11 October 2013 10:02 [Source: ICB]
European polyethylene terephthalate (PET) buyers should be safe in the knowledge that an abundance of low cost imports will continue to service the region, while European PET production goes through a period of rationalisation, speakers at Global Service International’s 11th annual PET Day in Artimino, Italy, said on 3 October.
“The revolution is coming,” according to Francesco Zanchi, CEO of GSI.
The process of consolidation among European producers has begun in earnest, with La Seda de Barcelona (LSB) the latest victim of high raw material costs and low demand.
Back-integrated PET plants should survive the backlash of competitively priced imports, but production sites reliant on purchased raw materials are unlikely to succeed, speakers said.
“Only a madman would invest in Europe,” according to one participant.
Potentially lower oil prices over the next five years could in fact generate additional PET demand and should go some way to curbing the global PET oversupply of 6m tonnes/year, Zanchi said.
2M TONNES OF IMPORTS
The loss of European production will be more than compensated by an onslaught of at least 2m tonnes of potential imports. Many of these will originate from low-cost raw material regions, and over the course of the next three years, will not be hampered by antidumping duties, according to Zanchi.
However, the sudden surge in imports will undoubtedly lead to European producers launching more antidumping and anti-subsidy campaigns, a second speaker said. About 70% of global PET demand comes not from the 3m tonnes/year demand for the market so favoured by Europe, but by the expanding textile industry dominated by Asia. “The textile industry is the driving force of our business,” Zanchi explained.
Europe is a drop in the ocean in comparison to Asia, and it is China that will essentially condition global pricing, according to attendees. Those present at the conference collectively speculated on PET prices in Europe and Asia coming off in 2014, but many emphasised that the market would not see huge changes.
“We don’t like raw material price volatility, but we can live with it. [What we don’t like are] long periods of raw material high prices that lead to demand destruction,” Paolo Cescutti, a sheet producer with AMB said during his paper.
Despite the negativity and uncertainties surrounding European demand and supply in 2013, the mood at the conference was positive regarding the future of PET.
“At the moment, there is no other product with the same efficiency, quality and low cost as PET,” the first participant said, echoing comments made by others at the conference. “Unless there is another invention, PET will continue to grow over the next 10 years in line with the economic growth,” he added.
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