Europe MEG producer targets €70/tonne increase in January

16 December 2010 15:49  [Source: ICIS news]

Europe MEG producer targets January hikeVALENCIA, Spain (ICIS)--A Europe-based producer of monoethylene glycol (MEG) is targeting an increase of €70/tonne ($92/tonne) in the January contract price, up from December’s €975/tonne, because of rising feedstock costs and tight supply, a source with the producer said on Thursday.

Ethylene needs to jump, and I also see MEG increasing into the mid-€1,000/tonne, so a further significant increase of €70/tonne. Product is tight,” the source said.

“Also, if you convert the [increasing] Asian CIF (cost, insurance and freight) MEG price for large parcels to euro, take into account higher freight, the EU discount on the [free delivered] European contract price…then you come to the same level,” the source added.

Upstream ethylene in Europe was finely balanced. Price ideas for January centred on an increase of €80-100/tonne, based on firm crude and naphtha values, as well as robust demand. The December ethylene price settled at €1,005/tonne FD (free delivered) NWE (northwest Europe).

The MEG market has also been finely balanced. As a net importer, Europe has been reliant on imports during a time of rising prices in other regions.

Customers remained unhappy about the €70/tonne hike implemented from November to December, and they were against seeing further increases in January. They cited decreases in the Asian contract price nominations as a reason to curb calls for an increase in Europe.

Asian contract nominations for January saw decreases of $10-30/tonne and a rollover from December, bringing prices to $1,150-1,160/tonne CFR (cost and freight) Asia.

Regarding the tightness in the European market, buyers acknowledged that there could be cause for a pull on demand from the antifreeze sector in January, but they said the situation did not call for the current price situation.

“MEG will roll over, or there will be a small decrease,” according to a downstream polyethylene terephthalate (PET) producer. This was echoed by other MEG buyers.

The December MEG contract was agreed on a free delivered (FD) Europe basis.

($1 = €0.76)

For more on MEG 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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