22 March 2012 17:30 [Source: ICIS news]
LONDON (ICIS)--Short-term demand for polyethylene terephthalate (PET) in Europe is weak, despite the imminent peak season for PET bottlers, sources said on Thursday.
"March has been slower than February. It's hard to imagine. This is despite being closer to the [peak] season," said a trader, echoing comments made by other industry players.
The turnaround in the Asia market has impacted sentiment in Europe and buyers are adopting a wait-and-see stance as they do not want to stock up on material.
"Based on demand, the market looks softer, but raw materials don't stack up… April has got 'softer' written all over it," said a second trader, adding that its market was "dead quiet".
Were this situation to continue, producers will be forced to reduce operating rates, said a producer. Another said recently that it was balancing inventories.
"If there is no pre-buying for quarter two and the summer, it will all come in a rush and there has been a lack of imports," said a third trader.
March prices were assessed around €1,400/tonne ($1,842/tonne) FD (free delivered) Europe, and this level is giving way to lower prices, according to data from ICIS.
"We are sailing towards a storm. Reduce your sails and get ready for the storm," said a customer whose sales are "definitely below budget".
Demand has to resume sooner or later, particularly now that Asia is looking more stable, buyers and sellers said.
"Some customers definitely need to come back in April or May," said the second trader.
There are reports of some buyers requesting offers for medium-term deliveries of PET. It is as if they see prices bottoming out again in April and raw materials continuing to increase, the producer said.
The spate of pre-buying that took place from November to February should be an indication of why some customers do not need product right now, said a buyer.
"This should not be a surprise to producers. They knew it was pre-buying and they knew it would hit the market. We didn't buy it to put it in a museum," the buyer added.
($1 = €0.76)
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