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PET bottle markets follow opposite paths in Europe and Asia

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 10/07/2020 (09:34)
Spot PET bottle prices in Europe have been on a firm footing since H2 June, with markets of Italy and Northwest Europe opening July with a new series of increases. The case in China, however, was the opposite as offers turned softer in mid-June which also weighed on Southeast Asia.



Main drivers behind the divergent trends have been as below:

· Cost support persisted in Europe, faded in Asia
· Chinese buyers have already stocked up
· Uncertain outlook for autumn influence mood in both regions
· Yet, promising demand in SEA may offset waning activity in China

EUROPE

Rising costs overweight less than expected demand

European markets were propped up by rising feedstock costs in late June following a 3-month long downturn. Although end user demand lagged behind expectations following virus-driven lockdowns, higher MEG and PX prices pushed the low end of the PET market up by €10-20/ton.

Prices gained further ground in July

Fresh PET bottle offers for July surfaced with renewed hikes of up to €40/ton. This was in tandem with producers’ aim to recover their margins after prices hit their lowest levels since ChemOrbis started to compile data in 2011 back in May.

Demand from tourism sector is yet to recover much

In Italy and other European countries, some transactions have already been concluded €30-40/ton higher over June on the heels of higher MEG contracts.

Still, end product demand has not been up to seasonal expectations. Participants reported to ChemOrbis, “Consumption of small bottles is still below that of larger ones due to a sluggish tourism sector. Some bottle makers faced a 30% drop in orders when compared to last year.”

A lack of competitive import offers supports the market

Some Asian import PET bottle offers emerged slightly below the prompt markets of Italy and Germany this week. Nonetheless, these cargos were not deemed as attractive options considering their longer delivery terms. “We refrain from distant cargos unless they provide really good prices since demand outlook for autumn appears unclear,” admitted a converter.

ASIA

Weaker PTA futures weigh on China’s PET market

Export PET bottle prices out of China followed a softening trend since the second half of June in response to volatile upstream chain in Asia. Prices edged down by a further $10-20/ton this week dragged by lower PTA futures on the Zhengzhou Commodity Exchange.

Export offers out of China and Korea softened 4% in a month

According to the weekly average data from ChemOrbis Price Index, PET offers on an FOB China/South Korea basis softened $20-25/ton (3.5-4%) in the last 4 weeks.

The easing reflected spot PX (paraxylene) prices which lost more than 6% from mid-June up until today on an FOB South Korea basis, ChemOrbis data revealed.

Subdued demand led to price cuts

Most converters in China have wrapped up their restocking activities back in the previous weeks which weighed on raw material demand as July kicked off.

Summer months are traditionally the high season for bottles as hot weather buoys more demand for soft drinks. Yet, optimistic expectations about end demand seem to have failed to materialize so far.

A trader said, “July and August refers to peak season for PET but most buyers have already replenished their inventories at lower prices. Now, they are just sourcing their basic needs.”

Better demand in SEA may offset weak China

Southeast Asia’s PET market was influenced with price cuts in China with offers across the region mostly following a stable to slightly softer trend for the last 1 month.

At the same time, demand has been more promising amid the lifting of lockdowns related to the COVID-19 pandemic as well as high summer season. “This may outweigh the impact of mild demand and the expected restarts of some PET plants in China to some extent,” opined players in Southeast Asia.
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