Initial Europe December MEG settles up at €660/tonne

09 December 2009 10:38  [Source: ICIS news]

MEG is a feedstock for PETLONDON (ICIS news)--An initial European December monoethylene glycol (MEG) contract price has been agreed at €660/tonne ($971/tonne), up €28/tonne from November, due to soaring prices in Asia, a buyer and seller confirmed on Wednesday.

The initial contract settlement was agreed late on Tuesday at €660/tonne FD (free delivered) NWE (northwest Europe), they said.

“[We agreed at €660/tonne] because of the crazy situation in Asia, where FOB (free on board) is now $900/tonne. We wanted to settle before it gets crazier there,” the buyer said.

The seller agreed that Asian prices were the main cause of the increase in the European December contract, but it said that it had been already targeting a figure of around €660/tonne at the end of November, when prices in Asia were showing signs of climbing from the mid-$800s/tonne.

Soaring spot prices in Asia were attracting imports from the Americas and the Middle East, leaving the European market with less availability, players said.

Another customer said it disagreed with the initial settlement of €660/tonne and with the logic behind the increase.

“It is very high from our expectations. [We were looking for] €640/tonne to pass on the ethylene price. European producers are cashing in on the Asian market,” said the customer.

The December ethylene contract went up by €7/tonne from November to €840/tonne FD NWE. As a result, MEG spot prices in Europe were increasing, players said.

An offer for December was heard at €550/tonne CIF (cost, insurance, freight) Europe, while a producer reported selling 1,000 tonnes at €580/tonne.

This was up from the low-to-mid-€500s/tonne seen in early December, according to global chemical market intelligence service ICIS pricing.

Further confirmation from other market sources was pending.

($1 = €0.68)

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

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