Notations for PET packaging resins in Europe largely moved up in line with the EUR 70-80/t rise in feedstock prices in January. As supply and demand were well aligned and demand slack except for inventory refilling, producers were unable to book much improvement in margins, however. In North and South America as well as Asia, notations tended upward.

For February, another surge in worldwide production costs appears to be on the horizon, and as the market picture remains mostly unchanged against January, buyers on all continents can expect to pay more for polymer.

Change January against December: Up EUR 75/t
The cost curve pointed more steeply upward in January than expected in late December 2011. Supported by developments in Asia and North America, European producers successfully passed on the entire EUR 70-80/t upturn in the cost mix resulting from a EUR 80/t increase in PX prices and a EUR 54/t rise for MEG. Smaller accounts at the upper end of the Plasteurope.com range faced a steeper increase than large or medium-sized buyers at the lower end. Sluggish demand provided little impetus for a significant improvement in producers’ margins.

Supply: Balanced. European production plants were operated mostly below nameplate capacity. With polyester prices in Asia rising and the euro weakening, imports were generally slack. Rather than pay unattractive prices of EUR 1,400/t or more for Asian material, European converters tended to buy from their home-grown suppliers.

Demand: Normal. As usual at the beginning of the year, demand was boosted by converters’ need to restock. Toward the end of January, as the upswing in petrochemical prices gathered momentum, many converters in the film segment stepped up ordering.

Worldwide developments: The ongoing price weakness in the US staggered to an end in January. After a brief period of stability, notations began to climb in the second half of the month on the back of rising PX prices, and in euro terms added EUR 50/t. Higher costs, stronger demand and exchange rate shifts pushed Asian prices forward by EUR 100/t.

Outlook: Even if the trend may not be sustainable in view of the gathering economic uncertainty, the upward momentum of petrochemical prices shows no signs of slowing in the immediate future. At press time, the PX contract had not yet been fixed. However, spot notations in the fourth calendar week of 2012 were about EUR 160/t higher than in the last week of 2011. If February PX prices move up accordingly, PET should add another EUR 80/t. Producers already have their sights set on this target. Their quest will be supported by price increases for polyester in Asia, where demand from the textile industry will gather strength after the Chinese new year. At the same time, the sagging euro will keep the European market unattractive to importers. How much PET prices will rise in February will depend on the development of demand. As this looks rather lacklustre at present, the most likely scenario is that producers will be able to pass on their higher costs but may not be able to improve margins.

Prices PET (EUR/t)
Region	January 2012			December 2011
Western Europe	1,470	-	1,600	1,400	-	1,520
USA	1,400	-	1,500	1,350	-	1,450
Asia	1,000	-	1,200	900	-	1,100
Data without guarantee. Compiled: 31 January 2012.

More on PIEWeb.com: PET: Data & Charts