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Europe’s PET markets stagger with aggressive imports, lethargic demand

by Manolya Tufan - mtufan@chemorbis.com
  • 06/10/2022 (02:35)
After reversing direction in August, Europe’s spot PET bottle markets have extended losses into the third month in October. Import prices retained competitiveness in the wake of falling freight rates, lower temperatures in the northern hemisphere and fluctuating parity.

Consumption hit by inflation became more prominent despite shrinking producer margins amid energy hikes and reduced regional supplies.

Prices move close to €1400 FD level

Initial October offers emerged with €80/ton decreases from September. Drops pushed prices close to the €1400/ton FD level in the spot market, with the main pressure point being aggressive import prices that stand well below spot ranges.

Accordingly, spot PET bottle prices were assessed €50-70/ton lower from last week at €1420-1530/ton FD Italy/NWE, 60 days.

PET bottle prices indicated a cumulative drop of around €330-340/ton or 18-19% since the downtrend kicked off in August, ChemOrbis data showed. Still, prices still stand at multi-year highs based on the historical data.

FD NWE–Italy–PET–Bottle

Competitive imports are here to stay

Spot freight rates out of Asia fell to their lowest since 2020. European markets have been under the pressure of aggressive import offers, mainly from Vietnam, India, South Korea and China as plunging freight rates and shipping terms made it possible to move goods from Asia to the rest of the world.

Import prices stand €200-300/ton below the spot ranges at €1220-1250/ton CIF, 60 days for South Korean and Southeast Asian material.

Although the November outlook is still blurry, some players expect lower freight rates and off-season to keep putting further strain on the import market.

How things will pan out amid output curbs?

Earlier in July, JBF-RAK took its PET plant offline in Belgium and declared a force majeure on PET feedstocks due to weak demand.

Apart from autumn turnarounds, more producers are issuing run rate reductions to counter thinner demand and more comfortable supply levels that emanated from arriving imports from Asia. Plus, high energy costs prompted regional producers to trim production rates at their upstream and PET plants.

Production costs have been steadily climbing, mainly driven by spiking energy prices amid the war in Ukraine. PET producers contemplate extending the duration of planned turnarounds to avoid rising stock levels at a time when the off-season kicks in and preserve their margins. Some of them even plan to keep their lines shut until the year-end.

It remains to be seen whether or not any supply concerns will arise due to output cuts across the region as globally lower freight rates and high netbacks in Europe may continue to attract Asian exporters.

On the demand front, players reported relatively better buying interest in Southern Europe amid warmer temperatures. Still, overall consumption took a hit from widespread uncertainties and the falling euro weighing on European economic activity. Eurozone manufacturing PMI fell to a 27-month low of 48.4 in September, according to data released by S&P Global.

Manufacturers, who are still running their lines regularly, also contemplate reducing run rates due to higher utility costs and a lack of hope for demand recovery soon amid off-season. That is to say, regional disruptions may keep the downward momentum in check instead of pushing prices higher so long as demand remains sluggish.
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