02 June 2010 12:16 [Source: ICIS news]
LONDON (ICIS news)--The European June mono ethylene glycol (MEG) contract price has been agreed at €820/tonne ($1,000/tonne), down €36/tonne from May, the four parties involved confirmed on Wednesday.
The contract settlement was first concluded on a free delivered (FD) northwest Europe (NWE) basis on Monday evening. It was followed on Wednesday morning, the two MEG producers and two downstream polyethylene terephthalate (PET) producers said.
The lower price was a compromise for producers. A significant drop in Asian spot prices alongside exchange rate factors put a halt to any ideas of prices rolling over, according to the first producer.
“I thought the number would have been higher... because European supply is currently still tight and [will be] for the next few weeks,” the second producer said, adding that shutdowns at three major upstream ethylene oxide (EO) plants was bound to impact MEG.
There was, however, no point in delaying confirmation of the first agreement, it said.
The customer who settled first said €820/tonne was a realistic number which took into account the “drastic reduction” in Asian prices.
“There is a $40/tonne gap between the Asian contract price and the European contract price, which seems to me quite reasonable,” the second customer said.
A third supplier said recently it had been targeting an increase of €9/tonne from May prices.
This was the first time the second customer, which is based in ?xml:namespace>
As more PET manufacturers disappeared or merged with their competitors, there were fewer MEG customers who could get involved in the contract process, the second contract settler noted.
“The liquidity of negotiations should improve. It is very important,” the first producer stated, echoing previous comments made by other buyers and sellers.
($1 = €0.82)
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