Europe PET, PTA supply strained on BP's Geel power outage amid mixed demand

Author: Caroline Murray

2020/11/13

LONDON (ICIS)--The power failure at Geel, Belgium, on 6 November briefly brought BP Chemicals’ purified terephthalic acid (PTA) and JBF’s polyethylene terephthalate (PET) plants to a standstill, causing a strain on supplies despite mixed demand.

Although the issue was resolved quickly, an unexpected outage at a 1.37m tonne/year PTA plant such as the BP Chemicals' one has repercussions that the market has felt through the week.

“Both lines are running for JBF and will be ramped up gradually to full capacity in the next week,” a source at JBF said.

BP Chemicals had not responded to a request for comment at the time of writing.

DEMAND: MIXED VIEWS
Demand for PET has been described as "very subdued" by some sources.

"Contract customers are not taking high levels but also they are not taking low levels, they are taking average levels [for the time of year]. There is no urgency to sell off," a producer said.

However, the shutdown season began earlier than expected, and is likely to end later than planned due to coronavirus restrictions.

A hiccup at a plant has the potential to dry out excess supplies, just as recent exports to the US did.

''There is not a lot of stock and then there is the hiccup at BP which will be ok as of next week, but customers are more nervous because they realised that if something happens [with production, prices] could actually go up,” a trader said.

Also, with PET prices at historical lows, any optimism in demand caused by news of a vaccine, for example, takes the pressure off suppliers.

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Imports are coming into Europe, but fresh business is hard to conclude with soaring freight costs and offer prices moving up in Asia.

“The market is generally moving up. For the first time in many, many months, I heard producers speaking in a form that says…they are not under pressure,” a second trader said.

As for PTA, the length in the market has also constricted due to the BP Chemicals’ outage clashing with scheduled shutdowns.

“Material is super tight, and there will be customers that will need to adjust operating rates due to a lack of PTA,” a source said.

Supply of PET and PTA is improving as plants ramp up, so whether or not sellers’ full order books continue beyond November remains to be seen.

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: BP's Geel site
Source: BP