19 April 2013 19:00 [Source: ICIS news]LONDON (ICIS)--The value of monoethylene glycol (MEG) spot prices in Europe is slipping as buyers hesitate in a bearish environment, sources said on Friday.
"At the moment, [buyers] are hesitating a lot because we don't know what will happen. Asia there is stabilisation but [upstream] ethylene, naphtha, crude are all very weak, so [prices] won't change to the other direction," a buyer said.
A decrease in the May ethylene contract price is widely expected, largely because of a weaker upstream market."Ethylene might drop by 80-90/tonne [$104-117/tonne)," a producer of downstream polyethylene terephthalate (PET) estimated. Other observers of the ethylene contract process reckoned on a drop of anything from 50-100/tonne.
MEG bulk spot prices started to fall in March after a steady February, and are now quoted down to 820/tonne CIF (cost, insurance and freight) NWE (northwest Europe). This figure has not been seen since the summer of 2012.
The bulk prices make no sense as replacement volumes when placed alongside the low-priced truck market. Bulk and truck prices have been mimicking each other in April ,as they did in February.
Some players speculate on spot prices in general having bottomed out, while others say more decreases are likely.
"The general mood of the markets is down, down, down In the short term, regardless of all the shutdowns, they are all ringing and pleading for us to buy something. [The price] is just going to go lower and lower," a buyer of MEG for the automotive industry said.
Europe is balanced-to-long. The European shutdown schedule means that most domestic producers are not present on the spot market.
"Inventories moved significantly down. Import is extremely stable," a supplier said, adding that the market was therefore, relatively balanced.
While this may be the case, several industry sources are of the opinion that the MEG outages are having little effect on availability amid reduced demand and lower prices.
"It is a strange marketEuropean producers don't have material to sell. It shows how dire the market is, if against that background [another supplier] lowers its price to move product," according to a reseller.MEG April contract negotiations are ongoing and a decrease is highly likely.
($1 = €0.77)
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