Europe MEG April contract discussions at a standstill

18 April 2013 13:53  [Source: ICIS news]

LONDON (ICIS)--European monoethylene glycol (MEG) April contract discussions have come to a standstill as neither buyers nor sellers are prepared to move from their current price position, sources said on Thursday.

"There are some people complaining about the delayed settlement … we can't afford to pay prices not in line with competitors in other regions. I understand [MEG] producers, they have bad margins and want to at least keep them," a buyer of MEG for polyethylene terephthalate (PET) said.

Buyers are trying to get sellers to agree to a greater decrease than the upstream ethylene passthrough, but sellers say they are not budging.

A figure of €1,020/tonne ($1,325/tonne) FD (free delivered) NWE (northwest Europe) would be acceptable, according to one buyer. Others are pushing for more of a decrease and one has a target below €1,000/tonne.

The March contract price was agreed at €1,070/tonne.

Offers of €1,030-1,035/tonne are already on the table, but this is not enough of a compromise, a buyer said.

"We are not moving from where we were … I don't think below ethylene is the number we will accept," a supplier said.

Amid the certainty of an MEG price decrease from March to April and lack of an actual MEG contract price, paraxylene (PX), PET's main feedstock, dropped by €130/tonne from March to April.

This put pressure on PET values to decrease from March to April.

PET producers have so far been able to hold onto some margin this month, a rare feat in what has been a difficult period fraught with squeezed and non-existent margins for PET producers.

($1 = €0.77)

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By: Caroline Murray
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