European monoethylene glycol prices are coming under pressure from reduced operating rates downstream, with polyethylene terephthalate producers scaling back operations amid nervousness about end-user demand, according to industry sources.
MEG along with purified terephthalic acid are the two main feedstocks needed for PET resin production.
Spot MEG prices were heard Friday at Eur860-870/mt ($1,132-1,146/mt) FCA NWE and Eur840-850/mt CIF NWE, dropping around Eur20/mt on the week.
"We can see the cautiousness from PET producers on contractual offtake too," one MEG producer said.
PET sources have reported that there are high stocks throughout the European PET chain, with converters holding stocks of both preforms and bottles and prebought PET resin from earlier in the year. Traders also reported that disappointing sales figures meant that PET producers also were sitting on stocks of resin, putting downward pressure on European PET prices.
On March 14, Northwest European spot PET values were assessed at Eur1,385/mt FD NWE, and have since tumbled Eur80/mt to be assessed Wednesday at Eur1,305/mt FD NWE.
"An expected decline in the MEG April contract price for NWE was also adding to the bearishness in the market," a PET producer said.
The NWE MEG CP for April is yet to settle with MEG buyers aggressively pushing for a decrease. This is in contrast to MEG producers, who had to absorb an Eur40/mt increase in the April ethylene CP.
Meanwhile in Asia, MEGlobal has already nominated its May Asia CP for MEG at $1,120/mt CFR Asia, down $80 from its April nomination, the company said Friday.
"The April ACP reflects the short-term supply/demand situation in the Asian market," the company said.
