Red Bull's Australian driver Daniel Ricciardo set the race lap record of one minute 18.063 seconds around the Mediterranean principality's twisty low-grip layout last year but the cars are already faster this season.
Lowe said the performance of the new compound, which will be making its first appearance in Thursday practice as an option along with softs and supersofts, would be “particularly interesting”.
“We're looking forward to seeing what kind of lap time improvement that might bring - and perhaps even a new lap record,” he said in a team preview for the race.
“It's set to be an intense battle between ourselves, Ferrari and Red Bull, so we'll need a perfect weekend to come out on top.”
The ultrasoft is likely to be the default tyre for qualifying but is also a popular option for the race.
“The large numbers of this compound nominated by the teams for the Monaco GP shows that it is a serious race tyre rather than just a 'qualifying special',” said Pirelli motorsport director Paul Hembery.
No room for error
Mercedes' Monaco resident Nico Rosberg has won the last three Grands Prix there but Renault-powered Red Bull arrives on the back of a sensational win in Spain for 18-year-old Dutch driver Max Verstappen.
Ricciardo could also have the benefit of a new specification engine which Renault hopes will bring half a second's improvement per lap.
Verstappen's win was helped by Rosberg and Hamilton colliding on the opening lap in Spain, putting each other out of the race, and Ferrari and Red Bull then making strategy errors in his favour.
Monaco leaves no room for error, with its metal fences and tight turns, and Mercedes motorsport head Toto Wolff said the team had to get it right.
“Once again, we have seen our competitors make steps forward which have given us an even bigger battle on our hands,” said the Austrian.
“Red Bull came out on top in Barcelona after a close fight with Ferrari, so it's clear that we are under attack from more than one angle. We cannot afford to drop the ball, so we must remain united, remain strong and hit back hard this weekend.”
Original source: Monaco F1GP could see record laps