Europe MEG sellers resist downward pull of possible bids

10 April 2013 17:05  [Source: ICIS news]

LONDON (ICIS)--The monoethylene glycol (MEG) spot market is void of activity as sellers try to hold onto prices in the face of little interest from buyers, traders and a buyer said on Wednesday.

"[I] only see a few people buying…We offer nothing below €860/tonne ($1,132/tonne). No need," a trader said.

The market is balanced to long because of the continued lack of demand, according to a second trader.

A heavy upstream ethylene oxide (EO) shutdown programme, as well as planned MEG maintenance shutdowns between March and September have, so far kept producers out of the MEG spot market.

Resellers meanwhile, are faced with poor or no returns if they buy bulk and sell onto the truck market.

Downstream, polyethylene terephthalate (PET) also has a spate of outages, but poor weather and hand-to-mouth mentality has kept buyers at bay and pulled prices down in much of Europe.

"PET is passing through a crisis," a producer of PET who is also an MEG buyer said, echoing comments made by sources from all sides.

Should demand return, the markets may well turn bullish. Asia, the dominant market, is already experiencing more activity this week.

"I can imagine that [MEG] prices will increase again because there will be more demand together with all the shutdowns," the second trader added.

MEG bulk buyers are few and far between and say they are in no rush to dip into the market. Nevertheless, there is some interest and bid ideas are far below what sellers are looking for.

"Europe spot is down," the customer said. He added that offers are well below the €840-860/tonne CIF (cost, insurance and freight) recorded by a couple of sellers.

It is a question of who can hold out the longest and nobody seems to be in any hurry, players agreed.

The European April contract price is still under discussion and a decrease is widely anticipated.

($1 = €0.76)

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By: Caroline Murray
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