LONDON (ICIS)--European monoethylene glycol (MEG) spot prices are playing catch up to the recent price surges in the Asia market, sources said on Wednesday.
European bulk prices jumped up significantly on Friday after gains in Asia injected some seller confidence back into the market.
In Asia, daily MEG prices increased once again on Wednesday, bringing prices to $1,046-1,066/tonne CFR (cost and freight) China Main Ports.
Since the end of March, weekly Asia figures have soared by triple digits, taking them back to the high levels seen in February.
Meanwhile, over in Europe, bulk MEG activity has increased and prices were assessed at a €45/tonne hike on the low end and a €40/tonne jump at the top end of the range, bringing prices to €805-810/tonne CIF (cost, insurance and freight) NWE (northwest Europe) in the week ending 13 April.
Inventories over the last few months have been rather low due to dampened buying interest but now demand for larger volumes has improved.
Last week, bulk supply tightened and domestic producers were said to be sold out currently.
Bulk offers are being pegged at a higher level this week, reaching heights in the region of €840-860/tonne CIF NWE but so far there has not been any concluded business this week.
Truck MEG pricing levels were failing to respond as quickly as bulk levels, which is typically the case. Typically trucks command a premium over bulk levels.
The tables seem to be turning and traders are now seeing signs of upward movement.
"Finally, truck prices start to catch up slowly," a trader said on Wednesday.
Lower end prices are disappearing from the market, and sources are pegging the low end around €830/tonne FCA (free carrier) mid-week.
On 13 April, truck spot prices were between €815-835/tonne FCA NWE.
Market sources are keen to see if this upward momentum continues throughout the week, and if the downtrend from March is well and truly in the past.
MEG is mainly used in the production of polyester fibres, resins and films (around 80% of global consumption), followed by use in polyethylene terephthalate (PET) resin. It also used as automotive antifreeze.
Pictured: Polyester fibres, a key end market for MEG
Focus article by Melissa Hurley