In the first half of July 2024, the European Polyethylene Terephthalate (PET) market saw mixed price movements. These weekly fluctuations were primarily driven by changes in purchasing sentiments and seasonal variations in downstream industries amidst supply disruptions coupled with logistical challenges. Additionally, feedstock market conditions played significant roles in influencing prices.

However, PET prices underwent a notable 4% surge from late June to early July, reflecting a complex interplay of factors reshaping market dynamics across the region. Central to this increase were heightened production costs, constrained availability, and resilient demand conditions. The rise in PET prices was directly influenced by a 2.6% increase in the cost of PTA (Purified Terephthalic Acid), a crucial feedstock for PET production. This uptick in PTA prices exerted upward pressure on overall PET production expenses. Adding to this, the maintenance shutdown at Indorama Ventures Plant in Rotterdam—operating at reduced capacity (50%) for 15 days starting July 1, 2024—further restricted PET supply, exacerbating market tightness.

Demand for PET remained robust throughout the region during this period. There was a clear preference for virgin PET over recycled PET, driven largely by the price disparity favoring virgin material. This preference was particularly pronounced in the British market, where reliance on recycled PET remains lower compared to other parts of northwest Europe. The sustained interest in virgin PET was evident from increased inquiries and filled order books reported by market participants.

Despite healthy demand, logistical challenges emerged as a significant issue impacting market dynamics. Strikes at key ports such as Hamburg and Bremen disrupted supply chains, leading to delayed deliveries and heightened transportation costs. These logistical hurdles, coupled with limited availability from local producers who were largely sold out for July 2024, dampened the appetite for imported PET. High freight costs further discouraged arbitrage opportunities from Asia, contributing to the market's reliance on domestic supply.

Looking forward, PET prices are anticipated to continue their upward trajectory in the coming weeks. Factors driving this forecast include ongoing increases in PTA and crude oil prices amidst geopolitical tensions, as well as persistently high freight charges across Asian routes. Additionally, production cuts announced by OPEC+ members are expected to exacerbate these cost pressures, reinforcing the likelihood of further price hikes in the European PET market.

In summary, the first half of July 2024 was characterized by significant price escalations in the European PET market, spurred by rising production costs, supply constraints due to maintenance activities, and strong demand dynamics favoring virgin PET. As the market navigates through logistical challenges and global economic uncertainties, stakeholders are poised for a period of continued volatility and potential price increases in the PET sector.