PETpla.net Insider 01+02 / 2010

MATERIAL / RECYCLING 14 PET planet insider Vol. 11 No. 01+02/10 www.petpla.net PET prices: The “seasons rule” is losing its importance in Europe Global Service International (G.S.I.) is the European market- leading importer of PET into the EU. Since 2002 the company has organised the annual PET Day, aimed at providing exten- sive updates for their clients on PET market trends and price movements. At the 2009 PET Day, which took place in Octo- ber in Florence, it clearly emerged that making reliable fore- casts about the way that PET prices would move was becom- ing ever more complex and challenging. What are the principal factors responsible for the movements in PET prices? Just a few years ago this question would have been easy to answer, as the movements in PET prices in Europe followed a simple rule: demand and availabil- ity determined the price. The former increased in the months of Febru- ary, March and April and at the same time the availability became more restricted, because preform manufac- turers and beverage bottlers bought large quantities in order to produce in readiness for the forthcoming summer season. In the summer months, the so-called “high season”, there was a significant increase in the sales of mineral water and soft drinks (as there continues to be today), and for this reason the demand for PET to produce beverage bottles increased towards the end of the winter and during the spring. With the help of this overview, Sanjay Sinha has pointed out the influencing factors that control the PET price. One of the factors also included is the price of cotton. (Source: Reliance) The price of crude oil has also played a role for many years in deter- mining the price of PET - although perhaps not as much as the seasonal factors. But extreme price differences, such we have seen as over the course of the last year, became more noticea- ble. As crude oil moved towards record levels in the first half of 2008, and in July of that year hit an unheard-of 147 US Dollars per barrel, the price of PET increased following this extreme move- ment in the price of oil. The beginning of the economic crisis had an equally rapid impact on PET prices, with the price of crude oil falling at times to below 40 Dollars per barrel. PET Day: an insight into complex relationships There is no doubt that observing the movements in the price of crude oil and taking note of the “seasons rule” will continue to be of help in fore- casting PET prices, the demand levels in Europe, and availability, but for reli- able forecasts regarding the way that prices will move these factors are no longer sufficient. Several new factors have come into play which must be kept very much in mind, commented Francesco Zanchi, CEO of Global Service International, Rescaldina, at the PET Day 2009 organised by his company. “Price volatility of 100 to 200 Euros per tonne, regardless of the season, will in future be the rule for PET - and 100 Euros/tonne is 10% of the average annual price,” said Zanchi (the average price during 2008 was 920 Euros/tonne for European PET and 1020 US Dollars/tonne FOB for PET from the Far East). PET Day thus provided G.S.I. with the opportu- nity to pursue their aim of giving their guests an insight into these increas- ingly complex relationships affecting the price of PET, as well as looking at some recent market trends. “Only