Europe Nov MEG expected to be concluded alongside Dec contract

05 December 2013 17:44 Source:ICIS News

LONDON (ICIS)--The European November monoethylene glycol (MEG) contract price is expected to be concluded alongside an initial December contract, producers said on Thursday.

“Certainly it will be a combined settlement... We don’t agree with the November price so we need to recuperate in the December price,” a producer said.

Discussions have begun, and for December one seller is seeking €40/tonne ($54/tonne) over the initial November price of €949/tonne FD (free delivered) NWE (northwest Europe).

Sellers refused to follow the initial November agreement that was settled mid-November at a decrease of €36/tonne from October, because they saw it as an excessively low price.

It is unlikely there will be a new, stand-alone November price, so producers are seeking compensation in December.

“Settling the first settlement all over again at a different number is unheard of in MEG,” a second producer said.

Buyers were also dissatisfied with the initial November figure because at the time, spot prices had dropped and margins in downstream polyethylene terephthalate (PET) were dire. They too, will be looking for compensation.

Spot prices may have turned a corner, with a deal confirmed at €752.50/tonne FOB (free on board) Antwerp, taking the high so far this week, to mid-November levels.

The upstream ethylene contract also went up from November to December.

($1 = €0.74)

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By Caroline Murray