Spot PET prices end the year on a rising trend as demand picks up in Asia

In Asia, spot PET prices ended the year on a rising trend, with most predicting that prices will continue to firm up in the days ahead, as per Chemorbis. In addition to finding support from stronger upstream costs, PET sellers are also reporting improved demand inside Asia as beverage manufacturers within the region began ramping up their rates in the final week of 2010 in order to begin preparations for the Chinese New Year holidays, which will begin at the start of February. Converters commented that they have become more active in the market these days, although they added that they remain hesitant to purchase in large quantities given the uncertain economic environment. Offers for Korean PET on an FOB Busan basis gained US$40-60/ton in the final week of 2010. In addition to seeing better demand, sources close to Korean producers reported that sellers in the country are not feeling any inventory pressure these days as they had managed to conclude a good number of deals in December by holding their offers relatively below the prevailing price levels for other Asian origins. Inside China, seven major domestic producers announced January benchmark prices last week with increases of CNY300/ton (US$45/ton) when compared with their most recent December benchmark levels. Producers pointed to rising PTA and MEG feedstock costs as the main reasons for their price increases, saying that the price hike was need to maintain acceptable operating margins following the recent run-up in upstream costs. Relatively limited supplies were also cited as support for producers’ price hike targets. Export offers for Chinese PET also ended the year on a rising trend, with spot offers on a FOB China basis gaining US$20-40/ton over the past week in accordance with firmer prices in the local market and rising feedstock costs. Chinese exporters complained that their new offer levels are meeting with resistance from converters, whose buy ideas stand approximately US$20-50/ton below sellers’ current offer levels. On the cost side, main PET feedstocks PTA and MEG posted strong increases over the course of December as high cotton futures prices stimulated demand for polyester while spot feedstock prices also gained support from higher energy prices as both crude oil and naphtha feedstock prices reached their 2010 highs in the second half of December. On the month, spot PTA prices on a CFR basis rose US$80/ton over the month of December while spot MEG prices on a CFR China basis posted US$100/ton increases on a month over month basis.