European Monoethylene Glycol Prices Observe Spike in Early February Owing to Strong Energy Feedstock Prices

Monoethylene Glycol prices in Europe have started the new year on a firm note, and MEG market has further strengthened in February stemming from consistent rise in upstream Crude oil and Natural gas prices. In the latest assessments on 2^nd week of February, European MEG prices have increased by USD 40 per MT on FD basis.

Meanwhile, demand from polyesters have remained robust stemming from optimum consumption levels from apparel, clothing and other segments. Polyester staple fibre (PSF) and Polyester filament yarn (PFY) markets have been optimistic on the back of healthy buying sentiment in the European region.

Crude oil prices have climbed significantly since the beginning of the year and both ICE Brent and WTI crude were traded in excess of USD 90 per barrel in February. Continuous climb in crude oil prices have resulted in strong cost pressure and culminated in refiners opting for robust prices for derivatives. Natural gas prices have also been in the uptrend owing to strong winter demand and constrained supply fundamentals amid tensions between Russia and the West. Consequently, ethylene prices have consistently gained in last few weeks. This has increased the cost pressure over downstream MEG and accordingly, MEG producers have opted for price spikes.

As per ChemAnalyst, “Monoethylene Glycol prices are likely to remain robust in coming weeks owing to strong cost pressure and healthy demand from downstream Polyesters. Crude oil prices are unlikely to turn southwards in the short term as global demand continues to outpace available supply. Recent talks between Iran and the West have provided a glimmer of hope where return of Iranian crude oil in the global supply chain will strengthen the supply fundamentals and may result in stabilization in crude oil prices.”