Waning cost support, demand sour PET sentiment in Italy and West Europe
by Manolya Tufan - mtufan@chemorbis.com
Regional PET bottle markets plateaued in August after rallying for three months between May and July, while the sentiment has turned softer recently as rebalancing supply-demand dynamics coincide with waning cost support, cementing reversal expectations among players.
Players receive fresh offers with drops after 4 months
Signs of reversal after four months were evident as markets returned from summer holidays on a muted note. Despite initial hike requests in early August, sellers stepped back to rollovers to encourage sales in the spot market. In the contract markets, August deals were closed with rollovers to minor drops.
August demand fell short of expectations despite high temperatures. A preform manufacturer noted, “Our demand has been steady, with no significant increase during the high season. We don’t expect a demand revival in the near term.”
A sheet maker reported, “Converters did not buy more virgin PET, even though they reduced their R-PET offtakes given elevated prices. This is related to the weak end demand.”
Availability was deemed sufficient to cover existing demand despite production hiccups in the region as well as reduced imports given shipping turmoil.
Although the gap between spot and import prices is deemed insufficient to lure European buyers back to the market, softening import offers amid easing freight rates weighed on the sentiment. Plus, fading seasonality and long lead times also curbed buying interest for imports.
Extreme volatility in crude oil markets cast a shadow on the outlook for downstream markets. Softer voices have become more pronounced even before August PX settlement that indicated a notable decrease of €65/ton from July.
Initial September offers emerged €20-30/ton below August, matching earlier expectations. Spot PET bottle assessments both in Italy and West Europe were €20-30/ton lower on the week to stand at €1140-1210/ton FD, 60 days.
Demand to shrink further
Europe’s PET bottle markets are entering a period of downward price corrections, several players have affirmed. Although local PET producers may attempt to preserve their margins, the downward pressure mounts amid unsupportive costs, waning demand and potentially lower import prices.
Some buyers expect to see significant drops in the coming months, considering the SUP directive mandating 25% recycled content in beverage bottles starting from January 2025.
Players receive fresh offers with drops after 4 months
Signs of reversal after four months were evident as markets returned from summer holidays on a muted note. Despite initial hike requests in early August, sellers stepped back to rollovers to encourage sales in the spot market. In the contract markets, August deals were closed with rollovers to minor drops.
August demand fell short of expectations despite high temperatures. A preform manufacturer noted, “Our demand has been steady, with no significant increase during the high season. We don’t expect a demand revival in the near term.”
A sheet maker reported, “Converters did not buy more virgin PET, even though they reduced their R-PET offtakes given elevated prices. This is related to the weak end demand.”
Availability was deemed sufficient to cover existing demand despite production hiccups in the region as well as reduced imports given shipping turmoil.
Although the gap between spot and import prices is deemed insufficient to lure European buyers back to the market, softening import offers amid easing freight rates weighed on the sentiment. Plus, fading seasonality and long lead times also curbed buying interest for imports.
Extreme volatility in crude oil markets cast a shadow on the outlook for downstream markets. Softer voices have become more pronounced even before August PX settlement that indicated a notable decrease of €65/ton from July.
Initial September offers emerged €20-30/ton below August, matching earlier expectations. Spot PET bottle assessments both in Italy and West Europe were €20-30/ton lower on the week to stand at €1140-1210/ton FD, 60 days.
Demand to shrink further
Europe’s PET bottle markets are entering a period of downward price corrections, several players have affirmed. Although local PET producers may attempt to preserve their margins, the downward pressure mounts amid unsupportive costs, waning demand and potentially lower import prices.
Some buyers expect to see significant drops in the coming months, considering the SUP directive mandating 25% recycled content in beverage bottles starting from January 2025.
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