21 March 2013 17:04 [Source: ICIS news]
LONDON (ICIS)--The polyethylene terephthalate (PET) market in Europe has come to a standstill, as buyers wait for a price decrease – but sellers are in no rush to lower their offer price, sources said on Thursday.
"Someone has a reason [for prices] to go one way, then another pops up with reasons to go the other way," a reseller said.
Buyers said that with feedstock prices finally falling, they have no intention of buying until the decrease is reflected in the price of PET.
Sellers, however, are holding out at the current levels of €1,300/tonne ($1,688/tonne) and just above on a free delivered (FD) Europe basis.
They have been fighting to improve dire margins, and although production costs have fallen, raw materials remain expensive.
"[Players] say the trend is down, but raw materials are still expensive and the [euro-US dollar] exchange rate is not good at all. Producers outside Europe [keep their prices] stable, and European producers are preferring not to sell," a buyer acknowledged.
While on paper the market is oversupplied, lacklustre demand and various European outages mean not everyone is flush with material.
Therefore, if and when the spring/summer peak season kicks in, sellers may be well placed to command healthier prices.
"There is more of a chance to go to a bullish market than a bearish market," a reseller speculated.
Factors that could support a more bullish market include tighter supply and warmer weather attracting more PET bottle sales.
Demand for gasoline could also rise, leading to higher crude oil prices – which in turn will impact on the value of PET feedstock paraxylene (PX), and result in more expensive freight rates.
All this could eventually lead to higher PET prices, the reseller surmised.
($1 = €0.77)
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