VINACHEM

SINGAPORE (ICIS)--Asian polyethylene terephthalate (PET) bottle-grade chip prices have hit a 16-year high, supported by prevailing raw material purified terephthalic acid (PTA) and monoethylene glycol (MEG) prices, market sources said on Friday.

On Friday morning, offers for PET bottle-grade chip prices were pegged at above $1,850/tonne (€1,332/tonne) FOB (free on board) China and South Korean producers were heard offering at up to $1,930/tonne FOB Korea.

Last week, spot prices of the material were assessed at $1,810-1,830/tonne FOB China and $1,820-1,880/tonne FOB Korea, based on ICIS data.

On Thursday, PTA prices were $32-35/tonne firmer, at $1,495-1,505/tonne CFR (cost & freight) China Main Port (CMP) for South Korean cargoes and $1,512-1,522/tonne CFR CMP for Taiwanese parcels, reflecting current discussion levels.

Meanwhile, MEG prices were at $1,258-1,265/tonne CFR CMP, up by $23-25/tonne from the previous week.

A two-tiered pricing structure was evident in the spot market with strong demand from the EU market, industry sources said. Export prices heading to the EU market were significantly higher than those heading to other regions, they added.

“Asian producers who can export into the EU are seizing the opportunity and the price difference between the EU market and other markets can go up to $50/tonne,” said a major South Korean PET producer.

Domestic supply in the EU market had been tight for months because of a lack of imports and the situation had been worsened by the recent shortage of feedstock PTA, which drove several European PET producers to either declare forces majeures or reduce their operating rates.

The producer estimated that around 10,000 tonnes of PET bottle-grade chips had been exported from South Korea into the EU market over the last month. Export volumes were expected to increase in the coming weeks, the producer added.

Meanwhile, buying ideas remained low despite a recovery in demand from other regions ahead of the peak demand season that starts in March.

Converters said they could not pass on the escalating costs and were thus only buying on a need-to basis.

“Raw material costs are now higher than the finished good contracts,” said a Saudi-based converter.

Converters provide preforms and bottles for carbonated soft drinks, mineral water, edible oil, food, detergents, and personal care products.

In the Middle East, major converters said their average operating rates were at around 50-60%, compared with 90-95% during the same period a year earlier.