OUTLOOK ’19: US PET oversupply extends into 2019

HOUSTON (ICIS)–The US polyethylene terephthalate (PET) market will continue slow, with ample supply and low buying interest in the first quarter of 2019.

PET prices have been under significant downward pressure in the fourth quarter of 2018 from excess supply and weakened demand, as well as declining feedstock prices and competitively priced imports.

Additionally, year-end festivities and cold weather are key elements that have traditionally dampened business activity for bottled beverages and PET in December and the first quarter of the following year. Demand in the first quarter of 2019 is expected to remain seasonally dull.

With the overflow of Asia and Eastern Europe virgin resin, the PET market has been experiencing excess supply. Prices held steady in most of the fourth quarter. However,  weaker precursors prices, particularly paraxylene (PX) with an 8.5-ct/lb drop from October to November exerted additional pressure, triggering lower price ideas among buyers and culminating in resin price erosion.

Looking ahead into the first quarter of 2019, supply will likely continue long and demand may not increase until later in the quarter. Prices in early 2019 will remain flat-to-soft on the seasonal downturn, despite recent Asia’s desire for a push in prices. Current Asian price volatility in PET and its feedstocks will keep buyers alert for any potential price strengthening next year that might affect US pricing.

Producers may consider Chevron Phillips Chemical’s announcement of its PX unit closure at its Pascagoula, Mississippi refinery at the end of December as a key issue that may justify fluctuations in PET values. The announcement pushed spot PX numbers up in early December. The plant has a capacity of 495,000 tonnes/year, which represents about 10% of US capacity, and is Chevron Phillips’s sole PX unit.

US PET producers DAK Americas, Indorama Ventures and Nan Ya Plastics Corporation’s appeal to the recent findings in favour of imports from Brazil, Indonesia, Korea, Pakistan and Taiwan may be a factor to be considered regarding resin pricing in 2019.

If a negative final determination is reached again, US resin prices are likely to continue on the soft side. If a positive final determination is reached, US suppliers will not have to compete so aggressively against offshore offers, giving room to potential price strengthening.

DAK Americas, Indorama, Nan Ya Plastics Corporation and Far Eastern New Century (FENC) are PET producers in the US.

On the recycling front, the National Association for PET Container Resources (NAPCOR) and the Association of Plastic Recyclers (APR) continue to place emphasis on the importance of increased R-PET demand by end users and the commitment of consumer brands to reach circular economy sustainability.

Both associations work to address the industry’s ongoing challenges to improve the quality of PET from the waste stream, reduce non-PET contamination in recycling streams, and build awareness on the importance of recycling.

Prices for food-grade R-PET pellets remained flat in the fourth quarter of 2018, and are likely to remain unchanged in early 2019. Prices for PET bottle bales lost a few cents in the fourth quarter of 2018 and are expected to stay flat in early 2019.

US polyethylene terephthalate recyclers include CarbonLITE Industries, Global PET Inc, Peninsula Plastics Recycling, Florida Recycling, Perpetual Recycling Solutions, Signode Plastic Recycling Alliance, PQ Recycling, Evergreen Plastics and Reterra.

Focus article by Luly Stephens

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