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Will the Rising Uncertainties in Europe Lead to High Dependency on the Asian PET Market?

Will the Rising Uncertainties in Europe Lead to High Dependency on the Asian PET Market?

Will the Rising Uncertainties in Europe Lead to High Dependency on the Asian PET Market?

  • 20-Sep-2022 6:00 PM
  • Journalist: Henry Locke

Germany: The European Polyethylene Terephthalate (PET) manufacturers are struggling with their production units since Europe is tackling the energy crisis. Earlier, the Natural gas prices in Europe had rose, which has now started easing. However, it remains higher than the pre-crisis, which ultimately pressures the manufacturing units, who prefer to reduce their production rather than operate at a high cost.

According to the sources, Europe’s natural gas prices have started mitigating as nations put efforts to ease the energy crisis with the start of the heating season in less than two weeks. However, Russia’s gas supply cut-off to Europe has disrupted the manufacturing facility. The cuts in PET production due to the power crisis and uncertain natural gas prices led European countries more dependent on the Asian market.

Meanwhile, Asian Polyethylene Terephthalate (PET) manufacturers have high inventories heading into the winter season amid slowing regional demand. Thus, Europe is happy to import Polyethylene Terephthalate (PET) at a lower price since the Euro depreciates against the US dollar. In addition, the decreased cross-regional freight costs also strengthen their opportunities to import more from the Asian market. At the same time, upstream Purified Terephthalic Acid (PTA) demand has been insufficient in the European market, which has caused many small-scale producers to reduce their run rates amidst volatile energy prices.

If Germany’s energy crisis continues, the import volume of Polyethylene Terephthalate (PET) may increase in the domestic market. Still, the major problem which may arise in the supply issues is a delay in deliveries from Chinese ports, the rising river Rhine level in Europe, and the strengthening US dollar could impact the trading of Polyethylene Terephthalate (PET) in the domestic market.

However, the ChemAnalyst database says, “Though energy prices are easing in the European countries, it is still high to pressurize the manufacturing units. Therefore, the rising production cost has reduced operating rates in Europe, which prefers to import rather than perform at high-cost pressure. Also, imports are cheaper since Asian countries face a lull in demand, leading to overflowing inventories in the Asian market.”

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