LONDON (ICIS)–The tightness of polyethylene terephthalate (PET) in Europe is such that the cost of material verges on inconsequential, sources said on Friday.
“It’s not a price issue anymore, it’s an availability issue,” a customer said.
Mid May and prices had already jumped significantly because of news of another upset in upstream production, but now price hikes of €100/tonne and more are being mentioned as potentially viable.
As well as the €1,200s/tonne FD (free delivered) Europe now on the table, figures close to €1,400/tonne are apparently being discussed.
PET is tight globally. There is now a force majeure in Belgium, and a Spanish plant that is having to operate at technical minimum. There is little respite offered up in the form of imports. As a largely contractual market, Europe is faced with hardly any spare spot volumes during a period of very good demand (this being the high season).
Buyers may be forced to consider shutting production and wait for their preform and bottling customers to catch up in terms of prices, because at this rate the losses incurred in buying PET at today’s levels may be too great a risk to take.
“We discussed about a very short market already. Now we have a minus market. Buyers will have to stop [producing]…because there is no alternative. It is simply not there,” a seller said.
With the surprise of so little PET being made available prices are sky rocketing, but how long this price surge will last, nobody knows.
PET is used in fibres for clothing, containers and bottles for liquids and foods, thermoforming for manufacturing, and in combination with glass fibre for engineering resins.
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