Europe June MEG finalised at €520/tonne, July at €575/tonne

02 July 2009 12:49  [Source: ICIS news]

LONDON (ICIS news)--After lengthy deliberations, the European monoethylene glycol (MEG) June contract price has been finalised at a €10/tonne ($14/tonne) decrease from May, alongside a €55/tonne increase for July business, buyers and sellers confirmed on Thursday.

“The delay [in settling the June contract price] was causing us problems, and with the holidays coming up we needed to know [where we stand],” a consumer said.

The drop in June, to €520/tonne, which sellers were trying to avoid, and the hefty increase of €55/tonne that followed for July were a compromise, according to the producer side.

The customer countered: “It is not a compromise. But we have to be realistic that after the initial €575/tonne [for July] was done, we won’t find lower.”

He added that the new July price was far above levels in Asia, a leading benchmark for European settlements.

The list prices for July MEG in Asia ranged from $620-680/tonne CFR (cost and freight) CMP (China Main Port). Spot was around $630/tonne, according to global chemical market intelligence service ICIS pricing.

At the current price levels, however, European producers were still struggling to create margins, sources agreed.

“With €575/tonne as a [July] contract price…producers have close to zero margin,” according to a reseller.

MEG in Europe was tight as production rates had been significantly cut for economic reasons.

In addition, imports were scarce, industry sources said. This was causing spot levels to soar from lows of €410/tonne CIF (cost, insurance, freight) NWE (northwest Europe) to around the €500/tonne mark.

There were three producers and two customers who agreed to the June contract, two of which from both sides also confirmed the new July price.

The initial July settlement was established on 1 July in conjunction with the June settlement, which was first agreed in early June. Both figures were done on a free delivered (FD) northwest Europe (NWE) basis.

($1 = €0.71)

For more on MEG visit ICIS chemical intelligence
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By: Caroline Howard
+44 20 8652 3214

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