04 April 2012 12:26 [Source: ICIS news]
“People don’t buy and producers don’t reduce production, so they have to sell [PET] cheaper,” a customer said.
Buyers are loath to delve into the market until sellers’ offers fall below the psychological barrier that is now €1,300/tonne ($1,711/tonne) FD (free delivered) Europe.
“Producers want to sell…but there are no offers below €1,300/tonne,” said a second customer.
Sellers, meanwhile, are concerned about margin loss. They talk of production costs possibly decreasing by €40/tonne from March to April, and one producer is already anticipating a €50–55/tonne drop in the price of PET.
“The €1,300/tonne [price] would mean a loss of margin and margin retention is as good as it gets,” the producer said.
March began with prices about €1,400/tonne but they dropped into the mid €1,300s/tonne and are now lower, according to data from ICIS.
The market is waiting for news from upstream paraxylene (PX) and monoethylene glycol (MEG). PX has already dropped by $65/tonne in the dominant Asian market to $1,585/tonne CFR (cost & freight) Asia. Europe April MEG contract discussions are proving difficult to begin because of rising production costs compared with falling Asian prices, but PET players are counting on a decrease or a rollover at the most.
As soon as there is clarity about feedstock developments and sentiment in Asia from Thursday, following the Chinese holiday this week, the market could become more active as sellers either decide it is the right time to drop prices further or buyers bank on a change of direction caused by a potential rush to buy product.
“I am afraid what will happen if everyone buys at the same time,” the second customer said.
($1 = €0.76)
Follow me on Twitter
Please visit the complete ICIS plants and projects database
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|