Middle East PET players remain cautious amid uncertainty

30 May 2011 12:03  [Source: ICIS news]

MEG is a feedstock for PETSINGAPORE (ICIS)--Middle East polyethylene terephthalate (PET) players remain cautious, waiting for the spot market to show signs of bottoming out before hurrying into it for purchases, market participants said on Monday.

Spot prices for bottle-grade PET chips slumped $305/tonne (€214/tonne), or close to 16%, during the past two months, caused by sharp declines in upstream purified terephthalic acid (PTA) and monoethylene glycol (MEG) markets as well as persistently weak buying confidence.

On 27 May, PET bottle chip prices were at $1,620-1,640/tonne CFR (cost and freight) GCC (Gulf Cooperation Council) and $1,600-1,620/tonne FOB (free on board) GCC, according to ICIS.

Regional converters and end-users welcomed the price decreases and were confident that demand will increase once spot prices stabilise.

“Reductions in spot prices will encourage more buyers to come forward and volume will increase by around 10-20%,” said one UAS-based converter.

Another Saudi-based converter has reportedly increased its average operating rates to around 80%, compared with 60-70% previously.

“Converters will definitely try to adjust up the operating rate further if spot prices remain soft,” the Saudi-based converter added.

However, local producers said the spot market has yet to witness any signs of significant recovery.

“The spot market situation stays very confusing at the moment, although [demand] should not have been [so weak] given the summer season is already here,” said one major regional producer.

“People are not buying and preferring to wait till June or July,” the producer added.

“Buyers no longer make bulk purchases for 1-2 months’ worth of inventories, they are buying strictly on a hand-to-mouth basis now,” said an UAE-based trader.

“This is also one reason why producers do not see recovery in bulk purchases although demand is improving,” the trader added.

($1 = €0.70)

By: Yu Guo
+65 6780 4359

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