European PGE prices rise €30/tonne on Shell PO FM

LONDON (ICIS)–Prices for both methoxy propanol (PM) and methoxy propanol acetate (PMA) in the European propylene glycol ethers (PGE) market have risen as a result of the force majeure (FM) declared by Shell this week on production of several products including propylene oxide (PO) at its Moerdijk, Netherlands facility, sources said on Friday.

PM prices were assessed at €1,350-1,380/tonne FD (free delivered) northwest Europe (NWE), and PMA prices assessed at €1,520-1,570/tonne FD NWE, according to ICIS.

Several producers and distributors said PM and PMA spot prices started to climb on Wednesday after the FM declaration, and sources expect further significant upward movement in the near future.

The majority of increases were around €30/tonne, though some players talked of rises of up to €50/tonne, though there was not sufficient confirmation from the market to support such increases this week.

“We are currently fully utilised and cannot match requests [for material]. We see the prices are moving up, currently we have a level of €30-40/tonne increase on both,” a producer said.

One distributor said it did not initially believe spot prices would move up following the FM, but agreed prices were moving up by Friday.

“On Monday I would have said no [to increases], but from Wednesday I have to say yes to increases in spot this week,” the distributor said. “For every tonne I sell I need to replenish inventory with more expensive stock.”

This is the first increase European PM prices have seen since November last year. Weak demand and ample supply had kept PM prices flat throughout the whole of 2014.

PO was already less available following a fire at Moerdijk in June, which together with LyondellBasell’s FM on European acetic acid imports between June and August saw PMA prices rise for the first time in 2014 in June.

Wednesday’s FM on PO has now significantly tightened feedstock availability further. However, BP’s FM on acetic acid announced 3 October will not have a significant impact on PGE prices if any, sources said this week.