Colombia PET market loses lustre
According to ICIS, it is the world’s largest petrochemical market information provider and has fast-growing energy and fertilizer divisions, the Colombia polyethylene terephthalate (PET) market – once seen as the shining star in Latin America – has started to see the bright lights of a booming economy dim
Crude oil – the country’s largest export – has dropped globally, putting downward pressure on the overall Colombia economy. There are fewer imports entering the country, and international businesses appear to be easing up on capturing the once-thriving Colombia marketplace.
For PET, the market was once seen as a competitive area. PET consumption is expected to soften as the country consumes fewer soft drinks and the economy stagnates. Inflation rates may rise. Crude – the backbone of the Colombia economy – continues to be soft. “I don’t know what is happening,” a Colombia source said. “Oil is dropping, freight costs are dropping. FOB (Free on board) prices are going down and spot prices are going down.”
Just this first December week, both domestic and import prices in Colombia were assessed lower on the week, based on pressure from lower Asia prices and a slowing of the Colombia economy. DEL (delivered) PET prices fell to $1,210-1,232/tonne. Spot international prices dropped to $1,100-1,120/tonne.
Rumours heard are that some in the country are buying material from Asia at USD 860/tonne. Even factoring in 10% duties, this would still put those deals at USD 946, below current PET prices in Colombia. Because those volumes were not confirmed in the market – and were heard to be low volumes of 1000 tonnes – they were not factored into that week’s assessment.
Colombia is also suffering from a devaluation of its currency. Sources said six months ago, the exchange rate was Colombian pesos 1900 to USD 1. The going rate now is about Pesos 3000, sources said. That devaluation hurts imports.
Another issue in Colombia: inflation. Forecasts are that the country could see a higher-than-expected rate of inflation, putting even more pressure on the economy.
“It is still a good market,” the source said. “But it’s slowing down. The devaluation in the currency has been a problem. The same thing is affecting Brazil and Paruguay. The [US] dollar is gaining power in the world.”
Another source in the Colombia market said there has been a decline in the volume of material that buyers purchase. The source added that things could stay flat for the rest of the year.
“The dollar is hitting us really hard,” the domestic supplier said. “People are lowering their inventories and using what they have. Everyone is in a panic state. About everything. About the dollar. About crude.”