Europe MEG January contract price set to rise on tight market

06 January 2010 16:36  [Source: ICIS news]

LONDON (ICIS news)--The European January monoethylene glycol (MEG) contract price is likely to increase because of tightness in the market, buyers and sellers said on Wednesday.

“Considering spot availability, production problems, healthy demand and Asia...still in an upward trend, [the price] should be something with an eight,” a producer calculated.

Another seller thought that the January contract price would have to head into the €700s/tonne, up from the €660/tonne ($943/tonne) in December.

“I accept that it will go up...but it should be within reason,” a customer acknowledged.

Spot prices had already showed signs of where the market was headed as prices shot up from the mid-to-high €500s/tonne CIF (cost, insurance, freight) NWE (northwest Europe) to around €700/tonne on bulk. Truck prices were also heading north.

Offers of €700-750/tonne FCA (free carrier) Rotterdam were heard alongside others in the €600s/tonne, traders said. These levels were up from €560-590/tonne that were present in December.

“The cost situation has not changed. They are just taking advantage of Asia,” the customer complained.

Asian prices were heard to have hit $1,050/tonne FOB (free on board) Asia following production outages both locally and in the Middle East, sources said.

January ethylene meanwhile, went up by €30/tonne taking the price to €870/tonne FD (free delivered) NWE.

Contract discussions were yet to begin in earnest.

($1 = €0.70)

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By: Caroline Howard
+44 20 8652 3214

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