14 February 2013 12:27 [Source: ICIS news]
By Caroline Murray
"It is quiet but mainly because customers are still reluctant to accept the higher levels. They have a wait-and-see attitude because they are convinced that prices will come down due to oversupply," a reseller explained.
Buyers are operating hand-to-mouth, hesitant to commit to material they may not be able to pass on at current free delivered (FD) Europe price levels.
"We have extreme difficulties to transfer increases to our customers. All our customers are furious. It is the lowest month in sales for PET industry, food and beverage, and no one is buying…no high season is expected to come," a buyer of PET said.
Producers are keeping inventory levels in check and are only optimising efficient plants.
"[Producers in south Europe] must still be at 60-65% operating rates because there is no PET around. They are not interested in selling," said a second customer.
Suppliers said they were already sold-out earlier in the month, but there may be areas of excess PET that some players said was sold at lower prices, perhaps for cash.
"Producers' main concern is some have inventory in hand and want to sell some PET because they can't switch off their line…When you have stock, it is better to sell material now [rather than] expose yourself to higher risks the month after," a third customer said.
According to the first customer, echoing comments made by other industry players. "…PET is short today but in general it is not short."
PET prices have been on the rise more or less since the summer of 2012, pushed upwards by rising production costs. Producers' margins have been squeezed to such an extent that they say there is no alternative but to target even higher prices.
In these uncertain times, markets sometimes react against the norm. For instance, current demand is not particularly good, yet prices are high. The situation was reversed in the peak season of 2012 when demand was high and prices dipped.
"Whatever forecast we issue it will be wrong. Of this I am sure," the first customer surmised.
($1 = €0.74)
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