Monoethylene glycol’s initial December settlement at a decrease of Eur5/mt on the month fell below some expectations and produced mixed reactions.
The December contract for MEG was settled initially Friday at Eur820/mt ($893/mt), between buyer Indorama and seller Shell, as confirmed by Indorama.
“Frankly, we disagree with the number,” said one production source.
There has been bullish pressure on MEG from production limitations in Europe, a shortage of imports and a Eur22.50/mt rise in the December contract of feedstock ethylene.
Spot prices for MEG averaged Eur925/mt FCA NWE through November, 21.7% higher year on year.
But availability is increasing with the return of BASF and Ineos plants recently from maintenance and force majeure, respectively. BASF’s Antwerp plant has EO capacity of 500,000 mt/year and MEG capacity of 350,000 mt/year.
Ineos’ Dormagen plant at Cologne, Germany, has annual EO capacity of 290,000 mt and 150,000 mt of MEG.
MEG is one of two feedstocks for polyethylene terephthalate. Sources in the PET market had largely expected increases in the MEG contract price and had priced the December spot price accordingly.
“With ethylene up Eur22.50/mt, I expect a Eur5/mt upward move on ECP MEG given that material is relatively tight,” a PET producer source had said Wednesday.
Another PET trade source said earlier this week that the Northwest European spot price was supported by production issues in MEG, which had led to producers pushing for a price increase in December.
The NWE PET spot price was assessed at Eur935/mt FD NWE Wednesday, stable from the previous week.
However, MEG production shortages have largely been resolved and market sources said imports have arrived.
“I was not surprised by the settlement, we see the market very weak,” a MEG trade source said Friday. “Do the conversion from Asian prices and we know that European prices are very high.”
Asian prices were assessed Friday at $561/mt CFR China, an increase of $6/mt on the day and a decrease of $4/mt on the week, and $564/mt CFR SE Asia, a decrease of $4/mt on the week.
