26 April 2013 10:08 [Source: ICB]
The price of polyethylene terephthalate (PET) in Europe has fallen and is unlikely to drop much further because of a reduction in PET operating rates, buyers said on 18 April.
"The big bottlers started to buy large quantities of European product, then resin disappeared. At the beginning of the month [suppliers] were more desperate to move product - now they are more eager to increase the price," a buyer said.
DECLINES SLOW DOWN
A price increase is not the general message emanating from the market, but where players have been able to secure material below €1,240-1,250/tonne ($1,610-1,623/tonne), they are now finding it hard to repeat purchases at these levels.
Some buyers see the market more positively following months of cold weather and dire demand.
"Business is finally growing. We start to produce a bit more. The season is starting," a converter said.
Another customer described its demand as "pretty good", allowing it to increase operating rates at last.
Until now, activity and PET producers' margins have been stifled by a lack of demand, too much supply and high production costs. This forced European producers to shut down or lower operating rates.
There is still a fine line where demand is concerned, and the industry is not necessarily on the road to recovery.
"Demand is still bad. It depends what your base line is. It is better than January or February but it is still on low levels. It is still bad," a reseller said.
With upstream paraxylene (PX) falling by €130/tonne from March to April, and the monoethylene glycol (MEG) contract price also likely to move down, PET producers have managed to regain some margin so far in April.
If cheap imports bought now are still cheap on arrival in Europe at the end of May and in June, producers may have to lower their prices again, a buyer said.
"In the second half of May there may be quite competitive import cargo," the reseller added.
The price of oil, the state of the economy and exchange rates will influence what happens next. For now, following a roller coaster ride, prices look like they may not have much more room to manoeuvre.
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