LONDON (ICIS)--Polyethylene terephthalate (PET) in Europe, as in other regions, remains cautiously bearish despite the normally buoyant time of year. However, if the popularity of imports wanes, domestic producers may find renewed interest in their product.
- Production costs could decrease
- Inventories high; pre-bought volumes may last the season
- Appetite for Asian PET may waneSummer PET: warmer weather would prop up the market. Picture source: Photoalto/REX/Shutterstock
This information will help buyers determine if it is preferable to purchase contract over spot, while sellers want to recover from production costs estimates that went against them in April.
Spring heralds a traditional pick-up in sales, but buyers and sellers find themselves with plenty or inventories, more than desired in the case of some sellers.
A good stretch of warm weather would help empty stocks.
Committing to imports from Asia at this late stage will mean delivery in the height of the summer, so the end of the PET buying period.
This is a risk that does not appeal to the masses.
Prices are coming off in Asia, but bids from Europeans have been too sharp for sellers of Asian material.
Imports bought now are probably uncompetitive in today’s domestic market.
Come July, however, and if import arrivals dissipate along with customers’ stocks, this will present an opportunity for European producers to sell comfortably, potentially at increased prices.
That said, what has been pre-bought ahead of the season, albeit possibly at prices that are higher than current levels, may suffice the needs of buyers, so demand may not necessarily increase.
Imports have featured heavily thus far in 2019, as buyers concerned about past supply disruptions attempt to secure volumes.
Also, producers separately targeted increases on conversion fees in cost-plus contracts that many customers found hard to digest.
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