If Asian markets are any indication in the way of cost, the 5-6 cpp increase pushed forward by resin producers will be light. Values in MEG and the PX/PTA chain can’t add up to these efforts. Availability of import prices below 61 cpp are fading, as importers have bought less, and price indications in Asia have moved up. There are still efforts to export at or below these levels by domestic producers. This of course does not make the market. And while the 6 cpp increase will not likely make it, producers may in fact be able to push values up by 2-3 cpp depending on what issues are found in MEG in both the US markets and around the world.
Markets are not very robust and lack direction. While prices may have some pressure to move up in August, demand does not paint a strong picture. Values in Asia have stopped falling so this may in fact help the cause. However, hollow demand will likely render increases ineffective. Asian values are too high to move in at this point so perhaps European producers can move up on this basis alone.
Polyester markets have been cautious going into August. Restocking interest in early July prompted both fiber and resin markets to firm up in the early goings. Resin prices were able to improve back above the 1300 $/MT mark, reaching $1330-$1350 CFR in mid-July. Sentiments have since cooled off, but firm feedstock costs prompted resin to quickly stabilize with transactions at $1310-$1320 CFR China last week. Sentiment was more tentative this week, but prices are generally holding steady at 1310-1315 $/MT. Domestic PET markets were likewise stable at Rmb 9550-9650 with demand coming off over the past 5 days. Like many other markets, PET was adversely affected by the spate of typhoons hitting the region. Taiwan markets were very subdued from Wednesday to today due to heavy rains. Flooding and wind damage in Guangdong province led to the forced shutdown of BP Zhuhai’s PTA lines and China Resource’s 300 KTA PET bottle chip line, both units in Zhuhai. Both units were able to restart within 3-4 days after power was restored to the region, but logistics remains an issue due to damaged road networks. Thus, we should see demand remain subdued in the very near term. Further out, PET price trends will heavily depend on the strength of fiber orders for the winter buying season. While it is unlikely prices will drop given the rebound in MX and PX values, it will be equally difficult for PET producers to talk up values without support from end-user markets.