LONDON (ICIS)--The mood in the European polyethylene terephthalate (PET) market has been so downbeat, with consistent drops in production costs and crashing Asian prices, that a force majeure declaration at Indorama Ventures in Rotterdam, The Netherlands, has tweaked perspectives.
- Market unsure of force majeure impact
- Asia may be bottoming out
- Production costs could weaken further
"We received enquiries from customers we don't normally get. I wanted a cargo and [another producer] was sold out until the end of December ... They have no availability even for small quantities and all customers are going to maximum contract offtake," a reseller said.
A hot oil leak on 15 November resulted in a shutdown of line one at Indorama's facility in Rotterdam. At the time, no injuries or serious damaged were recorded.
On 23 November, technical problems forced a shutdown of line two.
Both lines remain down and force majeure on PET out of the Rotterdam site was declared on Wednesday (28 November).
Had the problems stopped at the first line's shutdown, market sentiment would not perhaps be swayed.
"Indorama didn't appear to be a problem a week ago, but now all hell has broken lose ... Whether it impacts on price and tightens supply I'm not sure - It is the low season," a buyer said.
December is a short working month and there are plenty of buyers who say they have commitments from imports that are due into Europe in the first quarter.
This may give Indorama and others a chance to build up stocks in time for the high season.
Import purchases made recently will already look expensive, as Asia's falls have not yet ceased, but this may be about to change.
"[Asian] producers are convinced that prices are touching the bottom," the reseller said.
Raw material prices in the form of paraxylene (PX) and monoethylene glycol (MEG) have been going down, and there are expectations based on current Asian dynamics that they could continue to do so in Europe.
"PET demand is not great enough for the Indorama force majeure to impact the market," a trader said, expecting domestic prices to continue their descent in December.
Indorama Ventures has capacity to produce 426,000 tonnes/year total at the Rotterdam site, and is taking product from its other locations to limit the damage to customer deliveries.
The outcome remains to be seen.
PET is used in fibres for clothing, containers and bottles for liquids and foods, thermoforming for manufacturing, and in combination with glass fibre for engineering resins.
Picture source: imageBROKER/REX/Shutterstock
Focus article by Caroline Murray