Market Summary
European monopropylene glycol industrial grade (MPGI) spot prices are frequently reported lower this week, amid good supply, quieter market conditions during the summer holidays and aggressive selling from certain players.
Numbers are quoted closely either side of €1,300/tonne FD. The range was changed to €1,290-1,340/tonne FD this week. This reflects a reduction of €20-30/tonne from last week.
Prices down to €1,260-1,270/tonne FD were also heard in some cases in the distribution sector, but they were not widely confirmed.
Numbers above the range were also heard in a few cases on the sell-side, but they were not widely confirmed. Two producers maintain they are selling in the upper €1,300s/tonne FD, if not slightly higher for full trucks.
They also expect to hold prices relatively steady into August, despite further news of the reduction of €15/tonne in propylene feedstock costs.
One of the suppliers said that the decrease in feedstock costs in August is negligible and it is not prepared to lower MPG prices any further, as it expects that propylene costs could rise again in September. These suppliers maintain that the softening in propylene costs is likely to be offset by balanced market conditions and the possibility of some pre-buying, particularly for the winter de-icer season.
However, these higher levels have not been confirmed by any other market players. In fact, other producers reluctantly concede that these price levels are no longer feasible for MPGI full truck business.
Di-propylene glycol (DPG) prices are mainly holding relatively steady in the €1,600s/tonne FD, despite the downwards feedstock pressure, as demand continues to exceed supply. Players acknowledge that while the market is not as tight as seen in recent weeks, supply remains snug. This is attributed to the need to rebuilt stocks, following the recent lengthy maintenances of at two main plants. DPG output is normally most affected by plant outages than its standard glycol counterparts because of its lower yield. DPG offtake remains steady, with little-to-no-summer slowdown noted.
One producer said it had increased its DPG prices by €20-30/tonne in August to €1,650-1,700/tonne FD NWE, citing ongoing supply restrictions and good demand as justification for this.
By contrast, a few players suggest that DPG prices could soften, on the back of improved supply. Numbers around €1,600/tonne and slightly below are heard, but they are not widely confirmed.
MPG US pharmaceutical (USP) grade prices are fairly steady, supported by balanced market conditions. MPG USP grade consumption is holding up well, generally unaffected by seasonality. MPG USP prices are mainly quoted in the low-to-upper €1,400s/tonne FD. Numbers as low as €1,370/tonne FD were also heard, thought to be aggressive selling from one producer. However, this is seen to be an exception rather than the norm.
Upstream
The European propylene contract settled at €1,115/tonne FD NWE for August, down by €15/tonne from July. This was the second number to emerge after an initial rollover settlement failed to find the necessary support from the market. While feedstock is firm, the bearish supply-and-demand balance continues to weigh on spot levels, but sources say these are showing signs of stabilising around €900/tonne CIF NWE.
($1 = €0.70)
This week on ICIS news: www.icis.com:
29-Jul-11 13:30 Europe August propylene fully settles after second number emerges
28-Jul-11 06:35 Germany’s BASF second quarter net profit up 23% to €1.45bn
27-Jul-11 17:17 Europe August ethylene fully confirmed at €1,120/tonne
