23 February 2012 17:24 [Source: ICIS news]
LONDON (ICIS)--European polyethylene terephthalate (PET) prices increased in February and are likely to rise again in March and April as the market remains precariously balanced and upstream costs strengthen, sources said on Thursday.
“Producers are relaxed because there are no imports and they can afford to push prices up. Feedstocks are going up, too,” a PET buyer said.
February PET rose to €1,370-1,410/tonne ($1,803-1,855/tonne) FD (free delivered) Europe, up by €60-90/tonne from January, because of rising feedstocks and strong demand.
“March depends on [upstream] paraxylene (PX) and we could see another cost-driven push,” a second buyer said.
Indications for PX in Asia, the dominant feedstock and market, point to another PX increase of $110/tonne from February to March. February PX increased to €1,232/tonne FD NWE (northwest Europe), up by €102/tonne from January.
Initial reactions from European traders are that anything from a PX rollover to plus-€50/tonne could be realised next month.
Upstream purified terephthalic acid (PTA) saw a price rise of €27-30/tonne from December to January and February could conclude close to €70/tonne higher, at around €1,000/tonne if traditional calculations are adhered to.
Not everyone believes that raw material developments will be the main driver for PET movements, however.
“Asian PX and MEG [mono ethylene glycol] won’t be the main driver for PET movements,” a PTA buyer said. The lack of imports and growing demand ahead of the [bottling] season are more likely to influence the market, he added.
Imports remain scarce due to them being uncompetitive with domestic product, and customers have been pre-buying locally where possible from November to the first half of February.
There may be more PET volumes in March than expected, as traders sell product they bought at cheap prices at the end of 2011, according to another buyer.
He added that despite this, the market remains strong and there is no chance of a decrease, merely that the pace of the price increases has slowed down.
PET prices have increased by nearly €200/tonne since December, according to ICIS.
“Fluctuations will occur, though the spread should be narrow if oil remains upwards long-term,” a reseller said.
($1 = €0.76)
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