Price and market trends: Europe PET shutdowns may stifle price falls

05 April 2013 09:40  [Source: ICB]

Demand remains sluggish, especially in Southern Europe. But maintenance shutdowns could soften or halt price declines

A number of reduced operating rates and shutdowns at European polyethylene terephthalate (PET) plants may stifle a price decrease in April, sources said on 28 March.

"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.

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.

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

The PET industry is monitoring developments in upstream sectors paraxylene (PX) and monoethylene glycol (MEG), which are 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.

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

"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, was scheduled to be shut down for a month's maintenance on 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.

Spain-based CEPSA Quimica's 175,000 tonne/year PET site in San Roque, was scheduled to be shut down for maintenance on 1 April for two weeks. 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. The 100,000 tonne/year line went down on 1 March and will be down until sometime in April.

OPERATING RATE

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 130,000 tonne/year commodity PET unit at the same site.

Mossi & Ghisolfi's (M&G's) 220,000 tonne/year plant in Patrica, is running specialties campaigns and is short of product.


By: Caroline Murray
44208 652 3214



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