Plastics pricing: PET prices up in Asia in anticipation of a thirsty summer

Temperatures in Peking are at or below freezing this week but the prices there and throughout Asia for PET are warming up as the region's beverage industry prepares for the coming summertime rush on bottled beverages. In Asia, spot polyethylene terephthalate (PET) prices ended the year on a rising trend, with industry insiders predicting that prices will continue to firm up in the days ahead.

This is according to the plastics pricing mavens at Chemorbis (Istanbul, Turkey), who shared their insight with Plasticstoday.com. In addition to finding support from stronger upstream costs, reports Chemorbis, 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 $40-60/ton in the final week of 2010. In addition to seeing stronger demand, sources close to Korean PET suppliers 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 PET suppliers announced their January benchmark prices last week with increases of CNY300/ton ($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 they needed to raise their prices in order to maintain acceptable operating margins following the recent run-up in upstream costs. Relatively limited supplies were also cited as support for suppliers' 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 $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 targets stand approximately $20-50/ton below sellers' current offer levels.

On the cost side, PET feedstocks purified terephthalic acid (PTA) and monoethylene glycol (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, reported Chemorbis. Spot PTA prices on a CFR basis rose $80/ton during the month of December while spot MEG prices on a CFR China basis posted  $100/ton increases on a month-over-month basis.