PET prices rise on higher raw material costs
Asian polyethylene terephthalate (PET) bottle chip prices rose for a second week, gaining $10-30/tonne as producers boosted offers to keep up with the rise in feedstock costs. Raw materials purified terephthalic acid (PTA) and monoethylene glycol (MEG) extended gains this week.
The market’s focus was still on paraxylene (PX) ahead of the settlement of the August Asian Contract Price (ACP), which may surge by more than $100/tonne above the July ACP, said the market participants surveyed this week.
The uptrend in raw material values bolstered selling ideas for all three grades of PET. As with last week, Asian producers either persisted with successive upward price adjustments throughout the week, or halted offers altogether.
Some buyers in the main export markets stepped back and opted to wait for stability to return to the feedstock market before resuming negotiations, said producers and traders.
Feedstock
PTA prices closed this week at $1,190-$1,222/tonne CFR CMP, up from last Friday’s price of $1,175-$1,200/tonne CFR CMP.
MEG prices similarly rose, increasing by $25-$30/tonne week on week to close at $1,225-1,235/tonne CFR CMP on Friday.
Fibre grade
Sturdy demand and low buyers’ inventories lifted fibre chips prices by $10-20/tonne.
Offers for Korean and Taiwanese cargoes advanced to $1,580/tonne CFR China, up from $1,550-1,560/tonne CFR China last week. Fixtures for Korean and Taiwanese semi-dull chips were heard concluded at $1,565-1,570/tonne CFR China, inclusive of 90 days credit.
Some Chinese producers continued to withhold offers because of the unpredictability in raw material costs. In the domestic Chinese market, fibre chip prices were at (yuan) CNY 12,400/tonne, inclusive of delivery costs to buyers within 100km.
The sales-to-output ratio at most Chinese polyester yarn plants remained at 100% in the first half of this week but fell to 60-80% in the second half of the week after the downstream textile converters slowed down purchasing because of power restrictions at their plants.
The average inventory level of polyester yarn producers in China was stable at around 4 to 12 days’ worth this week. The average operating rates at major Chinese polyester plants remained stable at around 80%.
Recent hot weather has caused some local polyester plants in eastern Zhejiang province to shut down or operate at lower rates, producers said.
The transaction volumes at the benchmark China Textile City in Shaoxing were at 4.8m-5.1m meters/day, slightly lower than last week’s 4.8m -5.6m metres/day.
For the Japanese market, Chinese and Taiwanese producers were heard indicating prices at around $1,570-$1,580/tonne CFR Japan for August cargoes, compared with around $1,560/tonne CFR Japan two weeks ago.
The strength of the Japanese yen has sustained Japanese importers’ interest to secure cargoes at the current US dollar price levels for delivery in the next two to three months, traders said.
Domestic prices in India were heard unchanged at Indian rupees (Rs) 78/kg EXW, or an import parity of $1,575-1,580/tonne CFR India. Some producers expect August pricing to be at a rollover from July levels. Discounts of Rs1-2/kg continued to be applied to larger sales volumes from producers that were eager to offload their inventories.
Bottle grade
Bottle grade chips prices rose by $10-30/tonne across the range, led by gains in feedstock PX, PTA and MEG prices.
As negotiations for August shipments began in earnest, offers advanced to $1650-1,700/tonne FOB Asia from early this week.
Sales to the key export markets including Central and South America, Asia including Japan, the Commonwealth of Independent States (CIS) and Africa consolidated in a $1,620-$1,640/tonne FOB Asia range.
Some producers also managed to conclude fixtures around $1,650-1,660/tonne FOB Asia. But such a price level is clearly encountering buyers’ resistance. A number of customers in the key markets did not make firm inquiries after seeing the latest offers, said several producers surveyed this week.
Producers across the region continue to operate their plants at full capacity to meet peak summer demand as orders from most key markets continued to stream in. The price increases were in part supported by very low or completely depleted inventories at several PET plants, said the market participants.
The expectation of a further price increase sustained traders’ buying interest and position-taking, said producers.
Unstable upstream price movements remained a key concern for PET manufacturers and prompted two Korean producers to temporarily stop offering cargoes late last week. The speed of the raw material price increase presented a further difficulty for producers who hesitated to increase PET prices to the same extent.
The two Korean producers raised August offers to $1,640-1,650/tonne FOB Korea early this week, compared with $1,620-$1,640/tonne FOB Korea late last week. A higher price target of $1,700/tonne FOB Korea also surfaced, with a third producer boosting its August offer to this level from last week’s $1,650-1,670/tonne FOB Korea.
Deals done were heard in a $1,620-1,640/tonne FOB Korea range for August loading cargoes headed for Africa, South America and the CIS. A small lot bound for Africa was heard priced at $1,625/tonne FOB Korea.
