11 October 2013 15:32 [Source: ICIS news]
By Caroline Murray
LONDON (ICIS)--The European monoethylene glycol (MEG) spot market is coming under pressure due to customers delaying purchases and there being more availability, sources said on Friday.
Spot prices have gone down faster than many had anticipated. Spot truck and bulk prices started a relatively steady and significant climb from July to August. Following a few weeks of stability, average prices have since dropped.
In the case of bulk, spot prices are now around €100/tonne ($135/tonne) cheaper, and average truck prices have decreased by almost as much.
"We have not committed [to buying bulk] because it still appears to be soft," a buyer said.
Buyers seem to be waiting for prices to drop further.
"People believe there is more to come. It's dangerous strategically," a buyer said, adding that this can only lead to an eventual price increase as the antifreeze season picks up.
The European net importing region is receiving its regular consignments of imports but other than that, the market is relying on domestic material.
"There is not much imported material," a trader said. He added that the downward price pressure exists because there is limited demand.
The antifreeze market should be looking to buy once more, but seem to be retreating a little to the sidelines this week.
"I think [MEG] supply is quite good at the moment…There is more [upstream] ethylene oxide (EO) going to MEG," a trader said.
Upstream ethylene oxide (EO) has been putting more efforts into the glycol market of late, other players agreed.
"EO surfactants is actually coming into season, but bigger margins in glycols," an EO buyer said.
Apart from INEOS Oxide's 250,000 tonne/year EO and 15,000 tonne/year EG plants in Lavera, France, that will not be up again before the middle of November, all other European shutdowns have either ended or are about to end.
Sasol is on schedule to bring back its 215,000 tonne/year EO and 15,000 tonne/year EG plants in Marl, Germany, on 18 October, a company source said earlier this week.
Poland's Polski Koncern Naftowy Orlen SA (PKN) 115,000 tonne/year EO and 70,000 tonne/year units in Plock, Poland came up on 25 September.
BASF's Ludwigshafen 345,000 tonne/year EO and 25,000 tonne/year EG plants came back on 27 September.
"It's running at regular rates," a BASF source said.
Clariant's 240,000 tonne/year EO and 140,000 tonne/year EG units in Gendorf, Germany, resumed on 8 October.
The September and October contract prices are yet to be fixed as contractual players are at loggerheads.
($1 = €0.74)
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