LONDON (ICIS)--The domestic price range for Europe polyethylene terephthalate (PET) declined with expectations of further downward movements for Asian and European feedstock acting as a key price driver, sources said on Friday.
Bottle grade domestic prices are consequently assessed at €980-1,020/tonne FD (free delivered) Europe, having previously stood at €1,000-1,040/tonne FD Europe.
Sources said towards the end of April that raw material settlements would provide greater indications as to the direction PET will be taking in the coming month.
As many expected a reduction in May upstream costs, these initial settlements have been offered as the main reason PET prices have lowered recently.
A higher euro is said, however, to also be influencing market purchases with some saying that imports have become more competitive in Europe lately.
Although peak season for PET buying has begun, more sources, but not all sources, are labelling demand quiet with many saying that milder weather has had an impact on sales.
Purchases of end-use PET bottles usually climb in hotter weather while colder temperatures, that have been experienced in some European countries in April and early May, can instead act as a deterrent.
Lower demand can also be partially attributed to consumers who are waiting for confirmed raw materials settlements before purchasing as expectations of further upstream decreases in May have become more common.
News of the sharp crude oil futures value decrease, in the week commencing 1 May, as well as the subsequent drop in Asia PX prices, will support those that say that European PET will continue its downwards trend.
These sources, consequently, are now asking themselves how far PET prices will drop and when should they re-enter the market.
"The question is how much [can PET prices decrease] and who can wait? Those who can wait prefer to wait even until next week," said one trader on Friday.
Previously, sellers argued that the product’s value will not soften as volumes would be tight in May in part due to a scheduled turnaround at a plant owned by Indorama Ventures Ltd (IVL).
A company source confirmed on 4 May that the planned shutdown has commenced at the Thai producer's 200,000 tonne/year facility in Rotterdam, the Netherlands, and is expected to last no less than three weeks.
On top of this, some suppliers said they are sold out for the month and state that PET secured from abroad, that buyers argue is lower priced than domestic material, will not arrive until June.
A few participants have added to doubts of more PET price drops by saying that many influential factors such as crude oil, the foreign exchange and geopolitical events have been volatile as of late.
They therefore anticipate more surprises for the PET market in the near future.
As one trader remarked: "We go into May now with these lower numbers, god knows what will happen in June."