07 December 2012 17:11 [Source: ICIS news]
LONDON (ICIS)--European monopropylene glycol industrial grade (MPGI) spot prices have softened amid slow general demand, good supply and feedstock relief, despite the first signs of snow in Europe this week, market players on Friday.
However, the price trend may reverse soon if the cold snap persists and seasonal MPGI demand increases.
“It is too early to see any effect of the first snow [in parts of Europe] on [MPGI] demand yet. [They have] already stocked up downstream,” said one reseller.
Sources said that de-icer players had learned their lessons from the harsh winter seen a few years ago, which started early and caught them unawares.
As a result, de-icer players have been well prepared for the winter to start this year and therefore it will take some time before pre-existing stocks are worked through and there is any real increase in MPGI demand.
However, while the snow in parts of Europe has not resulted in any immediate uplift in MPGI demand, one producer said there are signs that regular de-icer players are keen to ensure that they receive their agreed volumes on time or even earlier than planned. The latter suggests that MPGI seasonal demand could gain momentum, if the cold weather were to continue for a prolonged period.
Both buying and selling sources, however, acknowledge that MPGI prices in excess of €1,200/tonne ($1,558/tonne) FD (free delivered) NWE (northwest Europe) have now largely disappeared for fresh business, with prices largely in the upper €1,100s/tonne FD.
One distributor said that there is still some downward pressure this week as sellers need to lower prices in order to stimulate general demand for industrial applications at year-end, amid stricter inventory control for working capital considerations and due to low seasonality.
Players are now waiting to see if the winter weather continues and whether this will lead to a seasonal boost to demand, which could in turn push prices upwards.
However, there is some talk that certain sellers are already giving out offers with shorter-term validity - until mid-December rather than for the whole month, as they are hoping that the cold snap will continue and they may have an opportunity to raise MPG prices.
MPG producers have struggled with poor profitability throughout this year, because of high propylene feedstock costs on the one hand, but the difficulty in passing them on downstream amid subdued demand in the main downstream unsaturated polyester resin (UPR) sector during 2012, as it has been most affected by the fragile economic climate.
MPGI's are used in a number of end applications such as UPR, surfactants, de-icer and antifreeze among others.
($1 = €0.77)
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