The final quarter of 1995 painted a surprisingly distorted picture as regards starting materials prices for PET bottles and films. In particular, it pointed up a pronounced discrepancy between segments of the market. European producers exercised considerably more caution, compared with the third quarter (see Plasteurope.com No 19, 1995), and against the background of a fairly well balanced supply situation inched their way towards higher prices, in the range of DM 3.40-3.80/kg. By contrast, traders, who were faced with an overfilled pipeline and flat demand, saw themselves compelled to offer rebates, placing material in the market at less than DM 3.00. What effect this has had on the tight supply situation is difficult to determine, as market players have been tight lipped in view of the uncertain outlook. For large consumers, the fourth quarter was the time for drawing up new contracts for 1996, which is sure to be another critical supply year – perhaps the last ?

In their calculations for January/February 1996, PET producers have in any case continued to err on the side of caution. A shortage of PTA seems to be contributing to the confusion as to which way the market might go, to say nothing of the perceived impact of enormous increases in PET production capacities planned for Q 1 or already in place. In a nutshell, producers appear to have frozen their asking prices at the flat Q4 1995 level and in some cases have even reduced prices. The major converters have accepted this as welcome relief, even if it may be only temporary. Standard grades are being quoted within a price range of DM 3.20-3.60, special polyester at DM 3.50-4.50 and imported product at DM 2.85-3.25.

On the whole, the PET market is gearing up for a boom year in 1996, whereby both polymer producers and converters expect to benefit from an anticipated surge in use of the packaging resins for beverage bottles. PET is certain to be short on a global scale, with a relaxation not likely before the end of 1996 or the beginning of 1997, when the new capacities have had time to make their impact on the markets. Insiders anticipate that in 1997-98, prices will have declined to a much lower level than at

present. This itself could extend the attractiveness of PET beyond the beverage sector, for example to cooking oils, detergents and cosmetics. It also seems possible that the process of substituting PET for PVC mineral water bottles in France and Spain could pick up additional momentum.

The picture for APET films applications looks quite different. Market players in this sector continue to complain of "catastrophic" price developments for their products. Against this background, European trade associations such as EuPET would do well to take steps to clear up the cloudy quality profile for food packaging films. This could help to improve their current negative image.