Buying ideas in some markets still lagged behind producers’ revised offers. Customers in the Middle East were especially quiet this week, ahead of the August PET price announcement from a major Saudi producer, Korean manufactures said. Early-week bids from Middle Eastern customers below $1,600/tonne FOB Korea were declined by a supplier.
In view of weaker buying interest from eastern Europe and the CIS around the $1,650/tonne FOB Korea level, a producer was considering revising its offers downwards by $10/tonne to boost sales.
One producer was heard to have sold cargoes at higher prices and concluded sales to western Europe and Russia at around $1,650/tonne FOB Korea, firmer than its early-week fixtures of $1,640/tonne FOB Korea.
Two Taiwanese PET makers revised up offers to $1,700/tonne FOB Taiwan to protect margins as raw material prices raced higher.
Based on its expectation of a possible $150/tonne hike in the August PX contract price, a Taiwanese producer raised its offer from Monday to $1,700/tonne FOB Taiwan for its key markets including Japan, southeast Asia, Central and South America and the Middle East.
Deals consolidated around $1,650-1,660/tonne FOB Taiwan for the Central and South American markets. The strength of the Japanese yen also facilitated deals around this level. But buyers in North America, Asia excluding Japan and the Middle East were slow to respond to the price increases and held back purchases, the producer said.
Another producer adjusted August offers towards $1,670-$1,700/tonne FOB Taiwan from the middle of the week and concluded sales at around $1,645-$1,655/tonne FOB Taiwan.
Sturdy demand during the PET peak season also supported a $10-30/tonne increase for cargoes loading in China. Supply remained tight, partly because of a spike in summer demand within the domestic market.
Strong seasonal demand has narrowed the previous $20-30/tonne price gap between product from China and from other Asian suppliers, a trader said. Chinese cargoes are now priced on par with bottle chips from other Asian makers, said the trader.
Several bottle chip makers are still forced to delay shipments because of their extremely low stock levels, Chinese producers said. While manufacturers previously delivered cargoes within five days of signing a contract, depleted inventories have extended such lead time to about 10 days or even two weeks.
In tandem with feedstock price movements, producers’ offers for the key markets Japan, South America, the CIS and Africa climbed to $1,640-$1,660/tonne FOB China by Thursday.
Deals similarly advanced to $1,620-1,630/tonne FOB China, compared with early-week levels of $1,615-1,620/tonne FOB China as customers gradually accepted the new prices, producers said. Early-week deals were limited to small lots as the revised prices stalled buying. Demand from the Middle East was particularly subdued this week, said producers.
Traders were heard booking cargoes at around $1,620-1,630/tonne FOB China on expectations of a further price increase.
Domestic transactions in China rose to CNY12,700/tonne EXW, up by CNY 100-200/tonne from last week’s close.
Offers from southeast Asian producers similarly tracked higher feedstock prices and rose to $1,650/tonne FOB SE Asia, with deals edging up to $1,620-$1,640/tonne FOB SE Asia. Bids at around $1,640/tonne CFR Middle East and $1,650-1,660/tonne CFR western Europe were declined by a producer.
Comfortable inventories and volatile raw material prices prompted a major southeast Asian producer to halt offers from Thursday. The producer plans to resume offers on Monday after buyers in its main markets have had time to absorb the new price indications.
Early week deals consolidated in a $1,620-1,630/tonne FOB SE Asia range for cargoes bound for South America, Asia and northern Africa. A bid at $1,590/tonne CFR Saudi Arabia was declined by the producer.
Having fully committed their sales volumes for July, selling indications from two Indian producers were heard at $1,670-$1,700/tonne FOB India, up from $1,650-1,680/tonne FOB India last week.
Sales to the key markets in South America, Europe, North Africa and south Asia were heard steady in a $1,630-$1,650/tonne FOB India range. A fixture at a stronger level of $1,670-1,680/tonne FOB India was also heard.
Film grade
PET film grade spot prices were assessed to be $10-20/tonne higher on the back of stronger bottle chip values amid thin trade.
Activity in the spot market was subdued because most deals for film chips are conducted on a monthly basis, with price negotiations taking place typically at the end or start of each month.
In line with the gain in bottle chip values, a producer plans to boost film chip prices in August by about $100/tonne to $1,800/tonne FOB SE Asia, from its July pricing of $1,700-1,720/tonne FOB SE Asia.
($1 = CNY6.44)
($1 = Rs44.08)
Covering editor: Trisha Huang
This week on ICIS news ( www.icis.com ):
28 July 2011 04:55 Asian PET producers hike August offers on higher feedstock costs
27 July 2011 17:10 Europe June PTA prices decrease in line with upstream PX
27 July 2011 07:13 Taiwan's Formosa restart plans may get delayed by fire
26 July 2011 23:48 South America August PET prices expected to roll over
26 July 2011 09:06 China’s Ningxia Baofeng Energy plans 1.5m tonne/year methanol plant
