Weekly Market Drivers for the USA
by ChemOrbis Editorial Team - content@chemorbis.com
PE Drivers
According to Resin Technology Incorporated’s (RTI) weekly market driver report for plastics processors, January contracts hit with a 5-cent hike as energy slides below December’23 levels, February increase discussions on-going.
Market Overview
• More PE producers have come out with proposed February increases of 5 cents/lb in an effort to build on the increase seen in January and improve margins.
• But there is still little merit to these increases from a supply/demand perspective, especially as Shell’s units in Monaca come back online. In its quarterly call this week, the company said that 2 of 3 PE trains were running well at or above capacity, and the 3rd train will ramp up over the next few weeks.
• Final ACC data for December came out this week as well and confirmed that inventory was good heading into January.
• Supply/Demand: Final December Supply /Demand Data:
⎯ Inventory Change: +45.2 MM/lbs
⎯ Operating Rate: +1%
⎯ Demand Rate: +4%
⎯ Exports: +2%
• We should get our first look at January supply/demand data next week, which is expected to show reduced production due in part to precautionary slowdowns from the recent arctic blast.
• Meanwhile, in the secondary market, producers will likely continue to move material via export, as they have done for much of 2023.
• So far this year, export demand has been well supported by logistics issues out of the Red Sea and Panama Canal, which have also kept ocean freight prices soaring.
Feedstocks
Ethylene: Ethylene spot levels stayed below 20 cents/lb heading into February and traded as low as 19 cents/lb this week. The market had been under upward price pressure due to planned turnarounds.
Crude Oil (CO): WTI drifted lower this week to the low-$70s/bbl amid weakness in China’s economy and a surprise build in domestic inventory from the previous week.
International
Asia: PE import prices in Asia were assessed stable to $30/mt higher this week, according to ChemOrbis. The combination of strong costs and reduced supply from the Middle East and the US overshadowed lackluster demand amid the holiday lull.
Europe: PE spot levels were stable this week as players moved to the sidelines as they wait for the next ethylene contract, expected to settle stable to slightly higher.
PE Outlook and Suggested Action Strategies
30 Days: The hike in contract pricing is unsettling for every buyer, as meaningful increase in demand is yet to materialize, while the uniform push for increases takes hold. Global increase in prices are mostly driven by higher freight which does not bode well for higher FOB pricing.
60/90 Days: The weak demand outlook through Q1 has still not changed, but stay on top of your supply chain. The current favorable weather outlook thru mid-February should support a less volatile supply chain. Feedstock costs are still expected to remain strong in Q1 due to the heavy turnaround season for refiners and ethane crackers.
PP Drivers
Producers seek margin expansions amid elevated feeds, record inventories.
Market Overview
• January PP contracts picked up 3 cents to start the year due to the spike in PGP monomer costs as PDH operations remain an issue. This is the fourth consecutive monthly jump for PP contracts, combining for an overall increase of 16.5 cents/lb.
• These PDH issues are still expected to be resolved by the end of the month, but there is a planned turnaround at another PDH unit in February.
• Still, inventory remains healthy as shown in final ACC data for December and should not be too far off from the record level 2.01 billion lbs when we see January inventory next week.
• Supply/Demand: Final December Supply /Demand Data:
⎯ Inventory Change: +122.9 MM/lbs
⎯ Operating Rate: -6%
⎯ Demand Rate: -5%
⎯ Exports: -15.8%
• There will be some tightness in the market heading into February, though, with Ineos still on a FM at its Chocolate Bayou units in Texas, following the recent arctic freeze.
• These bullish fundamentals have prompted producers to come out with proposed increases of 2-4 cents/lb for February, in addition to any change in the February PGP contract.
• TotalEnergies has also come out with a proposed price increase of 2 cents/lb, in addition to any change in the March PGP contract.
Feedstocks
• PGP spot prices dropped below 50 cents/lb this week in response to EPC’s PDH units coming back online. The upcoming January PGP contract remains on track to settle 2- 3 cents/lb higher.
