Asian polyethylene terephthalate producers are increasingly making contact directly with European PET consumers, cutting out the middleman as they look to tap into the relatively strong European market, according to European PET converters.
"I certainly have had people ring me and had face-to-face meetings with Asian suppliers, which is good from my perspective because traders always take a cut," one converter said.
He said he'd been offered virgin PET at $1,900/mt CIF UK, and with duties and other costs, the price worked out to less than GBP1,300/mt FD UK.
Last week PET spot prices in the UK were GBP1,390-1,400/mt FD UK.
Another converter said he was receiving a sample from an Asian PET producer to test the quality. He said he was also getting more phone calls from Asian producers, but he added that sometimes communication by phone was difficult.
But a trader pointed out that converters must be a certain size and have particular infrastructure in place to successfully buy direct from Asia.
"I think only a few customers can buy directly," he said.
However, he added that Asian PET prices do influence European PET prices.
"Prices are under pressure and will be for sure in May... We are following the fall in Asia," the trader said.
The second converter agreed changes in the polyester and cotton outlook in Asia will definitely have an impact on European PET prices.
"I think it's not a 'could', it will," he said.
Sources at KP Chemical and SK Chemical in South Korea said Tuesday that they haven't increased direct sales to European customers recently, although if the converters can open a letter of credit, the producers do sell direct.
PET prices in Asia have fallen from $1,880/mt FOB Northeast Asia at the end of March to $1,795/mt last week. In Southeast Asia prices went from $1,905/mt FOB SE Asia to $1,820/mt over the same time period.
Last week's European spot price in dollars work out to $2,264/mt FD NWE and $2,270/mt FD UK, several hundred dollars higher than Asian PET prices even at the end of March.
Asia seems to currently have a two-tier market in PET. Those who can sell to the EU can offer at $1,850/mt FOB Asia, while those who cannot are offering around $1,770-1790/mt FOB Asia.
