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Global PET markets surge on heels of costs, tightness

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 15/10/2021 (08:43)
PET markets have posted increases after moving mostly sideways during September as soaring upstream costs fuelled a firmer trend. Supply woes have gained prominence, while elevated freight rates amid shipping bottlenecks coupled with active demand added to the uptrend in Asia, Europe and Turkey moving into H2 October.

Prices – CIF Turkey – CIF SEA – PET Bottle – FOB China

MEG tracks multi-year high oil prices

Commodity markets have been hit hard by a power crisis amid short coal supplies in China as well as record-high natural gas prices in Europe. This turmoil spurred consecutive gains in crude oil markets. ICE Brent Europe futures hit their highest levels in 3 years, while NYMEX (WTI) oil futures reached a 7-year high, according to ChemOrbis Price Wizard.

Surging energy complex triggered gains in spot MEG markets across the board. According to ChemOrbis data, spot MEG prices on FD NWE basis have been up by around $30/ton since last week. Prices on CFR China basis spiked slightly more than $100/ton in the period. Besides, spot PTA prices rose by $60/ton with the same terms, reinforcing the cost support for downstream PET.

Higher costs couple with reduced supply in Asia

Asian PET markets have responded to the rising upstream chain while adding to the scene has been better demand. Export PET bottle offers from China were assessed $40-50/ton higher from the week before the Golden Week holiday at $1050-1080/ton FOB, cash. South Korean offers also climbed by $50/ton to $1080-1100/ton FOB Busan, cash.

A China-based trader commented, “The implementation of the energy control policy has forced PET suppliers in Jiangsu, Zhejiang, Guangdong and Fujian provinces to reduce their operating rates. Chinese demand also has been bolstered by the fall in COVID-10 cases.”

A PET producer in Thailand pointed to a strong regional and global demand. “We have hiked our offers sharply this week. Demand has picked up as more governments have eased Covid restrictions in Southeast Asia,” he said.

European markets supported by turnarounds

In Europe, hikes of up to €70-80/ton have passed on October PET deals amid tightening availability. Several producers have reportedly sold out their monthly allocations, while some suppliers even claimed to sell out until the end of the year.

*Right click the image and open in a new tab to view the full-sized snapshot.

Prices –PET Bottle – Italy – Northwest Europe – FD

Maintenance shutdowns, higher exports to the US and Latin America as well as lower import volumes emanating from challenging logistics led to reduced availability across the region. JBF-RAK and Equipolymers were planning to shut their plants between September and November.

Looking ahead, prices are mostly expected to post further hikes in November, mainly supported by supply concerns and rising feedstock prices. A participant opined, “Spot prices may hit €1350/ton FD on average next month.”

Turkey up on low domestic stocks, curtailed imports

Prompt supply for PET bottle grade appears tight for Q4

Dwindling supplies in the import and local markets spurred a new round of price hikes in Turkey’s PET markets this week.

Chinese PET bottle offers were assessed $60/ton higher at $1440-1460/ton CIF Turkey, subject to 6.5% customs duty, cash. A domestic producer issued triple-digit hikes from last week, in line with reports about healthy demand and a lack of sufficient import cargos.

More players seemed convinced that prices will continue to rise. “We secured some material for November and December, feeling that it will be more challenging to find material later on. Producers report being sold out and it is hard to find enough material,” a buyer noted.

Short cotton availability boosts polyester demand

In the local market, PET textile chips prices were $100/ton higher from last week. Asian import PET textile chips prices were assessed $50/ton higher at $1330-1350/ton CIF Turkey, cash.

POY (Partially Oriented Yarn) offers for 300-500 D (denier) reached $1780-1800/ton CIF, cash for Chinese material, indicating $110-130/ton hikes from last week. “Malaysian and Indian suppliers have closed their order books until November or even December,” confirmed multiple sources.

According to players, tight cotton supplies and higher crude oil prices were the key drivers of the bullish run. Polyester demand rebounded swiftly, while a trader remarked, “Energy crisis affected the markets profoundly. Hikes were mostly driven by tightness.”
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