29 May 2002 17:40 [Source: ICIS news]
LONDON (CNI)--Europe’s polyester producers need competitive raw materials in the long term to allow the industry to capture growth opportunities, said Robert Gregan, business director of polymer intermediates at KoSa.
Speaking on Wednesday at the First European Aromatics and Derivatives Conference* here, he explained that while there were a few big competitive paraxylene (PX) plants in Europe, there were more smaller, non-competitive units.
Gregan said the sector has been hit recently by feedstock price disadvantages, particularly for PX and purified terephthalic acid (PTA) in Europe, compared with Asia.
He explained that a lot of downstream polyester products were priced on a half year or full year basis but petrochemical feedstocks are based on much shorter term movements.
Both the producers of feedstocks such as PX, PTA and ethylene glycol and of polyesters need to take some of the price risk but better tools are needed to achieve this, Gregan stressed.
Today, polyester producers favour quarterly contracts if competitiveness is ensured. He noted that he was not against monthly pricing as a basic principle but it was hard to cover the risk or exposure until real tools became available.
Gregan said there was a need for consolidation in the European polyester industry itself so it can operate world-class units that are competitive. He showed that there were 22 polyester polymer producers in Europe but it would not be easy to consolidate them as these some operated in sectors that were not necessarily linked.
The European market also faces two levels of imports on a large scale, explained Gregan. The first level of filament, staple, film and polymer accounts for 630 000 tonne, about 16% of demand. Then it faces a second level of imports in the form of textiles.
* The First European Aromatics and Derivatives Conference was organised by ICIS-LOR, European Chemical News (ECN) and International e-Chem and concludes on Thursday. CNI, ICIS-LOR and ECN are all owned by Reed Business Information (RBI).
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