Signs of Europe PET prices bottoming out amid August falls
Caroline Murray
26-Aug-2016
LONDON
(ICIS)–European polyethylene terephthalate (PET) August
domestic prices decreased from July to August because of poor
sales and falling production costs, but the market may be
bottoming out, sources said on Friday
Prices remained in the high €800s/tonne FD
(free delivered) in southern areas where the weather
stayed hot, but bigger decreases into the mid €800s/tonne
were common further north.
“Starting from end of last week and this week I see European
producers trying to increase the prices, and I see some
higher bookings really coming through. I don’t know
whether… customers are buying again because they are back
from holidays and need to buy, or whether it is really on the
back of the oil price,” a reseller said.
August was a varied month, where sudden drops in crude oil
values creating uncertainty in an already nervous market
environment.
The recovery that followed is setting the scene for less
bearish sentiment going forward to September, particularly as
next month will also mark the end of the traditional holiday
season in Europe.
“Due to delayed behaviour we experience[d], the issue is now
that customers are forced to buy, so demand looks healthy.
The position has moved quickly to more a position of holding
prices to slight upward movement is possible,” a seller
said.
Those PET buyers who either need to buy or are speculating on
this being the end of the downturn, have indeed been in the
market for product. How long this lasts is another matter,
with one source stating that it thought the buying spree
had already come to an end.
Suppliers still have competitively-priced imports to contend
with, which could delay an uptrend in domestic prices.
We are also approaching the time when prices traditionally
bottom out as it is the end of the peak season. Add to this
the uncertainties concerning raw materials, and the situation
blurs once more.
Initial August raw material prices were all agreed below
those of July.
The European paraxylene (PX) contract has been fully
confirmed at €730-745/tonne on Friday after
players failed to agree to follow one of the initial
settlement, but MEG producers are yet to follow the initial
settlement in that market.
Downstream participants expect MEG feedstock ethylene, to
increase slightly from August to September.
“It is a bit too early to say if it will be the exact trend for September, but in general I have the impression there are some factors that argue the trend will now reverse and prices can go up again,” a buyer said.
The exchange rate situation will play its part in any
decisions taken. For now, the PET market seems to have
stabilised but essentially the markets are very unpredictable
and anything could happen in September.
Focus article by Caroline
Murray
Follow Caroline Murray on Twitter
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