26 July 2013 07:45 [Source: ICIS news]
LONDON (ICIS)--Spot monoethylene glycol (MEG) spiked to €840/tonne ($1,105/tonne) due to a tight market, a buyer and seller said on Thursday.
"It was the only option we had to buy," the buyer said.
European producers have either had production problems or are about to shut down for maintenance. Imports meanwhile, are limited in Europe, a net importer of MEG. There are also vessel delays compounding the problem.
"To say the market is not flush with product is an understatement," a trader said.
Other deals were concluded this week between €815-825/tonne CIF (cost, insurance and freight) NWE (northwest Europe) T2. This is up from earlier deals at €785-805/tonne.
A trader sold and buyers included a distributor and an end user, among others.
Demand for MEG into the coolant sector picked up over the last few weeks, but most buyers had said they were now covered for August.
A hike in Chinese prices, €50-100/tonne increases talked on upstream ethylene for August, and the realisation of just how little product is available, all contributed to buyers' decision to purchase.
"People are right when saying there is not much volume available unsold. There is availability, but it is already sold," according to a second trader.
Prices have been steady for months, so this spike has come as a surprise to some.
"I have the feeling it is a bit tight but there is no reason why prices should go to €850/tonne, because the [August] contract price may go up €20-40/tonne, but I don't expect the contract price to go up more than that. So how much can spot go up? €10-20/tonne, not €50-60/tonne," a third trader said.
The July MEG contract rolled over at €946/tonne FD (free delivered) NWE.
($1 = €0.76)
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