News Code : 43761

Petrotahlil :PET prices in Europe have been under continuous downward pressure for the large part of 2019 . The prevalent trend can even be traced back as far as late August 2018 on ChemOrbis Price Index, barring a short-lived recovery between January and March 2019. And now, as early indicators for the year-end and 2020 starting to take shape, players are focused on finding a bottom for the PET market.

Current prices stand 40% off the peak in 2018

Local PET prices in Northwest Europe and Italy started to slide off the six-year highs during the third quarter of 2018 and they have steadily moved away from the peak since then. As the weekly average data on ChemOrbis Price Wizard suggests, the current levels stand 40% off the peak in August 2018.

Challenging summer for European markets

Reduced requirements from domestic producers and the continuous length in supplies saw the market levels slumping to multi-year lows by mid-summer. Following a disappointing peak season, demand weakened further largely due to the seasonality of the bottling industry by late October

Onset of winter coincides with broader challenges

In late October, the Italian Government’s tax proposal of 1000€ per ton ( later lowered to 500€ per ton) of plastic packaging made quite a stir among market players. The uncertainty over the tax kept Italian buyers unwilling to engage in of pre-buying activities and demand in Italy lagged behind the average in Northwest Europe markets.

The forthcoming change in International Maritime Organization (IMO) regulations has also become a source of concern. The new IMO rule is set to bring a potential increase in freight rates, and in turn, contribute to higher production costs. These costs could in theory be passed on to end-consumers.

Market poised to end 2019 at flat levels

After November deals were done with rollovers to decreases, initial December offers held mostly steady. The flat levels were largely a result of suppliers seeking to put an end to the prolonged weakness.

Overall, suppliers reported better demand in December as compared to November, saying they are receiving higher orders mostly due to Christmas holidays.

Will 2020 be the year that PET prices regain vigour?

Most players in Europe now think that prices have almost found a floor. This sentiment has been reflected in unchanged weekly price assessments and the current stability is largely expected to extend into January.

Some players welcomed the stable pricing as a positive sign, indicating that there could be a small recovery in sight. The recent upturn in Asian PET markets is also expected to find reflection on Europe soon.

However, the majority of market participants believe that a pickup will be temporary as market fundamentals are not strong enough to support a substantial increase in Europe.

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Source :ChemOrbis

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