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Supply tightness, feedstock pricing pressure US IPA: sources

http://www.chemnet.com   Jan 11,2017 Platts
Tightness in spot availability has maintained pressure on the US isopropyl alcohol market, and likely increases in feedstock contracts appear primed to add further pressure, sources said Tuesday.

Stronger demand in the US and Europe, production issues in the second half of last year and expectations of an upcoming maintenance in the first quarter have combined to restrict spot availability, sources said.

US IPA was assessed Tuesday at 49.50-50.50 cents/lb ($1,091-$1,113/mt) FOB USG, the highest since late November.

"There's still not a whole lot of extra volume out there," a distributor said.

Spot pricing received minimal relief from lower December feedstock chemical-grade propylene contracts, and expectations for higher January contracts will likely apply further pressure, sources said.

December contracts for feedstock chemical-grade propylene declined 4 cents/lb to a nine-month low of 30 cents/lb, but expectations for January have called for increases of as much as 5-7 cents/lb, sources in that market said.

Contract buyers who have a propylene component in their contracts have seen easing in pricing this month, but that will likely be short-lived given the January expectations, a source said.

"There was a significant push in late summer and early fall to get IPA prices up, and it seems to have held up," the source added.

US IPA producers and marketers to issue pricing increases in the second half of last year included ExxonMobil, LyondellBasell, Monument Chemical and Dow Chemical, according to letters sent to customers at the time.
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