MPG

04 December 2000 00:00  [Source: ICB]

Monopropylene glycolPredicted growth of 4% through to 2005 means stable operating rates and little need for new output, with only Lyondell and Huntsman bringing onstream new capacity

Uses



The major outlet, which accounts for about 45% of consumption, is unsaturated polyester resins (UPR) which are used in surface coatings and glass fibre reinforced resins. A rapidly growing market is in non-ionic detergents which now accounts for 7% of demand. About 5% is used as an antifreeze and its replacement of ethylene glycol in areas such as de-icing aircraft and as a coolant in the food industry is showing strong growth. It is also used in the manufacture of plasticisers and hydraulic brake fluids and is an excellent solvent with outlets in printing inks, alkyd resins and as an extractant. It is widely used as a humectant in the pharmaceutical, cosmetics, animal foodstuffs and tobacco industries.

Supply/demand



Europe is oversupplied structurally. However, markets are said to be tightly balanced because of restrictions on propylene oxide (PO) feedstock availability following the startup of a number of PO-derivative plants as well as unplanned shutdowns and delayed startups.

Demand growth in Europe last year was reported at about 8%, the highest annual increase for PG in ten years. Erdölchemie expanded capacity by 45 000 tonne/year this year and Repsol is now said to be producing small volumes from its new PO plant in Tarragona which was originally due up in quarter one, but has suffered continuing operating problems. Lyondell's tolling agreement with Condea to take part of Marl's output expires next year. Exports have grown this year with material moving out to Asia, South America, the Middle East and Africa. China is a net buyer of 70 000-75 000 tonne/year but usually sources this from the US.

Pricing



Current European prices for industrial grade monopropylene glycol (MPG) are between DM1700-1800/tonne for medium-sized customers but the big contract buyers in the UPR sector will get discounts. A number of buyers are on formula-related contracts but some suppliers are said to be moving away from this.

Producers have been struggling to raise prices during this year and have tried to lift levels over DM1800/tonne but with no success. Suppliers are still targeting an increase to DM1850/tonne for quarter one. A premium of about DM100/tonne is paid for pharmaceutical grades and for food and flavour use with prices to these sectors reported in the range DM1800-1900/tonne. Players say margins have dropped by a minimum 30% during the year and are being squeezed severely. Sources say if prices do not improve then PO producers will find it more attractive to put PO into other uses, such as polyols, rather than produce MPG.

Technology



Commercial production is by hydration of propylene oxide. Di- and tripropylene glycols, as well as small quantities of higher glycols, are also produced. The reaction between propylene oxide and water takes place at 200°C and 12 bar pressure. To limit the quantity of higher alcohols formed, the amount of water is controlled to favour the formation of MPG. The reaction can be accelerated by the use of acids or alkalis but this makes the separation of the final products more difficult. The reaction mixture is dehydrated by evaporation under vacuum and the various glycols are separated by distillation.

Health and safety



Propylene glycol is a colourless, tasteless, slightly viscous liquid with hardly any odour. It is not harmful although the liquid is an irritant if it comes into contact with the eyes. It is miscible with water, non-corrosive and combustible, but not flammable, at room temperature.

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EUROPEAN PROPYLENE GLYCOL CAPACITY, '000 TONNE/YEAR



Company Location Capacity
Lyondell Fos-sur-Mer, France 80
Botlek, Netherlands 80
BASF Ludwigshafen, Germany 80
Condea Marl, Germany 18
Dow Stade, Germany 130
Erdölchemie Cologne, Germany 90
EniChem Priolo, Italy 23
Novacke Novaky, Slovak Rep 2
Chemicke Zavody
Oltchim Rimnicu Vilcea, Romania unavailable
Repsol Puertollano, Spain 22
Tarragona, Spain 30
Rokita Brzeg Dolny, Poland 4


Most of the above include mono, di and tripropylene glycols. Capacities are flexible as they can also be used to produce ethylene glycolSource: ECN/SRI

OUTLOOK



The average growth rate for MPG worldwide is predicted to stay at about 4%/year through to 2005. Global operating rates are expected to remain stable as there is limited new capacity planned.

The only new capacity announcements to date are from Lyondell, which will build a worldscale PO plant in Rotterdam with a PG output of about 32 000 tonne/year to start up in 2003, and Huntsman, which will debottleneck its Port Neches, Texas, US, plant by mid-2001, adding 10% to the current capacity of about 61 000 tonne/year.





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