HOUSTON (ICIS)--The spread of the coronavirus (Covid-19) in the US is a large source of uncertainty severely impacting markets, including the polyethylene terephthalate (PET) segment.
Current demand levels of resin have been declining due to concerns of the already-slow economic growth that began with the US-China tariffs war and worsened due to the pandemic and oil price plunge after Saudi Arabia's announcement to increase production by 2.5m barrels and potentially more, despite declining demand.
Because of the oil industry's major role in the US economy, crude prices are expected to slow down growth.
Although markets rebounded 4% early on Tuesday, 10 March, on expectations that the Trump administration economic plan could help the economy, markets fell again in view of no clear details of a thought-through plan with clear measures to help individuals and the economy in the short term.
The US is cancelling public events, and many schools and businesses are continuing operations remotely from home.
The State Department has decided to hold the Group of Seven (G7) Foreign Ministers meeting previously scheduled in Pittsburgh on 24-25 March virtually by video teleconference.
In the midst of all this, the peak of the outbreak seems to have passed in China and South Korea.
Chinese sellers are now offering PET pellets to South American buyers at competitive prices of $925/tonne CFR Main Port Pacific Coast, roughly $15/tonne lower than their late January offers. However, buyers have been hesitant to buy Chinese product fearing that shipping disruptions could still impact deliveries and preferred to purchase product from Indian suppliers or other Latin American sellers from Mexico or Brazil.
Prices for virgin resin remain flat amid scant buying interest.
Clear PET flakes imported from Latin America were heard at 37-39 ct/lb on the US west coast. Prices for bales remain flat.
PET resins can be broadly classified into bottle, fibre or film grade, named according to the downstream applications. Bottle grade resin is the most commonly traded form of PET resin and it is used in bottle and container packaging through blow molding and thermoforming. Fibre grade resin goes into making polyester fibre, while film grade resin is used in electrical and flexible packaging applications.
PET can be compounded with glass fibre for the production of engineering plastics.
DAK Americas, Indorama, Nan Ya Plastics Corporation and Far Eastern New Century (FENC) are PET producers in the US.