10 August 2011 09:56 [Source: ICIS news]
By Trisha Huang
Several northeast Asian producers maintained price ideas at around $1,700/tonne (€1,190/tonne) FOB (free on board)
Spot PET trading in Asia came to a virtual standstill by Tuesday afternoon as the slump in crude futures curbed firm discussions between producers such as
“We have not changed our offer. We are still asking $1,700-1,710/tonne FOB because our raw material costs are already set,” a northeast Asian producer said on Wednesday.
“The only change this week is that we may be more flexible in our price negotiations,” he said.
Several PET producers were reluctant to revise down price ideas because they had settled their raw material prices prior to the global stock market rout.
“We can’t afford to lower our August offers now. We had committed our raw material prices at the end of July,” said a southeast Asian PET producer.
Trading volumes in the PET market shrank on Monday and Tuesday as buyers withdrew from firm discussions, and deals were limited to sales of small lots to regional buyers, producers said.
Crude futures rebounded on Wednesday, with WTI trading at above $82/bbl and Brent at $105/bbl after falling by as much as $5/bbl during intra-day trade in
For the past three weeks, the strong uptrend in the values of raw materials paraxylene (PX), purified terephthalic acid (PTA) and monoethylene glycol (MEG) spurred successive price hikes by PET producers across the region.
This week’s offers in the $1,700/tonne FOB
World stock markets recovered after the US Federal Reserve pledged on Tuesday to keep interest rates near zero through to mid-2013. Markets had been tumbling since the start of August on fears of a slide back into recession for the US, reinforced by a downgrade of the US credit rating to AA+ by Standard & Poor’s on Friday. The global market rout deepened into Monday as investors dumped stocks worldwide.
Early this week, PET bottle chip sellers and buyers alike opted to wait for the violent gyrations in global stock markets to ease before resuming negotiation.
“We don’t know how much to offer now,” said a northeast Asian producer. “There have been no buying inquiries at all,” he said.
Most PET producers have maintained their price ideas at $1,700/tonne FOB
Spot PX prices for September and first-half October delivery slid to $1,470-1,480/tonne CFR (cost and freight) Taiwan/China Main Port (CMP) on Tuesday, down by $75/tonne from last Friday, according to ICIS data.
For PTA, spot prices dropped to $1,205-1,230/tonne CFR CMP by Tuesday’s close, compared to Friday’s price of $1,245-$1,250/tonne CFR CMP.
MEG prices also fell to $1,205-1,210/tonne CFR CMP on Tuesday, down from Friday’s closing price of $1,245-1,255/tonne CFR CMP.
Two Korean PET producers refrained from actively offering cargoes in response to extremely subdued buying interest.
“Producers are reluctant to offer, and our buyers are also very hesitant to [make purchase inquiries],” said a Korean producer.
“There is too much uncertainty in the current global markets. No one wants to make any decision now.”
Other major Asian PET makers include
Additional reporting by Bohan Loh and Lei Lei Wong
($1 = €0.70)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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