Asian PET market strengthens on costs, better demand, supply issues

01-Aug-11

PET prices in Asia rose as they saw support from several factors including higher upstream costs, improved demand and tight availability as per ChemOrbis. Amid these bullish market dynamics, data obtained from Chinese Customs shows that the country’s PET exports rose 44% in H1-2011 when compared with H1-2010. Tightness in Asia caused by limited feedstock supplies played a role in this rise in export figures as well as the plant shutdowns in USA and Brazil. In upstream markets, spot prices recorded considerable increases over the month of July for PX and PTA while MEG prices were mostly stable. Spot PX prices gained US$210/ton on FOB Korea basis and PTA prices moved up by US$75/ton on CFR China basis from the beginning of July. However, spot MEG prices are mostly stable at around early July levels. Meanwhile, August PX contract prices settled with US$140/ton increases from July. Last week, the overall ranges for South Korean PET prices gained US$30-40/ton FOB Busan, cash basis, with respect to the previous week. Higher upstream costs caused producers to lift prices by around US$20-30/ton within the range. This week in China’s export market, prices moved up by US$30/ton at both ends of the range on FOB China, cash basis. Within the range, most producers elected to announce around US$20/ton hikes, pointing to their higher feedstock costs. Since producers feel free from sales and stock pressure, they are not willing to concede to any discounts, either. Most producers were reported to have completed August business on good sales. Inside China, producers issued increases of CNY100-200/ton (US$16-31/ton) at the beginning of last week in an attempt to keep up with the escalating feedstock costs. Most sellers claimed to have achieved a good number of sales while adding that they are not feeling under any inventory pressure. Following producers’ hikes, distributors also raised prices to cover their replenishment costs. Overall demand is reportedly good due to the summer season as most converters secured some materials at the beginning of last week with the expectations of higher PET prices after observing the bullish upstream developments.