US MPG hike may succeed on rising feedstock costs - buyer

17 August 2009 22:56  [Source: ICIS news]

HOUSTON (ICIS news)--Producers may successfully push through September price hikes of 5-10 cents/lb ($110-220/tonne, €77-154/tonne) for US monopropylene glycol (MPG) if feedstock costs run up next month, as some expect, a buyer said on Monday.

Feedstock propylene values increased 4 cents/lb in August, and some MPG producers expected proposed increases of 8-12 cent/lb for September propylene.

Following the propylene run-up, one MPG producer announced a 10-cent/lb increase for September, after rescinding an earlier 5-cent hike.

Other MPG producers were considering doing the same, prompting ire from the buyer.

“They are all greedy. They will follow the lead of the originator since they are the biggest,” the buyer said.

An MPG producer said it had no choice due to rising production costs.

“If September propylene prices increase by 10 cents/lb, the increase for the two-month period of August-September would be 14 cents/lb. We will need to increase prices by 10 cents/lb just to maintain margins,” the producer said.

Most transactions for industrial-grade MPG for July were 55-65 cents/lb FOB (free on board) East of the Rockies, according to global chemical market intelligence service ICIS pricing.

US MPG producers include Arch Chemicals, Dow Chemical, Huntsman and LyondellBasell.

($1 = €0.70)

For more on MPG visit ICIS chemical intelligence
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