US September MEG contracts increase on tighter US markets

22 September 2017 23:00 Source:ICIS News
Arrow upHOUSTON (ICIS)--US September ethylene glycol industrial-grade (EGI), or monoethylene glycol (MEG), contract prices have been assessed at an increase from August based on market feedback.

September MEG contracts were assessed on Friday at 41-47 cents/lb ($904-1,036/tonne) FOB (free on board), an increase of 2 cents/lb.

The contract price increases largely reflect the balance of the market before Hurricane Harvey hit the US Gulf Coast.

As many contract negotiations for September material were concluded last month before the storm, massive price increases were not expected to take place.

The US markets in August had been steady, but somewhat tight, due to average demand from the downstream polyethylene terephthalate (PET) sector, the regular flow of exports to Mexico and Asia, and a turnaround taking place.

However, the markets were disrupted on the supply front in the aftermath of Hurricane Harvey.

View an interactive map of affected petrochemical plants by clicking here and using the drop-down menu to differentiate plants by products, and zoom in to see more details.

Looking ahead, although MEG production is starting to bounce back, an ongoing turnaround, along with supply constraints (force majeures and sales allocations) will keep pressure on domestic supply in October.

Domestic demand from the antifreeze sector is likely to pick up with the onset of the fall/winter season, as peak PET demand winds down.

A source remarked that although its October contracts have not been finalised yet, price increases are looking certain.

One consequence of the supply situation is that the amount of MEG available for exports to Europe and Asia has fallen.

Major glycol producers in the US include Eastman Chemical, Huntsman, Indorama Ventures, LyondellBasell, Nan Ya Plastics, Shell Chemical and MEGlobal.

By Tarun Raizada