Europe May MEG settled at €530/tonne on less supply

07 May 2009 12:24  [Source: ICIS news]

LONDON (ICIS news)--The European mono ethylene glycol (MEG) May contract price has settled up €28/tonne ($37/tonne) to €530/tonne due to less availability in Europe, a producer said on Thursday.

The producer was committed to following the settlement, agreed on a free delivered (FD) northwest Europe (NWE) basis. It was concluded between another supplier and two of its consumers which were not immediately available for comment.

"In Europe there is not much [product] around because operating rates are still low and manufacturers are not yet increasing production ratios; not before they see incentives for producing more," the producer said.

Whilst €530/tonne was €5/tonne below its targeted price, it remained within expectations and was a reasonable conclusion, he added.

Another producer confirmed it had also agreed to the €530/tonne with two of its customers.

One seller had originally been seeking €550/tonne for May and was confronted with lower price ideas from customers, some of whom had been determined to settle closer to €515/tonne.

Another supplier had said it would support anything over €530/tonne because of manufacturers' lack of profitability and reduced availability in Europe.

The April contract price was agreed at €502/tonne, up €7/tonne from the previous month.

Parity with Asia has traditionally been a driving force behind contract decisions in Europe.

Asian spot prices had slipped to around $555-564/tonne CFR (cost and freight) CMP (China Main Port), according to global chemical market intelligence ICIS pricing. May contract nominations, however, were at $580-650/tonne. The $650/tonne represented an increase of $110/tonne.

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By: Caroline Howard
+44 20 8652 3214

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