AMERICAS – S America steady, Mexico firming
Polyethylene terephthalate (PET) prices in South America are stable, while prices in Mexico are rising this month, participants said during the week ended 2 August.
Participants in South American countries noted price rollovers from July to August, as no fresh initiatives had surfaced.
In Mexico, however, PET suppliers have announced 4 cent/lb price hikes for this month in line with the firming trend in Asia. Discussions in Mexico are underway, and sources said that a substantial portion of the initiatives would likely be implemented.
DAK Americas, a subsidiary of Mexican conglomerate Alfa, is moving closer to completing its acquisition of US-based Wellman’s PET business, as it has received no objections from US regulators, Alfa said. The Alfa subsidiary expects to close the deal, worth $185m (€130m), by the end of August.
The purchase includes a 430,000 tonne/year plant in Bay St Louis, Mississippi, which employs 165 people. The facility will increase PET production capacity of DAK Americas, which also has operations in Wilmington and Fayetteville, North Carolina, and in Charleston and Columbia, South Carolina.
Indorama removed its force majeure on US PET supply on 25 July. The producer declared force majeure on PET from its 432,000 tonne/year plant in Decatur, Alabama, following a power outage on 28 April.
In the US, July PET fell 2-3 cents/lb to 95-100 cents/lb DEL, on good supply and lower paraxylene (PX) prices.
In Argentina, the PET market is quiet as prices rolled over from July into August, according to local sources.
July activity, although still soft during the off-peak season, had improved from June as buyers refreshed inventories. Demand is expected to rise in the near future on approach of the high season for bottled drinks in the fourth quarter.
PET prices in Argentina are pegged at $2,050-2,150/tonne DEL in the domestic market. However, sources said large-volume business had also been completed at $2,000/tonne DEL in July.
In Brazil, PET domestic prices were steady from July at $2,190-2,250/tonne DEL, according to most sources. Participants said no price changes are expected for August, but rising resin and feedstock prices in Asia could exert upward price pressure in Brazil by September.
Higher PET prices in a $2,250-2,290/tonne DEL range were also heard in July.
PET demand was gauged as soft, as cold weather in the south, rains in the northeast, high interest rates, and government controls to reduce inflation contributed to lacklustre buying interest.
In Colombia, the peak bottled-drink season during May-July school vacations has ended, sources said.
Concerns in Colombia over BP’s purified terephthalic acid (PTA) production issues in Decatur, Alabama, as well as Indorama’s force majeure on PET supply from its plant in Decatur, have eased, as inventories in the US are being restocked.
The rains in Colombia and their potential effect on PET supply or demand are no longer weighing on market sentiment, and the local producer is operating normally, sources said.
In Mexico, PET suppliers announced a 4 cent/lb price hike for August, on pressure from rising PET and upstream PX prices in Asia.
Discussions are underway, and although PET buyers said that an increase is inevitable this month, prices would likely be agreed somewhat lower, at around 3 cents/lb. Negotiations will probably be finalised by next week, a source said.
Export prices for PET are also facing upward pressure from the same market dynamics, and offers to northern South America rose by 3 cents/lb, participants said. Assessed export prices were correspondingly revised.
July PET domestic prices stand at $2,095-2,245/tonne DEL, pending further confirmation of the August increases. Export prices were assessed $60/tonne higher for August to $1,960-2,010/tonne FOB.
PET and downstream soft-drink demand in Mexico have weakened because of heavy rains, which are affecting the country’s densely populated southeastern regions, including the states of Oaxaca, Guerrero and Michoacan, a source said.
In the Pacific coast of South America, participants waited for August PET offers, which are expected to emerge by next week, amid concern over rising resin and feedstock PX prices in Asia.
July offers into the region were gauged at $1,730-1,780/tonne CFR.
Sources projected improving business into August and September in anticipation of the October-December peak season for bottled drinks.
OTHER REGIONS – Asian PET prices rise second week
In the Asia Pacific region, PET bottle chip prices rose for a second week, gaining $10-30/tonne on higher costs for feedstocks PTA and monoethylene glycol (MEG). PET bottle-grade chips prices were $15-30/tonne higher at $1,610-1,635/tonne FOB Korea and $10-20/tonne higher at $1,610-1,630/tonne SE Asia.
