Polyethylene terephthalate (PET)

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Discover the factors influencing polyethylene terephthalate (PET) markets

Utilised universally for synthetic fibers, films, packaging and bottle production, polyethylene terephthalate (PET) is the most common thermoplastic polymer resin of the polyester family. As it is the world’s recyclable packaging choice for many foods and beverages, it is crucial for market participants to stay in touch with each driver and every movement in the PET marketplace.

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Polyethylene terephthalate (PET) news

LOGISTICS: Container rates rise on peak season surcharges, but rate of growth slowing

HOUSTON (ICIS)–Rates for shipping containers continue to surge as carriers are implementing peak season surcharges while capacity remains tight from Red Sea diversions, but some shipping analysts think there are signs that the dramatic rate of growth may be slowing, which leads off this week’s logistics roundup. CONTAINERS Shipping container rates continued to rise this week, but the rate of increase slowed, according to data from supply chain advisors Drewry and as shown in the following chart. Ocean freight rates analytics firm Xeneta said its data indicates spot rates on major trades out of Asia will increase again on 15 June, but to a less dramatic extent than witnessed in May and early June. Average spot rates from Asia to US West Coast are set to increase by 4.8% on 15 June to stand at $6,178/FEU (40-foot equivalent unit). However, on 1 June, rates on this trade increased by 20%. From Asia into the US East Coast, rates are set to increase by 3.9% on 15 June to stand at $7,114/FEU. Again, this is a far less dramatic jump than when rates increased by 15% on 1 June. Rates from north China to the US Gulf are at the highest this year but leveled off this week, as shown in the following chart. “Any sign of a slowing in the growth of spot rates will be welcomed by shippers, but this is an extremely challenging situation, and it is likely to remain so,” Xeneta chief analyst Peter Sand said. “The market is still rising, and some shippers are still facing the prospect of not being able to ship containers on existing long-term contracts and having their cargo rolled.” Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. They also transport liquid chemicals in isotanks. LIQUID TANKER RATESUS chemical tanker freight rates assessed by ICIS were mostly unchanged. However, rates were lower from the US Gulf (USG) to India and unchanged from the USG to the Caribbean. From the USG to Asia, the market has gone overall quiet after a few busy weeks in the month of May. The spot market faces headwinds as activity has been slow, causing spot space to pile up for July, placing downward pressure on spot rates. Recent force majeures in the USG have caused some COA vessels to look for additional cargoes, adding pressure to rates. Market participants are optimistic that freight rates for larger parcels will stabilize in the near term. US PORT OPERATIONS Operations at US ports are stable even as import volumes are at the highest since 2022, and railroad performance has improved over the past month, according to analysts at freight forwarder Flexport. Nathan Strang, director of ocean freight, US Southwest for Flexport, said that apart from the Port of Charleston, South Carolina, volumes are moving really well through the East Coast ports with rail dwell averaging about two days. Charleston is undergoing an infrastructure project on its Wando Welch Terminal to expand the docks. Dock construction at Wando Welch terminal started on 11 March, reducing berth space from three to two berths for one year, with berths given on first come, first serve basis. Strang said some vessels are discharging at the Port of Savannah, Georgia, and then moving material to Wando Welch via trucks, or using other terminals within the Port of Charleston as space becomes available. Overall port omissions from all carriers are starting to reduce the extent of the delays, with six to nine days delay expected in week 24, according to a port update from Hapag-Lloyd. RAILROADS Strang said Flexport customers are seeing lower dwell times for rail cars at ports over the past month. “I have been talking about how rail performance to and through the West Coast has been suffering a little bit,” Strang said, describing his point of view in past webinars. “I will say that we have seen real improvement.” Strang said West Coast port operations have remained stable, with local pick-up dwell at six days for Los Angeles/Long Beach, at five days in Seattle/Tacoma (SeaTac) and at four days in Oakland. For the first 23 weeks of 2024, ended 8 June, North American chemical railcar loadings rose 3.8% to 1,082,614 – with the US up 3.9% to 745,780. In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest. PORT OF BALTIMORE OPENS The Fort McHenry Federal Channel – the entrance to the Port of Baltimore – is fully reopened just 11 weeks after a container ship lost power and struck the Francis Scott Key Bridge, causing its collapse and essentially shutting the port. The Unified Command (UC) said salvage crews successfully removed the final large steel truss segment blocking the 700-foot-wide Fort McHenry Federal Channel on 3-4 June. Deep-draft commercial vessels have been able to transit the port since 20 May when the UC cleared the channel to a width of 400ft and depth of 50ft. Following the removal of wreckage at the 50-foot mud-line, the UC performed a survey of the channel on 10 June, certifying the riverbed as safe for transit. The closing of the port did not have a significant impact on the chemicals industry as chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC). PANAMA CANAL The Panama Canal Authority (PCA) is offering an additional booking slot for the Neopanamax locks as of 11 June, increasing the total number of daily canal transits to 33, and is also raising the maximum authorized draft based on the current and projected level of Gatun Lake. The PCA will open an additional slot on 8 July, which will bring the total number of daily transits to 34. Because of the improved water levels now that the rainy season has arrived, the PCA is also increasing the maximum authorized draft for vessels to 14.02 meters (46.0 feet). This is the second increase in draft restrictions over the past few weeks. Wait times for non-booked southbound vessels ready for transit have been relatively steady at less than two days, according to the PCA vessel tracker. The tracker is only for non-booked vessels in the queue and shippers should consider two additional days as a minimum to estimate transit times for unscheduled vessels, the PCA said. Focus article by Adam Yanelli Additional reporting by Kevin Callahan

