Decreases gain steam in Europe PET markets, offers break below €1100 FD level

PET bottle markets have experienced another round of decreases, albeit at a faster pace, as October kicked off. A significant slowdown in demand and lower feedstock settlements for September pushed the weekly average PET bottle price in West Europe below the €1100/ton FD threshold for the first time this year.

Spot PET bottle ranges were last assessed €60/ton lower on the week at €1060-1130/ton FD, 60 days in Italy and West Europe. September PX settlement indicated a substantial decrease of €105/ton, while MEG contracts settled with decreases of €2.50/ton for September and €20/ton for October. Initial October offers posted declines of €40-60/ton based on the starting level.

Further drops may be ahead

October has been the second straight month of price drops, driven by subsiding demand in line with the economic challenges and the end of the high season for several applications. Sellers seem to be willing to make further amendments on their prices should market conditions do not improve.

This is because the overall buying interest remained calm despite recent drops. The cautious sentiment among buyers remained intact as they expect to obtain lower prices towards the year-end, considering their poor order entries. A market player opined, “October is a weaker month in terms of demand. Sellers are reporting limited transactions, aligning with the traditional patterns.” It is straightforward to say that further reductions as the month progresses are on the horizon, which would be compounded by fading seasonality.

Supplies deemed comfortable, eyes on imports

Moreover, overall supply is deemed rather comfortable as bulky import volumes could flow into the bloc amid easing freight rates since their peak in mid-July. There are no immediate supply issues within the bloc, while the focus has shifted to the future trajectory in the import markets amid recent crude gains.

Imports have been offering a competitive edge since around mid-Q3, while they stir no buying interest as buyers remain in a wait-and-see stance. Southeast Asian and Turkish PET bottle offers on CIF, 60 days deferred payment basis stood at €980-1000/ton in Italy and West Europe.

Spot freight rates on major routes are likely to extend their declines now that the port strike on the Gulf Coast and the East Coast was short-lived. Although this would keep import offers from Far East Asia under pressure, eyes are locked on the recent crude oil gains amid the mounting threat of a region-wide war in the Middle East. Brent futures indicated a weekly gain of more than 8% on Friday.

It remains to be seen whether upstream gains will outweigh falling freight rates and lead to a change in overseas suppliers’ pricing policies or not. As a side note, early November expectations call for additional decreases inside Europe.