Europe October PET prices face downward pressure

02 October 2009 23:59  [Source: ICIS news]

LONDON (ICIS news)--Polyethylene terephthalate (PET) prices in Europe face downward pressure due to falling feedstock prices and softer demand for PET, buyers and sellers said on Friday.

“For sure [PET] prices will go down in October, because feedstocks will fall – especially paraxylene (PX),” said a customer.

Some European producers were trying to cling onto a price in the €900s/tonne ($1,304/tonne) FD (free delivered) Europe and were targeting a decrease to €920-960/tonne from September’s €930-990/tonne.

“[A price of] €930-960/tonne is the minimum we can go to, a €30-40/tonne reduction from September. Customers say it’s not enough though,” said a producer.

Another producer said it simply could not afford to go below €920/tonne.

One producer, however, said it was prepared to meet competitive import prices and was operating at €850-860/tonne for October deliveries.

“At the end of September, €880/tonne was very low. Today, from the PX perspective, €850-860/tonne is much better,” said the producer.

An initial October settlement for European paraxylene (PX) was heard at €615/tonne FOB (free on board) NWE (northwest Europe), a drop of €145/tonne from the previous month largely due to the continued slump seen in the Asian PX market.

Regarding the other PET feedstock, monoethylene glycol (MEG), October contract price discussions had hardly begun. But already there were signs that negotiations could be heated.

Referring to Asian values, customers said that decreases of over €100/tonne would be appropriate, while other sources were expecting a more modest decrease of €10-20/tonne.

“October PET prices will go below €900/tonne. I hope it doesn’t end up below €880/tonne, as this will hurt producers,” a reseller suggested.

Demand was slipping, players agreed, due to the end of the bottling season. A poor cotton harvest in the US and China, though, could result in additional polyester sales, according to one of the producers.

“It won’t have a great impact on supply because there is a lot of material around. But in the short term, we could see higher prices in Asia,” said the producer.

Other sources said that cotton used to be in important factor for PET but it was unlikely that this year’s bad harvest would affect European PET pricing.

($1 = €0.69)

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By: Caroline Howard
+44 20 8652 3214

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