Insight Focus

  • PTA and MEG futures dropped sharply last week, following crude oil price declines.
  • PET export prices have now dropped 12-14% over the last two-weeks.
  • PET margins are expected to remain robust through Q3 2022 on tight availability.

  

PTA Futures and Forward Curve

  • PTA futures fell sharply last week, following a plunge in crude oil prices on fears that the US is heading into a recession.
  • PX prices also went into reverse, with buyers resisting high PX prices and the recent market squeeze.
  • Whilst PTA-PX spread widened slightly, PTA supply is expected to increase gradually due to higher operating rates, which will constrain margins.
  • The PTA 12-month forward curve remains sharply backwardated into 2023.
undefined

MEG Futures and Forward Curve

  • MEG futures plummeted last week, with buyers staying on the side lines.
  • Whilst weakness in global commodity markets drove the plunge, already high inventory levels were bolstered by several cancelled plant turnarounds and increased output.
  • The MEG forward curve remains in contango, with future contracts trading at a premium to current prices.
undefined

PET Resin Export – Raw Material Spread and Forward Curve

  • Chinese PET resin export prices continued their dramatic fall, reaching USD 1200/tonne by Friday.
  • Current export prices represent a fall of USD 150-200/tonne over the last two-weeks.
  • However, despite the fall in price, producers were able to push up the PET resin – raw material physical differential, with the weekly average increasing USD18 to USD 116/tonne. Friday’s daily spread was higher still at USD 129/tonne.
  • The PET export-raw material forward curve is now partially backwardated in Q3 2022 and through H2 2022.
undefined

undefined

Concluding Thoughts

  • Whilst many buyers have sat out the recent market volatility, some demand is now returning as prices fall into a more attractive range.
  • Whilst averaging around USD 1200/tonne, prices as low as USD 1180/tonne were also heard Friday, indicating a potential further downside to current average prices.
  • However, resin availability is still tight with most major producers sold-out through July and August.
  • At least one major domestic buyer was heard to have placed an additional 100kt order, to cover summer demand in China, leading to less availability for certain producers.
  • Given more attractive price levels, competitiveness in foreign markets, and tight availability, PET margins are expected to remain robust through Q3.
  • A potential repeat of strong Q4 export orders, as occurred last year, is also looking increasingly likely.


For PET hedging enquiries, please contact the risk management desk at MKirby@czarnikow.com.

For research and analysis questions, please get in touch with GLamb@czarnikow.com.

Other Insights That May Be of Interest…

Initial European PX Settlement Rocks PET Market

European PET Market View: Will Revenge Spending Boost European PET this Summer?

PET Resin Trade Flows: EU PET Imports Surge Despite Chinese Export Constraints

Plastics and Sustainability Trends in May 2022


Explainers That May Be of Interest…

Czapp Explains: Europe’s First Plastic Packaging Tax

Gareth Lamb

Gareth joined CZ in 2021 and is CZ’s PET analyst and recycling specialist. As well as regularly reporting on key market trends and dynamics, Gareth is also developing new research products and analytics within the PET and rPET space. Prior to joining CZ, Gareth led Wood Mackenzie’s PET research service and was Senior Consultant at IHS Markit, working within the petrochemical consulting team. Dr. Lamb graduated from the University of St Andrews with a PhD in organometallic chemistry; and has a masters of Chemistry degree from the University of Liverpool.

More from this author