Asia MEG nominations trigger Europe pricing talk

14 June 2007 18:30  [Source: ICIS news]

BRATISLAVA, Slovakia (ICIS news)--July mono ethylene glycol (MEG) contract nominations in Asia triggered a mix of reactions on Thursday ahead of upcoming European price settlements.

 

Although most producers and buyers in Europe only expect to settle July contracts at the end of June, early speculation on price movement was beginning to emerge.

 

Parity with the Asian contract price (ACP) and Euro: US dollar exchange rates are factors when discussing European contracts, coupled with domestic supply and demand and upstream costs.

 

In Asia, SABIC announced a $20/tonne (€15/tonne) hike on its July nominated ACP this week to $1,010/tonne CFR (cost and freight) Asia.

 

Shell Chemicals posted its July price at a rollover $990/tonne CFR Asia, while in the previous week, MEGlobal nominated $1,020/tonne CFR Asia, up $30/tonne.

One European manufacturer said it hoped the two higher priced Asian nominations would be more of a talking point, as they came from the largest producers.

 

This, coupled with tightening European MEG supply and excellent demand into derivative polyethylene terephthalate (PET), would make for a bullish July, both on contract and spot business, the source added.

 

A second seller said it hoped to see a higher July price to make up for a disappointing June settlement in Europe, which saw a €10/tonne to €820/tonne FD (free delivered) NWE (Northwest Europe), below most producers’ and even some consumers’ earlier indications.

 

In response, some buyers agreed that demand was good, but noted that this was only to be expected in certain PET applications in the summer months, such as the plastic bottle market.

 

One consumer said it foresaw no shortage of MEG in July, and did not predict a rapid rise in spot or contract prices.

 

Spot levels for bulk business have risen gradually over the past two months from the low to the high €600s/tonne CIF (cost, insurance, freight) NWE T2, although some sellers were now reporting business at €700/tonne CIF NWE and above.

 

Looking to Asia, European buyers noted that Chinese spot levels had fallen since late May from the high to the mid $900s/tonne CFR China.

 

This showed that the key Chinese market was not as firm as some sellers would make out and this should be taken into account when discussing European prices, one customer added.

 

European MEG participants involved in monthly contract talks include BASF, MEGlobal, Shell, Invista and Eastman.

 

($1 = €0.75)

 

 

By: Edward Cox
+44 20 8652 3214

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