Increasing competitiveness of US polyethylene terephthalate prices

US polyethylene terephthalate (PET) prices are becoming increasingly competitive globally even as contracts rise in December, as per ICIS. The lacklustre market is shrouded by slack demand and squeezed profit margins. However, lower import rates have been seen for December and January as US PET price hikes falls behind increases in raw materials paraxylene (PX) and monoethylene glycol (MEG). Also, imports from Asia have dwindled on reduced competitiveness of Asian PET. PET buyers and sellers indicated average December price increases of about US$55-66/ton, following nominations of 3-4 cents/lb for the month. US PET prices for smaller-sized December buyers were around 67.00-70.00 cents/lb DEL (delivered), after accounting for an average increase of 2.65 cents/lb. Buyers of larger monthly parcels had contracts lower by 5-9 cents/lb, as per ICIS. By comparison, PET offers in Asia for December lifting crossed US$1200/ton FOB (free on board) in the latest week, compared with December deliveries to the US that were purchased in the low-to-mid US$1100/ton during October and November. Delivery to the US of Asian PET frequently adds 15-20% of the resin cost on an FOB basis. Though market players widely agree that active buyers would have to take at least a 3 cent hike, lower-than-nominated average contract prices were seen as a sizeable portion of buyers delayed or avoided December contracts. Sellers in USA contend that concessions on original nominated increases were pointless because US resin values had become more competitive as offers in Asia soar. Pricing is not aggressive as this could lead to loss of share would not be as harmful as the margin loss resulting from cutting back on increases targeted for December.
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