Europe MEG contract may end in double April/May settlement

20 April 2012 19:22  [Source: ICIS news]

LONDON (ICIS)--European April monoethylene glycol (MEG) contract price discussions are ongoing, leading to speculation about a possible double settlement for April and May, sources said on Friday.

"Most probably…it will be a double settlement, why not?" a customer said, echoing thoughts voiced by other industry players.

So far, buyers and sellers have moved targets as much as they want to for now and still are far away from settling a price.

"Producers are still looking for four digits and buyers are looking for €100/tonne [$132/tonne] down [for April]. It's too far apart," a contract supplier said.

Buyers are talking about a €90-120/tonne decrease from March's €1,070/tonne FD (free delivered) NWE (northwest Europe), citing a weak Asian and European market.

"I'm not very active with the settlement because there is quite a big gap [between buyers and sellers] but I have my number… I am not a charity organisation," a customer commented.

Suppliers are maintaining a four-digit figure is justified because of the loss of margins they will incur. The €1,010-1,020/tonne range is understood to be their target for April.

"Producers are adamant to get decent pricing, considering the ethylene settlement," the supplier added.

Ethylene rose by €40/tonne to €1,345/tonne from March to April, yet the consensus is that MEG prices will decrease in April.

In view of the protracted discussions, some players expect the April contract price will be settled at the same time as the May contract. Even for May, however, price ideas vary dramatically.

"Assuming it will be €1,000-1,010/tonne for April, May could be €50-70/tonne higher…€950/tonne should be the number for May though, looking at parity with Asia today," a source said.

Were there to be two prices agreed for both months on the same day, another player expects to see €1,010-1,020/tonne for April and a May decrease to €970-980/tonne.

($1 = €0.76)

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By: Caroline Murray
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