Higher feedstock price yet to impact Europe PM, PMA prices

24 January 2014 17:56 Source:ICIS News

LONDON (ICIS)--Prices for methoxy propanol (PM) and methoxy propanol acetate (PMA) are still unchanged from December levels because spot buyers have resisted any attempts of increases in January, sources said on Friday.

Buyers have either managed to meet their January manufacturing needs with stock bought in December, or have been able to shop around in the market to secure cheap prices.

Producers had wanted to pass on at least some of the €20/tonne increase in the January propylene contract price, and in some exceptional cases, were able to do so. Resell prices were reported at €1,370/tonne from one producer, but this was not seen as representative of the overall market.

“What we do is try to continue to move the customers to higher prices, and this would be what we will try and do in February, … [but] it depends on the weather,” the producer said.

There was additional pressure for higher January prices because of the €37/tonne increase in the quarterly methanol contract, one producer said.

“From a producer stand-point the cost push is our key concern with material increases from both methanol (+€37/tonne) and propylene (+€20/tonne),” a second producer said.

Demand has been stable but lower than many players would have liked.

“There has not been any real [notable] movement. It has been a little more quiet than the beginning of year, but not too calm,” a distributor said, adding: “Business is quiet compared to the week before, but it’s not completely dead.”

Market participants are now considering February and a possible increase in the feedstock propylene, which could further squeeze producers' margins if spot buyers continue to resist higher prices.

“What might happen for February, I would expect a rollover. Not a decrease because the [January] €20/tonne upward movement hasn't been reflected,” a distributor said.

By Matt Tudball