Mild price increases persist across Europe’s PET markets in June

Initial PET offers for June were unveiled with rollovers to €10-20/ton increases, sustaining the pricing policy seen in May. As the PET industry exhibits a complex landscape, rather modest hike requests surfaced despite the traditional peak season. While regional suppliers have lowered production to balance out underperforming demand, a lack of competitive import origins has been supporting the most recent gains.

PET sustains firming despite prevailing challenges

European PET markets face a cocktail of challenges from squeezed producer margins and reduced output to lackluster demand and lower costs. The cost support weakened amid lower crude oil futures, while May PX contracts settled with decreases from April. This along with lethargic demand continued to work against all the positive catalysts, putting a brake on sellers’ hike requests.

Hikes in the import market genuinely supported the market though. As Chinese PET mostly disappeared from the market after the imposition of definitive anti-dumping duties from early April, the dominating origin in European markets became Vietnamese PET. Players also sourced material from Turkish and Egyptian sources, which were more favorable considering the long transit times and delays from Asia.

Yet, import origins mostly recorded increases due to soaring freight rates and lost their competitive power. Vietnamese PET bottle offers last reached €1120-1130/ton CIF, 60 days. This compares to the spot ranges at €1150-1210/ton FD, 60 days.

Seasonal boost in demand seems elusive

It is straightforward to say that buyers focused more on domestic production to avoid risks related to shipments and deliveries amid the freight crisis. However, this doesn’t necessarily mean that underlying demand has been faring better than earlier.

Without demand support, prices will not be able to move above certain thresholds. Despite the anticipation of a seasonal surge in demand, purchasing activity has remained surprisingly subdued. Unfavorable weather conditions in CEE and Italy have dampened the need for PET applications, while segments related to the tourism sector also failed to stage a recovery.

Indeed, a flacon manufacturer said, “We were supposed to run at full rates around this time of the year, but we idled some of the machines. When we receive orders, it’s always for immediate delivery and lower volumes.”

Amidst the gloomy outlook and a lack of preparations, the European Football Championship could not inject much-needed momentum into the market. The event should have led to a surge in consumer activity that will translate into increased demand for bottled drinks, offering a boost to the PET market, which has not been the case so far.

Concerns linger over availability

Regional suppliers have tried to keep supplies in check given profitability concerns and the influx of imports via idling some of their plants or lowering run rates. Apart from the optimization of some units across the region, Indorama Ventures reportedly shut its two lines despite a lack of confirmation in the wider market.

Jitters over availability have somewhat supported the bullish sentiment. Although current volumes are deemed sufficient to meet demand, barring a substantial surge in purchasing activity for June, planned or unplanned shutdowns may change the supply outlook considering a lack of import volumes.

Suppliers still cautiously optimistic

There’s a glimmer of hope on the horizon for some suppliers, underscoring that the impact of the Red Sea impasse has been moderate so far, but the ripple effects of the freight crisis will stimulate demand in July.

Sellers remain cautiously optimistic about an uptrend as the market adapts to the changing dynamics amid a myriad of challenges. The future trajectory of crude oil markets, the USD/Euro parity and developments in ocean transportation will be closely tracked.