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Editor Landon Feller, landon.feller@icis.com
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Prices on purified terephthalic acid (PTA) were unchanged in the US during the week ended 25 February.
Market participants said PTA costs could roll over or drop in March, depending on moves in paraxylene (PX).
US polymer producer Invista announced it will close within 30 days its Wilmington purified terephthalic acid (PTA) unit in North Carolina, because the plastic feedstock is cheaper to buy than to produce.
The company then plans to scale back its adjacent dimethyl terephthalate (DMT) production to match internal and external sales needs, a source at Invista said.
Upstream, spot mixed xylenes (MX) traded slightly lower from a week before with March price ideas in the low-$2.70s to low-$2.80s/gal FOB.
US polyethylene terephthalate (PET) prices were steady at the end of February.
Producers said customers with formula-based PET contracts might still face more than the incremental cost increase in February, which was estimated at 1-2 cents/lb ($22-44/tonne) because PET hikes since November have not fully covered the rising cost of production.
This margin compression was notably worsened because suppliers no longer had the cash reserves to cover bad margins for a month or more, one producer said.
Buyers acknowledged poor margins on the resin production side, but said growing US capacity far outpaced demand growth. With poor demand for bottled beverages and sluggish recovery in consumer discretionary spending, PET buyers said they did not have sufficient order volumes to improve upstream margins.
No March price change initiatives were announced, so buyers were hopeful that lower contracts could be seen in the coming month. Sellers were adamant that PET values should roll over from February to help producers regain lost margins.
PET producers said success in 2010 will require stable-to-higher pricing through the second-quarter, because sellers can no longer depend on strong demand from the carbonated soft drink (CSD) sector.
US PET growth has long hinged on a robust single-serve beverage market, primarily via convenience store sales which have taken a 20-25% hit since the onset of a prolonged economic recession, the PET seller said.
In other market news, the Beverage Marketing Corporation working on behalf of the International Bottled Water Association (IBWA) published a study showing that the average weight of single-serve water bottles has fallen 32.6% in eight years. The average PET bottled water container at the start of the decade weighed 18.9 grams, but by 2008 had dropped to 12.7 grams.
The group estimated that in 2000-2008, lightweighting of PET water bottles cut 1.3bn lbs of PET resin demand from the market.
($1 = €0.74)
This week on ICIS news ( www.icis.com):
25-Feb-10 20:22 March to be pivotal month for US PET as sellers seek margins
25-Feb-10 18:54 European MEG March contract price receives positive feedback
25-Feb-10 14:28 Europe PET customers rally against anti-dumping campaigns
25-Feb-10 11:36 TK Chemical to shut down South Korea PET line in March
23-Feb-10 20:37 Invista cuts US polyester feedstocks on poor economics
