16 May 2013 14:17 [Source: ICIS news]
LONDON (ICIS)--A tighter European polyethylene terephthalate (PET) market and a rollover upstream, is encouraging producers to increase their PET offers by €10-15/tonne ($13-19/tonne), sources said on Thursday.
"European producers are sold out because they reduced capacities in the last months so it can be [that this] will influence the price and it will go up a bit due to [there not being] enough material," a buyer said.
Disastrous margins have left producers with little choice but to reduce their output of PET, so stocks are limited.
There was a moment of panic in April when the main raw material paraxylene (PX), looked like it could fall in value, and some European producers offloaded PET at competitive prices, according to sources. This contributed to the current stock situation.
With spring/summer normally seeing a pickup in the bottling season, operating rates have now been increased.
Demand has been very slow and remains so in certain parts of Europe, like Spain. There is however, more positive news from other parts of Europe.
"Demand is a little bit better and it's hard to get the extra resin," a second buyer said.
A rollover in the PX contract price from April to May has helped to stabilise PET prices.
The monoethylene glycol (MEG) contract price is yet to be finalised and customers are targeting a decrease of up to €70/tonne.
MEG suppliers and some downstream players doubt that if there is a decrease it will be as big as that, particularly in view of euro/US dollar exchange rate developments.
"If someone suddenly becomes hungry for prompt cargo, I don't think it's possible to argue that MEG going down [should result in] the price of PET [being] cheaper," a seller agreed.
"We won't get lower PET [prices] if MEG goes down. It may help [PET] producers improve their margins," the second buyer said.
Prices are mostly quoted in the mid to high €1,200s/tonne FD (free delivered) Europe.
($1 = €0.78)
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