04 November 2013 06:22 [Source: ICIS news]
By Xia Xue
SINGAPORE (ICIS)--Polyethylene terephthalate (PET) prices in Asia are expected to remain weak, weighed down by poor demand and falling prices of purified terephthalic acid (PTA) and paraxylene, industry sources said on Monday.
PET bottle-chips grade prices have shed $50-150/tonne (€37-111/tonne) from mid-August, to $1,300-1,320/tonne FOB (free on board) China on 1 November, according to ICIS data.
Over the same period, PTA prices shed about 11% to $998-1,000/tonne CFR (cost and freight) China, while PX softened by more than 6% to $1,405-1,425/tonne CFR China.
PX is a raw material in PTA production, while PTA is the feedstock for PET, which is used in plastic drinking water bottles and in textiles.
PX and PTA have been on a downtrend, dragging PET along, because of oversupply amid weak downstream demand.
Industry players do not expect PET prices to rebound soon as the market will enter a lull period during the winter season.
In the key China market, the fibre and beverage industries – major downstream sectors for PET – are running facilities at 40-50% and at 30-40% of capacity, a Chinese PET producer said.
PET facilities in the country are also running at reduced capacity over the past two months given an oversupply in the market amid sluggish demand.
“The average operating rate of units in the PET Chinese industry is estimated at 60% for both October and November, considering the number of [plant] turnarounds in China,” said a Chinese producer.
Some producers in South Korea, meanwhile are considering cutting production and operate their plants at 80% of capacity to stem losses.
“[The market is] not optimistic, but also not exactly pessimistic, I would say it is more conservative," said a regional producer.
PET buyers are adopting a wait-and-see stance, anticipating further declines in prices.
“The biggest problem is the strong negotiation power of buyers,” said a major Chinese PET producer who had been cutting offer prices week-on-week to entice buying interest.
Some regional producers are optimistic that the table will turn in December, expecting demand to pick up as buyers start purchasing for their 2014 requirements.
($1 = €0.74)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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