Price and market trends: US March solvents contracts settle lower

12 April 2013 09:57  [Source: ICB]

US isopropanol (IPA) contract values fell by 3 cents/lb ($66/tonne, €52/tonne) for March, sources confirmed.

Weak fundamentals, including oversupply and weak demand, pressured IPA prices lower, despite a 6 cent/lb rise in February feedstock chemical-grade propylene (CGP). CGP reversed direction for March, falling by 6 cents/lb, and is expected to weaken similarly again in April.

The IPA decline took contract prices to a new range of 92-93 cents/lb, as assessed by ICIS.

PRICES TO DROP

Several market sources expect IPA prices to drop by as much as another 6-8 cents/lb in early April on strong downward sentiment and soft market conditions, but only one reduction of that magnitude had surfaced so far. IPA supply was short early in the first quarter, but supply has lengthened on the prospect of lower pricing, which has stymied sales and runs counter to producers' efforts to sell higher-priced inventory.

Economic signals from the home-building and home-buying markets have been mixed.

US Solvents

Although there have been recent positive indications, US pending home sales edged down by 0.4% in February from January. In its monthly report, the National Association of Realtors (NAR) said its pending home sales index (PHSI) saw its third decline in the last four months.

Despite the long-awaited US housing recovery appearing to take hold, new-home construction is sputtering because it is being deprived of credit fuel and facing uphill materials and labour costs, sources said.

Among feedstocks, the US April propylene contract is trending down by at least 6-7 cents/lb from March on softer demand and lower spot price values, sources said, but the fall could be steeper.

On the US truck acetone front, March prices continued to trend lower on weaker propylene, though supply continues to be constrained by reduced phenol production. Barge and truck prices for March settled down by 5 cents/lb and 6 cents/lb, respectively.

US IPA suppliers include Shell Chemical, LyondellBasell, ExxonMobil, Haltermann and Sasol.

MIBK FALLS

US March methyl isobutyl ketone (MIBK) contract hikes implemented early in the month lost traction, pulling prices down by an average of 5 cents/lb ($110/tonne, €86/tonne) at the low end of the range, sources confirmed.

The decline took the March MIBK contract range to $1.23-1.30/lb, as assessed by ICIS.

However, one producer with outlier pricing lowered its contract values by a significantly larger margin, sources said. Although the 5 cent/lb drop was broadly implemented, some contracts ended up at rollovers after prices stabilised. Weakening feedstock and soft demand continue to pressure prices downward, and most sources expect declines in April or at least less volatile price movements during the coming month.


By: Larry Terry
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