European MEG March contract price receives positive feedback

25 February 2010 18:54  [Source: ICIS news]

LONDON (ICIS news)--Markets are reacting positively to the timeliness of the European March monoethylene glycol (MEG) contract price of €899/tonne ($1,215/tonne), having incurred months of delays, sources said on Thursday.

“People have suffered because of the delays upstream,” a buyer of downstream polyethylene terephthalate (PET) said.

The effects of late feedstock price settlements were detrimental as they resulted in markets playing catch-up on a monthly basis, sources agreed.

Particularly where imports were concerned, a marketer of Asian PET said. Were Asian material to increase in value, for example, importers may struggle to sell product into a Europe which had yet to push hikes through.

“The effect [of increases] in Europe takes place with a little delay,” he said.

Over the last few months European sellers were obliged to sell PET without knowing what was happening in upstream MEG, a PET buyer acknowledged.

“PET [prices] are fixed during the middle or the end of the month. It’s a killer for [producers],” the buyer added.

Not all customers agreed on the price of March MEG, however.

“It is too much. If you calculate the exchange rate it is well over the Asian contract prices of $1,050-1,110/tonne CFR [(cost and freight] Asia,” a PET customer complained.

The customer did say that at least the early MEG settlement would give them a chance to pass the increases further downstream.

An MEG producer not involved in settling the March MEG contract price also praised the timely agreement, but said it did not offer sellers compensation for the February price of €840/tonne FD (free delivered) Europe.

($1 = €0.74)

For more on MEG, PET, PTA visit ICIS chemical intelligence
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By: Caroline Murray
44208 652 3214

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