SABIC has announced its Asian contract price for September shipments at $1,010/MT. A global supplier proposed its price for September at $1,030/MT, on a par with what MEGlobal nominated. The proposals, all on a per MT CFR Asia basis, are higher than the $980-990/MT nominations for August.
The increase of as much as $50/MT is within expectations. Spot prices for MEG in the key Chinese market had risen to $880/MT and above early August, on the back of snug supply and stable demand. About a month earlier, prices were hovering at $800 at best. Although spot MEG slipped slightly lower to $840-850/MT CFR China mid August, largely due to profit taking, traders remain hopeful that the drawdown in inventories in the storage tanks of coastal China will lift prices again soon.
Given that crude oil and naphtha futures had stabilised near the year's highs so far and feedstock ethylene costs had moved up towards $1,300/MT and above in NE Asia, the upward pressures on EO and MEG prices is obvious. Market participants also noted that consumption had been steady for MEG and stable-to-firm for many grades of EO derivatives, due to favourable economic conditions in China and neighbouring Asian markets.
As long as the snug supply continues and demand remains strong, most market participants believe the highest price of the year has yet to come.