US MPG May contracts expected to be stable, supported by demand

02 May 2014 21:40 Source:ICIS News

NEW YORK (ICIS)--US monopropylene glycol (MPG) contract values for May are expected to remain steady from April as an unusual period of better demand in Q2 lends stability to pricing, a market source said on Friday.

A May rollover is said to be supported by surprisingly better demand in Q2. Normally, Q2 is a slow time for MPG because demand from the downstream aircraft de-icing and anti-freeze sectors is gone by this time, which typically puts prices under downward pressure.

Aircraft de-icing and anti-freeze are the major demand drivers for MPG, making winter the strong season for it.

The unusually busy demand this quarter might be due to re-stocking activity, said a market participant.

Winter lasted longer than expected, driving aggressive demand and pulling MPG out of the system to the point that producers were nearly running on empty, the source said.

If re-stocking is going on, then the source expects inventories to be back up by mid-May.

April contract prices were assessed down in tandem with the 1.5 cent/lb ($33/tonne) decline in the March feedstock propylene contract price.

April prices as assessed by ICIS were at 94.65-103.65 cents/lb free on board (FOB) industrial grade from 95.65-104.65 cents/lb FOB in March; 100.65-109.65 cents.lb FOB pharmaceutical grade from 101.65-110.65 cents/lb FOB in March; and 85.00-94.65 cents/lb FOB anti-freeze grade from 86.00-95.65 cents/lb FOB in March.

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 (ADM), Dow Chemical, Huntsman, LyondellBasell and Lonza.

By Feliza Mirasol