FocusSellers expect Europe PET shutdowns to stifle price falls

27 March 2013 16:23  [Source: ICIS news]

By Caroline Murray

LONDON (ICIS)--A considerable number of reduced operating rates and shutdowns at European polyethylene terephthalate (PET) plants may stifle a price decrease in April, sources said on Wednesday.

"If someone can't wait any longer and realises they suddenly need to buy PET, the price will be lower, but the drop will be less than that of raw materials," a source said, speaking in Spanish.

PET producers are in no position to lower the price more than the potential fall in upstream costs, particularly as PET prices lagged behind earlier feedstock increases, a producer said.

"We will do everything in our power to keep the PET prices steady," the producer added.

The PET industry is monitoring developments of upstream sectors paraxylene (PX) and monoethylene glycol (MEG), which are currently bearish in the dominant Asian market.

PET players are already speculating on a drop of €50-70/tonne ($64-90/tonne) for PX and €40/tonne or more on MEG April contracts, even though contract discussions have not yet begun.

Demand for PET has been sluggish and there are areas particularly in south Europe, where PET output has been reduced because of this.

"At this moment it seems demand is met, but if [there is] sudden good weather and confidence then supply will tighten quickly," a second producer said, echoing comments made by other buyers and sellers.

Thailand-based Indorama Ventures’ 198,000 tonne/year PET plant in Klaipeda, Lithuania, is scheduled to be shut down for a month-long maintenance programme over the weekend of 30-31 March, a company source said.

Indorama’s newly expanded 190,000 tonne/year Dutch unit in Rotterdam is running at 'higher capacity levels'.

Discounting the campaign runs, the group’s 155,000 tonne/year unit in Workington, the UK, is still operating at reduced levels and its 150,000 tonne/year Ottana plant in Italy is also reduced because of poor demand in the surrounding area.

Meanwhile, Indorama has been optimising its 140,000 tonne/year operations in Wloclawek, Poland.

Spain-based CEPSA Quimica’s 175,000 tonne/year PET site in San Roque, is scheduled to be shut down for maintenance on 1 April for two weeks, a few weeks later than originally planned.

Meanwhile, the fate of Artenius' 80,000 tonne/year Greek plant in Volos is still unknown as no official comment has been made. Having shut down for maintenance late 2012, it is now under threat of permanent closure pending decisions made at board level. The holding company, La Seda de Barcelona, is still renegotiating the company's debt.

PET contract customers were being covered by Spanish-owned Artenius' plant in El Prat de Llobregat, players said earlier this month. Artenius also has a 140,000 tonne/year unit in Adana, Turkey, and a 200,000 tonne/year plant in San Giorgio di Nogaro in Italy that is focused on technical polymer production.

In addition, Spain-based Novapet has shut down one of its PET lines in Barbastro to prepare it for a more specialty-focused output. Its plants one and three are running, while plant two is down for technical reasons during March and will be for some of April. The 100,000 tonne/year line, which normally produces commodity PET, went down on 1 March and will be down until sometime in April, pending market conditions.

Once work has been completed, the operating rate at Novapet's 30,000 tonne/year specialty line, also in Barbastro, will drop to 40%. Novapet has a third unit at the same site that has capacity to produce 130,000 tonnes/year of commodity PET.

Mossi & Ghisolfi’s (M&G’s) 220,000 tonne/year plant in Patrica, is running specialties campaigns and is short of product, while fellow Italy-based Plastipak is also understood to be shut down, although this has not been verified at source.

Amid these shutdowns, buyers are holding out for lower prices to emerge.

Producers are targeting rollovers around €1,300/tonne FD (free delivered) Europe from March to April, but some acknowledge that they may have to endure lower prices in April.

($1 = €0.78)

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By: Caroline Murray
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