In Europe, third-week July PET reference contract prices decreased by a weighted average of €40/tonne from the third week in June. Prices dropped to different levels, the amount depending on starting point.
In the Middle East, spot prices of bottle-grade PET chips were assessed at $1,640-1,670/tonne CFR Gulf Cooperation Council (GCC), amid expectations of slowing demand in August because of the Ramadan fasting period.
European recycled PET (R-PET) prices are stable across all grades on balanced supply and demand, but projections for August are mixed. Prices for hot washed colourless flake stand at €1,100-1,200/tonne FD NWE.
FEEDSTOCKS – PX August ACP settles up $140/tonne
In feedstocks, the US July PX contract price was assessed at 70 cents/lb DEL, down by 5 cent/lb from June. US PX spot export prices were assessed unchanged at 66-68 cents/lb. ExxonMobil Chemical shut down its 600,000 tonne/year PX plant in Baytown, Texas, in July for a two-month turnaround.
US July PTA contract prices were assessed at 61.15 cents/lb DEL, 3.30-3.40 cents/lb lower from June.
US ethylene glycol (EG) July contract prices were assessed at 59-65 cents/lb FOB for industrial grade, up 2-3 cents/lb from June. The EG market is well-balanced following snug conditions earlier in the summer, as the export window to Asia closed and allowed more domestic product to remain in Europe.
In Asia, the August PX Asian Contract Price (ACP) settled at $1,540/tonne CFR Asia, a $140/tonne increase over the July ACP. In the Asia spot market, PX prices continued to firm during the week ended 29 July on tightening supply because of a delay in the restart of CNOOC-Kings Group’s Huizhou PX unit, which is now planned for mid-August. PX spot prices were gauged at $1,552-1,562/tonne FOB Korea on 29 July.
Asia PX prices surged by at least $60/tonne following the blast at Formosa Petrochemical Corp’s (FPCC) Mailiao refinery complex over the weekend, traders said. Bids for September shipments surged to $1,630/tonne CFR Taiwan and/or China Main Port (CMP) on 1 August from $1,570/tonne CFR Taiwan and/or CMP on 29 July.
Selling indications were at $1,650/tonne CFR Taiwan and/or CMP, but no transactions were heard done. Traders said there were concerns about a potential disruption in the supply of PX after the Taiwanese government ordered a “rotational closure” of the entire Mailiao refinery and petrochemical complex to thoroughly review safety standards.
The European July PX contract settled at €1,025/tonne FD NWE, down by €85/tonne from June. August contract discussions were starting. Spot PX prices in Europe were assessed at $1,550-1,600/tonne FOB Rotterdam on 29 July, up from $1,500-1,550/tonne FOB Rotterdam on 22 July.
NYMEX WTI crude futures closed at $93.79/bbl on 2 August, down by $1.10/bbl for the day, and down from $99.59/bbl on 26 July. US crude futures finished down, tracking a sell-off on the stock market in response to released data showing a drop in US consumer spending. Investors worried that despite the agreement in Washington to raise the debt ceiling, the US credit rating may still be downgraded.
NYMEX natural gas futures closed at $4.155/MMBtu on 2 August, down from $4.370/MMBtu on 26 July.
| NYMEX Closing | 12 Jul | 19 Jul | 26 Jul | 2 Aug |
| Crude Oil Front Month (US$/bbl) | 97.43 | 97.50 | 99.59 | 93.79 |
| Natural Gas Front Month (US$/MMBtu) | 4.333 | 4.533 | 4.370 | 4.155 |
($1 = €0.70)
This week on ICIS ( www.icis.com ):
02/08/2011 12:32 Asia IX, PX fall on weaker crude futures as Formosa faces shutdowns
01/08/2011 16:08 INSIGHT: Pessimism abounds in China chemicals markets
01/08/2011 10:05 Correction: Asia PX surges after Formosa pipeline blast
01/08/2011 11:37 Alfa makes progress on purchase of US Wellman’s PET business
28/07/2011 22:11 US July PET falls 2–3 cents/lb on supply, lower PX costs
28/07/2011 04:55 Asian PET producers hike August offers on higher feedstock costs
