Europe MEG market bullish amidst tight supply

20 August 2010 22:12  [Source: ICIS news]

LONDON (ICIS)--A combination of delayed shipments, fewer imports and good demand was resulting in a tighter European monoethylene glycol (MEG) market and spot prices were climbing, sources said on Friday.

“I have never seen anything like this. The fundamentals are in place what with new capacities on stream, for prices to come down,” a buyer experiencing higher prices commented.

Even suppliers were short and prepared to pay over €700/tonne ($897/tonne) for bulk material due into Europe in September, according to deals concluded this week.

These ICIS-assessed prices were up from lows of €630/tonne CIF (cost, insurance and freight) NWE (northwest Europe) in mid-July.

This was evident in the spot deals reported this week at up to €715/tonne, with an offer for 2,000 tonnes €10/tonne higher.

“[Traders are] very short because they can’t import Iranian [MEG],” a reseller commented.

Proposed sanctions against Iran, a traditionally active exporter of MEG into Europe, resulted in some resellers trying to source material from other suppliers. This in turn, was impacting on domestic availability.

“Shipments have been delayed from August to September. All European producers say they are sold out for September because the regular importers have turned to [them] for September product,” another trader said.

Availability from the US was booked or pre-sold until the middle of September, according to one source.

Demand was proving to be high.

Downstream polyethylene terephthalate (PET) producers were experiencing a surge of requirements not only due to the traditional summer high season for bottlers but also from customers speculating on PET prices bottoming out in August.

Requests from the industrial sector were also kicking in.

“Consumption is very, very high. The high season is starting,” one customer said.

The tight market came as a surprise to some players and one acknowledged: “I admit, I was sure numbers would go down. In the meantime I have changed my view”.

($1 = €0.78)

ICIS has launched weekly pricing reports in Africa for polyethylene and polypropylene. For more information contact Nadine Spoeri
For more on MEG, PET visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Caroline Murray
44208 652 3214

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