11 April 2013 12:23 [Source: ICIS news]
LONDON (ICIS)--Buyers and sellers said on Thursday they are in no hurry to settle the European April monoethylene glycol (MEG) contract price, but discussions are under way and a decrease is widely expected.
"The range is there now. It is a matter of the last €10/tonne ($13/tonne) plus/minus," a producer said, adding that discussions were taking place between €1,000-1,050/tonne.
The March contract was agreed at €1,070/tonne FD (free delivered) NWE (northwest Europe).
"We can wait. We are in no hurry," according to a buyer for polyethylene terephthalate (PET) production.
The buyer said the fall in Asian contract price nominations should technically push the European contract price down by €108-110/tonne. Asia is the dominant market and Europe is a net importer of MEG.
However, spot MEG in Europe has not seen big drops, rather a series of soft decreases. This, coupled with a lower, albeit still firm upstream ethylene contract price, has resulted in buyers considering a smaller MEG decrease, they said.
"Producers still want European contract price of MEG €1,020-1,030/tonne and buyers want below €1,000/tonne. I think it should land around €1,000/tonne," a second buyer said.
This week has seen a pick up in Asian polyester sales and a subsequent rise in the price of spot MEG from below $1,000/tonne CFR (cost and freight) China Main Port (CMP) to above.
The illiquid European spot market is lagging behind Asia and weak demand has put downward pressure on spot price ideas this week.
PET producers are keeping a keen eye on raw materials, having only recently clawed back minimal margins in some cases.
April PET prices started coming down from March before the April upstream paraxylene (PX) monthly contract was agreed at €1,120/tonne, down by €130/tonne.
"I have PET so the PX decrease doesn't make me happy. I have plenty of PET. I am trying to get rid of as much as I can … [PET] demand is awful," a buyer of PET said.
"MEG will survive only if we [PET producers] survive," the first MEG buyer said, adding that an offer for the April MEG contract at €1,030/tonne was "ridiculous".
($1 = €0.77)
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