LONDON (ICIS)--The long wait for full confirmation of the European monoethylene glycol (MEG) September contract price is not over as buyer and seller expectations continue to be unmatched after the conclusion of the European Petrochemical Association (EPCA) meeting earlier this week.
An initial MEG contract agreement for September previously emerged but has not been followed by a second buyer and second seller.
A buyer proposed a number for October, but the level was not accepted and talks remain ongoing.
The annual EPCA meeting ran in Vienna from 8-10 October.
A minimum 2+2 producer/consumer configuration is required to consider the agreements fully confirmed.
Higher crude and ethylene prices and the recently softer European spot prices on improved supply have been a feature of the lengthy discussions.
Earlier in the week, Asia prices firmed after players returned from the holiday period. This was highlighted among suppliers during EPCA, but throughout the week prices lost ground.
MEG discussions on Thursday in Asia slumped on weak imports from China amid losses in the Chinese domestic futures market.
Although there was more heated discussions at last year’s EPCA meeting about the effectiveness of the current contract mechanism, the market has become accustomed to frequently delayed settlements.
These frequent delays in confirmation causes administrative frustrations for invoicing customers, with players working in the dark during the month.
2018 started with a dual January and December contract agreement but then in the first four months of the year, settlements were completed in a timely fashion.
From June until now, every contract confirmation has been delayed.
“[You] always have to drag the past along with you…now it’s almost a habit, [it's] not how it should be” a buyer said during ECPA this week.
One of the reasons given for the stalling contract agreements is the small pool of contract settlers in the market.
“There isn’t a consistent pool for [contract] settlements”, said a supplier.
“…further reducing [the] number of players [is] a big set back to the system”, a buyer echoed.
Another issue is the divided opinion on how much emphasis should be placed on pricing movements in the Asian market.
During delayed discussions, the Asia market can change quickly so its a constantly changing landscape.
Alternative processes have not been found to replace the current 2+2 producer/consumer mechanism, even though this topic has been debated on the sidelines of this year’s EPCA meeting and at previous meetings in years gone by.
Some are less worried about the current process and are carrying on with business as usual.
“[The] system is working okay…[there is] no panic the system will collapse”, said a PET maker.
Talks are ongoing.
Focus article by Melissa Hurley