The European monoethylene glycol (MEG) spot market faces bearish pressure on slow derivative off-takes, market sources said Friday.
Demand from the derivative PET segment remains particularly slow as the relatively cold spring across Europe reduced PET downstream demand. The PET segment typically sees peak seasonality in spring as demand from the beverage industry tends to be at its highest.
But this year the seasonal strength has yet to be seen, sources said.
Weak PET fundamentals lead to a physical volume overhang in the production chain, sources said. "A recovery in PET demand is not happening yet, we are still hoping that there will be some improvement in May but the market is still weak," an MEG consumer said.
With thin PET demand, MEG remained a well-offered market.
"There is good availability of MEG, there is plenty of product around and the market is long," the consumer added. Traders and producers reported struggling with May spot sales in MEG.
"As there is doubt that PET demand will pick up, producers and traders are trying to clear their MEG inventories, and while there are no imports into Europe, [domestic] product is offered much lower now," a trader said. "There are no arbitrage opportunities to Europe now...but the market here is long."
While spot prices were heading lower, some sources said they were not encouraging sales as MEG spot buyers remained reluctant to accumulate stock.
"We have normal monthly off-takes for our contractual volumes but the spot product is very difficult to place. There are many aggressive offers out there and while the prices are lower, buyers are still reluctant to buy, as they expect prices to fall further in June," an MEG producer said.
Spot prices were heard at Eur750-790/mt ($971-1,023/mt) FCA NWE range, down from Eur825-830/mt level, assessed last Friday.