14-Jun-2024

VIDEO: Europe R-PET looks for more market clarity at PRSE

LONDON (ICIS)–Matt Tudball, senior editor for Recycling, takes a look at the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: ICIS at Plastics Recycling Show Europe (PRSE) – email recycling@icis.com for a meeting Mixed views on food-grade pellet demand Better 2024 outlook to emerge at PRSE Prices stable ahead of event

14-Jun-2024

BLOG: China could still become entirely petrochemicals self-sufficient despite EVs impact on refineries

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: China has set itself a target that 40% of all the vehicles on its roads will be electric by 2030. And by that year, the aim is that all new-vehicle sales will be electric vehicles (EVs). The country wants to reach peak carbon emissions before 2030 and carbon neutrality before 2060. “After 2030, it is going to be pretty much impossible to get approval for a heavy industry project because of the emissions targets,” said a petrochemicals industry source. This has led to suggestions that the resulting lower availability of feedstocks from local refineries will slow China’s push towards complete petrochemicals self-sufficiency. I disagree for the following reasons. Despite a cap on local refinery capacity, I’ve been told that local supply of naphtha, etc shouldn’t be a problem until up to a least 2030, because refineries will be increasingly turned in petrochemicals feedstock centers. More naphtha and gasoil crackers are expected to be added to refineries ahead of the 2030 cut-off point. Other heavier fractions from refineries are also forecast to be increasingly used as petrochemicals feedstocks. And even if local feedstock supply does become constrained after 2030, we shouldn’t assume that this will restrict domestic production because of the weaker-tonne economics of importing raw materials. China’s closer geopolitical relationships with the Middle East, along with increased availability of natural-gas liquids in the Middle East, suggest that imports of feedstocks will be available at the right costs. My view is that China’s economic challenges will result in annual average petrochemicals consumption growth of 1-3% per year up until 2030. Beyond 2030 I see growth falling to around 1%. Weaker demand growth will of course make it easier to increase petrochemicals self-sufficiency. Because recycling is mainly a “local for local” business due to the restrictions on moving plastic waste across borders growth of recycling in China will, in my view again, increase the country’s self-sufficiency in polymers. Recycling is exactly the type of higher-value industry China needs to nurture as it attempts to escape a middle-income trap made very deep by its demographic challenges. Security of local supplies of raw materials in an ever-more uncertain geopolitical world will add further momentum to the growth of recycling in China. Local virgin polymer and petrochemical plants will run at high operating rates, supported by maximising supply of feedstocks from local refineries and by competitive imports of feedstocks from China’s geopolitical partners. This will further boost supply security. Don’t be therefore distracted by suggestions that the growth of EVs in China and the country’s emissions targets will be good news for petrochemical exporters to China. China will become a vast continent-sized market that will be just about entirely self-sufficient. As I shall explore in a later post, this will apply to specialty as well as commodity grades of petrochemicals. Overseas producers most focus on markets elsewhere. As the chart below shows using high-density polyethylene (HDPE) as an example, the opportunities in other countries and regions are big. China lifted all petrochemicals boats during the 1992-2021 Supercycle, making even the least-competitive companies successful. This is no longer the case. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

