PBAT Prices in Eurozone Remain Steady Amid Upstream Market Volatility and Economic Challenges

Following the bearish trajectory till last week, Polybutylene Adipate Terephthalate (PBAT) prices in the Eurozone have shown a rigid character in the week ending September 22. Oil market volatility and the downtrend economy of Germany have resulted from a wait-and-see attitude among the traders. Fluctuating oil prices have caused a price fluctuation in upstream petroleum products of PBAT. Thus, PBAT prices in the Eurozone have remained constant at USD 1928 per metric tonne, FOB prices, Hamburg, Germany.

The upstream Adipic acid trading prices have been unchanged on that following week, while 1,4-Butanediol (BDO) has been trading at a lesser price, about 5.5 percent down, compared to the previous week. Cheaper raw material prices have weakened the cost support to PBAT sellers. Propylene, an upstream material used in the manufacturing of PBAT, has shown a slight uptrend of 0.7 percent in Italian markets. Since Natural gas prices have increased in Germany in the week ending September 22, it has further supported the production cost of PBAT to be increased.

Over the past month, there has been a noticeable increase in the demand for Purified Terephthalic Acid (PTA). It has been primarily supported by improved market fundamentals and low domestic inventory levels to support the downstream PBAT industry. Moreover, from September 29 to October 6, the upcoming Golden Week in China is expected to cause a supply disruption internationally. Eurozone suppliers thus have ramped up their domestic inventory for future demand in the PBAT industry.

According to a senior economist in Oxford, the manufacturing industry has been contracting in all major Eurozone economies, as revealed by purchasing managers surveys, especially Germany, an important trade partner, whose export-oriented economy has been affected by energy prices and weakening demand from China. As per market sources, domestic investors in Germany have preferred investing in China rather than its regional market due to the declining economy and poor demand in the downstream paper and packaging industry. Due to high inflation, consumers have been reluctant to invest in online shopping, cafeterias, or restaurants.

Exports from Germany to one of its key trade partner, China, has been on a downtrend. Furthermore, the European Commission forecasted that the 4th largest economy in the World has been projected to shrink by 0.4% on a y-o-y basis compared to the 0.2% growth forecast last quarter.

Shanxi Tond Chemical, a China-based Research and development company, has signed a project to construct a manufacturing line for an average annual throughput of 60,000 biodegradable plastic PBAT. The project trial has been projected to start at the end of this year. That has been estimated to support a strong supply of PBAT from East-Asian countries to the Eurozone, especially Italy, Turkey, and France.