International
Europe: February PP is forecast to rise between €100-150/mt based on the recent increase in PGP costs in January due to a number of PDH issues.
Asia: In China, PP markets ended the first month of the year on a firm note, with prices stable to $20/mt higher following two weeks of stability, according to ChemOrbis.
PP Outlook and Suggested Action Strategies
30 Days: February and March are shaping up for relative strength, as Dow Chemical starts its 45-day PDH planned TA, which should keep monomer costs elevated. Margin expansions lack traction in any and all markets.
60/90 Days: The busy PGP outage season will be the dominating trend for the next 2-4 months. Nonetheless, inventories are beyond healthy at this point, and demand is yet to show a meaningful increase. Firm spot bids will pan out for the right grades, despite the raise in feeds we are seeing.
PVC Drivers
PVC pricing unchanged in January ahead of planned turnarounds for next month.
Market Overview
• PVC contracts held steady in January following recent production issues due to the arctic blast seen earlier this month.
• Producers had increases on the table at 2-5 cents/lb for January, but even with the recent impact to production, supply/demand fundamentals remain weak.
• Final ACC data for December showed inventory was up 192 million lbs, just below the 193 million lbs that was initially reported, while run rates were up nearly 14% alongside a 21.6% gain in exports.
• Supply/Demand: Final December Supply /Demand Data:
⎯ Inventory Change: +192.2 MM/lbs
⎯ Operating Rate: +13.8%
⎯ Demand Rate: -1.5%
⎯ Exports: +21.6 %
• Producers will have difficulty exporting material as Formosa works to bring its Point Comfort, Louisiana, unit back online and Westlake takes a planned turnaround at its Lake Charles and Plaquemine, Louisiana plants down for planned turnarounds.
• There is also the issue of Europe’s investigation into US PVC imports.
• Meanwhile, downstream demand from the housing sector has not been strong enough to lift the market yet, and we are still a few months away from the construction season.
Feedstocks
Chlorine: The January US chlorine contract was assessed lower on average by $20/st to a range of $855-875/st delivered USG, based on weak demand.
Ethylene: Ethylene spot levels stayed below 20 cents/lb heading into February and traded as low as 19 cents/lb this week. The market had been under upward price pressure due to planned turnarounds.
International
Asia: Import and export PVC prices followed a stable-to-higher trend, as the rise in the benchmark offers for February shipments still stirred the trading atmosphere, according to ChemOrbis. Meanwhile, domestic markets experienced some downward adjustments, with weakening futures and a holiday lull denting sentiment.
Europe: February PVC offers are expected to emerge in the following days, while market activities have been calm this week after players wrapped up their January business.
PVC Outlook and Suggested Action Strategies
30 Days: Demand is still expected to remain low in February, but there will be some tightness in the market due to planned turnarounds. However, exports will likely remain low due to ongoing logistics issues at the Panama Canal and the Suez Canal, not to mention Europe’s investigation into US exports.
60/90 Days: : For Q1, the overall demand outlook remains weak as housing and construction are not expected to pick up until we get closer to the summer.
PS Drivers
January PS contracts confirmed a penny lower, though February is still expected higher due to rising feedstock costs.
Market Overview
• PS contracts peeled off a penny for January as weak supply/demand fundamentals outweighed higher RMC during the month.
• January’s drop was also the third consecutive monthly decline in contracts, which combined for an 8-cent loss.
• February PS pricing is expected to move higher as upcoming February BZ and SM contracts are trending towards an increase, which will factor into higher RMC.
• There has also been discussion of prebuying because of rising Polypropylene and the expected increase in the upcoming February BZ contract.
• Meanwhile, imports are still competitive to domestic material because of lower priced opportunities, but quality could be a factor in why some consumers have returned to purchasing domestic volumes.
