Europe PET production costs set for further decreases

25 April 2013 16:03  [Source: ICIS news]

LONDON (ICIS)--The European polyethylene terephthalate (PET) sector is poised for further decreases in production costs that may push PET prices down further, sources said on Thursday.

"If MEG [monoethylene glycol] and PX [paraxylene] are going down, the PET price will go down. The question is by how much," a buyer of PET said.

Another decrease in PX prices will impact the price of PET's main feedstock, purified terephthalic acid (PTA).

"Paraxylene (PX) is not strong … There may be a little decrease in May, a lot less than in April. It seems to be looking for the bottom," a PET producer said.

The price of MEG, PET's secondary feedstock, is also falling.

April MEG contracts are yet to be settled as buyers and sellers fail to reach an agreement. The delay may result in April and May contracts being concluded at the same time.

"I am happy to make the initial [April] settlement and moved down already quite a bit. It's the buyers that don't want to move up. They apparently don't see the need to settle," an MEG producer said.

Ethylene is due for another significant fall from April to May, and this will feature in discussions on MEG.

April PET prices decreased by €40-60/tonne from March, creating some relief for PET producers which have been experiencing dire margin conditions for months.

"The market has to continue in the same vein to get to cash cost," a second PET producer said.

Demand for PET has lagged behind previous years, with spring traditionally haling better sales of PET to bottlers.

Operating rates at PET units have been reduced as producers attempt to keep control of stock levels, and some plants have been or are going down for maintenance.

By: Caroline Murray
44208 652 3214

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