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European PTA Producers Face Weak Profit Margins Amid Oversupply and Feeble Demand

European PTA Producers Face Weak Profit Margins Amid Oversupply and Feeble Demand

European PTA Producers Face Weak Profit Margins Amid Oversupply and Feeble Demand

  • 29-Nov-2022 3:47 PM
  • Journalist: Harold Finch

Germany: In Europe, the spot price for Purified Terephthalic Acid (PTA) has been continuously falling, squeezed by low production costs and cheap imports. PTA prices have weakened since the first week of November 2022 due to sluggish demand from the downstream sectors.

The broad range for PTA prices stands at USD 870/MT FD Hamburg on 25th November 2022, indicating a decrease of 4% compared to last week.

The price reductions were also attributed to several other factors, such as the decrease in container costs and the northern hemisphere's off-season, which compelled the downstream PET Bottle suppliers to reduce production for November 2022 due to weak demand and an abundance of supply that outpaced its actual demand outlook. Despite low run rates, the European PTA producers had enough material.

At the same time, China's prolonged zero-Covid policy and sluggish economic growth made weak regional demand. The production of downstream polyester facilities kept declining, thus increasing the availability of feedstock PTA. The profit margin also decreased under a pessimistic scenario, and PTA producers might also start to reduce output. Also, in the coming weeks, neither suppliers nor consumers anticipate a significant rebound in orders in China. In addition, most Southeast Asian players opt to wait because they think prices will continue to decline more in the forthcoming weeks.

Traders even quoted, "since we have enough supplies for another one to two months, they are not eager to restock. Additionally, weak demand has been a global issue, and producers in the Asian market are enthusiastic about sending material at cheaper rates to northwest Europe, escalating the oversupply in the European market.

ChemAnalyst forecast says, "The price for PTA might decline even more in the coming weeks, as downstream demand is not expected to recover from PET bottle and Polyester sectors. Meanwhile, high product availability may cause producers to sell out their material at cheaper rates."

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