Piovan Summiteer May 2024
PETnology Europe 2024_summiteer


ICIS - Supply chain adversity sparks panic in Europe PET/PTA markets

1:58 min Facts & FiguresEurope
London, United Kingdom

Actual and anticipated shipping delays caused by tensions in the Middle East are exerting pressure on the polyethylene terephthalate (PET) value chain.

“On one side it’s a gift from heaven for the European PET producers, but on the other side it may be a curse,” a source said.

Indeed, sellers are already individually seeking higher PET prices for January.

“I’m getting frightening information: most import offers are on hold. European [suppliers] plan on increasing the price dramatically, because of the Suez Canal situation and delays,” a buyer said.

Of course nobody knows how intense the problem really is and how long it will last.

The timing of a fresh shipping crisis is terrible, what with market participants ready to step away from their offices for the holidays.

“We are not offering and will open the shop again next year when we know about availability and costs,” a producer said.

Raw material purified terephthalic acid (PTA) deliveries may also be affected.

“For sure companies that buy imported PTA will be impacted. In Europe there are approximately 0.9m tonnes/year of PTA coming from Asia, and none of the European PTA producers can react overnight,” a second PET producer said.

Some vessels have already been rerouted and will provoke delays of 20-30 days.

Shipping companies are incurring additional costs as they divert cargoes, and prices have been modified up to reflect this.

Prices of $2,400 per 20ft container from Vietnam to Europe were heard, up from three-figure prices less than two months ago.

A trader said on Thursday that the price had since shot up to $4,000 per 20ft container for January shipment.

Another warned that the market is “crazy” enough that even higher rates could emerge on Thursday.

Recent history showed freight rates from Vietnam close to $6,000 per 20ft container in the summer of 2022, but a steep fall followed, according to freight analyst Xeneta.

A source said it had seen up to $4,000 per 20 foot container quoted for containers from China.

Some believe shipping lines are taking advantage of the situation, after a lacklustre period for demand.

The probability of the freight impact kicking in on January markets is high.

“We’ve seen the reaction, we have lots of new enquiries…We’ve closed on huge volumes,” a PET seller said.

This all comes on the back of a market desperate to see improved demand – one where the hot topic has been rationalisation in the European industry.

So, whether or not the consternation sticks, it brings welcome respite to a market that was practically on its knees.

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.

Author: Caroline Murray, Senior Editor for PET in Europe

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