Europe January MEG contract discussions are proving difficult

17 January 2014 18:51 Source:ICIS News

LONDON (ICIS)--The European monoethylene glycol (MEG) January contract price has yet to be agreed, with buyers and sellers far apart, sources said on Friday.

“We are looking for a small increase of around €20/tonne to reflect December in Asia, as we always do…The fluctuation of exchange rates makes it difficult to discuss,” a supplier said.

Another seller is seeking an increase of €35/tonne in an attempt to claw back margins and reflect Asian developments. This would bring the January price up to €1,000/tonne FD (free delivered) NWE (northwest Europe).

The idea of an increase contrasts with buyers’ targets to achieve a rollover or decreases of €15-40/tonne.

“The January European contract price needs to come down substantially (approximately €30-40/tonne) to compensate for [the] very high settlement of December…. We need to have a level playing field as even PET [polyethylene terephthalate] margins continue to be very bad,” a buyer said.

He added that neither spot developments in Asia nor Europe were reflected correctly in the December contract settlement.

“I’m afraid we face the same situation we faced almost all of 2013 - that settlements will be done at a late stage,” an observer surmised.

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By Caroline Murray