US Feb MPG contracts up on feedstock and producer price hikes

21 February 2014 23:45  [Source: ICIS news]

US Feb MPG contracts up on feedstock and producer price hikesNEW YORK (ICIS)--US monopropylene glycol (MPG) contract values for February have moved upwards from January on the back of the higher settlement for feedstock propylene in January and producer-led price increases, market sources said on Friday.

Producers achieved a 3-4 cents/lb ($66-88/tonne) increase in prices out of the 7 cents/lb price hikes that they had been targeting since mid-January, said a market participant.

Market sources were sceptical that the full increase would be achieved and expected a settlement closer to 3 cents/lb, they have said.

Formula-based contracts, by comparison, would have risen less than that as these contracts are contingent on the previous month’s movement of the feedstock propylene contract price.

US MPG monthly contracts are strongly influenced by the delta of the previous month’s propylene contract price and generally follow formula-based pricing.

Formula pricing can be equivalent to two-thirds of the monthly delta of propylene or two-thirds of the propylene contract price plus an adder number, depending on which formula market participants use.

Monthly MPG trends also take into account pricing based on negotiations between buyers and sellers that are not dependent on the formula pricing.

Supply, meanwhile, has been tight but is loosening, said a market participant. Sources expected the supply tightness to ease up by mid-February.

Material is expected to be more available in March, said a source.

February contract ranges were assessed by ICIS at 97.65-106.65 cents/lb FOB (free on board) for PG industrial-grade (PGI), up from 94.65-102.65 cents/lb FOB in January; at 103.65-112.65 cents/lb FOB for PG pharmaceutical-grade (PGUSP), up from 100.65-108.65 cents/lb FOB in January; and 88.00-97.65 cents/lb FOB for PG anti-freeze-grade (PGAF), up from 85.00-93.65 cents/lb FOB in January.

PG is a feedstock for unsaturated polyester resins (UPR), cosmetics and personal care products, functional fluids and antifreezes, liquid detergents and dog food.

US producers include Archer Daniels Midland, Dow Chemical, Huntsman, LyondellBasell and Lonza.

By: Feliza Mirasol
+1 713 525 2653

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