17 May 2005 15:00 [Source: ICIS news]
LONDON (CNI)--European polyethylene terephthalate (PET) producers are preparing for what might prove to be a difficult round of negotiations for June fibre grade mono ethylene glycol (MEG) contracts, CNI learned on Tuesday.
Most market observers expect a hefty decrease from May’s Euro942/tonne FD NWE (free delivered Northwest Europe) settlement. Their expectations are based upon a $260-280/tonne decline in Asian contract nominations May to June to $800/tonne CFR China Main Port (CMP).
However, a couple of PET producers said they also expect some compensation for what they see as an over-priced May contract given the recent collapse in MEG spot prices.
Meanwhile, at least one other PET producer said that it will not negotiate June prices until the May contract has been revised, a situation which most market participants claimed was unlikely.
April and May contracts were finalised in tandem on 15 April following some discord over the parties involved in the initial April contract; April was settled at Euro950/tonne FD NWE – up Euro30/tonne and May at Euro942/tonne FD NWE – down Euro8/tonne.
Spot levels have dropped by around 15% to Euro610-630/tonne CIF NWE for bulk lots since the April-May settlement and further erosion is expected. Global MEG prices have been under pressure because of oversupply and poorer than expected demand from China. A very slow start to the traditional peak demand period for PET in Europe was also to blame, according to market sources.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|