OUTLOOK ’12: Asian MPG market uncertain in Q1 on macroeconomic woes

03 January 2012 08:06  [Source: ICIS news]

By Loh Bowei

SINGAPORE (ICIS)--Asia’s monopropylene glycol (MPG) prices are expected to remain uncertain in the first quarter of 2012 because of the weakening global economy, industry sources said.

The prices of industrial-grade propylene glycol (PGI) on a CFR (cost & freight) northeast (NE)/southeast (SE) Asia basis were assessed at $1,650-1,680/tonne (€1,270-1,294/tonne) CFR on 23 December 2011, according to data from ICIS.

The prices of pharmaceutical-grade propylene glycol (PG USP) were at $1,880-1,930/tonne CFR NE Asia and $1,910-1,940/tonne CFR SE Asia on the same day, the data showed.

“It is really hard to predict PG prices now because the poor macroeconomic environment has affected people psychologically,” a downstream unsaturated polyester resins (UPR) maker from southeast Asia said.

UPR is used in housing such as sinks and water tanks.

“[The prices of] PG follow a country’s GDP [gross domestic product] because downstream UPR is used in the construction sector,” a Malaysian buyer said.

Malaysia’s GDP for 2012 is expected to be lower than 2011 and the market may experience a slowdown during the first quarter, the buyer added.

A major US producer said Asia’s PGI prices may decline, depending on the situation in Europe, but added that PG USP demand from the region should remain stable.

PG USP is used in the production of personal care products, such as cosmetics, and in the food additives sector.

Feedstock propylene oxide (PO) supply is expected to grow because of Dow Chemicals’ 390,000 tonne/year PO plant in Thailand, which was commissioned in October 2011, a Chinese trader said.

“If PO supply increases, PG supply will eventually increase as well,” the trader added.

This may weaken the prices of PG, but the demand forecast for the product in the first quarter is unclear and the current macroeconomic climate will result in an uncertain outlook, the trader said.

However, regional end-users’ inventory levels of PGI are low because most players maintained minimal purchasing over the past few weeks in view of the eurozone debt crisis, which may increase prices, market sources said.

“If demand [were to] pick up [next quarter], the prices [of PGI] will increase,” a southeast Asian buyer said.

On the other hand, the PG USP market is generally more stable than that of PGI and the demand for the former is expected to be stable in the first quarter, a northeast Asian PG USP maker said.

($1 = €0.77)

For more on propylene glycol, visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
For more pricing intelligence, visit ICIS pricing
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Loh Bowei

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index