23 May 2012 13:02 [Source: ICIS news]
LONDON (ICIS)--Lithuania’s Neo Group is on force majeure (FM) for polyethylene terephthalate (PET) sales and feedstock purchases and will operate at reduced rates until the middle of August at the latest, a company source said on Wednesday.
“Latest, in [the] middle of August we will be able to run [PET] at 100%,” the source said. Both 440 tonne/day PET lines are producing 220 tonnes/day, he added.
The situation is not expected to influence Neo Group’s contract customers, but will limit the company’s presence in the spot market.
Neo Group noticed that there was a problem with the biological waste water treatment facility in the first half of May, and this resulted in the closure of one of the two tanks for maintenance.
This forced the company to cut PET production by half and declare force majeure on 17 May of sales from its two 160,000 tonne/year PET lines in Klaipeda, Lithuania.
The company’s purchases of feedstocks purified terephthalic acid (PTA), monoethylene glycol (MEG) and purified isophthalic acid (PIA) have also been affected.
“[Purchases of PTA, MEG and PIA] have been partially cancelled from 17 May. This affects deliveries in May and June of purchases already ordered. Future purchases have simply been reduced,” said the source.
Suppliers of PET in Europe have struggled to sell in March, April and early May because of buyers hesitating to commit under the current poor economic conditions.
“Market margins are terrible,” the Neo Group source said, echoing comments by others. “There is some increase of demand for approaching June… more and more customers seem to be accepting the existing levels of PET prices and requiring [product] for pre-buying,” he added.
May PET prices are either side of €1,300/tonne ($1,646/tonne) FD (free delivered) Europe, according to data from ICIS
($1 = €0.79)
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