Perstorp looks for Europe mould inhibitor growth

28 June 2007 16:25  [Source: ICIS news]

AMSTERDAM (ICIS news)--Short and long-term prospects are healthy in many markets for the grain mould inhibitor propionic acid, according to Europe’s number two producer Perstorp.

Perstorp product manager Johan Rehnstrom said there was an increase in demand because of this year's changeable weather conditions in northern Europe, a poor 2006, longer-term higher energy prices and a growing demand for meat.

“It’s a very favourable market. The changeable weather – the combination of rain and sun – has caused a lot of crop growth. This means they’ll be more need for this product going into the winter," he said.

He added last last year had been a disaster as the weather was dry and there was little growth or need for mould inhibitor.

“The market is tight and will remain so for the rest of the season. We’re trying to make the most of this,” he said.

“For the third quarter, our raw material, ethylene has settled up €35 [$47} at €925/tonne, so we hope to push our prices up in reaction,” Rehnstrom added.

He said the current price for propionic acid was around €900/tonne.

Rehnstrom said trend growth for Europe should be 4-5%, but in South America and China growth of around 10-12% could be expected.

Increased prosperity in these regions has caused a surge in demand for meat produced by modern farming methods.

Higher energy prices are also increasing demand for propionic acid as farmers choose to use a mould inhibitor rather than drying their crops, he added.

Rehnstrom said Perstorp was studying the potential impact of the growth of biofuel crops on this market.

“We presume there will be a need to preserve biofuel crops [before processing] so we would expect this to improve demand,” he said.

($1 = €0.74)

By: Will Beacham
+44 20 8652 3214

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