Europe’s PET markets static amid delayed high season

Regional PET bottle markets stabilized at multi-month lows in March after following a downtrend for 7 straight months. Producers’ efforts to preserve their margins and stable to firmer import prices have been the key factors supporting stability despite weaker costs and unsatisfactory seasonal demand.

European PET markets face a cocktail of challenges from squeezed producer margins, lower-than-expected demand and lower costs to supply cutbacks inside Europe. Although players were hesitant to secure Chinese material due to an imminent antidumping investigation, the presence of other import origins has somewhat offset production losses within the bloc.

Stable to firmer imports support EU producers

The narrower gap between the local and import markets was one of the key factors that underpinned spot prices during March. This was because import prices followed a stable to firmer trend on the back of feedstock gains in Asia.

Export prices out of China were assessed higher for the fifth straight week at $1000-1050/ton FOB amid rising feedstock costs. Spot PX and PTA prices on FOB Korea and CFR China basis posted increases of $80-90/ton in the past two weeks, according to ChemOrbis Price Wizard. Recent hikes were driven by supply restrictions and higher demand arising from the start-up of a 1.5 million tons/year PTA plant in China.

European producers managed to hold onto their offers and alleviate the pressure on their margins. Indeed, regional buyers shunned imports as they were neither competitive nor easily accessible. Although overall demand lagged behind expectations, regional suppliers have seen slightly better demand due to buyers’ preference to meet their limited needs from the local market.

Gap between imports and locals visibly narrows

Southeast Asian PET deals were reported at around €1070-1110/ton on DDP Italy, 60 days basis. Northeast Asian PET bottle was dealt at €1120-1150/ton, while an Indian PET deal was reported at €1100/ton with the same terms.

In Italy and Northwest Europe, spot ranges were last assessed at €1140-1210/ton FD, 60 days. This shows how the gap between the local and import markets has shrunk considerably from autumn, when the delta was at around €200-300 per ton.

Lower feedstock settlements stay a drag

However, costs are not providing support to producers. March PX contracts fully settled down €20/ton at €1050/ton FD NWE. Meanwhile, an initial MEG contract for March was reported to have settled €35/ton lower from February at €795/ton FD NWE. This has been a drag on sellers’ hike intentions during March.

Crude oil futures have drawn near to the $75-80/bbl mark, which could influence the market outlook on feedstocks if it continues to trend higher.

April calls for stability or small hikes

Allegations about Chinese PET imports being dumped into the EU have been a drawback for buyers recently, as mentioned above. In fact, the European Comission has initiated an antidumping investigation on PET having a viscosity of 78 ml/g or higher as of March 30, 2023.

Regional buyers have been avoiding this origin as antidumping duty will be applicable on en-route cargos as well. Buying interest will wind down further going forward. Should firming in import markets prevail, this is likely to underpin regional PET prices.

April expectations are stable to slightly firmer despite a lack of cost support. Spot PET bottle prices are mostly expected to hover at around their current levels as a reversal is not deemed likely in April due to a lack of confidence in demand outlook.

Hopes pinned on replenishment activity by late Apr

Purchasing activity has not moved in lockstep with seasonal patterns in March, when seasonal preparations would normally start taking place. Financial concerns were exacerbated by a banking crisis that rippled through markets earlier in the month. Overall consumption remained below the previous years particularly in the packaging and film sectors, while strikes in France also curbed demand.

Since April will be a short month in terms of working days, most players do not expect to see a major change in supply-demand balance. However, approaching summer season is expected to support PET bottle applications heading towards the end of April.