OUTLOOK ’18: US MPG to follow feedstock propylene amid stable fundamentals

HOUSTON (ICIS)–The US monopropylene glycol (MPG) market is anticipated to remain largely stable in 2018, with pricing expected to follow the movement of feedstock propylene.

MPG contracts are influenced by the delta of the previous month’s propylene contract price, and generally follow formula-based contract pricing.

Propylene prices are expected to be steady-to-lower in 2018, which in turn, could see MPG prices move in a corresponding manner.

Sources believe that feedstock US propylene supply will be plentiful in 2018, due to the start-up of US midstream energy major Enterprise Products’ propane dehydrogenation (PDH) project at the Mont Belvieu, Texas natural gas liquids (NGL) hub.

In addition, no issues are anticipated to affect the production of propylene oxide (PO), which is used in the production of MPG.

Further ahead, LyondellBasell’s new PO facility at its existing Channelview and Bayport complexes just outside of Houston, Texas will produce 1bn lb/year (450,000 tonnes/year) of PO when completed.

Availability of MPG was generally good throughout 2017, while demand was relatively steady.

However, supply tightened in September and October, due to Hurricane Harvey severely impacting production along the US Gulf Coast.

Overall, MPG supply is expected to be good in 2018, not accounting for the impact of any unplanned outages.

Participants have said they expect steady growth for MPG in 2018, expected to be in line with US GDP growth.

Demand for MPG is overall likely to remain steady in early 2018 as it gets a boost from the antifreeze/deicing sector with the onset of colder weather.

Mid-winter buying in the antifreeze/deicing sector is a possibility, but is dependent on the weather. If winter is particularly cold, MPG demand could see a spike in buying activity from antifreeze makers.

MPG demand could come when Covestro expands its downstream thermoplastic polyurethane (TPU) production capacity in North America by 25% by debottlenecking its New Martinsville, West Virginia, facility. The additional capacity is expected to come online in the second quarter of 2018.

Additional demand could also come from the downstream unsaturated polyester resins (UPR) market due to post-Hurricane Harvey reconstruction activity in the housing sector.

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 and antifreeze/coolants, deicers, pharmaceuticals, liquid detergents and animal feed.

Major US MPG producers include DowDuPont, Huntsman and LyondellBasell.