Price and market trends: Europe MPG prices continue to soar on shortage

17 July 2014 18:13 Source:ICIS Chemical Business

There are no signs of this price spike abating and some believe the full impact of the explosion is yet to be realised

European monopropylene glycol (MPG) prices continue to climb as availability is falling rapidly after last month’s explosion at Shell’s upstream propylene oxide (PO) facility in Moerdijk, the Netherlands, sources said on 11 July.

The consensus is that the market is overwhelmingly supply driven and that prices will continue to rise in the near term as glycols become increasingly scarce.

Overall, demand is seen to be stable-to-strong and consistent with traditional summer seasonality, depending on the end-sector.

Producers noted MPG is still the least profitable PO derivative even as polyols prices also firmed recently, albeit not to the same extent as MPG.

The flexible polyols contract price rose by €30/tonne on the low end and €60/tonne on the high end to €1,780-1,870/tonne free delivered (FD) northwest Europe (NWE) in July.

One buyer, while conceding the market is tighter, said the recent price spike is driven more by logistical constraints than availability. However this was not widely confirmed in the market.

FULL IMPACT YET TO COME?
There are no signs of this price spike abating and some believe the full impact of the explosion is yet to be realised.

Others said prices will start to plateau in the near term but are unlikely to come down to pre-explosion levels anytime soon, especially with initial de-icer restocking demand expected in the next 1-2 months.

A similar price spike has not been seen since the winter of 2010/2011 when a record-breaking snow storm depleted existing de-icer stocks and created a short term MPG shortage.

The recent upward trend is widely seen as a more severe upstream shortage and the MPG shortfall is set to be more prolonged, especially given its comparative lack of profitability as a PO derivative.

MPG spot prices firmed to a wide range of €1,330-1,450/tonne free delivered (FD) northwest Europe (NWE), the highest levels since 2011.

By Stefan Naidu