Higher production costs push PET prices steadily up in Turkey

Since end 2011, spot feedstock prices have been on a bullish note resulting in steady increases in Turkey’s PET market since start of the new year, as per ChemOrbis. Both import and local PET prices recorded week over week increases in the period, while domestic producers also took a firm stance on their prices amid signals of slightly better demand in the first week of 2012. Upstream markets started January on a firm note along with a large increase in crude oil prices. NYMEX crude oil futures for February delivery climbed by over US$4/barrel in a single day on January 3 to settle at around US$103/barrel following the New Year’s holiday in the USA. Energy prices stayed above the US$100/barrel threshold in the following seven working days despite consecutive modest drops. The energy complex eventually moved down below this threshold to settle at US$98.70/barrel on Friday. Analysts attributed the fall to a number of factors including concerns about the crisis in Europe that overshadowed tension between the West and Iran, an unexpected rise in petroleum stocks in the US, weaker equity markets and strong US dollar. Despite the gradually softening energy market, spot PTA, PX and MEG costs persistently gained in Asia since the start of the month on the back of previous increases in crude oil prices. With respect to early January, spot PTA prices rose US$25/ton on CFR China basis, while MEG prices edged up US$5/ton with the same terms. Also, spot PX values posted a larger cumulative increase of US$70/ton on FOB South Korea basis in the same period. Looking at Europe, spot PX costs also jumped US$75/ton on FOB NWE basis. Reflecting higher costs in global markets and supported by a pick-up in enquiries, producers and traders raised their import PET prices gradually during the first two weeks of January. Prices for origins that are subject to 3% customs duty, including Far East Asian, Middle Eastern, Central Asian and Pakistani cargoes, created a US$20-30/ton higher range on CFR Turkey equivalent, cash basis last week. Compared to end December, the overall range for these origins represented a larger increase of $30-60/ton as per ChemOrbis. Also, origins that are subject to 6.5% customs duty, which consists of Chinese and South Korean, surged by US$60-70/ton CFR Turkey, cash compared to the previous week. These offers indicate US$70-80/ton increases over the last week of 2011. West European PET offers appeared in Turkey for the last two weeks, with prices rising by US$40/ton on a weekly basis. Also, Russian PET prices with ATR certificate were available in the market as well, with offers posting US$40/ton hikes last week. In the meantime, players comment that unclear allocations that will be given to importers exempting them from safeguard measures hampered real demand for imports compared to normal demand for local materials.“We managed to sell some materials in the local market but our transactions are rather slow in the import market,” a large trader said. “As the import market posts daily increases, buyers mostly prefer to observe the market instead of committing to new cargoes. Plus, players are also waiting for the allocations exempting them from safe guard measures to be clarified, which also slows imports,” he added. Overall supply was said to be sufficient while some converters lamented that their end product business didn’t improve much.“We have received an extremely limited number of inquiries from our customers,” a PET bottle maker said. “We are currently eyeing the local producers’ pricing policy in order to have a clearer view of the market,” he added. Another PET bottle producer is mulling over purchasing some import cargoes at the low end of the range, but he hesitates due to their sufficient stocks and the low season in the end product markets. “The market is firm for now as prices don’t soften despite weak demand,” a different end manufacturer mentioned. He claimed that most buyers already purchased material before the safeguard measures started to take effect. In the local market, the overall PET range moved up by US$25-50/ton recently, while the increase amount was nearly US$25-65/ton compared to end December levels. Similarly, domestic PET producers expressed their intentions of issuing some hikes on their prices as they think demand may improve in the coming weeks. Most players expect the firm trend to remain in place over the short term in tandem with the global rising trend. In China, import and export PET prices recorded additional increases during the past week although stability is foreseen in the short term due to the approaching one week New Year holiday.