• Overall, consumer confidence continues to look stronger as well. The Conference Board Consumer Confidence Index® was released this week and showed an increase in January to 114.8 (1985=100), up from a revised 108.0 in December. The reading was the highest since December 2021, and marked the third straight monthly increase.
• This comes a week after The University of Michigan’s Survey of Consumers showed a reading of 78.8 for January, its highest level since July 2021 and up 21.4% from a year ago.
Feedstocks
Crude Oil (CO): WTI drifted lower this week to the low- $70s/bbl amid weakness in China’s economy and a surprise build in domestic inventory from the previous week.
Butadiene (BD): BD producers have nominated a 3-cent increase for the February contract.
Styrene Monomer (SM): SM spot levels firmed this week due to higher feedstock BZ spot levels and reduced production from turnaround season.
Benzene (BZ): The February BZ contract settled at $3.64/gal, up 45 cents from the January contract price of $3.19/gal.
Ethylene: Ethylene spot levels stayed below 20 cents/lb heading into February and traded as low as 19 cents/lb this week. The market had been under upward price pressure due to planned turnarounds.
International
Asia: PS spot levels in China were mostly stable this week amid thin demand.
Europe: PS prices are likely to increase by another three digits in February as styrene spot prices have increased by €220/mt since the start of the month.
PS Outlook and Suggested Action Strategies
30 Days: With feedstock costs expected to rebound in February, PS will likely follow suit with its first increase of the year.
60/90 Days: The supply/demand outlook is still expected to remain weak through Q1, regardless of the direction feedstocks take, especially as we move into turnaround season.
ABS Drivers
February ABS will likely see higher RMC as feedstock contracts for BD, BZ, and SM target an increase.
Market Overview
• ABS went another month without seeing a price increase for January due to continued weakness, shrugging off Sabic’s proposed 9- cent/lb increase.
• Demand is still considered low, but February may see a slight increase in Q1 as processors return to the market.
• ABS production is healthy and was not impacted following the recent arctic blast in mid-January.
• An expected increase in upcoming contracts for BZ, SM, and ethylene markets will limit price erosion in February. The February feedstock BD contract has been nominated higher and will factor into higher RMC for February.
• Downstream automotive data continues to disappoint. Total new-vehicle sales for January 2024, including retail and non-retail transactions, are projected to reach 1,087,900 units, a 1.5% decrease from January 2023, according to a joint forecast from J.D. Power and GlobalData.
• The JD Power/Global Data forecast comes a week after S&P Global Mobility indicated US light vehicle sales for January were projected at 1.1 million units, slightly up from the same time last year at 1.0 million units.
• Overall, consumer confidence continues to look stronger. The Conference Board Consumer Confidence Index® was released this week and showed an increase in January to 114.8 (1985=100), up from a revised 108.0 in December.
Feedstocks
Butadiene (BD): BD spot levels remained stable at 32 cents/lb during the week.
Styrene Monomer (SM): SM spot levels firmed this week due to higher feedstock BZ spot levels and reduced production from turnaround season.
Benzene (BZ): The February BZ contract settled at $3.64/gal, up 45 cents from the January contract price of $3.19/gal.
Ethylene: Ethylene spot levels stayed below 20 cents/lb heading into February and traded as low as 19 cents/lb this week. The market had been under upward price pressure due to planned turnarounds.
International
Asia: ABS prices remained on a stable to higher trajectory thanks to firm feedstock costs, even in the face of weak demand. Weekly average data obtained from ChemOrbis Price Index suggests import prices in both markets reached their more-than-two-month highs, while China’s local prices were standing at the highest level since late October 2023.
Europe: ABS players are waiting for fresh offers to show up after wrapping up their January deals mainly with stable prices, according ChemOrbis.
ABS Outlook and Suggested Action Strategies
30 Days: The expected increase in the upcoming BZ, butadiene, and SM contracts will factor into higher RMC this month, which will make any further price erosion difficult.
60/90 Days: Feedstock costs are expected to remain high during Q1 due to planned turnarounds, but the ABS demand outlook is still weak.
