In the previous price report (see Plasteurope.com No 13, 1995) much was made of the lack of summer sunshine. The turnaround came shortly afterwards, due to the supply/demand balance and above average summer temperatures, making it easier for the European PET raw material producers to actually push through the much discussed price rises. In addition it must not be forgotten that, resulting from these drastic price increases, the doors of Europe have been opened wide to Asiatic exports.

Looking back over the price development for the third quarter, contract prices for European bottle grades were in the range DM 3.40 to 3.60: slightly below for film grades. Only the PET spot market became less attractive, due to the relatively large quantities on the market at the moment. If prices in July / August were in the range DM 3.80 to 4.50, then they were at premiums as low as DM 0.25 to 0.40 above the manufacturers' list prices in September. Spot prices ranged between DM 3.30 and 3.70, depending on quality. Fibre grades were priced well under DM 3.00. Copolymer grades and high viscosity PET grades were between DM 4.10 and 6.50.

What will happen in the 4th quarter – perhaps this will be influenced by discussions at the Düsseldorf plastics fair (5-12 October)? According to traders, the supply situation for the raw materials (PTA, DMT, MEG) holds the balance worldwide and no further price increases are anticipated. To what extent production will need to be restricted, or material will only be available on contingent, will become apparent during October. Increasingly we have been hearing comments to the effect that the high level of orders in the second and third quarter was not going to be repeated, and that the price level needs to be adjusted to maintain the continuity of material flow.

The European PET producers are talking about an exceptionally high level of demand, and are looking at a price level comparable to the basic price applying in the third quarter. In some segments they are even thinking of incisive price increases of about 5%. Can the market really take all this?

The PET market will scarcely be able to resist this, especially in view of the upcoming 1996 budget exercise – expansion of capacity will be expected at the earliest for the end of 1996 – nobody is giving up a single truck load. One of the most important European PET bottle manufacturers let slip the following remarks: "What is already in the silo, nobody can take away from us. Who knows, how short PET will get when mineral water bottles go over to PET during 1996". It is also difficult to see what effect the takeover of Polymer and Filament GmbH Rudolstadt (PFR) by Allied Signal and Akzo Nobel by Wellman will have on demand for polymer.

The situation is not transparent; it is difficult to draw a clear picture of what will happen. Market insiders are of the opinion that the PET price situation during the fourth quarter will move in much the same range as in the third quarter. Comment from the market: "Converters need to develop a feel for strengthening their position with their material supplier, and to think about the sort of compromise, which helps both sides to avoid overstretching the market".

In the film industry, the first bankruptcies are starting to occur. Film of just reasonable quality is starting to become short, which can lead to price rises which are absolutely essential. Meanwhile the substitution by PP and other more cost effective multilayer films proceeds apace.