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European PET hits 17-month low on flagging demand

by Manolya Tufan -
  • 15/02/2023 (12:14)
Regional spot PET markets have been on a stable to slightly softer trend as flagging demand outweighed supply cuts. In a surprise turn of events, import PET bottle prices erased some of their gains from January in line with easing feedstock prices and softening export prices out of China.

PET breaks below €1200 FD threshold

Although sellers were talking about a nearing market bottom in January, the market failed to stabilize amid a lack of support from the demand side. Prices posted rollovers to €20-40/ton drops on the month, while the PET downtrend has apparently lost steam. In Italy and Northwest Europe, spot ranges were assessed at €1150-1200/ton FD, 60 days.

A distributor affirmed, “We were expecting stability but local suppliers had to cut their prices further as demand remains low.”

As for the contract market, transactions cannot be closed promptly as it takes a long time for PX settlements to finalize. An initial PX contract for January settled €55/ton higher as of early February.

Spot PET bottle prices on the low end of the ranges broke below the €1200/ton FD threshold. The weekly average prices on ChemOrbis Price Index hit their lowest levels since September 2021. PET prices have been mostly on a downward trend since early August 2022.

FD NWE–Italy–PET bottle

Rally falters for imports

Imports have been surely one of the main pressure points inside Europe. The uptrend has wavered recently and the market followed a stable to softer trend after January hikes. This was because Asian PET bottle markets saw downward corrections as cost support weakened and post-holiday demand recovery was not up to expectations.

Southeast Asian PET deals were reported at around €1100-1150/ton on DDP Italy, 60 days basis. South Korean PET bottle was offered at €1120-1140/ton CIF, 60 days. Meanwhile, Egyptian PET was dealt at €1090/ton with the same terms.

Meanwhile, players shunned Chinese imports due to a pending anti-dumping probe on this origin even though there have been no official announcements about the issue. In general, buyers are not much interested in import material due to the late shipment terms as recent offers are for delivery in April at the earliest. The arrival of low-priced import cargoes that were secured earlier continued to weigh on local sellers, although the pressure reduced to some extent.

Seasonality yet to kick in

Some participants reported a nascent recovery in buying interest, which may be attributed to the late arrival of import cargoes and long lead times from Asia, which at least reached 50-60 days.

However, players have not seen the expected rebound from downstream sectors ahead of the high season. There was no pre-stocking activity as buyers claimed to be covered until March-April. Demand is subdued in the packaging sector, while overall activity is expected to improve by March.

Buyers are purchasing on a hand to mouth basis due to the uncertainties and there are no indications of a seasonal demand boost, as a trader put it.

Supply issues do exist

On the other side of the coin, producers have been lamenting about their eroding margins amid higher PX settlement, competitive imports and flagging demand. Hence, they reduced run rates at their plants or took some of their lines offline to rebalance supply levels within the bloc, considering the state of demand.

Dubai-based Equipolymers reduced operating rates at its PET site in Schkopau, Germany. A source from the company reported that one of the two PET lines was taken offline by around late January. The company’s Schkopau plant is able to produce 335,000 ton/year of PET.

Alpek Polyester UK has declared a force majeure on raw materials in the first half of February. Located in Wilton, the UK, their plant is able to produce 220,000 tons/year of PET. Alpek has been one of the regional producers who started to cut run rates from September.

Have prices bottomed out in February?

According to some players, PET prices may have already bottomed out this month. PET bottle offers will probably see limited gains in March, when buyers decide to restock for seasonal preparations. Considering regional supply limitations, demand recovery will be critical in determining if the market will reverse direction or not.
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