05 October 2012 19:52 [Source: ICIS news]
HOUSTON (ICIS)--The demand for US-produced glycol ethers is expected to climb in the coming months as the home construction industry ramps up activity in the wake of the economic recession.
Prices for glycol ethers, prominently used as solvents in paints and coatings, are projected to rise in the near term as paint producers such as Sherwin-Williams and PPG Industries respond to increasing demand for their products from construction contractors and home remodelers.
“Expansion in the construction and automotive industries will certainly create greater demand for paints and coatings, resulting in higher demand for glycol ethers and other solvents,” a US solvents producer said.
“In addition, a greater use of solvents means more demand for upstream oxo-alcohols such as butanol,” the producer said.
The US Department of Commerce has reported that August housing construction starts increased 2.3% from July, reflecting a 5.5% increase in single-family starts.
August starts were 29.1% higher than a year ago.
Year to date, total starts advanced 25.1%, single-family starts rose 20.2% and multi-family starts climbed 37.9%.
US construction spending in August was at a seasonally adjusted annual rate of $834bn (€642bn), about 12% higher than a 12-year low reached in February 2011.
The Commerce Department reported that spending on residential projects rose 0.9% in August, pushing residential spending to a seasonally adjusted annual rate of $273.5 billion, nearly 18% above the level a year ago.
Spending on single-family homes increased in August for the fifth straight month, while apartment construction spending rose for the 10th month in a row.
The data indicates that the housing marking is making a sustained comeback.
Sales of new homes remained near a two-year high in August, the Commerce Department said last week.
Economic data this week indicated that sales of previously occupied homes are more than 9% this year, and spending on residential construction has risen 16%.
According to a Harvard University report, home improvement spending could increase 12.2% in the first quarter of 2013 from the same quarter a year ago.
The increased home construction and remodelling activity is having a positive impact for paint sellers.
Earlier this year, paint maker Sherwin-Williams reported record sales volumes and income for the first half of 2012. The company also reported that it had opened 20 new corporate-owned paint stores during the period and sees sales growth continuing to accelerate through the second half of the year.
Pennsylvania-based paint maker PPG Industries also reported record profits in the first half of 2012 and said it expects sales growth to continue this year in North America and Asia, while European markets remain challenged.
The automotive market has been another stellar downstream market for glycol ethers as auto sales have significantly rebounded in 2012. Automotive coatings are also a market for glycol ethers.
US auto sales are on track to hit 14.5m units this year, an increase of 1m from 2011.
As a result of the resurgent economic activity in a variety of markets, demand for glycol ethers is on the rise, with prices starting to feel the upward pressure.
While the fourth quarter is a typically weak period for glycol ethers sales while the construction season slows down, increasing demand could prompt some producers to push for increases.
As of 5 October, Sasol is the only producer reported to be seeking an increase in the US market for October, having announced a 5 cents/lb ($110/tonne) increase for butyl glycol effective on 1 October, sources said.
Butyl glycol is currently assessed by ICIS at 83-85 cents/lb DEL (delivered). Butyl di-glycol is assessed in a range of 96-98 cents/lb DEL.
($1 = €0.77)
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