Europe MEG October/November contracts not yet settled

04 November 2010 16:22  [Source: ICIS news]

VALENCIA, Spain (ICIS)--Europe monoethylene glycol (MEG) contract prices for October and November have still not settled, with buyers refusing to accept proposed increases of up to €179/tonne ($252/tonne), sources said on Thursday.

“Suppliers are very greedy and consumers are very cautious. Suppliers want over €900/tonne for November and consumers want close to €900/tonne,” a buyer explained.

There was a single October contract deal at €806/tonne, which has yet to be followed. Were the industry to accept this figure, sellers would be seeking compensation in November and were targeting between €920-970/tonne, depending on source.

These prices would be up from September’s contract at €791/tonne FD (free delivered) NWE (northwest Europe).

“[Downstream] PET (polyethylene terephthalate) producers were looking for €850-870/tonne and now they are talking about something beginning with a nine,” according to an MEG supplier.

Producers of PET saw their costs increase on Thursday morning as upstream paraxylene (PX) soared by €123/tonne to €928/tonne for November.

A figure close to €900/tonne on November MEG would result in an additional cost of €90-100/tonne on PET production, they said.

“We are looking for plus €100/tonne on November PET to get plus €100/tonne not to compromise at plus €50/tonne,” a PET producer commented.

This was in line with other PET sellers looking to reach €1,200/tonne FD Europe and beyond for November contracts, in order to cover their estimated cost of production.

A PET customer disagreed, saying: “Last week producers were firm and pushed a lot to have over €1,200/tonne. Now clearly it will be below €1,200/tonne because demand is extremely soft”.

The driving force behind spiraling increases was high crude and developments across the chain in Asia. Polyester plants were reportedly selling four or five days’ production in a single day.

Thursday spot MEG price ideas in Asia hit $1,025/tonne CFR (cost and freight) China Main Port (CMP), according to ICIS. 

($1 = €0.71)

For more on MEG, PX, 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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