First signs of improved demand for PET in Europe

09 May 2013 13:43  [Source: ICIS news]

LONDON (ICIS)--Warmer weather and stable prices are enticing polyethylene terephthalate (PET) customers back to the European market, but the traditional high season has yet to kick in, sources said on Thursday.

"We are receiving several requests for pre-buying…from different parts of Europe," a PET producer said, speaking in Spanish.

Buyers of PET have perhaps offered their products at higher levels and want to secure their costs at current prices, he added.

"I think from the converter side, demand increases in terms of building up higher stocks, but [end-use] customers don't see higher demand," according to a source further down the PET chain.

The long-awaited peak season for sales of PET and its products is overdue, but there are signs of an improvement in some sectors while others remain slow.

"The season hasn't started and it is not a given that it will kick in," a PET buyer said.

Sales of PET for the mineral water market, for example, are still suffering because consumers do not have the spending power to justify buying such products in the current economic climate.

April and May sales have been low for the time of year, a second producer said.

“The recession is really being felt…However, it is also true that the effects of the season are beginning to be felt, and that today’s demand is a little better than April’s,” he added.  

PET sales into film for the food industry however, have shown more, sources agreed.

"The season is coming and demand is coming up. For us mainly in the bakery market, it is quite stable," a second downstream user commented.

The value of PET remains a sticking point. PET producers have endured months of terrible margins, so much so that most chose to reduce output until they saw an improvement.

High production costs and low demand have been threatening to force producers out of the market.
"Our customers would buy a bit more if PET were cheaper. [The upstream] paraxylene (PX) price has to go down [further]," the first buyer said, echoing comments made by other players along the PET chain.

($1 = €0.76)

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By: Caroline Murray
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