PET Drivers
Feedstock PX and PTA contracts move higher for January, leading PET contracts up to start 2024.
Market Overview
• The increase seen in January PX and PTA contracts will factor into higher RMC for PET this month forecast at up $0.01-0.015/lb.
• The January PET contracts also represent the first increase for PET contracts since August 2023.
• Despite the cost-driven increase, PET supply remains healthy as production was not impacted by this month’s arctic blast. Producers are still expected to keep run rates low, however, as they work to balance inventories with soft demand.
• Demand is still seasonally weak in both the bottle chip and fiber sectors.
• Logistics remain an issue as well between Asia and the US East Coast due to low levels at the Panama Canal and geopolitical tensions in the Middle East reducing traffic through the Suez Canal. This has also kept freight costs at elevated levels.
• Pricing overseas has been moving higher, though, due to higher feedstock costs and rising freight rates.
Feedstocks
PX and PTA: The January contract has settled at 56 cents/lb, up 2 cents from December and in line with expectations. January PTA followed PX higher and was assessed at 62.79 cents/lb, above the December price of 62.10 cents/lb.
MEG: Inventory was ample heading into January, but winter weather is keeping demand strong for antifreeze-grade MEG. Meanwhile, producers that have been impacted by the recent arctic blast this month have resumed operations.
International
Asia: PET bottle markets ended the first month of the year on a three-week uptrend, as export prices from China were assessed $10-25/mt higher this week.
Europe: PET deals were mostly concluded with €50-80/mt hikes, and market participants are now waiting for fresh offers to surface for February, according to ChemOrbis, as shipping delays impacted imports.
PET Outlook and Suggested Action Strategies
30 Days: Feedstock PX and PTA costs are forecast to see another modest increase in February, which will keep RMC high. But overall supply/demand positions for PET are not expected to improve much as we are still out of bottle season.
60/90 Days: RMC are expected to increase through Q1, which will make it difficult to for any potential price erosion. This comes as logistics issues continue, even amid low seasonal demand.
According to Resin Technology Incorporated’s (RTI) weekly market driver report for plastics processors, January contracts hit with a 5-cent hike as energy slides below December’23 levels, February increase discussions on-going.
Market Overview
• More PE producers have come out with proposed February increases of 5 cents/lb in an effort to build on the increase seen in January and improve margins.
• But there is still little merit to these increases from a supply/demand perspective, especially as Shell’s units in Monaca come back online. In its quarterly call this week, the company said that 2 of 3 PE trains were running well at or above capacity, and the 3rd train will ramp up over the next few weeks.
• Final ACC data for December came out this week as well and confirmed that inventory was good heading into January.
• Supply/Demand: Final December Supply /Demand Data:
⎯ Inventory Change: +45.2 MM/lbs
⎯ Operating Rate: +1%
⎯ Demand Rate: +4%
⎯ Exports: +2%
• We should get our first look at January supply/demand data next week, which is expected to show reduced production due in part to precautionary slowdowns from the recent arctic blast.
• Meanwhile, in the secondary market, producers will likely continue to move material via export, as they have done for much of 2023.
• So far this year, export demand has been well supported by logistics issues out of the Red Sea and Panama Canal, which have also kept ocean freight prices soaring.
Feedstocks
Ethylene: Ethylene spot levels stayed below 20 cents/lb heading into February and traded as low as 19 cents/lb this week. The market had been under upward price pressure due to planned turnarounds.
Crude Oil (CO): WTI drifted lower this week to the low-$70s/bbl amid weakness in China’s economy and a surprise build in domestic inventory from the previous week.
International
Asia: PE import prices in Asia were assessed stable to $30/mt higher this week, according to ChemOrbis. The combination of strong costs and reduced supply from the Middle East and the US overshadowed lackluster demand amid the holiday lull.
Europe: PE spot levels were stable this week as players moved to the sidelines as they wait for the next ethylene contract, expected to settle stable to slightly higher.
