Europe MEG customers target ethylene pass-through for May contract

16 May 2013 17:25  [Source: ICIS news]

LONDON (ICIS)--European monoethylene glycol (MEG) customers are targeting the full pass-through of upstream ethylene for the May contract price, sources said on Thursday.

"We want the full ethylene pass-through. Producers do not share the same idea," a customer said, adding that a €60/tonne ($77/tonne) decrease on MEG would represent the ethylene decrease of €100/tonne from April to May.

A second customer had been talking of a €70/tonne drop but other buyers and sellers said this was perhaps too sharp.

Several customers actively negotiating contracts consider €960-970/tonne to be a realistic figure for May.

The April MEG contract price was agreed at €1,020/tonne FD (free delivered) NWE (northwest Europe).

Demand for downstream polyethylene terephthalate (PET) is picking up but is still not as good as it should be for the time of year. PET bottlers are normally very much in the market by now, and while there has been talk of a major bottler pre-buying, others are still operating hand to mouth.

Exchange rates are currently in favour of MEG producers, but the dominant Asian market is a little volatile and spot prices softened today.

"Let’s give it time to see if [the situation] stabilises … It won't go down to €950/tonne, but it could end up at €970/tonne, €960/tonne," a third customer said.

Suppliers said recently they were vying to reflect the supply/demand situation in Europe and the Asian market developments during April.

($1 = €0.78)

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By: Caroline Murray
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