14-Jun-2024

Mexico’s petchems supply flowing despite Altamira disruption, but industry crisis could continue

SAO PAULO (ICIS)–The drought affecting the Altamira petrochemicals hub in Mexico’s state of Tamaulipas is not yet affecting the supply of chemicals, but the water restrictions for industrial players could continue, sources said this week. The modest rainfall in the past few days has not resulted in any great improvement in water supplies, with households still suffering water restrictions. Supplies to industrial players will only resume when supply for households is normalized. Earlier this week, Mexico’s chemicals producer Alpek declared force majeure on supply of purified terephthalic acid (PTA) out of Altamira. The producer has the capacity to produce 1 million tonnes/year in two plants at the petrochemicals hub. Sources in the US PTA and polyethylene terephthalate (PET) markets have said they fear disruptions to supply if the crisis in Altamira continues. In May, the critical situation affecting water supply to residents in the area prompted authorities to halve water supply to industrial players, with many of them declaring force majeures thereafter. This week, a well-connected source in the Mexican petrochemicals industry limited the current crisis, for now, to production issues, with supplies of all materials still flowing. “What we are hearing in the market is not about shortages – for now, it is limited to a production problem,” the source said. “A lot of US product also comes to Mexico, so for now there is no supply problem as such. However, everything will depend on how long it takes for this to be resolved so industry can return to normal production.” Weather patterns developing normally, Mexico’s east coast should be entering the rainy and hurricane season soon, which could start to ease Altamira’s drought. However, with residents in the area still suffering water restrictions in their homes, normalization in water supplies to industrial players should still take some time. The light rain in the past few days, however, may already be starting to show positive effects. Last week, local media in Altamira reported how the Champayan lagoon, west of the city and a natural spot very much loved by the locals, had dried up overnight. On 11 June, residents woke up to a lagoon with water again. ELECTIONS STOLE FOCUS FROM DROUGHTMexico concluded on 2 June an electoral process which kept political parties’ focus away from the drought developing in Tamaulipas, said the source in Mexican petrochemicals. “Altamira is located in an area which doesn’t lack water. The drought became a perfect storm on the back of the authorities’ poor response. In an election year, instead of investing resources to reverse the drought situation months ago, those resources went to the electoral campaigns,” it said. “Having so much water in the area, they could have installed pumps in certain rivers to transfer water to other rivers, which could have solved the situation preventively. They are pumping water now, but now turned out to be too late for industrial players. In addition to the drought, the campaign had the greatest impact in the current crisis.” Last week, the government of Tamaulipas ordered that tanker trucks be sent to the south of the state from other municipalities not affected as harshly by the drought, as well as from other Mexican states. The trucks will not sort out the dire situation at industrial parks, however, because the water is being deployed to households only. The latest report by the public body in Mexico monitoring the drought, published on 5 June and covering up to 31 May, continued showing the state of Tamaulipas in the Gulf Coast as one of the hot spots suffering the current crisis. MEXICO DROUGHT MONITORTamaulipas (east) suffers ‘exceptional drought’ amid a nationwide crisis Color scale: Yellow, abnormally dry; light orange, moderate drought; orange, severe drought; red, extreme drought; brown, exceptional drought Source: Mexico’s National Water Commission, part of the National Meteorological Service. See more here, in Spanish Front page picture: The Port of Altamira, Mexico’s state of Tamaulipas Source: Altamira Municipality Focus article by Jonathan Lopez

