30 December 2009 12:23 [Source: ICIS news]
By Yu Guo
SINGAPORE (ICIS News)--Asian polyethylene terephthalate (PET) bottle-grade chip prices are likely to be driven by costs instead of demand next year as the start-ups of new plants and capacity expansions will increase supply, industry sources said on Wednesday.
The capacity was expected to increase by 1m tonnes/year in the ?xml:namespace>
"The PET market will continue to be oversupplied going into year 2010, as it has been for the past two years," a major Middle East-based PET producer said.
About 500,000 tonnes/year of new PET capacity came on stream in the
Overcapacity eroded margins in the past couple of years for most producers and they could barely recover their costs, industry sources said.
PET bottle-grade chip prices were at $1,350-1,420/tonne (€941-990/tonne) FOB (free on board) Korea in December 2007 while the spot prices for PET bottle chips were at $1,180-1,200/tonne FOB Korea in December 2009.
"The pricing mechanism is now determined by upstream costs, rather than market fundamentals," a market source said.
The seasonal slowdown in the last quarter of 2009 in exports of PET bottle chips, which are mainly used for bottled waters, had not deterred the prices from rising in line with higher feedstock purified terephthalic acid (PTA) and monoethylene glycol (MEG) costs.
PTA values were at $925-930/tonne CFR (cost and freight) CMP (
Chinese producers were hopeful that the uptrend of PET spot prices would continue in the next year due to a recovery in demand.
A source from a major Taiwanese producer said: “The Chinese market is still growing.”
“Chinese domestic demand this year was estimated at 2.15m tonnes while demand from the export market was estimated at 700,000 tonnes. This sums up to almost 100,000 tonnes annual growth as compared with year 2008 despite the influence of global economy slowdown,” the source added.
Global PET demand declined around 3-5% in 2009 owing to the economic slowdown, a market observer estimated.
The expected growth rate was at around 1-2% in the European and US markets which were severely affected due the slowdown, the source added.
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