PE Outlook and Suggested Action Strategies
30 Days: The hike in contract pricing is unsettling for every buyer, as meaningful increase in demand is yet to materialize, while the uniform push for increases takes hold. Global increase in prices are mostly driven by higher freight which does not bode well for higher FOB pricing.
60/90 Days: The weak demand outlook through Q1 has still not changed, but stay on top of your supply chain. The current favorable weather outlook thru mid-February should support a less volatile supply chain. Feedstock costs are still expected to remain strong in Q1 due to the heavy turnaround season for refiners and ethane crackers.
PP Drivers
Producers seek margin expansions amid elevated feeds, record inventories.
Market Overview
• January PP contracts picked up 3 cents to start the year due to the spike in PGP monomer costs as PDH operations remain an issue. This is the fourth consecutive monthly jump for PP contracts, combining for an overall increase of 16.5 cents/lb.
• These PDH issues are still expected to be resolved by the end of the month, but there is a planned turnaround at another PDH unit in February.
• Still, inventory remains healthy as shown in final ACC data for December and should not be too far off from the record level 2.01 billion lbs when we see January inventory next week.
• Supply/Demand: Final December Supply /Demand Data:
⎯ Inventory Change: +122.9 MM/lbs
⎯ Operating Rate: -6%
⎯ Demand Rate: -5%
⎯ Exports: -15.8%
• There will be some tightness in the market heading into February, though, with Ineos still on a FM at its Chocolate Bayou units in Texas, following the recent arctic freeze.
• These bullish fundamentals have prompted producers to come out with proposed increases of 2-4 cents/lb for February, in addition to any change in the February PGP contract.
• TotalEnergies has also come out with a proposed price increase of 2 cents/lb, in addition to any change in the March PGP contract.
Feedstocks
• PGP spot prices dropped below 50 cents/lb this week in response to EPC’s PDH units coming back online. The upcoming January PGP contract remains on track to settle 2- 3 cents/lb higher.
International
Europe: February PP is forecast to rise between €100-150/mt based on the recent increase in PGP costs in January due to a number of PDH issues.
Asia: In China, PP markets ended the first month of the year on a firm note, with prices stable to $20/mt higher following two weeks of stability, according to ChemOrbis.
PP Outlook and Suggested Action Strategies
30 Days: February and March are shaping up for relative strength, as Dow Chemical starts its 45-day PDH planned TA, which should keep monomer costs elevated. Margin expansions lack traction in any and all markets.
60/90 Days: The busy PGP outage season will be the dominating trend for the next 2-4 months. Nonetheless, inventories are beyond healthy at this point, and demand is yet to show a meaningful increase. Firm spot bids will pan out for the right grades, despite the raise in feeds we are seeing.
PVC Drivers
PVC pricing unchanged in January ahead of planned turnarounds for next month.
Market Overview
• PVC contracts held steady in January following recent production issues due to the arctic blast seen earlier this month.
• Producers had increases on the table at 2-5 cents/lb for January, but even with the recent impact to production, supply/demand fundamentals remain weak.
• Final ACC data for December showed inventory was up 192 million lbs, just below the 193 million lbs that was initially reported, while run rates were up nearly 14% alongside a 21.6% gain in exports.
• Supply/Demand: Final December Supply /Demand Data:
⎯ Inventory Change: +192.2 MM/lbs
⎯ Operating Rate: +13.8%
⎯ Demand Rate: -1.5%
⎯ Exports: +21.6 %
• Producers will have difficulty exporting material as Formosa works to bring its Point Comfort, Louisiana, unit back online and Westlake takes a planned turnaround at its Lake Charles and Plaquemine, Louisiana plants down for planned turnarounds.
• There is also the issue of Europe’s investigation into US PVC imports.
• Meanwhile, downstream demand from the housing sector has not been strong enough to lift the market yet, and we are still a few months away from the construction season.
