Europeans unwilling to follow initial August MEG contract price

10 August 2011 17:52  [Source: ICIS news]

LONDON (ICIS)--Europe is still without a monoethylene glycol (MEG) August contract price, as players are unwilling to follow the initial increase of €4/tonne ($6/tonne) to €1,048/tonne, buyers and sellers said on Wednesday.

“We are interested in looking for a new number,” a major supplier said.

Producers are unimpressed with the first settlement that was agreed on 1 August, and are targeting higher figures.

“I do not believe [there will be] a new number,” a buyer surmised.

Sellers had originally been seeking close to €1,100/tonne in an effort to reflect the demand/supply balance as they see it. Proposals of plus €10–15/tonne were also reportedly on the negotiating table in early August, according to the buy side.

“We can follow but at the moment the first [settlement] was done our supplier said they wanted to wait,” the buyer explained, adding that he expects to see a joint August/September settlement.

After the initial agreement, prices rallied in the influential Asian market, only to then slip back again.

Meanwhile, European spot bulk prices have soared from lows of €920/tonne CFR (cost & freight) NWE (northwest Europe) on 5 August, to a deal at €985/tonne that was concluded on Monday.

“I think in a few weeks [spot] numbers will soften as concerns over the broader economic picture will start to weigh on sentiment,” a second customer said.

Contract discussions remain deadlocked.

The July contract price was agreed at €1,044/tonne FD (free delivered) NWE.

($1 = €0.70)

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By: Caroline Murray
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