US June MEG contracts roll over on large supply, slow demand

13 June 2014 22:20 Source:ICIS News

NEW YORK (ICIS)--US monoethylene glycol (MEG), or EG industrial-grade (EGI), contract prices for June rolled over from May amid plentiful supply and slow demand in the second quarter, market sources on Friday.

June contract prices were at 50-52 cents/lb ($1,102-1,146/tonne) free on board (FOB), the same as in May.

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.

Buyers and sellers confirmed the rollover, saying that demand has been slower than anticipated. This is largely attributed to a weak rise in demand in the downstream polyethylene terephthalate (PET) sector at a time when the market should be in its peak season.

In addition, the downstream antifreeze sector is in its off season, which has contributed to the soft demand for MEG.

Furthermore, a long market in Asia has limited the opportunity for US sellers to sell MEG into that regional market, as Asian buyers are said to be flush with inventory amid a weak market. In particular, the downstream Asian polyester market has cut back operating rates.

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

Major MEG producers in the US include BASF, 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).

Click here to watch the latest ICIS Special Report, in which European pricing editors discuss the key issues affecting their markets as we approach the middle of 2014.

By Feliza Mirasol