05 October 2009 00:00 [Source: ICB]
The primary outlet for monopropylene glycol (MPG) is in unsaturated polyester resins (UPRs) used in surface coatings and glass fiber-reinforced resins. The second largest consumer is functional fluids such as deicing and anti-freeze.
MPG is also used in plasticizers and hydraulic brake fluids. Other uses are in nonionic detergents and as a humectant in the pharmaceutical, cosmetics, animal foodstuffs and tobacco industries. MPG is also an excellent solvent and extractant.
The European market is steady at present with balanced supply and demand. Some producers say that demand into UPRs is gradually improving, although Europe is lagging other world regions. Others disagree, though, and say UPR demand remains depressed and that rationalization in the UPR sector has forced end-users to switch to other products.
UPRs saw strong growth in the first half of 2008, estimated by one source at close to 10%, driven by the construction and automotive sectors. But the market collapsed in late 2008.
The US pharmaceutical (USP) grade market is also steady, while demand for dipropylene glycol (DPG) is weak. Demand in late 2008/early 2009 in the deicing/anti-freeze sector was the strongest for five years, driven by bad weather across Europe.
Russia's Nizhnekamskneftekhim switched production to MPG in May 2009, but sources say export volumes were fairly small. Unconfirmed reports say the plant has returned to propylene oxide (PO) output.
European spot prices rose by €60-80/tonne in September, taking the reported range to €960-990/tonne. Producers were targeting further increases in October in a bid to raise prices above the psychological barrier of €1,000/tonne. However, any move to raise prices will be undermined by the €28/tonne fall in propylene October contracts.
Producers say margins are low and have not kept pace with the price developments for propylene feedstock.
MPG is produced by the hydration of PO and the reaction also produces DPG, tripropylene glycols and small quantities of higher glycols. MPG production is driven by PO availability and extra MPG can be produced to balance PO.
There has been much interest in producing MPG from renewable resources such as glycerin. Glycerin is a by-product in biodiesel manufacture and a boom in biodiesel projects stimulated development work on renewable MPG (RMPG). But many projects have not proceeded and much biodiesel capacity in Europe is idled.
MPG producers say the cost competitiveness and long-term reliability of supply for glycerin are big issues for MPG production, as well as the fact that the process is more complex. They say RMPG will not compete with large-volume, low-cost MPG, but there will be niche opportunities.
No major investment is expected in Europe, where growth precrisis was 2-2.5%/year, in the short to medium term. One source believes that smaller, uneconomic plants could close in the future.
US producer Dow Chemical plans MPG capacity in its joint-venture complex with oil major Saudi Aramco at Ras Tanura, Saudi Arabia, due in 2015. Dow is also adding MPG to its PO project in Thailand. It says the world will need more new capacity but timing is uncertain at present.
Asia is the world's strongest growth region, at about 6-7%/year and a project is planned in China for 2010.
US-based Archer Daniels Midland has delayed start-up of a 100,000 tonne/year RMPG plant in Decatur, Illinois, until early 2010.
EUROPEAN MONOPROPYLENE GLYCOL CAPACITY, '000 TONNES/YEAR
80 Dow Chemical
225 INEOS Oxide
120 LyondellBasell Industries
Botlek, the Netherlands
80 Fos, France
80 Novacke Chemicke Zavody
Rimnicu Vilcea, Romania*
9 PCC Rokita
Brzeg Dolny, Poland
4 Repsol YPF
22 Tarragona, Spain
75 Sasol Germany
18 *Status unknown SOURCE: ICIS PLANTS & PROJECTS
Profile last published July 10, 2006
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