SINGAPORE, June 15, 2011 /PRNewswire/ --

Spot prices for bottle-grade PET chips slumped $305/tonne (€214/tonne), or close to 16%, during the past two months, caused by sharp declines in upstream purified terephthalic acid (PTA) and monoethylene glycol(MEG) markets as well as persistently weak buying confidence.

On 27 May, PET bottle chip prices were at $1,620-1,640/tonne CFR (cost and freight) GCC (Gulf Cooperation Council) and $1,600-1,620/tonne FOB (free on board) GCC, according to ICIS.

Regional converters and end-users welcomed the price decreases and were confident that demand will increase once spot prices stabilise.

"Reductions in spot prices will encourage more buyers to come forward and volume will increase by around 10-20%," said one UAS-based converter.

Another Saudi-based converter has reportedly increased its average operating rates to around 80%, compared with 60-70% previously.

"Converters will definitely try to adjust up the operating rate further if spot prices remain soft," the Saudi-based converter added.

However, local producers said the spot market has yet to witness any signs of significant recovery.

"The spot market situation stays very confusing at the moment, although [demand] should not have been [so weak] given the summer season is already here," said one major regional producer.

"People are not buying and preferring to wait till June or July," the producer added.

"Buyers no longer make bulk purchases for 1-2 months' worth of inventories, they are buying strictly on a hand-to-mouth basis now," said an UAE-based trader.

"This is also one reason why producers do not see recovery in bulk purchases although demand is improving," the trader added. ($1 = €0.70)

By Yu Guo, Markets Editor - Middle East and Asia

Related Middle East PET market commentaries can be found in ICIS pricing weekly Middle East Polyethylene Terephthalate (PET) report.

Request a sample copy of the PET (Middle East) report from ICIS pricing at http://www.icis.com/mpet or by emailing sales.ap@icis.com

For more information on ICIS pricing, visit http://www.icis.com

Notes to Editors:

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SOURCE ICIS Pricing