NEW YORK (ICIS)--US polyethylene terephthalate (PET) prices for February fell on the back of declining feedstock costs, market sources confirmed on Thursday.
Prices were assessed down by 2.50-3.00 cents/lb ($55-66/tonne), according to input from market sources. The February price range fell to 82-86 cents/lb DEL (delivered) for stretch blow moulding from 84.5-89.0 cents/lb DEL in January, as assessed by ICIS.
Some players said they settled their February prices at a 2.50-2.75 cent/lb decline from January while others finalised their February prices at a 3.00 cent/lb reduction from January.
Pricing talks persisted through nearly all of February, and some players had not yet settled their February prices by the end of that month, they said. These players were not available to comment on whether they had finalised their February settlements by now, but they had earlier agreed that PET is moving down.
Negotiations were prolonged because of uncertainty in the upstream paraxylene (PX) settlement for February contracts. Though a US PX settlement was heard at a significantly deeper decline than initially expected, market sources were unable to confirm if the settlement was market wide.
Sources were mixed in their reactions to the US PX settlement, with some saying the settlement was finalised, while others said that some suppliers have not yet agreed to the price, which represents a 6% drop from the January PX contract price.
A 6% drop in the PX contract price in February will bring the February purified terephthalic acid (PTA) contract price down by 4.8% from January, on a formula-based correlation.
PTA is a major feedstock for PET, and its price is not freely negotiated. For the purpose of the ICIS assessment, PTA’s price movement is equivalent to 67% of the US PX price delta for the month in which it is settled.
Meanwhile, softer PET prices in Asia have opened an arbitrage window, making imports to the US from Asia a threat, said one market participant.
However, with US prices on the decline themselves, this puts a damper on imports from Asia, as transit time takes six weeks, and domestic US prices could fall by time of arrival, said another market participant.
Following weakness in January and February, PET prices are likely to roll over in March, as demand has started to see some pickup going into the beverage season. Demand is still overall slow, but it seems to be improving, said a market player.
The PET peak season typically runs from March through to August.
PET is used in plastic bottle production and in textiles.
PET producers in the US include DAK Americas, Indorama, Mossi & Ghisolfi (M&G) and Nan Ya Plastics.