09 June 2006 12:44 [Source: ICIS news]
LONDON (ICIS news)--An initial European June mono ethylene glycol (MEG) contract settlement has been agreed at €777/tonne, a rollover from May, a key consumer said on Friday.
Discussions over the contract, which is settled on a FD (free delivered) Northwest Europe (NWE) basis, had become deadlocked as both buyers and sellers were adamant that their respective positions should be upheld.
“We failed to agree, so we have gone for a rollover,” said the source who settled with one of its suppliers, a key Swiss headquartered MEG producer.
The consumers’ position had hinged on the weak US dollar amid fears that its downstream markets would be disrupted by cheaper Asian imports. They were aiming for decreases of €7-20/tonne.
Producers felt that a decrease, or even a rollover in some cases, was not justifiable in view of high upstream costs, tightening availabilities due to unplanned production hiccups, at a time when polyethylene terephthalate (PET), its key derivative, was moving into its peak demand season.
Earlier this week, two global suppliers announced MEG July contract nominations in Asia of $910/tonne CFR (cost, freight) Asia, up $40/tonne from June. This news, together with $15-25/tonne gains in Asian spot levels to around $880/tonne CFR Asia this week, was thought to have gone some way to supporting producers’ positions.
It was not immediately clear whether other contract players would follow the €777/tonne rollover.
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