US Mar MEG contracts rise 2 cents/lb on firming demand

NEW YORK (ICIS)–US March monoethylene glycol (MEG), or EG industrial-grade (EGI), contract values were assessed higher by 2.0 cents/lb ($44/tonne) on Monday on anticipation of stronger demand in the downstream polyethylene terephthalate (PET) market.

March MEG contract prices were assessed by ICIS at 43-45 cents/lb FOB (free on board), up from 41-43 cents/lb FOB in February.

In addition, tightness in the Asia MEG market was said to be drawing on US MEG supplies due to recent low spot prices for US MEG, market sources said.

Asia MEG is tight on the back of increasing operating rates in end-use markets. Meanwhile, MEG prices in China continue to increase as cargo-holders were reluctant to sell at lower prices.

In the US market, the March MEG contract increase was led by a 2.0 cent/lb rise in MEGlobal’s North American Benchmark (NAB) price, market sources said.

The benchmark price applies to railcar orders, or orders of roughly 200,000 lb (91 tonnes). Large customers who buy in barges, or 3m lb or more, generally receive discounts off the benchmark price.

Other producers, including Huntsman, LyondellBasell and Shell, were separately seeking 3 cent/lb increases for March MEG prices, but buyers said they settled at the 2 cent/lb increase.

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.

Demand in the downstream PET market will see its seasonal pickup in the spring as bottle makers ramp up production ahead of the peak consumption season for bottled water in the summer.

MEG is primarily used in the production of PET and in anti-freeze/coolant.

Major EG producers in the US include Eastman Chemical, Formosa Plastics, Huntsman, Indorama Ventures, LyondellBasell, Shell Chemical and MEGlobal. MEGlobal is a joint venture between Dow Chemical and Petrochemical Industries Co (PIC).