European IPA producer targets spot rises on back of propylene.

28 February 2013 16:34  [Source: ICIS news]

LONDON (ICIS)--A European isopropanol (IPA) producer said that it will target increases of €50/tonne for spot technical, cosmetic and pharmaceutical grade IPA, following the €55/tonne increase in the March propylene contract price, a source said on Thursday. 

European IPA producers’ margins have been squeezed substantially during 2012, because of high feedstock costs and low IPA demand. Since the beginning of 2013, producers have been trying to claw back some lost margins as demand levels have stabilised.

“Margins haven't been there for so long that we need to get some profit back,” the producer said.

February saw spot technical grade IPA prices rise above feedstock propylene costs for the first time since the third quarter last year.

With the March propylene contract price confirmed at €1,155/tonne FD (free delivered) NWE (northwest Europe), technical grade IPA prices will need to increase in order for producers to see margins improve.

Last week, technical grade IPA spot prices were €1,110-1,150/tonne FD NWE, according to ICIS data.

Buyers were not surprised that the producer was looking for substantial increases in March.

“Producers took an opportunity to push prices up when propylene went down [in January], so it’s no surprises that they'll follow propylene up on this occasion,” a distributor said.

Buyers reluctantly accepted increases in January and February spot prices, aware that 2012 had been hard on producer margins. It remains to be seen, though, how much further producers can raise prices before demand levels suffer.

“Demand has been ok – not brilliant, but not poor,” the distributor added.

Other producers in the European market have yet to publicise their spot price intentions for March.

($1 = €0.76)

By: Matt Tudball
+44 208 652 3214

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