Escalating Sea Freight Causes Polyethylene Terephthalate (PET) Import Prices to Boom in the USA

The import price for Polyethylene Terephthalate (PET) in the United States has been undergoing substantial price hikes, with market participants attributing the surge to disruptions in global ocean freight. The current price for PET Resin Bottle Grade rose by 1.6%, with prices hovering at USD 1235/MT DDP Los Angeles, as per the ChemAnalyst database.

During this week, the prices of PET have surged sharply due to disruptions and delays caused by events such as rebel attacks on vessels in the Red Sea. These incidents, coupled with disturbances in traffic through the Suez Canal, have prompted companies to alter their shipping routes, opting to circumvent the Suez Canal and Red Sea by diverting cargoes around the Cape of Good Hope. Unfortunately, this alternative route has resulted in considerable delays and a reduction in the availability of shipping containers.

At the same time, the European market for PET and Purified Terephthalic Acid (PTA) has been also grappling with shortages due to diverted shipments and multiple outages. Simultaneously, the Asian polyester market is feeling the negative effects of the Suez Canal and Red Sea diversions, with rising freight rates hindering buying activities. However, in Europe the price for PET was quoted steady. This was due to the muted purchasing activity from downstream packaging industries.

Adding to the complexity, the Panama Canal is also facing issues due to low water levels resulting from a local drought. The Panama Canal Authority (PCA) has been limiting vessel passages since early November. However, the PCA said on January 16 that more vessels would be permitted to transit the waterway every day due to recent improvements in rainfall and lake levels.

On the other side, the United States, which depends significantly on PET imports, has been especially exposed to these logistical problems. Due to this, the domestic PET price and supply may have been impacted by the delays and disruptions in PET imports. Meanwhile, the low seasonality and economic headwinds have led to little demand for PET in the US, although the market is still balanced. But things could get worse if these freight interruptions continue through the busiest summer months or if problems with natural catastrophes or other issues affect domestic manufacturing.

Therefore, ChemAnalyst predicts that the disruptions in the supply chain will drive an increase in the price of PET Resin in the US market. The low availability of material is expected to exert upward pressure on PET bottle prices, further contributing to the overall uptrend in prices.