24 May 2012 13:15 [Source: ICIS news]
LONDON (ICIS)--European polyethylene terephthalate (PET) customers are poised for further decreases while producers try to hold onto margins, sources said on Thursday.
"I don't see any reason why the price shouldn't drop because it is all very bearish," a customer said, echoing comments made by others.
Some industry players thought in April that May prices would be relatively stable before increasing in June when the warmer weather would prompt some sort of a peak season for PET bottlers in Europe and the polyester sector in
"They have realised that in this environment PET cannot go up," according to the customer.
Domestic material in May was sold just above and below €1,300/tonne ($1,625/tonne) FD (free delivered)
"If suppliers want to sell they have to drop prices," a second buyer said. He added that June prices would probably fall to €1,230-1,240/tonne and that production costs would prevent them falling much further than around €1,220/tonne.
"All of the PET producers are working below break even point and it is time to recover margin," a producer said.
Customers report having received calls from suppliers keen to sell, but the lack of imports in June will mean that buyers are heavily reliant on domestic availability.
"If demand is added to the equation, there could suddenly be problems with [accessing] volumes," a second producer commented. He added that while demand remains uninteresting, sales have improved in May.
Raw materials look weak going into June, but the weakness of the euro against the US dollar may help stifle price drops in
"Some people try to increase [prices] but I think we will be able to keep the current [PET] price level," a third customer said.
The first producer commented: "In June nobody will pass the savings to the market… I guess that two days of good weather will move price levels up by €20/tonne."
A fourth customer summarised the situation: "Generally, oil price is still dropping, cotton price also…[and] demand in
Discussions regarding June prices are ongoing.
($1 = €0.80)
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