13 December 2012 13:55 [Source: ICIS news]
LONDON (ICIS)--The cost of producing polyethylene terephthalate (PET) in Europe has decreased but low stocks and poor producer margins are leading to some spot price increases, sources said on Thursday.
"Spot market prices have gone up a bit even though feedstock prices have come down…I see a slight increase in price compared to November, up €5-10/tonne ($7-13/tonne). It touches €1,300/tonne for December," a customer said.
The dominant market, Asia, has also experienced higher PET prices along the polyester chain, and this has impacted offers of imported PET that are now higher than a week ago.
"One week ago we had an indication of $1,465/tonne FOB (free on board) Shanghai and this week we got $35 higher to $1,500/tonne FOB Shanghai, because of demand increasing and expectations that raw materials will go up," according to a converter.
Material from the Middle East is also increasing in value, with offers for December delivery now at €1,290-1,300/tonne FD (free delivered) Europe. This is up by €40-60/tonne on offers made in early December.
Of those PET plants operating, European output is averaging around 70% amid some new capacity coming on line in the Netherlands and Oman. Production has been lowered to sit more comfortably with slack demand, buyers and sellers agree.
A period of cautious buying, unattractive import opportunities, lower production rates and moments of panic selling over the last few months have led to depleted stocks all round. As we head to the end of the year, some players see prices rolling over from November, but many are prepared to operate at a slight increase in December, notwithstanding the situation upstream.
"[PET producers] are really under pressure these days," the first customer said.
Raw materials paraxylene (PX), which feeds into PET's main raw material purified terephthalic acid (PTA), saw the initial December contract price slip by €5/tonne from November, while monoethylene glycol (MEG), PET's secondary feedstock, decreased by €22/tonne in the same period.
($1 = €0.76)
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