After a mostly flat September, the PET market has moved up, as higher upstream costs fuel the uptrend. Supply concerns have come to the fore, while rising freight rates due to shipping congestion coupled with positive demand have added to the bullish trend in Asia, Europe, and Turkey. Turkey as it enters October.
MEG surges along with the highest oil prices in years
Commodity markets have been hit hard by the energy crisis due to coal supply shortages in China as well as record-high natural gas prices in Europe. This turmoil has fueled successive rallies in the crude oil market. According to ChemOrbis Price Instrument, Brent European ICE oil futures have hit a three-year high, while NYMEX (WTI) oil futures have hit a seven-year high.
The rise of the energy complex has triggered a bullish trend in the global spot MEG market. According to ChemOrbis data, the North West European FD spot MEG price has increased by about $30/ton since last week. Prices under China CFR method increased slightly more than 100 USD/ton during this period. Besides, the spot price of PTA has increased by 60 USD/ton in a similar manner, reinforcing the source of cost support for downstream PET.
Higher costs and shrinking supply in Asia
The Asian PET markets reacted to the upstream price rally while the buoyant demand added to the situation. Quotations of PET bottles exported from China are estimated to increase by 40-50 USD/ton compared to the week before the Golden Week holiday, reaching 1050-1080 USD/ton FOB, cash. Korean quotes also increased by 50 USD/ton, to 1080-1100 USD/ton FOB Busan, cash.
A trader in China commented: “The implementation of the energy control policy has forced PET suppliers in Jiangsu, Zhejiang, Guangdong and Fujian provinces to reduce their operating capacity. Chinese demand is also underpinned by a drop in COVID-19 cases.”
One PET producer in Thailand pointed out that demand is strong regionally and globally. The manufacturer said: “We have dramatically increased our quotes this week. Demand has increased as many governments ease Covid-related restrictions in Southeast Asia.”
European market supported by maintenance
In Europe, October PET transactions are bullish to EUR 70-80/ton due to tight supply. Some manufacturers say they’ve sold out of their monthly allotment, while some even claim to be out of stock until the end of the year.
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Maintenance shutdowns, higher exports to the US and Latin America, as well as reduced imports due to challenging logistics operations have reduced supplies across the region. JBF-RAK and Equipolymers have planned to close factories from September to November.
Going forward, most forecast prices will continue to rise in November, mainly supported by concerns. concerns about supply and the increase in raw material prices. One market participant said: “The spot price could average 1350 EUR/ton FD next month.”
Turkey increases prices due to low domestic inventories, reduced imports
Short supply of PET bottles for quick delivery in Q4
The drop in supply in the import and domestic markets prompted a fresh rally in the Turkish PET market this week.
China PET bottle quote is estimated to increase by 60 USD/ton, to 1440-1460 USD/ton CIF Turkey, subject to 6.5% customs duty, cash. A domestic producer posted a triple-digit increase from the previous week, due to reports of high demand and shortfall in imports.
Many market participants seem confident that prices will continue to rise. One buyer noted: “We bought some ingredients for November and December, feeling that it would be more difficult to find them later. Manufacturers have reported out of stock and it will be difficult to find enough materials.”
Cotton supply shortage drives polyester demand
On the domestic market, the price of PET textile chips has increased by $100/ton compared to last week. The price of PET textile chips imported from Asia is estimated to increase by USD 50/ton, to USD 1330-1350/ton CIF Turkey, cash.
POY (Partially Oriented Yarn) quotes for China’s 300-500 D (denier) grade of raw material reached $1,780-1800/ton CIF, cash, up $110-130/ton from last week. Multiple sources confirmed: “Malaysian and Indian suppliers have closed orders until November or even December.”
According to market participants, the tightening of cotton supply and the upward momentum of crude oil are the main drivers for this uptrend. Demand for polyester recovered quickly, while one trader commented: “The energy crisis has had a profound effect on the market. Most of the rallies are driven by shortages.”
