The utilization rates for PET producers were up in the high 80’s from low 80’s in Q1 of 2011 as compared to the ending quarter of 2010 as demand was strong during this time. This can be true as some packaging options were changed to PET bottles. Tropicana’s change PET bottles from cartons was indicative of this. There is a forecast of higher demand as we head into Q2, as the high season approaches. Although the output rates have been marginally higher there has been no news of production curtailment due to raw material shortages, mainly PTA and PX shortages. In the European market, prices have steadily crept up to the mid 1600 Euro level for delivered resin. Preformers / bottlers seem to be caught in the middle, with fillers resisting price increases. However, inventories in the supply chain are very thin, as a price drop was expected after lunar year holidays. There was a temporary price hike hiatus but then again gradually in light of rising raw materials PET prices have started followed. This has been difficult for the converters to pass along, specifically the small to medium converters, which have lower bargaining leverage with fillers. A notion also persists that with such price increases substitution to other packaging types i.e., glass, aluminum should be considered, however, high entry barriers due to high capital investment appears to dampen the chances of such a switch.
The 6.5% anti-dumping duty imposed on Turkish imports from many far eastern suppliers has been allowed to lapse, as the consumption of 240 ktpa, outstrips the production capacity of 140 ktpa. Imports are essential in the short term. Some Korean producers feel that in light of current feedstock prices, PET prices could rise as high as $2000. Earlier, faced with raw material shortages, it was felt that many European customers were bound to purchase resin; however, this seems to have changed with the lifting of force majeure of BP PTA plant. In the Chinese market in comparison to fiber business, PET resin makers for packaging are still facing some margin issues, which they would like to recover. FOB’s have been hovering around high $1800 levels, and with pressure on PTA, brought about with the PX shortage being faced by Nippon’s PX plant of Japan
