• PTA producer margins fell last week, with polyester production down due to COVID controls.
  • PET resin export prices remained flat, but the physical differential over feedstock narrowed.
  • The raw material forward curve remains flat, slightly backwardated over the next 12 months.

PTA Futures and Forward Curve

  • PTA futures followed crude oil higher last week, but the PTA-PX spread narrowed, highlighting more bearish fundamentals.
  • China’s PTA demand has sharply dropped in recent weeks, as COVID controls have reduced polyester production.
  • The PTA 12-month forward curve remains backwardated, with future months trading at a discount to the current April contract.

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MEG Futures and Forward Curve

  • MEG futures continued their downward trajectory last week, following weaker demand.
  • Polyester production cuts and a drop in demand from the apparel sector have dampened MEG demand.
  • Strict logistics controls due to COVID outbreaks in Shanghai and other cities added to the decline.
  • The MEG forward curve remains in contango with future contracts, trading at a premium to current levels.

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PET Resin Export – Raw Material Spread and Forward Curve

  • With China’s PET resin export prices closing the week at 1,190 USD/tonne, the current physical differential over feedstock futures has fallen by around 7 USD/tonne to 115 USD/tonne.
  • The PET export-raw material forward curve remains flat, slightly backwardated over the next 12 months.
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Concluding Thoughts

  • COVID controls within China have severely impacted polyester production and consumption.
  • Official figures show that China’s consumer spending fell, and unemployment rose last month.
  • Weaker domestic demand is becoming a concern for PET producers; whilst PET export prices have remained firm, the physical differential over feedstock continues to erode.
  • Increased export availability may become more apparent if the domestic market fails to stimulate demand.
  • Chinese PET producers face prospect of weaker export demand with lower sales to Russia and Ukraine.

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…

European Buyers Under Pressure as PET Prices Hit New Highs

PET Resin Trade Flows: China’s COVID Response Slows Exports

Chinese PET Industry Faces Biggest COVID Outbreak Since 2020

European PET Market Rocked by War in Ukraine

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.

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