Feedstocks
Chlorine: The January US chlorine contract was assessed lower on average by $20/st to a range of $855-875/st delivered USG, based on weak demand.
Ethylene: Ethylene spot levels stayed below 20 cents/lb heading into February and traded as low as 19 cents/lb this week. The market had been under upward price pressure due to planned turnarounds.
International
Asia: Import and export PVC prices followed a stable-to-higher trend, as the rise in the benchmark offers for February shipments still stirred the trading atmosphere, according to ChemOrbis. Meanwhile, domestic markets experienced some downward adjustments, with weakening futures and a holiday lull denting sentiment.
Europe: February PVC offers are expected to emerge in the following days, while market activities have been calm this week after players wrapped up their January business.
PVC Outlook and Suggested Action Strategies
30 Days: Demand is still expected to remain low in February, but there will be some tightness in the market due to planned turnarounds. However, exports will likely remain low due to ongoing logistics issues at the Panama Canal and the Suez Canal, not to mention Europe’s investigation into US exports.
60/90 Days: : For Q1, the overall demand outlook remains weak as housing and construction are not expected to pick up until we get closer to the summer.
PS Drivers
January PS contracts confirmed a penny lower, though February is still expected higher due to rising feedstock costs.
Market Overview
• PS contracts peeled off a penny for January as weak supply/demand fundamentals outweighed higher RMC during the month.
• January’s drop was also the third consecutive monthly decline in contracts, which combined for an 8-cent loss.
• February PS pricing is expected to move higher as upcoming February BZ and SM contracts are trending towards an increase, which will factor into higher RMC.
• There has also been discussion of prebuying because of rising Polypropylene and the expected increase in the upcoming February BZ contract.
• Meanwhile, imports are still competitive to domestic material because of lower priced opportunities, but quality could be a factor in why some consumers have returned to purchasing domestic volumes.
• Overall, consumer confidence continues to look stronger as well. The Conference Board Consumer Confidence Index® was released this week and showed an increase in January to 114.8 (1985=100), up from a revised 108.0 in December. The reading was the highest since December 2021, and marked the third straight monthly increase.
• This comes a week after The University of Michigan’s Survey of Consumers showed a reading of 78.8 for January, its highest level since July 2021 and up 21.4% from a year ago.
Feedstocks
Crude Oil (CO): WTI drifted lower this week to the low- $70s/bbl amid weakness in China’s economy and a surprise build in domestic inventory from the previous week.
Butadiene (BD): BD producers have nominated a 3-cent increase for the February contract.
Styrene Monomer (SM): SM spot levels firmed this week due to higher feedstock BZ spot levels and reduced production from turnaround season.
Benzene (BZ): The February BZ contract settled at $3.64/gal, up 45 cents from the January contract price of $3.19/gal.
Ethylene: Ethylene spot levels stayed below 20 cents/lb heading into February and traded as low as 19 cents/lb this week. The market had been under upward price pressure due to planned turnarounds.
International
Asia: PS spot levels in China were mostly stable this week amid thin demand.
Europe: PS prices are likely to increase by another three digits in February as styrene spot prices have increased by €220/mt since the start of the month.
PS Outlook and Suggested Action Strategies
30 Days: With feedstock costs expected to rebound in February, PS will likely follow suit with its first increase of the year.
60/90 Days: The supply/demand outlook is still expected to remain weak through Q1, regardless of the direction feedstocks take, especially as we move into turnaround season.
ABS Drivers
February ABS will likely see higher RMC as feedstock contracts for BD, BZ, and SM target an increase.
Market Overview
• ABS went another month without seeing a price increase for January due to continued weakness, shrugging off Sabic’s proposed 9- cent/lb increase.
• Demand is still considered low, but February may see a slight increase in Q1 as processors return to the market.
• ABS production is healthy and was not impacted following the recent arctic blast in mid-January.
• An expected increase in upcoming contracts for BZ, SM, and ethylene markets will limit price erosion in February. The February feedstock BD contract has been nominated higher and will factor into higher RMC for February.
