European monoethylene glycol spot offers have been climbing sharply in the week started Oct. 10 amid a failure to agree on the October contract price, which had led to increased demand for bulk deliveries in October and November, sources said Oct. 12.
Barge spot prices have surged Eur50/mt with indications seen at Eur850/mt ($962/mt) CIF NWE, up from the S&P Global Platts assessment of Eur800/mt CIF NWE on Oct. 8.
In afterhours trading Oct. 8, a 1,000 mt parcel for early-November delivery traded at Eur830/mt CIF Antwerp, bought by a distributor, the buyer confirmed. Trading sources said indications for barges were talked around the Eur850/mt CIF ARA mark, up a further Eur20/mt on Oct. 12.
The rising barge prices led to higher truck offers as well, with trucks trading at Eur865/mt FCA ARA Oct. 12, the highest level since the record high of Eur985/mt CIF NWE on March 5.
"Most of the import material was for contracts, leaving spot market short," a trader said Oct. 8.
No Oct CP settlement yet
The October CP remained unsettled in the month of delivery at the time of publishing. This was the first time in years that an initial CP has not yet been agreed so late in the delivery month.
This followed a pattern of dual settlements for many months, showing the difficulty in agreeing to a contract within the European CP mechanism. In September, the full settlement of the August CP was followed by an initial settlement of the September CP.
Now, not only was the September contract yet to be fully settled but an initial October contract was also still outstanding.
Platts considers the CP as settled once confirmation is received from two independent sellers and two independent buyers.
"Settlements late are always bad and don't help with cashflow as pricing is impossible. We are not in a settling business so can just watch and wait," a trader said.
"The market is frustrated with these published CP, the ECP," a distributor said.
Talking about the rising volatility seen so far since the start of October, a second distributor said: "They should've concluded on time."
European monoethylene glycol CP differentials versus spot truck prices traded in the key FCA Antwerp hub have shrunk to around 3% since 2019, a distributor said Oct. 7, pointing to a rise in relative contractual pricing versus spot in recent years -- a factor that many have pointed to as making it difficult to reach an agreement.
The lack of a settlement has made it difficult for consumers to plan their cost structure, leaving them with little alternatives but to look to the spot market for supply, according to market sources.
Barge-truck premium halves
The firmer demand for barges has halved the barge-truck premium to Eur15/mt, compared with the Eur30/mt barge-truck premium assessed by Platts Oct. 8.
Tank congestion was another reason for the narrowing FCA-CIF spread and the relative strength of the bulk market versus trucks, sources said.
"In my opinion, the biggest challenge is fitting in slots for spot material sales. Trying to sell another 200 mt will be a nightmare for the supply chain," the same distributor said. "Maybe squeeze it for late first week of November. Until then, we are moving maximum number of trucks per day from tank."