Insight Focus
- PTA futures correct downwards, partially reversing the previous week’s rise.
- PET export prices track feedstocks, margins stabilise, rise slightly on tight supply.
- PET resin inventories remain low, with September shipment typically the earliest available.
PTA Futures and Forward Curve
- PTA futures fell last week, partially reversing the previous week’s rally.
- PTA prices tracked PX lower, with PTA producers’ margins growing.
- The PX sell-off was largely driven by higher PX operating rates, the start-up of a new plant, and PTA producers selling PX because of their own production cuts.
- However, PTA supply is still expected to grow in June because of operating rate increases, which will cap margins.
- The PTA 12-month forward curve remains sharply backwardated into 2023.
MEG Futures and Forward Curve
- MEG futures fell back last week, with traders actively selling at higher prices.
- Whilst supply continues to decrease, there remains ample supply and high inventories.
- The MEG forward curve remains in contango, with future contracts trading at a premium to current prices.
PET Resin Export – Raw Material Spread and Forward Curve
- Chinese PET resin export prices have been on a roller-coaster ride in June, increasing over USD 100/tonne before reversing last week and settling at an average of USD 1,260/tonne FOB Friday.
- The whipsawing has led to volatility in daily physical differentials, but the weekly average has risen modestly to USD98/tonne. Friday’s was higher at USD 112/tonne.
- The PET export-raw material forward curve has moved to partially backwardated in Q3 2022 and through H2 2022 and is now beginning to look flat in early 2023.
Concluding Thoughts
- Having fallen sharply in recent weeks, PET resin export margins are expected to stabilise around current levels, or even rise slightly in the next few weeks.
- A recovery in export margins to April/May levels is unlikely and would not follow previous seasonal trends.
- PET resin supply is expected to grow through June, with the easing of restrictions and improved logistics.
- However, inventories are showing little sign of growing, with major Chinese exporters increasingly selling out September shipments.
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.
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Explainers That May Be of Interest…
