FocusKorea PET leads gains on strong €

14 April 2008 04:51  [Source: ICIS news]

By Hong Chou Hui

SINGAPORE (ICIS news)--Polyethylene terephthalate (PET) values in Korea led gains across Asia, boosted by a stronger euro against the dollar and a lack of trade barriers on the country’s exports to Europe, producers and traders on Monday.

Looking ahead, however, PET makers across Asia expect gains to be limited from this week as buyers have sufficient inventory to last them until the end of the summer's peak season in May.

PET end-users have been purchasing ever since mid-May, but some resistance has also been developing amid falling feedstock purified terephthalic acid (PTA) and monoethylene ­glycol (MEG) prices.

Meanwhile, deals for PET bottle chips from Korea firmed to $1,430-1,470/tonne (€915-941/tonne) free-on-board (FOB) Korea for the week to 11 April from the previous week’s level of $1,400-1,440/tonne, based on global chemical markets intelligence service ICIS pricing.

“We’ve been able to secure higher prices than any of our competitors to Europe due to the favourable exchange rates for the euro. We’re sold out for the month of April and are currently offering cargoes for May,” said an executive from Korea’s largest PET bottle chip maker, KP Chemical.

KP Chemical concluded various deals between $1,450-1,470/tonne to Europe for the first half of April, the source added.

The euro recorded a historic high against the dollar on Thursday with the currency buying $1.58 due to the European Central Bank’s decision to leave its interest rate unchanged at 4% in order to combat rising inflation.

Europe’s common currency gained against the dollar over the past two months on the back of interest rate cuts by the US Federal Reserve, which regulates the nation’s economy, to combat an economic quagmire triggered by the US sub-prime credit crisis that began in the last quarter of 2007.

The gains made by the euro have been rolled back recently after the Group of Seven nations expressed increasing fear over the dollar’s decline. The dollar rose to $1.56 versus the euro this morning before stabilising at $1.57.

A lack of anti-dumping duties (ADD) in Europe for Korean PET imports gave a further boost to export prices from the northeast Asian nation.

“We would like to export to Europe to take advantage of the currency’s strength but we can’t because of the ADD imposed on both Chinese and Taiwanese PET,” an executive from Far Eastern Textile’s Shanghai office, said in Mandarin.

“The Koreans are the only ones in Asia who enjoy the benefit of no ADD for their European exports,” he added.

The Taiwanese PET bottle chip producer has two PET facilities in Shanghai and Suzhou in eastern China with a combined annual capacity of 340,000 tonnes.

“Middle Eastern makers such as JBF-RAK from the United Arab Emirates (UAE) are also selling PET bottle chips to Europe but with so much domestic demand from their own backyard, it limits their outbound cargoes. This leaves a huge demand gap for the Koreans to fill,” the Far Eastern executive said.

PET bottle chips are used to manufacture bottles for consumer goods such as drinking water and cooking oil while PET fibre chips are utilised for making polyester fibres used for stuffing toys and cushions.

Major PET producers in Asia include Reliance, SK Chemicals and Indorama.

($1 = €0.64)

By: Hong Chou Hui
+65 6780 4359

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