Chemical profile: propylene glycol

24 September 2007 00:00  [Source: ICB]

DEMAND

2005: 895m lbs 2006: 885m lbs 2010: 960m lbs, projected. Demand equals production, plus imports (2005: 89m lbs 2006: 46m lbs), less exports (2005: 272m lbs 2006: 310m lbs).

GROWTH

Historical (2001-2006): 0.9%/year. Future: 2%/year through 2010.

PRICE

Historical (2001-2006): High, 93 cents/lb, contract, annual average, Gulf, industrial grade, tanks, f.o.b. works low, 44 cents/lb, same basis. Current: 79.5-81.5 cents/lb, same basis.

USES

Unsaturated polyester resins (UPR), 26.4% functional fluids, 22.2% (deicing, 12.1% engine antifreeze, 6.4% heat transfer, 3.7%) food, drug and cosmetics uses, 20.4% liquid detergents, 15.4% paints and coatings, 4.4% tobacco humectant, 2.3% miscellaneous, including plasticizer use, 8.9%.

MARKET PERSPECTIVE

Domestic consumption of propylene glycol (PG) has increased modestly over the past five years, led by the production of UPR, the major outlet for PG. Nearly 75% of UPR is reinforced with fiberglass or mineral fillers to form fiberglass-reinforced plastics (FRP), which are tough, lightweight composites.

In residential and commercial construction, FRP is used primarily to produce building panels, bathroom components, fixtures and corrosion-resistant tanks, pipes, and ducts. Another key market is in the production of pleasure boats. FRP is also used in passenger cars and trucks, as well as in the consumer production of recreational vehicles (RVs) and major appliances. Most FRP markets are sensitive to economic conditions. Purchases of products containing FRP components are often among the first to be postponed or canceled in an economic recession.

PG in personal care products and pharmaceuticals has experienced strong growth. Additionally, the personal care (antiperspirant/deodorant) and liquid detergent segments benefited from reformulations that favored the use of PG.

Over the forecast period, unsaturated polyester resins are anticipated to grow at 1.5%/year, with the personal care segment doing somewhat better, at 2.5%/year. Together, these two segments make up more than 60% of the current demand for PG.

Rising feedstock costs kept upward pressure on US prices for all grades of PG, resulting in price hike attempts by producers on July 1. Producers sought an increase of 4 cents/lb. However, buyers resisted, and the two sides eventually settled on price increases of 2-3 cents/lb, depending on whether the buyer was a small- or large-volume customer, and on whether the buyer had been buying near the low or high end of the price range.

OUTLOOK

The PG market remains under severe pressure because of the run-up in oil and natural gas costs. Although gas prices have eased compared to three years ago, when they reached above $10/m Btu, gas pricing is still in the $6-7/m Btu range. In addition, crude oil prices have recently reached historic highs of nearly $80/bbl. As a result, producers' margins are still being squeezed, despite a series of price increases this year. Additional price increases could be expected. Long-term growth will probably be no greater than 2%/year, as nearly all PG applications are mature.

Sources: ICIS Chemical Business, USITC, ICIS pricing

US propylene glycolCAPACITY, millions of LBs/year
Company Location Capacity
Arch Chemicals Brandenburg, Kentucky 75
Dow Chemical Freeport, Texas 400
Dow Chemical Plaquemine, Louisiana 420
Huntsman Port Neches, Texas 145
Lyondell Chemical Bayport, Texas 550
TOTAL 1,590
SOURCE: ICIS CHEMICAL BUSINESS


Profile last published October 25, 2004Commercial production of propylene glycol (1,2-propanediol) (PG) is by hydration of propylene oxide. Di- and tripropylene glycols, plus small quantities of higher glycols, are also produced in the reaction. PG capacities at some locations can be supplemented by shifting hydration equipment normally used for ethylene glycol (EG) to the production of PG.

There is considerable interest in producing PG from renewable resources such as glycerin. Glycerin is a by-product of biodiesel manufacturing, and with the boom in biodiesel projects, much effort is being made in finding new uses for glycerin.

* Last July, Huntsman announced it would partner with RBF Port Neches to build and operate a biodiesel plant to be located at Huntsman's Port Neches, Texas, US, site. RBF will design, build and own the plant, which will have an initial capacity of 89m gals/year (336.9m liters/year) of biodiesel, expandable to 180m gals/year. Start-up is expected in mid-2008, after which the facility will be operated and maintained by Huntsman, while RBF will market the plant's output. Huntsman has an option to purchase the crude glycerin by-product of the biodiesel plant, which complements Huntsman's plan to commercialize its proprietary process for manufacturing PG from glycerin.

Archer Daniels Midland is building a plant at Decatur, Illinois, US, to produce glycerin-based PG and EG. The plant is reported to have a capacity of 220m lbs/year (99.8m kg/year) and is anticipated to start up in 2008.

DuPont and Tate & Lyle established a joint venture in 2004 to produce corn-derived 1,3-propanediol. The plant, located in Loudon, Tennessee, US, has a capacity of 100m lbs/year.

Subject to approval by regulators in the US and Europe, Huntsman will be acquired by Hexion Specialty Chemicals. The deal was announced last July. That same month, Access Industries' Basell agreed to acquire Lyondell Chemical.


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