European PET Erases Nearly Half of Its War-Driven Rally

The correction in the European PET bottle market continued to deepen in early July, with local prices recording another significant decline despite the ongoing peak season for beverage packaging. While crude oil has recently regained some support amid renewed geopolitical tensions in the Middle East, market sentiment remains largely driven by supply-demand fundamentals rather than upstream volatility.

Local bottle-grade PET prices in both Italy and Northwest Europe have fallen by around €300/ton from the highs reached in May, resulting in cumulative losses of nearly 19%. Even after these declines, prices remain considerably higher than the levels seen before the Middle East conflict began in late February.

A Large Portion of the Rally Has Been Reversed

The recent downturn has removed a substantial share of the extraordinary gains recorded during the spring rally. Between late February and the market peak in early May, bottle-grade PET prices in Europe surged by more than 70%. Since then, approximately 19% of those gains have been lost as market conditions softened.

Italy – PET Bottle Grade

Increase from Pre-War to Peak: ▲ 73%
Peak Reached: Early May
Correction from Peak: ▼ 19%
Current vs Pre-War Level: ▲ 40%

Northwest Europe – PET Bottle Grade

Increase from Pre-War to Peak: ▲ 74%
Peak Reached: Early May
Correction from Peak: ▼ 19%
Current vs Pre-War Level: ▲ 41%

Although prices have retreated sharply from their highs, they continue to trade roughly 40% above pre-conflict levels, indicating that a notable geopolitical premium remains embedded in the market.

Weak Demand Continues to Pressure Prices

The latest round of price reductions has been driven mainly by cautious buying activity rather than any major change in supply conditions. Many converters remain well stocked after purchasing material during the spring rally and are limiting fresh purchases to immediate production needs.

Buyers are also working through inventories acquired at higher prices and generally expect the market to soften further in the coming months. Several market participants believe local PET prices could test the €1200/ton FD level before September, while some expect values to approach €1100/ton by the end of the year if current market conditions persist.

Despite the peak season for beverage packaging, demand has not provided meaningful support. While hot weather in parts of Southern Europe has boosted mineral water consumption, overall demand has largely been described as stable rather than strong, reducing the need for stock replenishment.

Import Material Attracts Limited Interest

Imported PET offers also moved lower, narrowing the gap with domestic material. Southeast Asian material was reported at €1130-1150/ton DDP Italy, while offers into Western Europe were heard at €1160-1240/ton DDP.

However, buyers remain hesitant to commit to long-haul cargoes, as the cost advantage of imported material has diminished once freight expenses are taken into account. Many participants prefer to reassess import opportunities in August for October arrivals, while others are waiting for clearer signs that the market has reached a price floor.

Oil Market Recovery Under Observation

The recent rebound in crude oil prices has introduced some uncertainty into market expectations following renewed geopolitical concerns involving Iran. Some traders believe PET producers may attempt to slow the pace of price declines if energy costs remain elevated.

Nevertheless, most market participants believe that higher crude oil prices alone are unlikely to reverse the current market direction unless geopolitical tensions escalate significantly enough to trigger a sustained rise in energy markets. For now, ample product availability, comfortable inventory levels, and cautious purchasing activity continue to dominate pricing trends across the European PET market.

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