Asian PET bottle falls sharply after peace deal, but war premium is far from gone

Asian PET bottle markets largely extended their multi-week weakness, with prices across all segments posting notable losses and eroding part of the gains accumulated during the war-driven rally earlier this year. Although China’s local market had briefly rebounded in the previous week, the recovery proved short-lived as the downward trend resumed.

The latest downturn was primarily driven by a steep decline in crude oil and key feedstock values following the announcement of a US-Iran peace deal, which sparked broad-based bearish sentiment across petrochemical markets. Weak demand fundamentals, ample supply, and heightened caution among buyers further intensified pressure on regional PET bottle prices. Despite the recent correction, however, prices across Asia remain well above their pre-war levels, indicating that a significant portion of the war-related premium has yet to be unwound.

Crude-led feedstock slide sends PET bottle prices lower

The sharp decline in energy and feedstock costs emerged as the dominant factor shaping PET bottle pricing this week. Comparing July 9 and 16 settlements, Brent crude futures plunged nearly 14%, slipping below the $80/bbl threshold after news of the US-Iran peace deal eased concerns over shipping and production disruptions. Reflecting the weakness in upstream energy markets, spot PX and PTA prices dropped by $95/ton and $75/ton respectively, while spot MEG registered a comparatively modest weekly decline of $10/ton.

Market participants widely agreed that the collapse in feedstock costs accelerated downward pressure on PET bottle values across Asia. A Chinese exporter remarked that overseas orders also fell sharply as buyer caution heightened even further amid bearish expectations. Echoing similar sentiment, a source from a Taiwanese producer added that regional spot prices, particularly for Chinese-origin cargoes, posted steep declines as downstream processors grappled with highly squeezed margins.

Supply-demand imbalance deepens market gloom

Beyond feedstock weakness, deteriorating supply-demand fundamentals continued to reinforce bearish sentiment throughout the region. In China, market participants reported sluggish domestic consumption alongside sufficient material availability, leaving little support for prices.

Similar conditions were reported across Southeast Asia, where buyers largely stayed on the sidelines. A Vietnamese trader described market activity as muted, citing persistently weak demand and elevated inventory levels as key concerns. Meanwhile, a Vietnamese converter noted that purchasing interest remained scarce despite additional cuts both in local and import offers. “Buyers show no willingness to source more material, awaiting additional price reductions after the US-Iran news,” the converter said, adding that many sellers were also reluctant to offer and instead preferred responding selectively to buyer inquiries.

Much of the war premium remains despite recent correction

Despite the recent downturn, ChemOrbis Price Index data indicate that Asian PET bottle markets have yet to surrender most of the gains accumulated during the war-driven rally.

FOB China PET bottle prices surged by 45% from the pre-war week beginning February 23 to a late-April peak, the highest level since mid-2022. Although prices have since fallen by 11%, they still stand 29% above pre-war levels. Similarly, ex-warehouse China PET bottle prices climbed 41% from the pre-war week to a mid-March peak, marking the highest level since September 2022. After easing by 11% from those highs, prices remain 25% above their pre-war level.

In Southeast Asia, CIF PET bottle prices rallied 47% before reaching a late-April peak, also the highest level since mid-2022. Despite the subsequent correction, prices are still 32% higher than before the war-driven surge.

FOB South Korea PET bottle prices recorded the strongest increase among the major benchmarks, soaring by 50% to their highest level since September 2018. Even after losing 11% from the peak, they continue to trade 34% above pre-war levels.

The figures suggest that although the recent collapse in crude oil and feedstock costs has triggered a notable correction, a significant portion of the war-related premium remains embedded in regional PET bottle markets.