LONDON (ICIS)--The European polyethylene terephthalate (PET) market is being pulled in different directions for May, just as the peak season should be gathering momentum.
- Demand moderate
- Sellers hope activity will pick up with season
- 'General trend a concern, creating a downward spiral' - traderSource: imageBROKER/REX/Shutterstock
Demand has been moderate and the mood in general far from buoyant, yet sellers are holding onto the hope that the seasonality of the product will prevail.
Spring/summer is usually boom time for sales of PET bottles.
Weather conditions have been unpredictable and production cost expectations have been variable.
All this has contributed to the sense of unease pervading the market that is already trying to find its way amid a host of uncertainties in global and macroeconomic terms.
Expectations of increasing upstream paraxylene (PX) capacity in Asia during the second half of the year have resulted in bearish sentiment, and a lack of buyers has accelerated the downtrend in PX prices there.
“The general trend is one of concern and is creating a downward spiral," a PET trader in Europe said.
"The mood is bad, the market is slow, prices are not making anybody happy, the euro is dropping, the political situation is a worry.”
Crude oil though has been on an upward trajectory, underpinning chemical prices, or perhaps even curbing the falls.
The European PX contract settlement for April was only confirmed this week at a rollover from March.
The monoethylene glycol (MEG) March contract eventually settled on Thursday at an increase, but April remains outstanding.
PET buyers and sellers in Europe have mentioned potential lower production costs in May, but sellers are reluctant to drop PET prices too much if the market is proved wrong.
Also, at this point in the year, demand could still pick up.
IMPORTS - PROS AND CONS
Buyers are weighing up the pros and cons of securing imports that look relatively cheap now, but may turn up when demand has died down, which could result in lower prices at the time of arrival.
Neither side is quite prepared to make the move, but prices being discussed now for May are below April’s.
PET resins can be broadly classified into bottle, fibre or film grade, named according to the downstream applications. Bottle grade resin is the most commonly traded form of PET resin and it is used in bottle and container packaging through blow moulding and thermoforming.
Fibre grade resin goes into making polyester fibre, while film grade resin is used in electrical and flexible packaging applications. PET can be compounded with glass fibre for the production of engineering plastics.
Focus article by Caroline Murray