08 November 2011 11:49 [Source: ICIS news]
(recasts, clarifying sixth paragraph)
LONDON (ICIS)--The European monoethylene glycol (MEG) November contract has been confirmed on Tuesday at €1,053/tonne ($1,442/tonne), a fall of €83/tonne from October, as a second producer and buyer followed the initial settlement.
The fall in the contract price was a result of lower Asian and European spot prices in October and early November.
Since the beginning of October, European bulk spot prices have fallen by €70–90/tonne CIF (cost, insurance & freight) NWE (northwest ?xml:namespace>
A drop in the November contract price had been widely expected, because of the need to reach parity with Asian prices. Asia is currently the dominant force in the market, with
“€1,053/tonne is in line with the market. Of course we were looking for something lower, but it’s in line with the Asian numbers,” the buyer involved in the second settlement said.
The producer which followed Monday's initial settlement said it had been targeting a figure closer to €1,080/tonne, but had agreed €1,053/tonne as a compromise because of the need to reach a finalised number for November.
“It’s a compromise on the bottom [price level] of discussions. It’s time to go ahead with the settlement,” the producer said.
MEG demand is low because downstream polyethylene terephthalate (PET) consumption is weak as a result of volatile macroeconomic conditions.
The MEG November contract was agreed on a free delivered (FD) NWE basis.
($1 = €0.73)
Additional reporting by Caroline Murray
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