PX to rise as MEG falls - PET buyers, sellers

07 February 2008 22:30  [Source: ICIS news]

HOUSTON (ICIS news)-- The return of lower ethylene glycol (EG) prices was expected to counter higher anticipated paraxylene (PX) prices, participants in the polyethylene terephthalate (PET) sector said on Thursday.

Market talk that Saudi Basic Industries Corp (SABIC) was restarting production of EG, a PET feedstock, at its Al Jubail plant in Saudi Arabia lent hope to consumers who have faced soaring costs and a global shortage since August.

Seasonal demand for PX, a feedstock for PET, usually rises between late-first quarter and early-second quarter, sources said.

The timing of EG and PX price movements was yet uncertain, but the arrival of additional EG supply was expected to coincide with high production season for gasoline blenders who consume PX, a market observer said.

"We do not anticipate more than a 5% shift in PET pricing [between February and April]," a trader said.

Bottle-grade PET values in the upper-70s cents/lb mean a 5% shift would be less than 4 cents/lb, consistent with seasonal price movements seen in previous years.

US PX producers nominated February contract hikes of 2-4 cents/lb over January's 54.75 cents/lb DEL (delivered), citing a need to rebuild margins. Some PX buyers said a rollover was possible but would only lend momentum to increases in March.

Soft demand for EG has weakened price ideas, dropping February contracts into the low-60s cents/lb FOB (free on board) from a January high of 74.5 cents/lb FOB, according to global chemical market intelligence service ICIS pricing.

For more on PET visit ICIS chemical intelligence

By: Landon Feller
+1 713 525 2653

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