In the second half of May 2024, Polyethylene Terephthalate (PET) prices saw an increase in the North American regions.

During the second last week of May, the prices of US PET increased by around 2.4%, primarily attributed to production disruptions from power outages and rising freight charges. However, the production cost of PET remained advantageous as the prices of essential feedstocks, such as Paraxylene PTA, remained steady, and MEG prices declined by approximately 2% due to high inventory levels. Despite limited supply, demand stayed at an average level.

During this period, hurricanes significantly impacted the US petroleum and petrochemical markets, adding complexity to the PET market by disrupting crude oil production and refining operations. Offshore crude oil production in the Federal Offshore Gulf of Mexico (GOM) was particularly vulnerable to severe weather conditions.

Refineries along the Texas and Louisiana Gulf Coast, which collectively represent nearly half of US refining capacity, were also affected by flooding and power outages resulting from major storms or hurricanes. To ensure safety and maintain facility integrity during severe weather events, these refineries often evacuated nonessential staff and suspended production.

Following the same trend, PET prices in the Mexican market rose by around 2.4%, mainly attributed to production disruptions caused by power outages, expensive imports, and increased freight charges. Despite facing these obstacles, the production cost of PET remained advantageous as the prices of essential feedstocks, such as Paraxylene PTA, remained stable, and MEG prices dropped by approximately 2% due to high inventory levels in the US. Despite limited supply, demand remained average.

Furthermore, Mexican authorities have declared a temporary tariff hike on PET imports, specifically impacting imports from nations lacking free trade agreements with Mexico. Market observers anticipate a positive outcome, expecting both domestic and import prices to escalate following the imposition of these tariffs. The anticipated rise in imported PET prices is projected to exert upward pressure on domestic prices in the forthcoming weeks.

Additionally, a deficit of ocean containers has impacted worldwide trade as the peak shipping season commences, resulting in a surge of approximately 30% in freight spot rates over recent weeks, with further increases expected. Adverse weather conditions, extended ocean transit durations, and vessels bypassing ports are exacerbating supply chain challenges.

In conclusion, analysts anticipate that PET prices will likely continue to rise in the coming weeks. This upward trajectory is driven by several factors, including increased global freight charges, peak season downstream demand, and fluctuations in feedstock prices due to volatility in crude oil prices.