US polyethylene terephthalate (PET) prices were set to go up in September and again in October on a continuing increase in costs, sources said Thursday.
"We might see another 4-cent/lb increase in October," a PET producer said, "but it depends how PX finishes the month."
Bottle resin prices in the US tend to increase when raw materials increase as margins remain thin for producers and they are typically able to pass on higher costs.
US contracts for PET's two main feedstocks, purified terephthalic acid (PTA) and monoethylene glycol (MEG) take their lead from benchmarks in Asia.
Since the US PTA contract is a formula-derived price with paraxylene as the main variable, the primary price US PET makers watch is the Asian PX spot price to get an indication of how their PTA price will move.
The Asia spot PX price has been on an upward trend since September's contract was settled at $1,655/mt at the end of August. Spot PX closed Thursday in Asia at $1,735/mt CFR China, up $25/mt from the day before. Assuming the bullish spot price holds, market participants believe the Asia PX CP will settle higher and the US will follow.
MEG contracts were also set to increase in the US for similar reasons as PX. There are US contracts based on the MEG Asia Contract Price nominations, and Sabic announced an October ACP at $1,400/mt, $50/mt higher than September. Two US MEG buyers believed Sabic had been premature in announcing only a $50/mt increase as the spot price hit $1,334/mt CFR China overnight in Asia, and typically the ACP nominations are at least $100/mt over the spot price.
"We might see MEGlobal and Shell go higher than Sabic and then the ACP average will be higher and push up the US contracts more than $50/mt," an MEG buyer said.
There is still time in the month for PX and MEG spot markets in Asia to decrease, but for now the talk for PET is of another increase.
US PET contracts are still unsettled for September, but due to a nearly 4 cents/lb increase in costs, producers felt confident theit 4-cent/lb price initiative would be successful. The 4-cent/lb increase would put domestic prices at about 94-95 cents/lb.
