US PBT Prices Hold Steady in Early August Amid Soft Demand and Economic Uncertainty

In early August 2024, the US Polybutylene Terephthalate (PBT) market experienced a stable price trend in the domestic market. This stability was largely due to diminished demand from downstream sectors, even as production costs surged. Notably, prices for key feedstock PTA remained steady, while Butanediol (BDO) prices rose by 1.9% during the week. The increase in BDO prices was driven by limited supply due to unexpected technical issues, maintenance shutdowns at domestic BDO production facilities and inventory depletion. The Labor Department reported that producer prices, reflecting wholesale inflation, rose by only 0.1% in July, with a 2.2% year-over-year increase, signaling rising production costs for goods and services at the wholesale level. However, this surge in PBT production costs did not affect overall PBT prices.

Demand for PBT remained notably low during this period, contributing to the stable price trend. The US domestic market showed weak demand for PBT from downstream manufacturing industries, particularly the automotive sector. According to a report from the National Automobile Dealers Association (NADA), new light-vehicle sales in July 2024 had a SAAR of 15.8 million units, down 0.8% year-over-year, with total sales falling below expectations. Retail deliveries in July 2024 were roughly flat compared with July 2023, while fleet deliveries declined by about 11%, marking the second consecutive month of year-over-year declines in fleet deliveries. The report also noted that Labor Day weekend sales, typically strong for new-vehicle sales, would be included in the August 2024 figures, likely leading to a significant boost compared to August 2023. However, September 2024 is expected to see a year-over-year sales decline.

Despite weak demand for PBT, supply remained ample in the region, with manufacturers and buyers remaining cautious about production and purchasing due to the sluggish demand for PBT in the downstream market. This stability in PBT prices was further supported by a notable decline in global marine freight charges in early August.

Moreover, the slowdown in the PBT downstream sector was influenced by ongoing economic uncertainty. The Federal Reserve maintained the federal funds rate at a 23-year high of 5.25%-5.50% for the 8th consecutive meeting in July 2024, citing progress toward the 2% inflation goal despite its remaining elevated. Economic activity continued to expand solidly, though job gains moderated, and the unemployment rate rose slightly but remained low. Chair Powell mentioned a potential rate cut in September if inflation trends downward as expected.

In conclusion, analysts anticipate that the price trend for PBT in the US domestic market is likely to follow a downtrend due to the low downstream demand.