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Bearish trend persists in global PET markets despite high season

  • 24/04/2017 (08:55)
PET prices have been tracking a bearish trend in major regions given persistently disappointing demand, which is yet to revive despite the start of the high season. Players cite the recent losses in crude oil futures as one of the main reasons behind the ongoing downward pressure on global PET markets. “Lower costs are keeping buyers on the sidelines in hopes of seeing further decreases,” sellers noted.

May crude oil futures on the NYMEX posted a cumulative decrease of $2.14/barrel on April 19 and April 20 to settle at a level of $50.27/barrel on Thursday.

In Asia, China’s export PET market has been moving downwards since mid-February. According to data from ChemOrbis Price Index, prices on a weekly average basis have posted a total decrease of around $120/ton since the market started its downturn following the end of the Chinese New Year holidays.

A few sellers operating in China attributed the ongoing softening trend to unsupportive upstream costs and unsatisfactory demand. “Demand remains limited as buyers are not in a hurry to replenish their stocks, expecting to see further drops based on lower costs. We believe that demand will set the tone of the market in May,” a trader based in Shanghai opined.

A South Korean producer offering PET with a $10/ton discount to export markets stated, “The number of done deals is still below our expectations. Buyers prefer to postpone their purchases when prices track a softening trend.”

In Southeast Asia, import PET prices continued to follow a decreasing trend which has been in place since the middle of February, with sellers blaming the lack of support from the upstream markets for lower PET prices. A Vietnamese trader noted, “We cut our offers by $5-10/ton from last week in line with declining feedstock prices. Although we received many inquiries, buyers are still cautious about their purchases as they anticipate lower price levels given softer energy markets.”

In the Mediterranean markets, although players in Italy, Turkey and Egypt were reporting improved demand at the start of April, regional PET markets failed to put an end to the softening trend in the face of the recent losses of the energy complex.

A supplier in Turkey commented, “Demand has improved thanks to the high season. However, it is now overshadowed by falling energy complex and consequently decreasing MEG prices. The import market witnessed some drops this week given the pressure from falling export PET offers out of China.”

In Egypt, the import PET market remained on a softening path due to lower upstream costs in Asia. “Although the high season has started, demand remains below our expectations as softening costs are pushing buyers to limit their purchases according to their urgent needs,” a trader complained.

Distributors in Italy concluded deals with decreases of up to €50/ton with respect to March, while they reported a limited number of transactions over the past week. A distributor in Switzerland said, “Buyers had already secured their needs in the first half of April. They prefer to adopt a wait and see stance for now, closely monitoring the developments in the upstream markets.”
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