• Downstream automotive data continues to disappoint. Total new-vehicle sales for January 2024, including retail and non-retail transactions, are projected to reach 1,087,900 units, a 1.5% decrease from January 2023, according to a joint forecast from J.D. Power and GlobalData.
• The JD Power/Global Data forecast comes a week after S&P Global Mobility indicated US light vehicle sales for January were projected at 1.1 million units, slightly up from the same time last year at 1.0 million units.
• Overall, consumer confidence continues to look stronger. The Conference Board Consumer Confidence Index® was released this week and showed an increase in January to 114.8 (1985=100), up from a revised 108.0 in December.
Feedstocks
Butadiene (BD): BD spot levels remained stable at 32 cents/lb during the week.
Styrene Monomer (SM): SM spot levels firmed this week due to higher feedstock BZ spot levels and reduced production from turnaround season.
Benzene (BZ): The February BZ contract settled at $3.64/gal, up 45 cents from the January contract price of $3.19/gal.
Ethylene: Ethylene spot levels stayed below 20 cents/lb heading into February and traded as low as 19 cents/lb this week. The market had been under upward price pressure due to planned turnarounds.
International
Asia: ABS prices remained on a stable to higher trajectory thanks to firm feedstock costs, even in the face of weak demand. Weekly average data obtained from ChemOrbis Price Index suggests import prices in both markets reached their more-than-two-month highs, while China’s local prices were standing at the highest level since late October 2023.
Europe: ABS players are waiting for fresh offers to show up after wrapping up their January deals mainly with stable prices, according ChemOrbis.
ABS Outlook and Suggested Action Strategies
30 Days: The expected increase in the upcoming BZ, butadiene, and SM contracts will factor into higher RMC this month, which will make any further price erosion difficult.
60/90 Days: Feedstock costs are expected to remain high during Q1 due to planned turnarounds, but the ABS demand outlook is still weak.
PET Drivers
Feedstock PX and PTA contracts move higher for January, leading PET contracts up to start 2024.
Market Overview
• The increase seen in January PX and PTA contracts will factor into higher RMC for PET this month forecast at up $0.01-0.015/lb.
• The January PET contracts also represent the first increase for PET contracts since August 2023.
• Despite the cost-driven increase, PET supply remains healthy as production was not impacted by this month’s arctic blast. Producers are still expected to keep run rates low, however, as they work to balance inventories with soft demand.
• Demand is still seasonally weak in both the bottle chip and fiber sectors.
• Logistics remain an issue as well between Asia and the US East Coast due to low levels at the Panama Canal and geopolitical tensions in the Middle East reducing traffic through the Suez Canal. This has also kept freight costs at elevated levels.
• Pricing overseas has been moving higher, though, due to higher feedstock costs and rising freight rates.
Feedstocks
PX and PTA: The January contract has settled at 56 cents/lb, up 2 cents from December and in line with expectations. January PTA followed PX higher and was assessed at 62.79 cents/lb, above the December price of 62.10 cents/lb.
MEG: Inventory was ample heading into January, but winter weather is keeping demand strong for antifreeze-grade MEG. Meanwhile, producers that have been impacted by the recent arctic blast this month have resumed operations.
International
Asia: PET bottle markets ended the first month of the year on a three-week uptrend, as export prices from China were assessed $10-25/mt higher this week.
Europe: PET deals were mostly concluded with €50-80/mt hikes, and market participants are now waiting for fresh offers to surface for February, according to ChemOrbis, as shipping delays impacted imports.
PET Outlook and Suggested Action Strategies
30 Days: Feedstock PX and PTA costs are forecast to see another modest increase in February, which will keep RMC high. But overall supply/demand positions for PET are not expected to improve much as we are still out of bottle season.
60/90 Days: RMC are expected to increase through Q1, which will make it difficult to for any potential price erosion. This comes as logistics issues continue, even amid low seasonal demand.
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