NEW YORK (ICIS)--Price direction in the US polyethylene terephthalate (PET) market heading into 2014 has become uncertain on the back of difficult-to-settle feedstock.
There is general sentiment that US PET prices may trend steady in January 2014, though participants will need to wait and see what happens.
December pricing negotiations lagged for the majority of the month, with only one settlement confirmed at a slight 0.5 cent/lb ($11/tonne) increase from November.
Market sources did not comment on whether that settlement reflected a slight increase in raw materials, but that is likely the case as PET generally follows raw material costs.
Moving into 2014, PET pricing is expected to continue following price trends in raw materials rather than supply and demand, market sources said.
Global oversupply of PET is expected to keep the US market depressed in 2014. As pricing will move solely with the trends in raw materials, producers will not be able to gain margin, market sources said.
Meanwhile, US demand is expected to remain soft going into the first quarter of next year, as the PET bottling sector is at its seasonal low and picks up in the spring.
Demand is currently weak, which is typical of this time of year. Buyers were either keeping inventories as short as possible throughout much of Q4 2013 or were buying only on an as-needed basis.
Feedstock purified terephthalic acid (PTA) contract pricing is also on uncertain footing, as upstream US paraxylene (PX) contract prices have had difficulties settling in November and December because the market lacked direction from Asian PX pricing trends.
US PX typically follows trends in the PX Asian Contract Price (ACP), but the latter has had no major contract settlements in either November or December.
US market players use the PX ACP as the starting point for their pricing negotiations. The US PX contract price has remained unsettled throughout the majority of December.
This leaves the forward direction of US PX/PTA uncertain, as well as downstream PET.
The PTA price is not freely negotiated and, for the purpose of the ICIS assessment, its movement is equivalent to 67% of the US PX price delta for the month in which it is settled.
RECENT US PTA/PET PRICES