Asia PET Bottle Market Momentum Fades as Falling Crude Weighs on Prices

Asian PET bottle markets began the week with a firmer tone, supported by elevated feedstock costs, particularly MEG. However, the upward momentum weakened as crude oil prices fell below $90/bbl, prompting some sellers in China to lower offers and keeping buyers cautious across the region.

The change in sentiment came despite continued strength in MEG. Spot MEG prices on a CFR China basis climbed to their highest level since November 2021, supported by tightening availability and exceptionally low inventories. However, weaker crude prices, subdued seasonal demand and expectations of further price reductions limited buyers’ willingness to replenish stocks, preventing PET producers from fully passing higher production costs through to the market.

Crude Oil Decline Weakens Market Sentiment

The Asian PET market initially carried forward the firmer tone seen in the previous week. Chinese domestic and export markets opened stronger, with producers citing high upstream costs to support their price positions.

Sentiment shifted as crude oil prices retreated. Brent crude dropped below $90/bbl on Tuesday and continued lower on Wednesday, reaching around $86.40/bbl at the time of reporting. The decline followed renewed optimism over the possibility of easing restrictions on shipping through the Strait of Hormuz after Iran and Oman discussed a temporary navigational corridor.

A Chinese trader said PET prices had strengthened at the beginning of the week, but the subsequent decline in crude encouraged some sellers to become more competitive. The weaker energy market therefore reduced the strength of the earlier PET rally.

Chinese PET Prices Move Lower Despite Strong MEG

China’s PET bottle market reflected the softer sentiment by mid-week. Export prices were assessed stable to $10/ton lower from the previous week, while domestic values were unchanged to CNY200/ton ($30/ton) lower.

The decline occurred despite a significant increase in MEG costs. CFR China spot MEG rose another $40/ton during the week, reaching its highest level since November 2021 as supply tightened and port inventories fell to record-low levels.

MEG futures on the Dalian Commodity Exchange also experienced sharp volatility. October contracts gained CNY165/ton on Monday and another CNY173/ton on Tuesday before dropping CNY250/ton on Wednesday as crude prices weakened.

According to a Chinese trader, the substantial rise in MEG prices since August has pushed PET bottle production margins back into negative territory. Planned maintenance at several major producers between September and October could keep inventories under pressure, while beverage demand is expected to continue through September.

Despite the cost support, the export market remained relatively weak. Higher freight costs from South China to Southeast Asia have helped support delivered prices but have also made purchases less attractive for buyers.

Southeast Asian Buyers Remain Cautious

The softer trend also reached Southeast Asia, where CIF SEA PET bottle prices were assessed stable to $10/ton lower on the week.

A Vietnamese converter reported that Chinese PET offers had declined slightly from the previous week, attributing the movement mainly to weak seasonal demand. Buying interest remained limited, encouraging customers to adopt a cautious approach.

Another Vietnamese converter said PET prices were still considered expensive and that there was little urgency to replenish inventories. The buyer preferred to use existing stocks and wait for the possibility of lower prices before making fresh purchases.

Overall, firm MEG costs continue to provide underlying support for Asian PET prices, but falling crude values and weak downstream demand are limiting sellers’ ability to push through further increases. Unless energy prices recover or buying interest strengthens, the market is likely to remain under pressure despite elevated

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