US PET more competitive even as prices rise - producers

18 December 2009 15:08  [Source: ICIS news]

US PET becoming globally competitiveHOUSTON (ICIS news)--US polyethylene terephthalate (PET) prices are becoming more globally competitive even as contracts rise in December, producers said on Friday.

In a market laid low by slack demand and squashed profit margins, resin sellers noted lower import rates for December and January as US PET price hikes lag increases in raw materials paraxylene (PX) and monoethylene glycol (MEG).

“This is a tough market. What is very clear is that Asia is not particularly competitive right now. We hear less material coming over,” a producer said.

PET buyers and sellers indicated average December price increases were 2.5-3.0 cents/lb ($55-66/tonne, €39-46/tonne) following nominations of 3.0-4.0 cents/lb for the month, according to global chemical market intelligence service ICIS pricing.

US PET prices for smaller-sized December buyers were around 67.00-70.00 cents/lb DEL (delivered), after accounting for an average increase of 2.65 cents/lb.

Buyers of larger monthly parcels had contracts lower by 5-9 cents/lb, sources said.

By comparison, PET offers in Asia for December lifting were above $1,200/tonne FOB (free on board) in the latest week, compared with December deliveries to the US that were purchased in the low-to-mid $1,100s/tonne during October and November.

Delivery to the US of Asian PET frequently adds 15-20% of the resin cost on an FOB basis.

There had been widespread agreement that active buyers would have to take at least a 3-cent hike.

But a sizable portion of buyers delayed or avoided December contracts, contributing to a lower-than-nominated average contract price.

US sellers argued that concessions on original nominated increases did not make sense because US resin values had become more competitive as offers in Asia soar.

“We’re not offering aggressive pricing,” a US producer said, noting that loss of share would not be as harmful as the margin loss resulting from cutting back on increases targeted for December.

“Without being overly aggressive, prices in the states are very competitive,” said another US seller.

November and December raw material costs have risen such that sellers said they would rather lose the business than be aggressive in cutting back nominated price hikes.

Higher PET prices in the US were prompted by hefty gains in PX and EG, which combined to increase the December cost of PET production by more than 5 cents/lb.

US PET producers include Dak, Eastman, Indorama, Invista, Mossi & Ghisolfi, Nanya and Wellman.

($1 = €0.70)

For more on PET visit ICIS chemical intelligence
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