18 October 2013 19:08 [Source: ICIS news]
LONDON (ICIS)--Monoethylene glycol (MEG) spot bulk prices have fallen rapidly this week, with a spot bulk MEG deal confirmed at €740/tonne ($1,000/tonne) CIF (cost, insurance and freight) NWE (northwest Europe) T2 and a second deal confirmed at €768/tonne CIF NWE T2, by buyers and sellers on Friday.
Several players were surprised that business had been concluded as low as €740/tonne CIF NWE. While they expected prices to fall, numbers closer to €770-780/tonne CIF had been expected, especially given the level of current Asian prices.
The seller said that it was looking to lock in deals, as it expected the liquidity of the market to soon start to decrease.
Spot truck prices also fell but are lagging behind the drops seen in the bulk market. Buyers are holding off purchasing, as they expect numbers to fall again.
Demand from the antifreeze sector remains slow at present, as it is cheaper to buy the finished product than to purchase MEG and blend it, sources said.
One trader said that earlier in week, sellers were fighting to get rid of product, but since then the market appears to have stabilised. It added that traders were unwilling to drop prices too much as they had purchased when material was more expensive.
One source said that producers would not want to be dropping spot prices while contract prices were unresolved.
MEG contract prices for September and October have yet to settle. One producer said it was unwilling to compromise on price just in order to rush a settlement through, but expressed dissatisfaction that the process was taking so long.
An initial MEG September settlement was agreed on 24 September at €1,038/tonne FD (free delivered) NWE, a €48/tonne increase from August. Another producer said that it was looking for a price closer to €1,015/tonne.
Customers have previously proposed as low as €970/tonne for October, alongside a confirmation of the initial September number, but suppliers said that was unworkable and are seeking a figure over €1,000/tonne. One buyer said it would not pay more than €950-970/tonne, pointing out that spot prices were falling and some compensation would be needed for this.
Now that paraxylene (PX) contracts for October have settled, sources said that downstream polyethylene terephthalate (PET) players could turn their attention to agreeing on a price for MEG.
Players in the European contract market have been expressing an interest in redefining the monthly contract price mechanism.
Diethylene glycol (DEG) bulk prices also dropped this week, with a deal confirmed at €780/tonne CIF ARA (Amsterdam-Rotterdam-Antwerp) T2 for 1,000 tonnes for early November loading. Some traders said they had expected prices to fall further and thought that this price was still relatively high, with €760/tonne mentioned as a feasible bid price.
Late on Friday, a deal was confirmed for 500 tonnes of DEG for October arrival at €860/tonne CIF, resulting in a wide range for DEG bulk prices.
One source said that a reduction in imports from the Middle East meant that although there is downward pricing pressure on the market, the pressure is not as extreme as it is for MEG. Sources said that DEG is following MEG numbers downwards, and some expected prices to drop further in the coming weeks.
($1 = €0.74)
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