- European PET prices are rebounding.
- Surging crude and ocean freight have pushed up import costs.
- Resin demand is showing signs of improvement with increased travel and warmer weather.
Freight Chaos and Rising Import Prices Boost European Producers’ Confidence
- European PET resin prices to mid-June slumped by over 200 EUR/mt versus April.
- Mid-June prices dipped to below 1,100 EUR/mt, with many converters expecting a more sustained price collapse into July.
- However, surging crude prices and continued increases in ocean freight have pushed Asian import prices higher, a key benchmark for European producers.
- Rising import costs, combined with some seasonal improvement in demand, have catalysed a shift in producer confidence.
- European producer offers are now increasing steeply, partially reversing the decline in prices and margins seen over the last month.
- In the first week of July, the range of spot European offers increased significantly, with many producers no longer offering sub-1130 EUR/mt, and instead offering an average of between 1,140 and 1,160 EUR/mt.
PET Demand Shows Signs of Improvement
- European PET demand is showing mild improvement now travel restrictions are easing and the weather’s getting warmer.
- After a slow start to the summer, increased retail activity is helping to lift demand at the converter level.
- However, demand growth is far from uniform.
- Preform manufacturers in Poland, Czechia, and the Baltics have reported an uplift in sales, whilst things are more subdued in much of West Europe, as well as Bulgaria and Romania.
- With INEOS’s PTA production at Geel (Belgium) now fully back up and running, most European PET producers are close to full capacity.
- However, persistent delays to PTA imports are still challenging PET plants with a greater reliance on imported raw materials, a situation that should remain for some time.
- With domestic PET resin supplies beginning to normalise, the European market has become more balanced over the past month.
- As Europe’s structurally a net importer of PET resin, delayed imports continue to support demand for domestic material with short lead times.
Potential for Demand Squeeze as July Becomes Pinch Point
- Resin demand could improve through July and August as travel restrictions ease further.
- Improved PET resin demand in July and rising prices may bring more customers into the spot market.
- However, a nervous and confused market may also cause yet more hesitancy on the buyers’ part.
- A demand squeeze in July is possible, but the market should remain balanced, with imports continuing and domestic production holding strong.
- As such, domestic prices should track import parity in the near term with prices potentially strengthening further over the coming weeks.
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