Europe MPG prices could spike on Middle East turmoil

30 August 2013 17:16  [Source: ICIS news]

LONDON (ICIS)--Europe monopropylene glycol (MPG) industrial grade prices may rise significantly on the back of a spike in upstream crude and naphtha costs resulting from unrest in Syria, market sources said on Friday.

An MPG producer said the uncertainty behind the rise in crude prices together with other contributory factors to the potential rise – possible higher feedstock costs, as well as early demand from the de-icing industry – are causing it to push its own prices up by €50/tonne ($66/tonne).

“We are dealing with a cost push due to the situation in Syria [even though] it is still a fluid situation,” the producer said. “We are talking about pushing up prices even more than planned [given the demand from de-icing]. We are not going to wait and see what happens – the market has spoken. Crude has [already] gone up [and the] risk is there will be further increases.”

A buyer of MPG, which uses it mainly in the de-icing industry, said that prices were already due to rise because of an expected increase in the monthly propylene feedstock prices and these new developments will add further upward pressure.

“[This] should push the price increase over and above [the expected] propylene feedstock [increase] because of the situation in Syria,” the buyer said. “It could be as high as €100/tonne [for MPG] by October or November.”

A trader, on the other hand, said market fundamentals are more noteworthy than the rising price of crude when it comes to the price of MPG.

“Demand has more of an influence [on the price], and demand is balanced right now,” the trader said. “MPG is too far away [downstream to be directly affected by crude]. If the propylene feedstock price goes up significantly, it could have an effect [on MPG], however supply is good and [suppliers] are desperate to move volumes. There is likely to be a price increase in the coming weeks [when demand increases] by €20-30/tonne but not more.”

The ICIS MPG price range was assessed at €1,170-1,200/tonne FD (free delivered) NWE (northwest Europe) last week.

($1 = €0.76)

By: Stefan Naidu
+44 208 652 3214

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