InterviewNPRA ’10: Global PO/PG markets to remain tight - VIDEO

28 March 2010 16:35  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS news)--The global propylene oxide/propylene glycol (PO/PG) markets are expected to remain tight, with improving demand, supply constraints and raw material cost pressures, the head of US-based Dow Chemical’s PO/PG business said on Sunday.

“We continue to see improving demand in just about every sector from the downturn,” said John Smith, global product director, PO/PG for Dow, in an interview with ICIS on the sidelines of the International Petrochemical Conference (IPC).

“It looks like we’re at a growth pace where the industry needs about one world-scale PO plant every year,” he added.

A world-scale PO plant would constitute about 300,000 tonnes/year of capacity.

Global PO growth was expected to rise a robust 5% per year over the next several years, while PG growth was expected to maintain more GDP-like growth rates of around 3%, said Smith.

“We are seeing improving demand in the automotive, bedding, appliance and construction end markets across the board,” he said.

The major driver of PO growth was polyether polyols, which consumes 60-65% of PO worldwide, he said. Polyols are then made into polyurethane foams and systems.

Tightness in PO/PG raw materials, in particular propylene in North America, Europe and Asia, was putting upward pressure on PO/PG prices, said Smith.

Plus, a number of planned outages in PO/PG could also extend the tight market, he added.

Dow is taking its Freeport, Texas, PO/PG unit offline for two weeks of planned maintenance in the latter half of May, he said.

“Supplies are tight right now and this could probably last in the next few months,” said Smith.

“Tight supply/demand and a cost push from feedstocks are driving prices higher. We see the potential for higher prices in all regions,” he added.

Dow nominated a price increase of 5 cents/lb on all grades of PO/PG in mid-March.

“It is too early to say [if it will be successful], but we think the market will accept it,” he said.

Dow has total global PO production capacity of more than 2m tonnes/year and PG capacity of 750,000 tonnes/year.

Other North American producers of PO/PG include Huntsman, LyondellBasell and Shell.

Hosted by the National Petrochemical & Refiners Association (NPRA), the IPC continues through Tuesday.

For more on PO/PG visit ICIS chemical intelligence
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By: Joseph Chang
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