24 June 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--Polyethylene terephthalate (PET) prices in Europe exceeded expectations by dropping €90/tonne ($129/tonne) on average from May to June as domestic producers are forced to compete with imports, sources said on Friday.
“It’s unfortunate that the market appears to have dropped more than the raw material drop, probably due to perceived availability of imported material and new plants coming on stream,” a PET producer said.
Domestic freely negotiated prices are now quoted from €1,330/tonne FD (free delivered) Europe, though some sources say they start around €1,300/tonne.
Following a rapid rise to €1,570–1,650/tonne in April, prices have been falling back to where they were in January.
Prices have dropped between €70–110/tonne compared with the same time in May. It varies according to when prices were settled, because of daily and weekly price decreases, buyers and sellers agreed.
The decreases exceed the €30/tonne that players had expected based on June production costs.
After a tight first half of the year caused by a series of production problems, PET is now more freely available and prices reflect this.
“European suppliers are knocking on our door wanting to sell. The tightness has certainly gone,” according to a buyer.
July discussions are yet to start in earnest, but already buyers and sellers paint a more stable picture.
“I can’t see the same sort of drops as the last few months,” the buyer said, adding that a little easing in July is likely.
A reseller echoed this idea, saying that if prices were to drop again in July, it would be by no more than €10–20/tonne.
Market participants had expected relative stability from May to June, but they were proved wrong.
The sell side said a July decrease was optimistic, and that tightness in upstream monoethylene glycol (MEG) could cause production costs to go up, though not significantly.
Initial thoughts from PET players about July MEG contracts point to an increase from June’s price of €1,015/tonne FD NWE (northwest Europe), though some buyers are pushing for a decrease. While Asian nominations are up, upstream ethylene is set to fall in Europe.
The outcome remains to be seen.
($1 = €0.70)For more on PET, PTA, PX, MEG visit ICIS chemical intelligence
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