PETpla.net Insider 06 / 2019

JUBILEE PET planet Insider Vol. 20 No. 06/19 www.petpla.net 26 PET price developments High PET prices par for the course today PETplanet is celebrating its 20 th birthday and now considers itself quite grown up. Its anniversary is also an occasion to look back on how the PET market and PET prices have devel- oped over the last two decades. In November 2010, PETplanet Pulse reported extremely high prices, which at that time meant €1,380 per tonne - a price that European convert- ers today can only dream of! In rela- tion to the PET price, feedstock was extremely expensive. At that time, MEG cost €905 per tonne and paraxylene €928 per tonne. From 2011, PET price rises came at ever shorter intervals. In June 2011, a price of €1,510 per tonne had already been recorded and in February 2013 it peaked at €1,660. Feedstock prices increased in the same proportions so in the same period, the MEG price was €1,105 and paraxylene even cost €1,260. A very different ideal situation for processors developed in January 2015, when the PET price fell to €1,264. At that time, feedstock was also extremely reasonable: MEG was €780 and paraxylene was €680. Similar prices were reached again in Septem- ber 2015 but since then prices have moved in only one direction: upwards. Drinks season has lost its influence A temporary high point came in September 2018 with a PET price of €2,050. Feedstock also came in at extremely high prices. MEG was €1,010 and paraxylene was €1,170. Meanwhile, most converters have come to expect the invariably high prices. PET producers benefit from higher margins and more concluded contracts, because, particularly in the last two years, repeated bottlenecks have arisen in the availability of PET. Ten years ago, prices of PET would regularly rise at the start of the drinks season and then fall again in late autumn and winter. Nowa- days, there is little trace of these cycles. Geopolitical events and the rising oil price heavily influence raw materials prices. “Planning has been impossible for us for a long time now as the market is hard to predict,” says one informant, summing up the situation that proces- sors must adjust to. Good times for recyclers The demand for regranulate and flakes has risen enormously in the last year because of worldwide climate discussions that have made recycled PET socially acceptable. This is also a trend. Despite the current criticism of plastic packaging, drinks bottles con- tinue to be made from PET and this is a success story. Their use is supported by the numerous advantages that con- sumers do not want to pass up, and also by the high recycling rate. Low demand, falling prices (Survey conducted March 21, 2019) Business is currently rather cau- tious for PET producers. “Since April we have been prepped for the high season but we’re not feeling any trace of it in this damp and rather cool weather,” comments one manufac- turer. He reckons that PET process- ers are still waiting to see whether prices will fall further, especially as the drinks season will obviously set in a little later. Many processors’ warehouses are still well stocked so there’s no pressure. “We need at least 4 weeks of good weather to stimulate the demand for and sales of PET to a tangible level.” PET significantly cheaper The price of oil has been high but it has fallen slightly in the last few days to around US$ 70 per Brent barrel at the time of going to press. Nevertheless, prices both for feed- stock and for PET have fallen. One reason could be the current rather cautious demand for PET and the large quantities that are available on the market. All European production plants are currently running without restrictions. PET producers are obvi- ously assuming that the weather will finally change and drinks consumption will race upwards. Since feedstock prices have fallen significantly, PET has also become much cheaper. As in April, purchasers of large spot quantities are continuing to bene- fit from this situation in May too. “But this doesn’t apply to buyers of small volumes,” says one informant. Also in May, there are no uniform prices for PET. Price drops of € 30-50 per tonne have been mentioned. So the PET price would then be around € 1,896 per tonne. Struggles to con- clude contracts for feedstock as in April, there was only one paraxylene contract concluded in May; no MEG deals had been concluded by the time of going to press and there were only forecasts from informants. One manufacturer explains that the situ- ation shows that prices are currently heavily contested to prevent any loss of margin. One bottler says “We hope that there will be a second para- xylene deal under € 900 in the next few days.” In May, prices for upstream products have fallen significantly. In May, paraxylene prices have fallen by € 75 per tonne and it is currently fetching € 920 per tonne. As in April, there were still no deals for MEG in pulse