LONDON (ICIS)--Big buyers and sellers of polyethylene terephthalate (PET) in Europe are failing to find a compromise when it comes to spot prices, as each side stands its ground, sources said on Thursday.Plastic bottles. Source: Shutterstock
“On one hand producers are waiting because they think they will get better prices, and customers are waiting because they think that the prices will soften... and maybe the decision maker will be the weather,” a reseller said.
Offtake has been limited both on spot and contract in many regions because of the uncertainty, such as where production costs will settle and whether or not the peak season will prove successful.
Sellers are pinning their hopes on warmer weather attracting the traditional pull on stocks.
“Demand is picking up lately. Perhaps not spectacular but customers are not taking minimum contract volumes, more average volumes. The weather will improve,” a seller said.
There are areas like Spain, where the weather has taken a turn for the worse, and then there is north Europe, where it is heating up.
Weather conditions need to be warm for weeks rather than days to make a significant dent in PET stocks.
Big customers are mostly covered, either under contract or with pre-bought volumes, so are unwilling to take a risk in buying more unless the price really swings in their favour.
Buyers are bidding well below where sellers feel comfortable in terms of margins, or at least their expected margins, seeing as upstream prices are as yet unknown.
Contract monoethylene glycol (MEG) sellers and buyers remain disconnected, and the March and April contract price still has not been fully confirmed, causing an administrative nightmare for the wider market.
The goalposts for paraxylene (PX) contract pricing in Europe have fluctuated, and discussions are ongoing. The effects of an explosion at FCFC in Taiwan in the dominant Asian market were short-lived, taken over by expectations of additional supply from new capacities.
PET largely goes into bottles and containers for beverages and foods, as well as other forms of packaging through blow molding, thermoforming or extrusion into film. It can also be used in fibres for clothing or compounded with glass fibre for the production of engineering plastics.
Focus article by Caroline Murray