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Reviewing a volatile year for PET What does the future hold?

Matt Tudball

Head of European Markets

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PET price and sentiment drivers in 2017: Europe, Americas, Asia & feedstocks

Predictions vs. reality: 2018 year to date

Outlook and expectations

R-PET: Ever-growing pressure to improve

Agenda

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PET price and sentiment drivers in 2017

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EU, US and Asia-Pacific PET bottle grade 12 month prices

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The influence of crude – PX vs. crude

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The influence of crude – MEG vs. crude

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Regional overview: Europe

Supply concerns separate PET from feedstocks

Warmer weather adds to supply limitations in Q3, prices rise

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Regional overview: Europe

Supply concerns separate PET from feedstocks

Warmer weather adds to supply limitations in Q3, prices rise

Import arrivals, cooler weather softens PET prices despite bullish crude

Feedstock increases add upward pressure in tight market

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Regional overview: Americas

Feedstock costs drove PET prices up end-August after lackluster summer demand

May PET drop due to feedstock costs

Hurricane Harvey touches land on 25th August, disruption follows

Mossi & Ghisolfi (M&G) financial problems fuel bullishness in US and globally

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Regional overview: Asia-Pacific

Feedstock spot prices rise Aug-Sep. Strong demand for Asian PET exports

May PET increase due to upstream spot price rises

China Golden week sees demand, prices drop; colder weather in other regions

Weaker polyester demand, high imports lead to MEG, PET drop in March

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Predictions vs. reality: 2018 year to date

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PET 2018: Predictions vs. reality

Europe

Prediction: JBF Industries' Geel plant restart increases availability, reduces prices

Prediction: European PET producer margins need to improve in light of 2017 financial difficulties in US, UAE.

Americas

Prediction: pricing pressure will persist because of supply uncertainty

Prediction: US Anti-Dumping Duty on imports from Brazil, Indonesia, South Korea, Pakistan and Taiwan

Asia

Prediction: Supply crunch to support higher PET prices

Prediction: US ADD on Asian material leads to alternative export market discovery

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PET 2018: Predictions vs. reality

Europe

Reality: Spot availability tight, price rises seen throughout Q1

Reality: PET producers keep prompt spot firm, may see some upstream reductions on Q2 as feeds, Asia softens

Americas

Reality: Upwards pressure persists on short supply, strong demand and firm feedstock costs

Reality: Preliminary ADD hearing set for 27 April

Asia

Reality: Early sales boom in Q1, but softer upstream prices pressure PET sellers in March

Reality: Demand for ‘new’ customers present in Q1

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Outlook and expectations

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US: Mossi & Ghisolfi and US Anti-dumping duty (ADD)

Mossi & GhisolfiJuly 2011: announces Corpus Christi,

Texas, as site for 1m t/pa PET and 1.2m t/pa PTA plant

April 2013: construction begins, expected finish: December 2015

Labour costs push costs from $1.1bn to an estimated $2.4bn to complete

PET market over-supplied, impacted by ‘sugar tax’ and recycled PET

October 2017: 12 M&G subsidiaries file for bankruptcy protection in USA

2018: Taiwanese Far Eastern Investment bought Apple Grove facility, could see product by end of the year

Anti-dumping DutyLooking increasingly likely to be

implemented

ADD countries represent a ‘significant’ amount of US imports

Expectation impacting market sentiment, reluctance to buy from ADD countries

Lead times for delivery heard longer, buyers seeking alternative, possibly regional alternatives

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500

550

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850

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950

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2016 2017

Asia: MEG prices have steadily moved higher

Over-purchase of MEG?

Downstream polyester performance improves

Decline in MEG inventory levels

Lacklustre polyester performance

2017 started on high

Low inventory levels

Weak Q2

in 2016

and 2017

2016 started from bottom

CFR

Ch

ina

US$

/to

nn

e Average Price

2016 – US$6552017 – US$849

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Polyester strength boosted China MEG imports in 2017

Source: China customs data

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2010 2011 2012 2013 2014 2015 2016 2017

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Asia: Spot MEG price drivers set to change

Market Sentiment:

• Market sentiment drives prices and reaction to

news and events can cause sharp price movement

Supply/Demand:

• Inventory levels of MEG and Polyester are closely

monitored

• Performance of the polyester sector closely related to

MEG prices

China Government Policies:

• Policies may directly or indirectly have an impact

on prices both in the short-term and long term. For

example, environmental checks tighter credit

policies and implementation of Anti-dumping

duties (ADD)

Forward/Futures market:

• Forward trading such as futures and swaps are

increasingly popular in China, adding complexity to the

market.

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Europe: Supply shortages into Q2

European PET market remains tight despite some restarts

March shutdowns in Spain and Germany

Some PET sellers sold out for March

Imports not expected until May; Americas remain attractive markets for exporters

Peak demand season may see further increases for just-in-time deliveries

Picture source: imageBROKER/REX/Shutterstock

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Upcoming planned outages (source: ICIS Live Supply & Disruption Tracker)

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R-PET: Ever-growing pressure to improve

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R-PET: Challenges and opportunities for 2018

The EU aiming for 55% of plastics used in packaging to be recycled by 2030

Plastics waste vs. food waste

Combating decline in quality of bales

Calls for better harmonisation around collection and sorting in Europe

USA adapting to China plastics ban amid temporary SEA import boom

Impact of Chain ban in countries in Europe, such as UK, still being assessed

Photo source: Rex Features

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Questions: Slido.com

Contacts

Matt Tudball

Head of European Marketsmatt.tudball@icis.com

Caroline Murray

Senior Editor – European PTA and PETcaroline.murray@icis.com

Pavle Popovic

Market Reports – European R-PETpavle.popovic@icis.com

Hazel Goh

Market Reports – Asia PET, PX, PTAhazel.goh@icis.com

Amanda Hay

Market Editor – US PET, R-PETamanda.hay@icis.com

mailto:hazel.goh@icis.com