Chemical Profile: Europe MPG

Heidi Finch

20-Oct-2016

 

 

USES

The two main uses of monopropylene glycol industrial grade (MPGI) are in the unsaturated polyester resins (UPR) sector, used in surface coatings and glass fibre-reinforced resins, and the second is in functional fluids such as de-icers and anti-freeze.

MPG is also used in plasticizers and hydraulic brake fluids, and more recently in electronic cigarettes, cosmetics, pharmaceuticals and the animal feed sector, though the latter three uses are normally MPG US pharmaceutical (MPG USP) rather than MPGI related. While MPG USP is the same molecule as MPGI, MPG USP has stricter handling and transportation requirements than MPGI.

SUPPLY AND DEMAND

During the second quarter of 2016, the MPG market tightened because of a spate of plant turnarounds during the spring, which resulted in increased demand for others.

However, supply improved during the third quarter, as players replenished stocks, following maintenance turnarounds, combined with the quieter summer holiday period.

In early Q4 2016, the MPG market had become largely balanced. Views on demand are mixed, depending on source.

Some producers and other sources said that demand has been robust, particularly from the downstream UPR sector, supported by favourable weather conditions. There was also talk of increased export opportunities for propylene oxide (PO) derivatives to other regions due to Europe’s competitive cost position and exchange rate benefits.

However, some resellers and buyers said that domestic demand was muted. There was talk that winter-season buying has been slow to start, because of the mild weather conditions in the autumn and existing stocks from the previous winter season.

Nevertheless, a few suppliers said that they had received de-icer enquiries, but this view was not widely confirmed in the market.

PRICES

In early Q4 2015, MPGI spot prices were assessed on average in the mid €1,100s/tonne FD NWE and ended the quarter at a similar price level, despite fluctuation during the quarter. In the first quarter of 2016, prices fell because of feedstock cost relief, improved supply and lacklustre winter demand.

From early April to the end of May 2016, MPGI spot prices moved in the opposite direction because of reduced supply, resulting from the spring maintenance turnaround season and upstream propylene cost gains during the second quarter.

During June 2016, prices started to stabilise and then decrease during the third quarter, as supply improved and demand slowed.

At the end of August and into early September, MPGI spot prices started to stabilise and then move up slightly during September, on slightly firmer upstream propylene contract costs and signs of higher than expected demand from the UPR sector. However, these factors were weighed against a largely balanced market.

TECHNOLOGY

MGPI and MPG USP are produced by the hydration of PO, and the reaction also produces dipropylene glycol (DPG), tripropylene glycol (TPG) and a small quantity of higher glycols.

OUTLOOK

MPG demand in Europe is expected to be largely flat or move with GDP in the short to medium term, according to market players.

This is despite talk of declining demand from the UPR sector in northwest Europe which some suggest is due to possible tweaks in formulation for customer-related reasons or because of the fragile nature of the downstream construction sector. However, one MPG supplier suggested that any reduction in MPGI demand into the UPR sector is likely to be offset by growth in other applications such as liquid detergents, flavours/fragrances and animal feed.

MPG demand in Europe is estimated to grow by around 2.1% during 2015-2020, while larger growth of 2.6% and 3.5% is expected in the Middle East and Africa respectively over the same period, according to the ICIS Supply and Demand database.

Players expect that the MPG price trend is likely to remain driven by seasonal market factors, along with raw material developments.

MPG suppliers are generally unfazed by the new joint venture Dow and Saudi Aramco Sadara Chemical Company complex at Al Jubail, in the Middle East, which is due to be completed by the end of 2016, according to a company statement.

MPG suppliers consider that the MPG plant at the complex is not that large relative to some units in Europe and they expect the volumes to be used in the Middle East and Asia and not in Europe anyway.

However, one MPG manufacturer suggested that the new complex may have an indirect effect on exports of PO derivatives from Europe to the Middle East and Africa, although it said this is likely to be mainly the case for derivative polyols.

It went on to say that upstream PO operating rates in Europe could be adjusted to mitigate any possible effects, although this remains to be seen.

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