US MPG producers likely to face resistance on 4-cent/lb Feb hikes

15 January 2010 22:48  [Source: ICIS news]

HOUSTON (ICIS news)--US mono propylene glycol (MPG) price-hike announcements of 4-cents/lb ($88/tonne, €61/tonne) for February were likely to encounter buyer opposition, a buyer said on Friday.

The price-hike proposals were announced by Dow Chemical and Huntsman. Similar price-hike announcements from other producers had not been heard but were expected.

The 4-cent/lb February hikes followed 7-cent/lb increases proposed for January that remain undecided, according to the buying community.

A large buyer said producers had been emboldened by the tightness of supply at Huntsman, and added that buyers were likely to push back on the increases.

“If propylene rolls back and if Archer Daniel Midland (ADM) comes online as planned, the buyers’ revenge will be swift,” the buyer said, adding that the proposals to hike prices were a case of “get it while you can.”

Huntsman announced sales allocations until further notice of 80% on propylene oxide (PO) and 100% on MPG amid a turnaround at its Port Neches facility that was expected to last 65 days.

A trader said the increases were driven by high feedstock costs, tightening supply and steady demand.

ADM is expected to start its renewable PG plant in Decatur, Illinois, sometime during the first quarter of 2010, with a nameplate capacity of up to 125,000 tonnes/year.

US MPG prices for USP-grade material were 70-78 cents/lb in December, according to global chemical market intelligence service ICIS pricing.

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

($1 = €0.69)

For more on MPG visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Gene Lockard
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