The Purified Terephthalic Acid (PTA) market in Germany is experiencing a surge in prices as February 2025 begins, primarily rooted in rising feedstock propylene costs and logistical challenges, despite persistent weakness in downstream polyester demand. 

Key Takeaways:

• Rising upstream crude oil and feedstock propylene and paraxylene prices are driving PTA prices.
• Cracker shutdowns, production issues, and higher import costs are tightening PTA supply in Europe.
• Despite sluggish polyester demand, the strong upstream market and cost-push inflation are the primary drivers of the current PTA price surge.

As January 2025 began, the PTA prices in Germany were firmly rolled over, however, as January 2025 came to an end, the PTA market started to surge with a hike of 1.3% in the first week of February 2025 compared to the previous weeks.

A primary driver of the PTA price surge was the significant increase in upstream crude oil prices. The rise in crude oil prices in early January, driven by tougher US sanctions on Russia's energy industry, poses a further threat to global supplies and is likely to exacerbate the upward pressure on feedstock paraxylene and propylene, consequently, PTA prices. 

Several production issues have also contributed to supply constraints. Polymer production plants continuing to operate at reduced rates, coupled with both planned and unplanned plant outages, have further limited the availability of PTA and contributed to overall market tightness.

Several significant cracker shutdowns have occurred in Europe. Dow Chemicals announced the planned shutdown of its ethylene and propylene crackers in the Netherlands on January 8th, while Ineos announced the shutdown of its ethylene and propylene crackers in France on December 18th. Although Braskem Europe announced the restart of its German PP plant on January 14th following a force majeure event, these shutdowns have generally tightened the supply of key petrochemical building blocks, indirectly impacting the broader market and potentially contributing to price volatility.

Simultaneously, the strengthening US dollar is making imported resin less attractive for European buyers, further tightening supply within the European market.  This currency effect, coupled with the rising crude oil prices, creates a perfect storm for potential PTA price increases, even in the face of weak downstream demand.

This cost-push inflation has created a bullish environment for PTA, with producers passing along the higher feedstock costs.  Even though demand from downstream petrochemical industries, including polyester and PET production, remains subdued and reflects a bearish market sentiment, the robust upstream market, and elevated PTA prices are overriding this downstream weakness.

As per ChemAnalyst, PTA prices in Germany are expected to further surge in the upcoming weeks of February 2025 due to a shift in the downstream demand for r-PET which could increase PTA inquiries as well.