11 October 2012 20:07 [Source: ICIS news]
By Ron Coifman
HOUSTON (ICIS)--Latin American polyethylene terephthalate (PET) markets are strengthening this month, led by earlier firming in Asia and the US, according to industry participants.
Major drivers for PET price direction in Latin America are Asian PET and feedstock paraxylene (PX) prices, which had been on an uptrend in August and September.
Although some participants in Brazil said that PET demand was rising significantly in the second half of this year on seasonality, sources in other countries maintained that the region’s markets were generally performing under expectations, even in countries in the southern cone of South America, where the peak use season was starting.
In Mexico and the US, the high season has ended as cooler temperatures set in. Earlier, participants described summer bottled-drink and PET business as soft.
Although by early October the price increases in Asia had appeared to have peaked, lagging Latin American prices were still catching up. October prices in the Americas were being talked higher.
However, markets sources suggest that PET prices in November and December may stabilise or decline, as participants through the production chain manage inventories at the end of the year.
Additionally, sources in Latin America said they doubted that the upward price trend for PET and upstream PX evident in the recent past can be maintained, as resin demand for bottle- and fibre-grades remains weak in Asia.
In Argentina, industry sources said prices rose by $70/tonne (€55/tonne) for October PET, driven by the market dynamics in Asia, and coming after a $60/tonne increase in September. The October domestic price of Argentina PET was assessed at $2,220-2,320/tonne DEL.
Demand remains moderate despite the warming temperatures and the beginning of the peak season for bottled beverages, participants said.
In Brazil, an $80/tonne price increase announced for October was under discussion, but early in the month, the outcome of negotiations was not clear, sources said. The proposal was supported by gradually rising seasonal business, firming feedstock costs and the global resin trend. The September domestic price of Brazil PET was gauged at $1,870-1,970/tonne DEL.
However, PET consumers noted that domestic demand, although increasing, remained less than robust, while offers of PET resin from Asia have been declining.
Brazil’s prices in September were up by an average of $70/tonne, on a $90/tonne hike initiative by the local producer.
In Colombia, September PET domestic prices stood at $1,950-2,000/tonne DEL, amid slow industry activity, sources said, while initiatives for October had not emerged by the first week of October and participants talked of rollovers.
Domestic PET prices in Colombia stood at $1,850-1,900/tonne DEL in August and $1,800-1,900/tonne DEL in July, on support from the global trend.
PET from Mexico was offered in September at $1,680-1,700/tonne CFR (cost and freight) Colombia, up from $1,640-1,650/tonne CFR Colombia in August, in line with the firming trend in the Americas and other regions.
In Mexico, sources said that a 4 cent/lb increase was implemented in October on support from higher PET values in the US and elsewhere in the Americas, despite tapering demand at the end of the peak season.
Offers of Mexican product for Colombia and Venezuela were heard at $1,600-1,680/tonne FOB Mexico.
PET targeted for Venezuela was last heard quoted at $1,760-1,780/tonne CFR Venezuela, compared with $1,720-1,740/tonne CFR Venezuela in August and $1,620-1,640/tonne CFR Venezuela in July.
PET producers in Latin America are DAK Americas, Indorama and Mossi & Ghisolfi.
($1 = €0.78 )
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