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Europe MEG spot price recovery in sight after weeks of declines
A European monoethylene glycol (MEG) spot price recovery is set to continue after truck prices increased for a second week running.
The European ICIS truck spot range was assessed at a €5/tonne increase at both ends, bringing prices to €645-660/tonne free carrier (FCA) northwest Europe (NWE).
There was some talk of sellers achieving prices above the high end of the range, but this was not said to be representative of the market at the end of last week.
European traders have been concerned by an unhealthy spread between bulk and truck prices in Europe for some time.
Elsewhere, spot prices in Asia have recovered in the last few days and there is an expectation that supply will decrease in the second half of March.
The MEG market has been dealing with higher inventory levels in China due to increased imports, mostly from Kuwait and the rest of the Middle East.
Imports reached record levels in December 2018, so it could take some time to absorb stocks and recover fully.
Prices in Europe have been on a significant downtrend since the final quarter of 2018, pressured lower by attractive import offers, good supply and lukewarm demand for larger spot volumes.
Sentiment has improved after the uplift in Asia and last week saw several European offers darting about the market without clear confirmation.
Private and confidential business was said to be concluded within the current range, between €615-640/tonne cost, insurance & freight (CIF) northwest Europe (NWE).
Other unconfirmed business was mentioned at €20/tonne above the high end - although the range was assessed as steady due to a lack of confirmed business.
"I am convinced prices will move up in the coming weeks," a source said on Friday.
European supply in the first half of March is expected to be less lengthy as it is difficult to secure prompt material at the moment.
US PRODUCT ARRIVES IN EUROPE
In the second half of March, availability will improve due to an influx of imported US material expected to arrive in Europe.
There was also talk of delays from the Middle East in terms of vessels. In addition, upstream local turnarounds are expected to begin soon, which could balance out European MEG supply.
In the meantime, European MEG contract talks are in their early stages following news of an increase in the ethylene monthly contract settlement late last week.
Higher MEG production costs and the recent uplift in Asian prices are being highlighted ahead of the contract talks.
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.