13-Jun-2024

PODCAST: US and European R-PET markets attracting more imports in 2024

LONDON (ICIS)–Senior editors for Recycling, Emily Friedman and Matt Tudball take a look at how both the US and European R-PET markets are seeing more activity around imported material, and what that means for local recyclers in the US and the EU, including: The growing numbers of imports into the US Price competitiveness of imports vs. local material Balancing recycled content with cost-saving objectives How imports stack up against legislation in Europe

12-Jun-2024

PODCAST: Europe BDO, PBT continue to see subdued demand amid supply constraints

LONDON (ICIS)–While the butanediol (BDO) and polybutylene terephthalate (PBT) markets in Europe have benefited from challenges in importing volumes from Asia, demand remains subdued for sectors. Limited imports from Asia through H1 2024 aided European demand Economic attractiveness of imports remains, but logistical constraints hamper appetite Demand holding steady through Q2, but macroeconomic concerns persist In this podcast, ICIS Europe engineering plastics editor Meeta Ramnani and ICIS Europe BDO editor Yashas Mudumbai discuss the current dynamics and the outlook ahead.

11-Jun-2024

Closures of high-cost assets to accelerate in Europe, northeast Asia – ICIS

SANTIAGO (ICIS)–Announcements of closures for high-cost assets, especially in Europe and northeast Asia, are likely to accelerate in coming quarters as the global petrochemicals industry is forced to rationalize, according to an ICIS analyst on Tuesday. Antulio Borneo, vice president for the polyethylene terephthalate (PET) and polyester chain at ICIS, said announcements of closures for steam crackers – the key facility to produce petrochemicals – in Europe are to accelerate after two key players already said they were shutting theirs. Earlier in 2024, US energy major ExxonMobil said it was to shut its cracker in Gravenchon, France, and Saudi petrochemicals major SABIC said it would shut its facility in Geleen, the Netherlands. “High-cost assets reside mainly in Europe and northeast Asia; the pressure to rationalize old and inefficient assets will intensify as time passes, but it will be expensive,” said Borneo. “Announcements of permanent closures of chemicals plants are expected to gain momentum throughout 2024.” Borneo was speaking at an event about logistics organized by the Latin American Petrochemical and Chemical Association (APLA). The consultant went on to say that Europe’s crackers are, on average, nearly 45 years old, while those in northeast Asia – excluding China – are on average just over 30 years old. With the global oversupply in petrochemicals expected to take years to be absorbed and take the market back into balance, those old assets are first on the line to be shut, concluded Borneo. The APLA Logistica event runs in Santiago on 11-12 June.

11-Jun-2024

India’s GAIL to build $7.2bn Madhya Pradesh petrochemical complex

MUMBAI (ICIS)–State-owned GAIL (India) Ltd plans to invest Indian rupee (Rs) 600 billion ($7.2 billion) to build an ethane cracker and its derivative plants in Madhya Pradesh. The cracker will have a 1.5 million tonne/year capacity and will be set up at Ashta in the Sehore district of the state in central India, GAIL said in a regulatory disclosure to the Bombay Stock Exchange (BSE) on 10 June. GAIL did not provide product or capacity details of the ethylene derivatives it plans to produce at the complex. “Around 800 hectares of land shall be provided by the MP [Madhya Pradesh] Industrial Development Corporation, for which the state government has already initiated the process,” GAIL said. Project construction is expected to begin by February 2025, with commercial production likely in the financial year ending March 2031, it added. Investment on the project is still pending approval from GAIL management board, and the mode of financing yet to be decided. The Madhya Pradesh state government has approved the project and land will be allotted soon, state chief minister Mohan Yadav had said in a statement on 7 June. He said that “petrochemicals like linear low density polyethylene (LLDPE), high density polyethylene (HDPE), mono ethylene glycol (MEG) and propylene will be produced” at the site. The new project is part of GAIL’s initiative to enhance its petrochemical portfolio, a company source said. “The demand for petrochemicals is increasing in the country, led by expanding industrial, construction and manufacturing,” he said, citing an 8-9% annual growth rate in India’s polymer demand. In March 2024, GAIL had signed a tripartite agreement with Oil and Natural Gas Corp (ONGC) and Shell Energy India to explore opportunities for the import of ethane and other hydrocarbons at Shell Energy Terminal in Hazira in the western Gujarat state. Separately, the company recently announced plans to set up liquid pipeline for ethylene (C2), propylene (C3) from Vijaipur to Aurai in the northern Uttar Pradesh state. At Pata in the same state, GAIL will begin operations at the 60,000 tonne/year PP plant by December 2024. At Usar in the western Maharashtra state, GAIL expects to begin operations at its 500,000 tonne/year propane dehydrogenation unit (PDH) and 500,000 tonnes/year polypropylene (PP) line by April 2025; and its 50,000 tonne/year isopropylene project by December 2025. In the southern Karnataka state, the company expects to bring on line its 1.25m tonne/year purified terephthalic acid (PTA) plant in Mangalore by March 2025. GAIL had acquired JBF Petrochemicals in June 2023 which allowed it to add PTA to its existing petrochemical portfolio. ($1 = Rs83.49) Focus article by Priya Jestin

