European PET market set for major price correction
June 4, 2021//Gareth Lamb
plastic bottles for soft drinks

Fresh from our interactive data portal, Czapp, we have our latest analysis of the PET market here on the Czarnikow blog. You can also access live information about the PET market via our interactive data feature, which you can see previewed below. New to PET? It is the most commonly used, and most recyclable plastic globally. You can find out more about it PET packaging here.

Key points to consider in this report

  • European PET prices could face a major downward correction.
  • Increased PET imports are on the way.
  • Ineos and JBF production facilities have lifted force majeure and will be making PET at full capacity in June.

EU production constrained by raw material supply

  • Within Europe, PTA production and imports have both been constrained, limiting PET production at European sites.
  • Two major PTA suppliers have been on force majeure and running at reduced rates since March.
  • Meanwhile, PTA imports remain hampered by the ongoing container shortage.
  • PET operating rates are running at between 60 and 70%.
  • Going into May, several PET producers further reduced output, challenged by limited PTA availability in the aftermath of the Suez blockage.
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  • With EU PET production hamstrung, domestic prices have sky-rocketed over the last few months.
  • Reduced supply is supporting record premiums over import parity, despite weak demand for PET-packaged beverages, such as bottled water and soft drinks.
  • In May, EU prices held a premium of around 245-260 EUR/mt over Asian imports on a delivered-duty-paid basis, and raw material spreads averaged over 515 EUR/mt, the highest seen in over a decade.
  • Buyers now hope domestic PTA and PET production normalises over the coming months, increasing supply and calming the exorbitant prices.
  • Industry players even talk of a price war, with resumed production and greater imports precipitating a major correction in European PET prices.
  • Inflated premiums of around 250 EUR/mt could be wiped off domestic prices, pulling the market closer to import parity.
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  • Asian exports from major supply origins, such as China, to the EU27+UK were subdued in the first 3 months of 2021 before increasing in April.
  • Relief coming from imports though should be relatively modest over the next couple of months, with volumes steadily fed in the market initially, rather than a dramatic wave of imports, such as those faced in H1’19.
  • In addition, any shipments made in April and May still face challenges in being delivered in time for the peak summer season.
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  • Pre-COVID, the average container cycle time for Asia to Europe was approximately 65 days.
  • This is now over 100 days due to a combination of increased demand, supply chain disruptions, and port congestion.
  • Overland transport within Europe is also facing difficulties due to a lack of drivers and increased road haulage volumes.

PET market outlook

  • With additional imports set to play a more pronounced role later this season, all eyes are on INEOS to increase PTA production.
  • INEOS and JBF have reportedly both lifted force majeure and should be back at full capacity by June.
  • The restart at INEOS should catalyse a recovery in PET production across Europe, lifting operating rates and boosting supply.
  • European PET prices for June have already started to soften in anticipation, representing a turning point for the market.
  • July price targets from some buyers are already set at the sub-1200 EUR/mt level, representing a decline of over 100 EUR/mt from current levels.

Looking for more information on the PET market?

Czapp’s interactive data feature now includes a live, interactive report on the PET market. You can access it here.

Czapp’s PET interactive data dashboard
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