29 September 2008 06:44 [Source: ICIS news]
By Hong Chou Hui
SINGAPORE (ICIS news)--Asian polyethylene terephthalate (PET) has fallen to a two-year low of $1,200/tonne after recording its sharpest price drop ever of nearly $400/tonne or 25% in the space of two months on very weak demand, said sellers and buyers on Monday.
"This is like driving down [a] greasy slope with no brake[s]. I’ve never seen prices crash from more than $1,600/tonne FOB to almost $1,200/tonne FOB in [the] space of two months," said a trader of PET bottle chips in northeast (NE) Asia.
Exports of southeast (SE) Asian PET bottle chips peaked at a high of $1,620/tonne FOB SE Asia in mid-July on peak summer season demand and high feedstock prices before going into a free fall, said industry sources.
Last week, PET bottle chips from SE Asia extended losses by $50-60/tonne to $1,200-1,240/tonne FOB SE Asia as a result of very weak demand for exports, according to global chemical market intelligence service ICIS pricing.
The crisis situation in the US could further squeeze Asian PET makers’ margins as the traditional year-end peak season demand orders could be delayed or even be markedly lesser than usual, said a market watcher from SE Asia.
"Normally, orders for PET chips from the US and Europe start to filter in by September as end users try to build up inventories for the year-end peak demand but this year, our order books are extremely thin, said an east China-based PET bottle chipmaker in Mandarin.
"The financial uncertainty is really impacting demand for consumer goods," the producer added.
PET prices had also fallen due to the drop in values of feedstock purified terephthalic acid (PTA) and monoethylene glycol (MEG) over the past few weeks. While lower feedstock values had offered some relief to non-integrated PET chip manufacturers in Asia, downstream end-users had also begun negotiating for more competitive rates.
"We can shop around and compare prices because the sellers are eager to get rid of inventory. When feedstock prices were high, they were using this as a justification for price hikes so now that PTA and MEG prices have tumbled, we are using it as a negotiation tool," said a buyer in the Middle East.
Some traders however believed that prices could stabilise in October. A combination of year-end festivities and summer weather in the southern hemisphere could drive demand for PET chips, a trader in NE Asia 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.
Source : ICIS PricingFor more on PET visit ICIS chemical intelligence
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