FocusHikes eyed for Europe MPG on Repsol FM

24 April 2008 17:26  [Source: ICIS news]

By Heidi Finch

LONDON (ICIS news)--Repsol’s force majeure (FM) on propylene oxide (PO) and glycol production at Tarragona, other maintenance work and high feedstock costs present a a long-awaited opportunity to push up monopropylene glycol (MPG) prices, said one European producer on Thursday.

One producer said it would look to increase spot MPG prices with immediate effect and contract volumes effective from 1 May. Initial targets were pegged at plus €50/tonne ($79/tonne).

Spot prices were quoted between €1,030-1,060/tonne FD (free delivered) NWE (northwest Europe) in the week ending 18 April, and although values were expected to move up, no business had been confirmed above this level at the time of writing. More information was expected in the next few days.

A few northwest European suppliers said they had already seen some additional buying interest from Southern Europe.

One producer said it had sold a few trucks at €1,060/tonne FD (free delivered) NWE (northwest Europe) to one customer in Italy.

Prices in Italy were previously pegged in the low €1,000s/tonne FD NWE or slightly below. Italian price movements are often regarded as a precursor to the rest of Europe.

European sellers’ dissatisfaction with poor MPG margins had been clearly evident in 2007 and early 2008 as they struggled to maintain prices, let alone pass on higher upstream propylene costs.

One buyer said it was still too early to assess the impact on the MPG market. The source said it expected producers to increase prices on the back of the Repsol FM, but that sellers’ success would depend on market fundamentals.

The buyer added that the quieter bank holiday period in May was also likely to diminish any upward pressure.

At present, there was no evidence of any tightness in the MPG market and views about demand were mixed between healthy and reasonable.

For PO, Repsol’s FM was expected to have minimal impact on the merchant market.

One market participant said that Repsol’s PO consumption was mainly captive, with any possible merchant impact to be for smaller volumes and limited to southern Europe.

However, in combination with a series of other upstream PO outages in Europe and the US, it was likely to put pressure on both PO and MPG resources, and stock levels were being closely monitored, said sellers.

Maintenance turnarounds include LyondellBasell and Bayer’s joint venture (JV) PO/styrene monomer (SM) plant at Maasvlakate in the Netherlands, which was currently down for maintenance.

This was thought to be three weeks into a six-to-eight week period, although this was not confirmed at source.

Dow’s PO plant at Freeport in Texas has recently come out of a turnaround. A company source had previously said that PO exports to Europe were likely to be on hold for at least a few months until US stocks were rebuilt.

INEOS Oxide’s PO unit at Cologne, in Germany was scheduled to go down for routine maintenance at the end of April and last approximately four days.

PO and MPG market players include INEOS, Dow, BASF, Repsol, Lyondell, Cognis and Sotragal.

($1 = €0.63)

For more on PO and MPG visit ICIS chemical intelligence. Please visit the complete ICIS plants and projects database

By: Heidi Finch
+44 20 8652 3214

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