Surging freight rates, lower supplies propel PET higher in Europe

European PET bottle market reversed the course as of October after touching multi-year lows under the shadow of the pandemic. December prices indicated more visible increases on the back of disrupted imports amid container issues, lower regional supplies and rising feedstock costs.

PET bottle defies seasonal patterns

After having reversed the course in October, PET prices followed a stable to slightly firmer path in November, defying earlier projections calling for a typical autumn stagnancy and the lower MEG settlement for November.

Meanwhile, December PET prices saw increases of up to €40-50/ton despite the stable MEG contracts for the month.

Prices far from nearing pre-pandemic levels

The pace of gains accelerated after import PET prices started being offered above the local ranges as a result of the shortage of shipping containers in Asia. This paved the way for surging freight costs as well as limited shipment options for the near term. Spot availability also diminished amid a spate of maintenance shutdowns.

Nevertheless, prices failed to make up for the losses seen throughout the year. Unlike other polymers, PET has a long way to go to reach its pre-pandemic levels.

According to the weekly average data on ChemOrbis Price Index, PET prices on FD Italy/NWE basis have risen by around 8-9% since late September to reach €745/ton. This marks the highest level since the second half of August.

Sellers aim to preserve current highs

Buyers are unwilling to accept larger increases, blaming low season and their businesses hit by the pandemic. However, sellers have no intention to step back from their initial hike requests due to the diminishing availability for PET and PTA.

European suppliers aim to recover their already thin margins after prices hovered at multi-year lows for a long time.

Supply concerns lure buyers back to the market

As the arrival of import cargos is not expected imminently, regional players returned to the local market to meet their requirements. Hence, supply concerns spurred buying appetite despite the low demand season. Sellers also reported accumulated demand due to the shortness of the month amid year-end festivities.

A player affirmed, “Increases mostly stem from higher costs and reduced availability. Demand has also shown an uptick amid supply concerns.”

Moreover, early talks for a firmer start to January also prompted buyers to replenish their stocks.

Is 2021 more promising than 2020?

The pandemic took its toll on the PET market as social gatherings and fairs were postponed and travel plans were mostly cancelled. These factors weighed on the high season and kept momentum tilted to the downside during most of the year.

A tangible improvement in the PET bottle markets depends on the pace of the recovery from the pandemic. Some sources shared more optimistic expectations for next year.

A player in the nearby Turkish market said, “If everything goes well and vaccinations curb the spread of the COVID-19, we foresee a strong demand outlook in 2021. Since major events and travel plans were postponed during 2020, pent-up demand can drive prices higher next year.”