Europe August PET price up by €30/t, Sept increase likely

28 August 2009 16:53  [Source: ICIS news]

LONDON (ICIS news)--European polyethylene terephthalate (PET) contract prices increased by an average of €30/tonne ($43/tonne) in August and could increase again in September due largely to feedstock prices, sources said on Friday.

“In August we have pushed for the raws and in the main got it, so a €30-40/tonne increase,” a seller said, echoing statements from other buyers and sellers.

Prices delivered to west Europe in August increased to as high as €980/tonne, matching some of the lower numbers seen in Spain during July.

Spanish accounts were still faced with prices as high as €1,000/tonne in some cases, but a price of €955/tonne FD (free delivered) was also heard, according to global chemical market intelligence service ICIS pricing.

Eastern Europe had witnessed the lowest levels at €890/tonne in July, but increases of between €20-60/tonne were recently recorded in this region. A customer earlier said that it had reduced its August offtake from those selling material at an increase of €60/tonne.

Sales in Europe overall were relatively good in August, sources agreed.

“Demand [for upstream purified terephthalic acid (PTA)] was quite acceptable during the month of August. The latest news of Wilton [Artenius’ site in the UK] being structurally down on PET and PTA has shaken the market a bit, so customers [PET producers] have increased their operating rates in northern Europe,” an upstream PTA producer said.

Producers were already targeting increases of between €50-100/tonne for September.

Expectations of higher feedstock costs and a need to improve margins were at the forefront of producers’ arguments for PET increases.

“PET will go up in September because feedstocks will be higher so margins could suffer. The colossal losses Artenius incurred during the last six months are proof that we need to recuperate margins,” a PET producer said.

Production costs went up in August and were threatening to increase further in September.

Monoethylene glycol (MEG) increased by €40/tonne to €615/tonne. Producers were targeting hikes of €70-95/tonne for September because of tight supply and a €80/tonne increase in the cost of upstream ethylene (C2).

September C2 was agreed at €875/tonne.

August PTA contract prices moved up by €21/tonne to €703-731/tonne FD NWE from July because of raw material costs. The feedstock paraxylene (PX) price went up by €32/tonne to €760/tonne in August, putting the pass-through onto PTA at €21/tonne.

European PET and PTA sources were expecting to see a rollover or a slight increase in September PX pricing, but this remained to be seen. The absence of Artenius from the PTA market led to several PX buyers anticipating an ample supply of PX in September and further downward pressure on prices.

“The [PET] industry should be able to get roll through of raws as demand is okay, yet capacity is down such as Artenius. Imports are coming through but even these have to reflect increased raws recently before they fall off, so gives us the confidence to move upwards,” according to a PET producer.

($1 = €0.70)

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