US IPA export prices rise as propylene costs continue to rise, Asian imports decline

HOUSTON (ICIS)–Although price increase nominations for isopropanol (IPA) were introduced in early January, domestic and spot prices have reflected more subtle changes.

However, prices did rise in export markets, as supply is more clearly constrained in areas where US producers export – such as Latin America – than in the US.

Nominations were sought amid consistently rising propylene spot prices as well as a rise in December contracts. Propylene is a key feedstock for IPA.

Propylene contracts settled on 17 December, up 10 cents/lb for most market participants. The increase is the largest month-on-month contract price jump since January 2017 and has taken contract levels to their highest levels since November 2018.

Spot prices of chemical-grade propylene (CGP) and polymer-grade propylene (PGP) have remained high in January.

IPA export prices rise
IPA export prices rose significantly last week. Meanwhile, US spot prices were unchanged at 64-69 cents/lb free on board (FOB) US Gulf. Domestic prices rose 4 cents/lb ($88/tonne) and are now assessed at 65-69 cents/lb delivered (DEL) US Gulf.

IPA export markets had been quiet recently with sources noting little volume and limited activity for US producers exporting to Latin America in H2 2020.

However, as container costs continue to rise in global shipping, Latin American buyers may be more heavily impacted than buyers in the US IPA market, who are insulated by the large number of domestic producers.

Meanwhile, Latin American buyers are seeing higher prices from suppliers that were previously on the low end of the market.

IPA exports historically trade at a discount to domestic and spot prices in the US. However, sources noted last week that there were instances of export prices selling at a premium to the domestic market, although further confirmation is needed.

Spot export prices increased 8 cents/lb ($176/tonne) last week and are now assessed at 60-64 cents/lb FOB US Gulf.

Imports to the US continue to decline
Due to several factors, most importantly the aforementioned rising container shipping costs out of Asia that have continued into Q1 2021, imports to the US have continued to decline.

Tariffs have also impacted the extent of Chinese imports, which have fallen more precipitously than imports from other countries.

After peaking in May 2020 and remaining high in the summer, imports have declined in each of the past four months.

IPA imports have fallen 40% from the May peak to November, the most recently available period for trade data on the ICIS Supply and Demand Database.

The table below compares imports from leading IPA importers at the start and finish of the most recently available six month period. Additional information can be found in the database.

Country	May 2020 (Imported Tonnes)	November 2020
China	2197	6
Japan	209	196
South Africa	101	351
South Korea	2636	44
Taiwan	1154	311

US IPA suppliers include ExxonMobil, Dow Chemical, LyondellBasell, Monument Chemical and Shell Chemical.

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