Subscriber note: ICIS now calculates the movement of the PTA contract price using a mathematically derived indicator representing 67% of the movement in the upstream monthly DEL USG paraxylene (PX) contract price. Please direct any comments to the editor.
Rising upstream costs drive bullish sentiment on PTA
The US purified terephthalic acid (PTA) August contract price is likely to rise, based on expectations of a substantial increase in upstream paraxylene (PX) costs, sources said in the week ended 4 August.
The PTA monthly price is formula-linked to changes in the US PX monthly contract, which in turn is heavily influenced by the Asian contract price (ACP) for PX. The US PX price has tracked the ACP to within $50/tonne since early 2010.
Last week, three major producers in Asia were heard to have settled the August ACP at $1,540/tonne CFR Asia, up $140/tonne from July.
Negotiations on the August PX contract price are under way in the US, market sources said this week, but there is no indication that a settlement is imminent.
US WTI crude and refined products, along with various commodities, tracked a massive sell-off in the stock market as investors shed length in response to concerns regarding stagnant global economic growth.
NYMEX Front-Month Crude Oil Contract
| Date | 14 July | 21 July | 28 July | 4 August |
| (US$/bbl) | 95.69 | 99.13 | 97.44 | 86.63 |
August PET prices likely to increase on higher PX
Participants in the polyethylene terephthalate (PET) market are already anticipating a sharp increase in prices later this month, driven by the likelihood of higher feedstock prices.
One producer said it is targeting an August price increase of 4 cents/lb ($88/tonne, €62/tonne), based on the projected rise in PX costs. The source described the PET market as balanced.
July prices were assessed last week at a 2–3 cent/lb decrease from June. The reduction in prices was prompted by lower feedstock costs and the removal of PET supply allocations.
DAK Americas, a subsidiary of Mexican conglomerate Alfa, has announced that it is moving closer to completing its $185m acquisition of US-based Wellman’s PET business, as it has received no objections from US regulators. DAK expects to close the deal by the end of August. The acquisition includes a 430,000 tonne/year plant in Bay St Louis, Mississippi. DAK also has operations in Wilmington and Fayetteville, North Carolina, and in Charleston and Columbia, South Carolina.
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. Sources said that a substantial portion of the initiatives would likely be implemented.
Asian bottle grade prices rose by $10-30/tonne, led by gains in feedstock prices, as negotiations for August shipments began in earnest. Producers across the region continued to operate their plants at full capacity to meet peak summer demand as orders continued to stream in. The price increases were in part supported by very low or completely depleted inventories at several PET plants.
After three months of decreasing European prices because of competitive imports and weakening feedstocks, sources are now speculating that prices have bottomed out, citing fewer imports and increasing production costs. Poor weather conditions across much of Europe have stifled demand, buyers and sellers agree, although some sellers say overall sales are good and operating rates are high.
A US ethylene glycol (EG) producer has proposed a drop of 2 cents/lb for the August benchmark, following the recent slide in Asian prices. The US market was said to be well-balanced after having been snug earlier in the summer. Part of the change was because the export window to Asia has closed. Blenders begin to gear up for antifreeze season in August, which could increase demand just ahead of two scheduled turnarounds.
($1 = €0.70)
This week on ICIS news ( www.icis.com ):
04-Aug-11 15:40 Divisions over initial Europe August MEG contract agreement
04-Aug-11 13:20 BP, India's JBF-RAK enter agreements to build Belgium PET plant
03-Aug-11 06:48 Asia PET offers jump $50-70/tonne on soaring feedstock costs
03-Aug-11 03:29 August PET prices on upward pressure from Asia market dynamics
02-Aug-11 00:43 August PET prices in Argentina to roll over on supply, demand
