Price and market trends: US MEG prices fall while DEG rises

21 April 2014 00:00 Source:ICIS Chemical Business

US monoethylene glycol (MEG) contract for April moved down 2-3 cents/lb ($44-$66/tonne), while diethylene glycol (DEG) contracts for April moved up 1 cent/lb, sources said on 11 April.

MEG, or EG industrial-grade (EGI), contract prices were assessed at 50-52 cents/lb FOB (free on board) in April, down from 53-54 cents/lb FOB in March.

DEG contract prices were assessed at 56-60 cents/lb FOB in April, an increase from 55-59 cents/lb FOB in March. For the purpose of the ICIS assessment, US contract prices represent levels paid by distributors on an FOB plant basis prior to any discounts, incentives or terminal upcharges.

US MEG

Downward pressure on MEG came from a slowdown in demand in the downstream de-icing and anti-freeze sectors amid a period of adequate supply, sources said.

In addition, lower prices in the MEG Asian Contract Price (ACP) contributed to downward pressure in US pricing, market participants said.

In comparison, DEG came up in the month because market participants cited tighter supply and strong, steady demand, particularly in the downstream unsaturated polyester resins (UPR) sector. In addition, an increase in solar power cell production in Asia had US sellers exporting to serve that market. However, a market player noted that there is spot DEG barge material available in the US market, so the US is not sold out.

Some buyers will not settle their DEG contract pricing until the end of the month as they wait to see what will happen in Asian markets, which makes it uncertain at this point whether the price increase will stick.

Meanwhile, a strengthening trend in European DEG spot prices because of a tight market and strong demand there offers an opportunity for US exports to that region, particularly since US spot prices are flat, said a market source. However, European spot prices, although rising fast, are still below Asia spot price levels. Meanwhile, import duties are on the rise, which could result in Europe DEG tightening further.

With another jump in European spot prices, some US market sources are expecting to see DEG exports to Europe, which they say can tighten the US market further.

By Feliza Mirasol