19 April 2013 17:02 [Source: ICIS news]
LONDON (ICIS)--Prices for European propylene glycol ethers (PGE) are likely to soften next month if the May feedstock propylene price decreases, sources said on Friday.
A producer said: “We’re hearing some weakness in propylene. I’ve not yet had a chance to discuss with our olefins group, but we expect a decrease. If naphtha dives then olefins follow.”
While discussions are yet to properly commence, a May propylene decrease of €50-100/tonne ($65-130/tonne) is expected on the back of softer crude oil and naphtha values.
“We haven't talked to our customers yet about May prices,” the source continued. “But if the whole basket drops, we'll have to drop [PGE prices] to some extent.”
As a result of this expected fall in the price of propylene, and in combination with lacklustre demand, many buyers are also expecting PGE prices to decrease next month. A number are consequently refraining from purchasing.
A distributor said: “There are lower prices for raw material, and slack demand. Everything is pointing downward. The market is on hold, people [buyers] are waiting to see [if prices fall]. People have enough material for April.”
Nevertheless, with margins having been compressed for some time, PGE producers are keen to keep any price decreases to a minimum.
“Margins are so compressed,” the producer said. “We have absorbed increased energy costs rather than pass them on to customers. It’s a very challenging environment. It’s been a tough winter. “
The source added: “The challenge we have is that margins have been compressed and compressed. We want customers to enjoy our product, but there comes a point when it gets uncomfortable.”
Next week should see more light shed on PGE pricing as the May propylene price settlement will likely be imminent.
($1 = €0.77)
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