Europe PET buyers relying on domestic supply but local PX, PTA offtake struggling as pandemic effects linger

LONDON (ICIS)–European buyers are relying heavily on domestic polyethylene terephthalate (PET) output as producers have regained market share from importers, yet upstream paraxylene (PX) and purified terephthalic acid (PTA) offtake is struggling.

“There are more and more PTA imports. I  hear there is not much spot PX demand on the market, so demand is not really there and prices are not there either,” a PX source said.

Recent historic price lows along the chain encouraged PET pre-buys and fixed price deals for deliveries in the second half of 2020 and beyond.

Cheap PET and cheap feedstocks mean both sides may benefit.

Business has picked up with the easing of lockdowns and warmer weather emerging, allowing sellers to target moderate increases for June, July, and perhaps August.

Buyers are keen to fix even at a small increase compared to May, believing that prices have indeed bottomed out.

This is propping up demand, but raising questions as to how fresh activity will fare going into the second part of the year.

“In a few weeks, we will see the brutal reality of the lack of PET demand,” a PET source said.

Fears of a second wave of coronavirus infections linger behind a short-term, relative optimism.

PET operating rates have stood at around 90%, and technical problems at Indorama’s UAB plant in Lithuania seems to make this site the exception. Indorama was contacted but would not comment.

Indorama has been able to perform commitments through 1H June with product flows from other sites, according to sources.

PTA: HIGHER IMPORTS 
Upstream PTA output has been reduced, however, with Indorama confirming its Sines, Portugal plant is not operating at the usual rates.

An increased number of PTA buyers turned away from contractual commitments in 2020, preferring instead to watch out for spot opportunities, many of which have come in the form of imports.

Between January and May, there were around 545,000 tonnes of PTA exported out of South Korea to Europe, with nearly 210,000 tonnes destined for Turkey.

This is up from around 485,000 tonnes during the same period in 2019, according to the ICIS supply and demand database.

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WAITING FOR HANBANG MEGAPLANT
Globally, PX has been under pressure due to a lack of demand, but the impending restart of Hanbang Petrochemical’s 2.2m tonne/year PTA unit is creating expectations of improved PX offtake in the influential Asian market.

European PX contract prices have a tendency to settle late in the month, and June negotiations are underway.

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 moulding 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.

Front page picture: Bottles made of PET chopped into pellets
Source: Universal History Archive/Shutterstock 

Focus article by Caroline Murray