09 November 2012 13:57 [Source: ICIS news]
LONDON (ICIS)--European monoethylene glycol (MEG) contract buyers and sellers are beginning to announce their targets for November prices, revealing a difference in ideas of at least €25/tonne ($32/tonne) already, players said on Friday.
Sellers are aiming to roll over October's €1,095/tonne FD (free delivered) NWE (northwest Europe) price, while customers are seeking a decrease.
"Exchange rates are going in the wrong direction," a supplier said, adding that this is serving to strengthen its convictions that a rollover is justified for Europe, which is a net importer of MEG.
Other factors that support a rollover include higher Asian prices and the onset of winter in Europe, which could introduce more coolant buyers into the market.
Asia is the dominant market and influences decisions made in Europe.
"We are talking of a rollover and are not negotiating anymore, because the past six months have been very aggravating," a second seller said, alluding to the long run of huge differences between buyers’ and sellers’ contract price ideas.
Buyers argue that there is sufficient availability of product, if not more than enough, to meet the lacklustre demand in both polyethylene terephthalate (PET) and the coolant sector.
A buyer said the negative mood in the market will force glycol prices to be adjusted downwards and predicted that November will settle at €1,065-1,070/tonne.
"There is destocking throughout the chain," according to a second buyer who agreed with the concept of a price decrease but has yet to specify a figure.
He added that the reduction, albeit small, in raw material costs, should also feature in price discussions.
($1 = €0.78)
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