11-Jun-2024

Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 7 June. Global urea prices firm as unexpected gas outages hit Egypt The near-term outlook for urea has firmed after prices saw a surprise uptick in North Africa and the Arab Gulf on news of unscheduled plant shutdowns in Egypt due to a lack of gas supply. Europe PET market tension intensifies on freight surcharges, container shortage Rising freight costs and a dearth of containers is thwarting the global flow of polyethylene terephthalate (PET) into Europe. Eurozone private sector momentum hits one-year high in May Business momentum in the eurozone hit the highest level in 12 months in May, pushing further into growth territory as service sector orders surged and the manufacturing industry showed signs of recovery. Heavy rainfall, flooding in Germany hits supply routes Torrential rain and flooding in Germany has led to evacuations in parts of the south of the country, hitting already-strained supply lines through central Europe and halting transport along some sections of the River Rhine. IPEX: Index down for first time this year on weak demand in all regions The ICIS Petrochemical Index (IPEX) was down 1.2% in May month on month, as weak downstream demand paved the way for price declines in all regions. Europe PE/PP June outlook muddied by falling feedstock costs and rising freight rates Polypropylene (PP) and polyethylene (PE) prices in Europe were largely stable for the final week of May, as players were waiting for upstream contract prices to settle.

10-Jun-2024

BLOG: China’s economic challenges continue to be made clear by PP spreads

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. China remains in my view trapped between an economic rock of being unable to significantly boost domestic consumption and the hard place of a more difficult export climate. Until or unless China fixes weak healthcare and pension systems – and maybe also does something to give rural migrants to urban areas better job opportunities and wages by changing the Hukou residency system – the growth in domestic spending is unlikely to be at the levels we saw during the 1992-2021 Petrochemicals Supercycle. And we must factor in the loss of growth momentum resulting from the end of a real-estate bubble. Real estate is worth some 29% of China’s GDP. “If China is to maintain growth rates of 4-5% per year, it can only do so if the rest of the world agrees to reduce its own investment and manufacturing levels to less than half the Chinese level,” wrote Michael Pettis in a December 2023 article for the Carnegie Endowment for International Peace. The rest of the world is hardy likely to accommodate China given the big reshoring push resulting from the Inflation Reduction Act and the EU Green Deal. Investigations into allegedly unfair China trading practices have also increased along with antidumping measures. At the risk of being boring (I’ve probably gone well beyond just a risk), consider the latest version of my PP spreads (it is the same pattern in polyethylene), which is the main chart in today’s post. Despite recent stimulus announcements, average CFR PP price spreads over CFR Japan naphtha costs remain at a record low in 2024 since we began our price assessments in 2003. The table at the bottom of the chart shows PP spreads during the 1992-2021 Petrochemicals Supercycle compared with spreads from January 2022 up until 7 June this year. Until average spreads recover by 149% from where they were up until 7 June, there will have been no return to the great markets we saw during the Supercycle. Meanwhile, too capacity will continue to chase too little demand. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

10-Jun-2024

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