FocusEurope PET takes bearish turn in September

04 September 2008 12:30  [Source: ICIS news]

By Ed Cox

LONDON (ICIS news)--Europe polyethylene terephthalate (PET) prices are set to move down again in September on bearish upstream sentiment and underlying weakness despite signs of better demand, producers said on Thursday.

“The summer has been a disappointment,” said one major producer.

"We have not sold decent volumes and saw a decrease of at least €50/tonne [$72/tonne] in August. It’s too early to say where September will end but it’s too optimistic to suggest a rollover would be possible."

August PET was assessed on a gross basis between €1,545-1,670/tonne FD (free delivered) West Europe for bottle grade.

Falling feedstock purified terephthalic acid (PTA) prices in August gave sellers some leeway on pricing but there was widespread acceptance that demand was extremely poor.

Operating rates were quoted at around 50-70% by PET sellers in August, extremely low for what should be peak season for bottle-grade demand.

Added a second manufacturer: “September demand looks better already and we will lift our rates to 65-70% from 50% but there’s too much competition and we see bearish producers already out in the market."

The source added that it expected around a €50/tonne drop in costs for September after the initial monoethylene glycol (MEG) contract fell €75/tonne and on talk of falling paraxylene and PTA prices.

One trader noted: “Everyone is playing poker right now.

"Buyers will have to take material but we’re advising consumers to wait as long as they can, given the soft tone in the market.” 

A greater decrease than in August, when prices came down by an average €40-50/tonne was likely, added the source.

There was little need for additional volumes to Europe, given ample supply. However, increased volumes from the Middle East and Asia had certainly contributed to weakness in the overall market in recent months.

The downward trend was global, with lower levels also noted from the US and Asia.

($1 = €0.69)

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By: Edward Cox
+44 20 8652 3214

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