Europe PET sellers await fall in feedstock costs

31 July 2008 12:45  [Source: ICIS news]

LONDON (ICIS news)--European polyethylene terephthalate (PET) producers are expecting upstream costs to fall in August, which will allow them to improve margins providing demand was healthy, they said on Thursday.

"We will go for a €40/tonne ($63/tonne) August PET increase. Like other producers we are desperate to improve margins. We would welcome the expected drop in purified terephthalic acid (PTA) as it would take some pressure away from our costs," said one large PET manufacturer.

There were already signs, however, that demand for PET could be slow in August, with reports of reduced operating rates from Italy and France.

"Volumes are low and demand is not good. We were not running at full capacity in July and do not expect to do so in August. It’s still early but I might push for a rollover," said another seller.

The source added that it was estimating around a €70/tonne drop in PTA for August, which is the main feedstock for PET.

Recent decreases in Asian paraxylene (PX) prices have led to talk of lower European PX and PTA costs in August.

A number of PET consumers were absent from the market, with the holiday season continuing in Europe.

Major questions have been raised over underlying demand for bottle-grade PET in Europe, the product’s main application, with offtake for bottled water heard to be falling around Europe.

"We have high stocks and are still well covered by imports. I could imagine a rollover for August, as players start to look towards the end of the season in September," replied one consumer

PET contract prices in July rose by €90-100/tonne, as sellers faced hefty upstream PTA and monoethylene glycol (MEG) hikes.

($1=€0.64)

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By: Edward Cox
+44 20 8652 3214

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