In mid-week May 2025, Polybutylene Adipate Terephthalate (PBAT) prices experienced a significant rise in both Europe and China. The price rise was a result of various factors such as increasing raw materials costs, environmental charges, supply chain problems, and consistent demand from major downstream industries. In both markets, agriculture and biodegradable packaging were major areas of application supporting the price rise. The rise occurred despite more general worries about inflation and the slowdown in consumer demand across some parts of Europe.

In China, PBAT prices rose due to several converging factors. The primary driver was a rise in Purified Terephthalic Acid (PTA) prices. PTA is a key feedstock in PBAT production, and the increased cost directly impacted PBAT manufacturing expenses. While prices for other raw materials like Adipic Acid and 1,4-Butanediol (BDO) remained stable, the rise in PTA was significant enough to push PBAT prices up.

There was also a modest increase in demand from the biodegradable packaging market. This growth was possibly attributed to buying more stringent enforcement of environmental legislation and seasonal restocking behavior by converters. Moreover, increased demand from agricultural film applications was also responsible for the increase in consumption of PBAT.

While China enjoys robust indigenous production capacities, PBAT production hovered steady instead of growing. This produced an even tighter supply-demand balance that further fueled price hikes. Environmental regulations perhaps brought short-term supply interruptions, placing an upward pressure on prices.

In Europe, particularly in Germany, PBAT prices also went up slightly during the same mid-May time frame. The price increase was largely attributable to the rising cost of 1,4-butanediol (BDO), another key PBAT raw material. In contrast to Adipic Acid and PTA, whose prices were unchanged, BDO prices went up, causing higher production costs. PBAT producers transferred these costs to downstream clients.

Consistent demand from the food packaging and compostable products markets also helped bolster the price rise. Germany, which is a keen advocate of sustainability, has continued strong demand for biodegradable options, such as PBAT-based films and bags.

Even though early May hinted at seasonal restocking, European retail demand was weak. Yet, small delays in production at key European ports caused by staffing shortages and vessel congestion, potentially limited supply chains temporarily.

China and Europe will both continue to see moderate demand for PBAT, particularly from sustainable packaging and agriculture industries. Increasing raw material and energy costs, along with inefficiencies in the supply chain, will keep prices firm. However, weakening in major segments and oversupply is expected to increase in the near term.