Europe PET price range softens, amid volatile market price drivers

07 April 2017 17:54 Source:ICIS News

LONDON (ICIS)--The domestic price range for Europe polyethylene terephthalate (PET) has dropped further with the foreign exchange, the value of crude futures and Asian feedstock all said to be influencing the market in a volatile manner, sources said on Friday.

Having strengthened earlier in the month, the euro weakened in late March and, by the end of the week commencing 3 April, the dollar rallied again.

Crude futures similarly decreased in value in the middle of March but moved upwards towards the end of the month and, on 7 April, prices were higher than they were a week before.

Additionally, news of US missile strikes in Syria led to crude oil futures and upstream Asia paraxylene (PX) prices surging on 7 April in response.

Asia PX therefore mostly rose week on week at the start of April as did Asian raw materials purified terephthalic acid (PTA) and monoethylene glycol (MEG), all having generally softened in the middle of March which many anticipated would influence European feedstock values in April.

Asian raw material prices in March did, in fact, partially have an impact on the April settlement for Europe MEG which decreased by €90/tonne.

Europe PX had an initial April contract settlement on 4 April with a €20/tonne drop however many PET market participants said that this was too small a decline when compared to the Asian movements seen in the month before.

As negotiations are ongoing for the Europe PX April contract at time of writing, many in the PET market say they are unsure as to what to expect next.

The aforementioned price drivers moved enough in March to force the Europe PET value down at the end of the month as well as in the week commencing 3 April, leaving the bottle grade domestic range to now stand at €1,015-1,050/tonne FD (free delivery) Europe.

However, the erratic nature of these factors has now caused market sentiment to split, with the competitiveness of PET sourced from outside Europe becoming a matter of debate.

As one trader said, "The market seems to change direction every two hours. It is again very difficult to assess what is going to be happen."

Sources previously largely agreed that imports were lower priced than domestic material but some say that PET secured from abroad is currently a similar price to domestic volumes, especially as the dollar has strengthened even more.

Whether this disagreement will continue into next month will be important, as some producers are already arguing that prices will jump in May, with tightness of product offered as the primary reason.

On top of this, some state that higher crude futures and Asia feedstock prices could lead to a firming of Europe raw material costs in May.

Yet views on demand are split as some purchasers are waiting to see the confirmed April settlements of PX first before buying, as they hope that decreased upstream contracts will bring further falls in the price of European PET.

Ultimately the situation has resulted in a general stalemate as there are suppliers that say that they do not have enough material to sell at the moment and there are buyers that note that, having built up stock in previous months, they do not need to buy.

By Pavle Popovic