in the absence of deals. Most producers were in a wait-and-see stance this week, but they were still assessing the impact of the rising upstream costs, and may even propose a price increase for August.
In southeast Asia, the prices of PGI bulk cargoes edged lower by $40/tonne to $1,750-1,800/tonne CFR SE Asia, reflecting lower buy sell notions amid decreased demand.
Selling ideas were heard at around $40/tonne lower from July at $1,800/tonne CFR SE Asia for bulk cargoes, against buying notions of up to $1,750/tonne CFR SE Asia.
Drummed cargoes were also assessed softer by $20-40/tonne to $1,900-1,950/tonne CFR SE Asia in tune with softer bulk prices. Drumming costs were heard up to $150/tonne.
As the Chinese domestic demand remained weak, Chinese producers continued to export cheaper product made from the by-product dimethyl carbonate (DMC) route into the southeast Asian region. Such cargoes were easily available in the $1,600s/tonne CFR SE Asia. Hence, this exerted downward pressure to the southeast Asian prices.
In the Chinese domestic market, prices for PGI cargoes were higher by yuan (CNY) 500/tonne at the low end of the range at CNY12,000-12,600/tonne ex-tank, amid higher discussion levels.
Some sporadic deals were located at CNY12,500-12,600/tonne ex-tank. However, due to the effects of the China’s credit crunch, buying ideas were heard no more than CNY12,000/tonne ex-tank.
Prices of cargoes produced via the cheaper by-product dimethyl carbonate (DMC) route were also offered at higher prices now, Offers were CNY200-300/tonne higher at CNY11,200-11,300/tonne ex-tank, said market players.
In Taiwan, offers for August were not located this week. Buying ideas were capped at New Taiwan dollar (NT$) 56/kg this week.
July parcels were finalised at NT$56-57/kg, said market players.
Pharmaceutical-grade propylene glycol (PG USP)
Pharmaceutical-grade propylene glycol (PG USP) drummed cargoes prices are assessed as unchanged in the published range with no deals reported in this last week of July. Producers said fresh August offers expected to be announced this week have been delayed as they grapple with the situation of rising feedstock prices upstream.
A Korean producer said it is still in the process of finalizing its August offers for PG USP and will only announce next week. The producer indicated that it is likely the offer will be higher than July, citing higher propylene oxide (PO) prices.
Small parcels of Japanese cargoes were heard to have been traded at $2,200/tonne CFR NE Asia and $2,250-2,300/tonne CFR SE Asia. However they are not included in the assessment as the deals are deemed unrepresentative of the wider market by other market players as cargoes of Japanese cargoes generally demand higher prices.
($1 = CNY6.44)
($1 = NT 28.82)
Additional reporting by: Lei Lei Wong
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