Buyer backs initial Europe Jan MEG at €30/t drop

09 January 2008 11:47  [Source: ICIS news]

LONDON (ICIS news)--A second consumer said on Wednesday it had followed the January Europe monoethylene glycol (MEG) contract, agreed down €30/tonne ($44/tonne).

"We wanted to get the number out of the way and the price was within an acceptable range so we decided to follow," noted the fibre manufacturer.

The contract was first agreed at €1,175/tonne FD (free delivered) NWE (northwest Europe).

Consumers were already looking to February and expecting further decreases, based on recent announcements from Asian producers, which are a major reference for European players.

"Current Europe MEG contract prices are still way too high. We need to see around €900/tonne FD NWE back in the market and hope this is the start of a downward trend. We will push harder in February," said a buyer.

MEGlobal reduced its February Asian contract price (ACP) $130/tonne to $1,460/tonne CFR (cost and freight) Asia, a company source said.

Shell Chemicals posted $1,500/tonne CFR Asia as its February ACP, also down $130/tonne.

Chinese spot prices have fallen dramatically recently, with business reported on Wednesday at $1,350/tonne CFR China.

The outlook for Asia was unclear, with talk of renewed tightness likely after the China holiday celebrations in February.

This, in turn, could make February contract talks in Europe a difficult issue.

Better supply of material in Europe led to sharp spot erosion, widening the gap between contract and spot numbers.

Europe MEG contracts reached a record high in December at €1,205/tonne FD NWE.

($1 = €0.68)

By: Edward Cox
+44 20 8652 3214

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