European dimethyl terephthalate (DMT) reference prices followed upstream monthly paraxylene (PX) and quarterly methanol trends.
PX developments have a strong bearing on the value of DMT. Challenges of overcapacity in the global polyester market as well as feedstock PX supply constraints are ongoing, particularly as downstream Asian purified terephthalic acid (PTA) capacities continue to increase.
After the severe Atlantic tightness that existed for most of the fourth quarter of 2012, the European and US methanol markets appeared to be normalising in late December/early January. Trinidad resumed regular production, and prices eased. However, inventories failed to recover sufficiently, concern over supply security returned, and the pricing trends resumed their upward trajectory.
Furthermore, this has been accompanied by rising prices in China, following surprisingly robust demand during the Lunar New Year celebrations and regional production problems. With global demand holding steady at healthy levels and no significant new supply additions expected in the near future, this trend could continue.
Methanol feeds into DMT and the quarterly contract price is also used in the DMT price calculations.
The economic downturn is set against a backdrop of high volatility in upstream products and this has contributed to speculation and uncertainty in downstream markets.
Updated to mid-February 2013