INTERACTIVE: NPE ’18: US PET pressured amid tight supply, peak demand

HOUSTON (ICIS)–Upward price pressure has emerged in May in the US polyethylene terephthalate (PET) market amid snug supply and the start of the peak-consumption season.

Buyers are digesting a round of price-increase initiatives, heading into this year’s National Plastics Exposition (NPE).

Producers have announced separate 3 cent/lb ($66/tonne) increases in late April, citing rising feedstock and freight costs.

Tight resin supply continues as the market’s primary price driver heading into this year’s NPE — a situation sparked in autumn 2017 by the bankruptcy and asset sale of former major US PET producer Mossi & Ghisolfi (M&G) and by the US’s antidumping probe into resin imports from Brazil, Taiwan, Indonesia, Pakistan and South Korea (see timeline below).

Preparation for peak season began earlier than usual this year, as buyers who have historically been accustomed to an amply supplied market acted on resin-shortage concerns.

Sources were advised that the second quarter could be particularly tight and to stock up so as to keep plants running.

Buyers without strong domestic contracts in place face a tough situation, as imports are said to be selling at a premium to domestic resin in some cases. Anyone short on supply as May begins may find it too late to take those proactive measures.

Domestic resin producers are sold out, and imports have slowed since the launch of the US antidumping investigation, creating a snug environment just as the warm-weather peak season kicks into gear.

International Trade Commission (ITC) data showed January PET imports down by 5.9% month on month and February imports down by 24%.

“My crystal ball says in the next 90 days, it’s going to get very tight, if not shortages,” one source said. “Supply is the name of the game.”

A buyer source said the market certain feels snug, especially ahead of the start-up of the ex-M&G plant in Apple Grove, West Virginia. New owner Far Eastern New Century (FENC), a Taiwanese PET producer new to the US market, will likely begin operations after the second quarter. However, the 360,000 tonne/year plant will absorb only some of the demand.

Moreover, logistics issues with rail and trucking continue to plague the market with shipment delays and higher costs. The source said there’s “no end in sight” on logistics troubles, and rail has not yet shouldered some of the backlog caused by trucking.

While supply is the main concern, raw material costs may be pressured upward in May as crude values firm and demand picks up as the weather gets warmer.

Looking ahead, market participants expect firm conditions to persist throughout 2018 and into 2019. It is widely expected that the US will impose duties on resin imports, keeping shipments to the country reduced.

Meanwhile, CC Polymers, the joint venture that purchased M&G’s giant but unfinished integrated PET/purified terephthalic acid (PTA) plant has not yet released a timeline for start-up. The market generally expects production to begin in late 2019, which should keep supply snug through 2019 as well.

Major producers of US PET are Indorama, DAK and Nan Ya.

Sponsored by the Plastics Industry Association (PLASTICS), NPE2018: The Plastics Show takes place on 7-11 May in Orlando, Florida.

Focus article by Amanda Hay