Red Sea Issue Complicate Global PET Market, Another Series of Struggle Starts for the West and US
- 24-Jan-2024 4:47 PM
- Journalist: Gabreilla Figueroa
Global Polyethylene Terephthalate (PET) market has been facing challenges since the start of January 2024 due to the high production cost and logistic barrier amid heightened demand. Overall markets around the globe including Europe and USA struggle with the recent price upswing.
The US PET market has been experiencing a continuous rise in prices since the start of the 2024. PET (bottle grade) prices, which were assessed at USD 1215/MT DDP Los Angeles during the first week of January 2024, later reached USD 1245/MT by third week of the month.
This rise in the PET resin price is primarily attributed to the ongoing conflict in the red sea trade route, which has resulted in low supply of commodities including raw materials and high production cost amid moderate demand in the downstream bottle and the packaging industries. Further, conflict is still continued to the date by the Yemen based rebel group. However, the US and UK with allies are striving to uphold the condition, which might ease the ocean logistic operation through the Red Sea route.
On the other hand, reduction in the water level in the Panama Canal is another obstacle in the export path, this is the worst drought in the central American region creating a turmoil in the shipment route developing container’s traffic blockage creating hesitation about the canal route amongst route users for the trade.
PET price in European countries has been maintaining a bullish trend since early January 2024. Price rapid from USD 1160/MT to USD 1200/MT FD Belgium in the month. During this period, market demand for PET was high from the consumer and downstream packaging industries but it has been noticing a huge restriction from the supply chain to fulfill the market and consumer requirement.
Red Sea Ocean dispute has disturbed the entire logistic operation causing a reduction in container movement and delay in reaching shipments to consumers amid high demand. The dispute has prompted altering the different routes for ships resulting in a surge in freight cost and reduction in the availability of required containers. The ongoing crisis will threaten the supply status as Europe mainly depend on Asian countries for more than 50% PET import.
In Asia, majority of the nations have been displaying a bearish market situation like China, Taiwan and South Korea except for India. The decline in prices of PET in these countries was primarily driven by halted exports to the European market, which has led the domestic inventories level to rise in recent weeks. The opening price of PET bottle grade of the month in China is USD 1127/MT FOB Wuhu whereas the current price is USD 1127/MT FOB Wuhu, China.
Nevertheless, in India, PET resin price has been seen opposite to all other Asian countries, in Indian domestic market, PET price rose during the past three weeks if January, owing to the disturbance in supply chain of the feedstock. The price of MEG and PTA, major feedstock of PET noticeably hit high during the period due to the upsurge in crude oil price. Crude oil price grappling to maintaining the price and supply in the middle east countries (OPEC) in the month because of the shut down of Sharara oilfield of Libya of 300,000 barrels per day capacity. The ongoing domestic protest in Libya results in the shutdown of Sharara oilfield, the largest oilfield in the entire country.
Conclusively, as per the analysis, PET resin bottle grade price will continue to follow uptrend in the coming month, owing to the logistics disruption and upgraded insurance charge in shipments and narrow inventory in domestic market amid moderate demand from the downstream industries.