Stronger PGE demand not translating into higher prices

21 February 2014 23:59 Source:ICIS News

LONDON (ICIS)--European prices for propylene glycol ethers (PGE) methoxy propanol (PM) and methoxy propanol acetate (PMA) have rolled over from last week because of unchanged demand and market participants waiting for an indication of the March propylene feedstock direction, market sources said on Friday.

“Demand surprisingly good,” a producer said, adding: “This year, had a great January, and already over budget on several solvents for February.

“We are seeing strong demand but not translating into price increases,” the producer concluded.

In the distribution market, spot prices were unchanged.

“No massive changes to report... It all feels fairly stable and demand, “so-so”,” a distributor said.

Demand has not dipped so far this year, despite the expected seasonal lull usually seen during colder weather periods in the first quarter.

Milder weather in December and January helped to prolong construction activity into 2014, maintaining demand for paints and coatings used in outdoor construction. This contrasts with the colder-than-usual winter at the beginning of 2013, which had a negative impact on solvents demand.

Some support in demand levels may also be coming from the automotive industry, which is seeing an improvement in new car registrations. According to data from the European Automobile Manufacturers' Association, passenger car registrations in the EU rose 5.5% in January compared to the same month a year earlier, the fifth monthly increase on the back of the European economic recovery.

Participants in the European PGE market are now waiting for an indication of the March propylene contract price settlement, which some expect may be similar to February’s rollover.

By Matt Tudball