AFPM ’19: US PET market stable despite firming feedstock

HOUSTON (ICIS)–The US polyethylene terephthalate (PET) market is expected to remain sluggish heading into this year’s International Petrochemical Conference (IPC) as sources cited seasonality as the main reason for the slowness.

Cold weather conditions and frequent heavy rains this winter appear to have dampened demand levels, keeping prices mostly stable throughout March following a 3-5 cents/lb hike in February.

Buying interest is likely to improve in the second quarter in anticipation of re-stocking activity in preparation for higher end user demand in the bottling sector.

The trade war between the US and China continues to weigh on international trading, particularly affecting the Chinese economy, which appeared to have weakened significantly, with a 21% drop in exports compared with the previous year.

Prolonged tariffs talks between the two countries have also affected freight costs, which fell about $40/tonne for Asian PET cargoes entering Latin American countries.

Savings in shipping costs were passed on to the resin buyers in countries such as Colombia, where imported PET prices declined roughly $100/tonne from February numbers.

As a result, Asian imports were preferred over US PET resin imports.

Upstream, some sources contend that feedstock paraxylene (PX) prices are likely to firm, as the uptrend has begun in Asia.

As a result of the current market scenario, mixed price ideas for April US virgin resin have emerged, with some participants citing talks of a potential 1 cent/lb increase.

Regarding import resin prices, offers were heard inching up, with increases assessed at least 1 cent/lb.

The potential uptrend may affect the recycling sector as recycled PET (R-PET) values traditionally follow the price direction prevailing in the virgin sector.

A clearer scenario regarding tariffs is expected to surface in late March or early April, which would likely affect PET resin numbers.

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

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Luly Stephens