AFPM '19: US MPG, PO under pressure amid weakening propylene costs

Source: ICIS News

2019/03/23

HOUSTON (ICIS)--US monopropylene glycol (MPG) and feedstock propylene glycol (PO) are under pressure from falling propylene costs, heading into this year’s International Petrochemical Conference (IPC).

MPG and PO prices tend to track the delta of the previous month's propylene contract price, and generally follow formula-based contract pricing.

Propylene contract prices have been falling since late 2018 amid improved production and lengthening supply. With propylene stocks at near record levels and production from crackers still strong, the outlook for propylene costs remains soft.

US propylene, MPG, PO prices

As propylene prices began falling in November 2018, strong demand for de-icer had kept prices for MPG steady. This was due to re-stocking after a harsh winter in the previous season. Following the demand spike in November, MGP prices began tracking declines in upstream propylene.

Winter demand for de-icer has faded as the US moves into spring and demand into unsaturated polyester resins (UPR) is beginning a seasonal uptick which is expected to continue through the second quarter.

UPRs are the largest single use of MPG, accounting for roughly 25% of MPG product in the US. They are widely used in an assortment of products including sinks, shower stalls, pipes, tanks, boats, buses, trucks trailers and automobiles.

MPG is also used in cosmetics and personal care items, functional fluids, pharmaceuticals, liquid detergents and animal feed.

Supply for MPG is adequate to meet demand, with few production issues heard in MPG or upstream PO. Over the longer term, PO supply may be somewhat tight as demand is growing faster than supply. PO also is a feedstock for polyester polyols.

Construction continues on a LyondellBasell PO/tertiary butyl alcohol (PO/TBA) plant, which is expected to be complete in 2021.

Major US MPG and PO producers include Dow Chemical, Huntsman and LyondellBasell.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Jessie Waldheim