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Europe PET market hovers around a decade-high, Asia stumbles

by Manolya Tufan -
  • 22/11/2021 (09:01)
Spot PET bottle markets across Europe were propelled higher by diminishing prompt availability and a lack of resin and feedstock imports. With the support from lingering supply chain disruptions, regional PET bottle markets remained indifferent to the softening in Asia amid lower feedstock costs.

Spot PET prices in Europe climb to more than 10-year-highs

After reversing course as of July, European PET bottle markets have been on an upward trend despite an unsatisfactory summer season.The seasonal patterns had little resemblance to the high season in the previous years in the shade of the pandemic. Still, shipment delays and sky-high freight rates pushed prices higher during July and August.

Not only regional turnarounds in autumn but also the absence of Asian cargoes due to logistics snarls contributed to the firming trend in Europe from September onwards. Higher netbacks in the US also prompted suppliers to boost exports to America following Hurricane Ida. Purchasing activities showed an uptick despite the end of high season as more flake buyers switched to virgin PET amid more competitive prices, as a side note.

The bullish rally started to gain steam in October as tightness exacerbated. Prices touched more than a decade-high as November started. Cumulative gains since late July reached around €380-420/ton, while prices were up by around €280-300/ton from early October alone, ChemOrbis Price Index showed.

FD – Italy/NWE – PET bottle

Europe’s PET production crippled by PTA shortage

Players highlighted the fact that PTA shortage, which was driven by a lack of imports from Asia, was the main culprit behind insufficient PET production within the bloc. There have also been planned and unplanned shutdowns across the region, while PKN Orlen resumed production at its 690,000 tons/year PTA plant in Poland following an unplanned outage that occurred on October 15.

Indeed, Alpek Polyester UK applied a surcharge of €170/ton on PET contracts for October to reflect rising feedstock costs amid unprecedented freight rate hikes from Asia. Indorama and Equipolymers followed suit and issued energy surcharges amid rising utility costs.

According to ChemOrbis Price Wizard, spot PTA prices on FD NWE basis stand at their highest levels since August 2019.

Asian PET markets weaken from two-and-a-half-year high

Asian PET bottle markets , however, yielded to the lower costs despite recovering demand. Export PET bottle offers from China were assessed $10-20/ton lower on the week at $1090-1130/ton FOB, cash basis, after having climbed to their highest since April 2019.

Spot MEG and PTA prices on CFR China basis have been on a downward trend for the past four weeks to post cumulative drops of $275/ton and $35/ton, respectively.

Meanwhile, Turkey’s import PET bottle market came off from multi-year highs after seeing downward corrections following in the footsteps of Asia.

Freight rates level off but it takes time to move goods

An arbitrage window from Asia to Europe remains wide open; however, this has been having little impact on the sentiment in Europe. Despite freight rates coming off their September peaks, they are still 300-400% above the same period of last year. Plus, prevailing logistics hurdles have still been hindering the mobility of containers from one place to another in a short span of time.

This coupled with longer than usual lead times can be interpreted as a lack of confidence in seeing a supply relief for the near-term in Europe. Indeed, participants expect tightness to persist well into the first quarter of next year.
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