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Global PET markets rely on costs, seasonal activity

by Manolya Tufan -
  • 20/06/2022 (04:11)
Spot PET bottle prices across global markets followed a stable to firmer trend over the past week. After lagging behind seasonal expectations, demand has shown signs of recovery in major markets. This along with surging feedstock prices provided sellers with the leverage to issue slight hikes.

Although fears over new clusters in China keep players on their toes, rising costs and seasonal activity are there to support sellers.

Asian markets stable to slightly higher on demand recovery

Export and import PET bottle prices in China and Southeast Asia have been propelled slightly higher by feedstock gains and strengthening demand in the past two weeks.

Although PET feedstocks erased most of their earlier gains this past week, they still indicated hikes from their late May levels. Crude oil futures also provided a floor for prices.

On the demand front, seasonal activity in western and regional markets showed signs of improvement amid higher number of price inquiries. Adding to the scene was limited local supplies in China. However, Chinese traders confirmed, “There is a strong resistance from downstream markets when sharp increases are on the table.”

In Southeast Asia, regional demand staged a nascent recovery amid warmer temperatures. Similarly, slightly better demand from the US and European PET markets was observed amid summer season.

PET markets are expected to take the lead from the upstream markets going forward, regional traders argued. The sustainability of seasonal demand from western markets will also support export markets.

Eyes on China amid the resurgence of new cases

Inside China, however, fears over new clusters amid the resurgence of Covid-19 cases weighed on domestic demand, pushing prices lower following hefty hikes in the previous week.

Some regional suppliers opted for rollovers as they closely monitor the repercussions of new measures on demand recovery in China. Should local supplies grow in China as a result of new measures, Southeast Asian markets may see increased cargoes.

Spot PET bottle nudges up in NWE

Regional suppliers revised their offers slightly up, citing soaring spot PX and PTA prices. According to ChemOrbis Price Wizard, spot PX prices on FOB NWE basis stand at an all-time high after rising by $295/ton since late May. Hence, June PX contracts are expected to settle with notable hikes of up to 3-digits.

Import prices have been also rising as the weaker euro encouraged demand for dollar-denominated import cargoes.

In West European markets, players reported slightly better buying activity in the spot market. Some converters claimed running their plants at full capacity in line with the high season. Demand had first shown an uptick in the mineral water sector a couple of weeks ago.

In Italy, prices have moved sideways as overall activity remained calm for this time of the year. Although warmer weather provided some support, high inflation kept trading hesitant. Yet, July expectations call for a stable to firmer trend.

Turkey’s preform demand underperforms 2021 but slightly improves

Last but not least, demand recovery signs for preform bottles helped the local market to pare its losses last week. The preform sector accounts for the bulky part of the overall PET bottle consumption, which is the main reason behind sellers’ firmer stance.

The local market’s growing discount over the import market has been another reason for recent hikes. This stemmed from relatively comfortable availability inside Turkey and underperformance of downstream sectors when compared to 2021. High season for PET products has failed to move in lockstep with the traditional patterns this year, barring the recent pickup in preform demand.
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