Europe PET buyers expect low demand to result in price falls

26 March 2013 16:05  [Source: ICIS news]

LONDON (ICIS)--European polyethylene terephthalate (PET) buyers expect lower prices will emerge in April because demand is so low, sources said on Tuesday.

"April prices will go down because of demand. Still the season has not come yet," one buyer said.

Cold weather across parts of Europe is impacting sales of PET used in the beverage sector. The situation is compounded by negative economic news from the eurozone.

"I struggle to see where demand is going to come from," a second buyer said, echoing comments made by other sources.

A preform producer said its company has underperformed in sales and, therefore, is stuck with a lot of stock.

"The crisis we are facing … is creating dark circle," the preform producer said.

For domestic PET manufacturers, developments in exchange rates mean they are not faced with aggressive offers from US dollar-based importers.

"If you offer [to buy] more volume, [producers] are more flexible on price. It is a risk to buy extra because nobody knows if Asia will fall further. The exchange rate helps European producers," according to a converter.

As for March, when prices remained around €1,300/tonne ($1,667/tonne) FD (free delivered) Europe, there has so far been little movement compared with February.

"Producers have been reasonably stubborn in March from a pricing perspective, and have managed to hold onto some, if not all, of the raw material drop. I hope there is a bit of a reduction in April," said the second buyer.

Sellers said their poor margins do not permit them to lower prices and customers acknowledge that this may well be the case.

"They lose money already so can't expect it will go down further," a third buyer said, adding that the peak season should be just around the corner.

($1 = €0.78)

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By: Caroline Murray
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