12 October 2012 09:41 [Source: ICB]
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 recession.
Prices for glycol ethers, which are prominently used as solvents in paints and coatings, are projected to rise in the near term as US 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 US Department of Commerce has reported that August housing construction starts increased by 2.3% compared with 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 by 25.1%, single-family starts increased by 20.2% and multi-family starts climbed by 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 that was reached in February 2011.
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.
Demand for glycol ethers is on the rise, with prices starting to feel the upward pressure. While the fourth quarter of the year is a typically weak period for glycol ethers sales, with the construction season slowing, increasing demand could prompt some producers to push for increases in prices.
As of 5 October, South Africa's Sasol was 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, according to sources.
Butyl glycol is assessed by ICIS at 83-85 cents/lb DEL (delivered). Butyl di-glycol is assessed in a range of 96-98 cents/lb DEL.
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