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Manufacturers anxious over drooping MEG prices

11
Sep '08
International oil prices lowered to US $100 per barrel, dragging spot price of ethylene below $1,300 per metric ton in the Far East market last week; ethylene glycol (EG) witnessed even worse decline past week. Average price for the whole week drooped below $850; currently prevailing nearby $810 per ton.

This resulted sales price fall even below production costs. It is expected that due to this, the third quarter earnings of major EG production enterprises in Taiwan Island will be reduced.

Industrial traders point out that although the spot price of Far East ethylene already fell below $1,300, the contract price of ethylene by CPC Corporation, Taiwan stood at $1600, while EG spot price in the Far East is less than $900 per ton.

Traders say, based on the estimate of $1,600 for August settlement price of ethylene price by CPC Corporation, hence EG offer price should atleast be near by $1,003 in accordance with calculation. But the current price is less than $850 per ton. Therefore major manufacturers in Taiwan will face a dead season in the forth quarter, and the third-quarter earnings of the industry are bound to be compressed.

According to the latest spot price in the Far East this week, ethylene price ranges in $1,230 to $1,240, down $70 from the previous week, the price has plummeted $400 in less than two months compared with the high level of $1,660 set in early July.

As MEG spot market prices decline, recently imports and exports via ports in East China continue to slow down, overall inventories remain in high level.

It is reported that current MEG inventory in Zhangjiagang area is about 15-16 million tons in total, MEG inventory is about 55,000 tons at Taicang port, and in Ningbo bonded area, MEG inventory is about 6-7 million tons.

SABIC nominated its MEG Asian contract price (ACP) for October at $1,000/ton (CFR, L/C 90 days), down $150/ton from September.

SHELL annouced its nomination for MEG Asian contract price for October at $1,020/ton (CFR, L/C 90 days), down $130/ton from September.

Fibre2fashion News Desk - China


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