26 May 2011 14:41 [Source: ICIS news]
LONDON (ICIS)--European polyethylene terephthalate (PET) prices are still decreasing but the market is likely to see less price volatility after a period of huge swings, sources said on Thursday.
“The speculative bubble has been broken,” one PET customer said, echoing comments made by other buyers and sellers.
This was likely to lead to a more stable environment, they added.
Prices adopted an unusual pattern during the first part of 2011, when they increased in the low season before decreasing just as the high season began.
During the slow winter months, domestic PET prices leapt by more than €300/tonne ($423/tonne) to €1,650/tonne FD (free delivered) ?xml:namespace>
A series of force majeure declarations on upstream purified terephthalic acid (PTA) hampered PET production to such an extent that Spain’s Artenius declared force majeure at its European PET plants and other producers went on allocation.
To secure volumes, customers risked importing additional material from Asia and the
“There are a lot of imports coming in,” one producer said.
Decreasing feedstock prices and a collapse in Asian values has sent European PET prices tumbling during the busy preparation period for bottlers.
PET availability is currently more manageable, too, and domestic prices have fallen into the €1,400s/tonne. European spot slipped just below this, while freely-negotiated domestic prices are recorded either side of €1,450/tonne.
A second customer said European producers have finally woken up and would like to match the import prices.
A large spread of PET import prices were reported, depending on the timing of each import purchase and which exchange rate was used. Imports are in the €1,290–1,450/tonne range between May and July. The later the arrival date, the lower the price.
“I doubt customers are booking a lot [of imports] now because they are afraid [of prices falling further],” a second producer said.
Bearish fundamentals behind decreasing demand for PTA in
“PTA Asia is probably the answer to why we have got imports excited again. But with the dollar strengthening, I do feel the market will show [some bounce back],” the second producer said.
Cotton prices soared and this pushed up demand for PET textile applications, particularly in
“[The cotton price] is still high but is more linked to market availability than to speculation,” one customer explained.
The market awaits news from the summer cotton harvest in
“There is no time pressure to buy. We are comfortable about the volumes on the way or being offered. We are all waiting,” the second customer said.
Speculation caused prices to rise more than necessary in early spring. Then a slump in demand for textiles in
“I don’t see it lasting long because people will need to buy clothes eventually. In June and July there will be a new trend, either up or down, because of the cotton crops,” he surmised.
($1 = €0.71)
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