Europe MEG November contract price may merge with December

Caroline Murray

22-Nov-2013

LONDON (ICIS)–The European monoethylene glycol (MEG) contract price for November is yet to be fully agreed upon, and confirmation of this may be combined with an initial December settlement, sources said on Friday.

“If no one is happy with a late settlement, they should just confirm it and have a new negotiation in December. What is the benefit of waiting?” a producer said.

The initial November price was agreed to on 15 November at €949/tonne ($1,282/tonne) FD (free delivered) NWE (northwest Europe).

“Our thoughts are that this is way too low. …We told our customers that this is a big disappointment and we are looking to combine December to correct it,” a second producer said. “We will wait for ethylene to be more clear before we start discussions for December [MEG].”

Some observers of the settlement process had been anticipating a higher figure, but others say €949/tonne is too high.

“We haven’t followed. …We don’t like the price,” a buyer said. “If there is nothing else, we will have to follow. We wanted a lower number because of the market. …We are still in discussion.”

Ideas for December vary, but the situation is likely to be unclear until upstream ethylene is confirmed for December.

“The last two [MEG] settlements were difficult to do because [downstream] PET [polyethylene terephthalate] producers were worried about PET and wanted [the MEG price] to go down further, but [producers] say we have our costs and naphtha is still very strong and we can’t go much further down,” a second buyer surmised.

A double settlement is not a popular method within the industry, but continued disagreements as to the value of contract MEG has led to the possibility of yet another one taking place after the upstream December ethylene contract settlement.

($1 = €0.74)

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