Reviewing a volatile year for PET What does the future hold? Matt Tudball Head of European Markets www.icis.com 1
Agenda PET price and sentiment drivers in 2017: Europe, Americas, Asia & feedstocks Predictions vs. reality: 2018 year to date Outlook and expectations R-PET: Ever-growing pressure to improve www.icis.com 2
PET price and sentiment drivers in 2017 www.icis.com 3
EU, US and Asia-Pacific PET bottle grade 12 month prices www.icis.com 4
The influence of crude PX vs. crude www.icis.com 5
The influence of crude MEG vs. crude www.icis.com 6
Regional overview: Europe Supply concerns separate PET from feedstocks Warmer weather adds to supply limitations in Q3, prices rise www.icis.com 7
Regional overview: Europe Supply concerns separate PET from feedstocks Warmer weather adds to supply limitations in Q3, prices rise Feedstock increases add upward pressure in tight market Import arrivals, cooler weather softens PET prices despite bullish crude www.icis.com 8
Regional overview: Americas May PET drop due to feedstock costs Feedstock costs drove PET prices up end-august after lackluster summer demand Hurricane Harvey touches land on 25 th August, disruption follows Mossi & Ghisolfi (M&G) financial problems fuel bullishness in US and globally www.icis.com 9
Regional overview: Asia-Pacific May PET increase due to upstream spot price rises Feedstock spot prices rise Aug-Sep. Strong demand for Asian PET exports China Golden week sees demand, prices drop; colder weather in other regions Weaker polyester demand, high imports lead to MEG, PET drop in March www.icis.com 10
Predictions vs. reality: 2018 year to date www.icis.com 11
PET 2018: Predictions vs. reality Americas Prediction: pricing pressure will persist because of supply uncertainty Prediction: US Anti- Dumping Duty on imports from Brazil, Indonesia, South Korea, Pakistan and Taiwan Europe Prediction: JBF Industries' Geel plant restart increases availability, reduces prices Prediction: European PET producer margins need to improve in light of 2017 financial difficulties in US, UAE. Asia Prediction: Supply crunch to support higher PET prices Prediction: US ADD on Asian material leads to alternative export market discovery www.icis.com 12
PET 2018: Predictions vs. reality Americas Reality: Upwards pressure persists on short supply, strong demand and firm feedstock costs Reality: Preliminary ADD hearing set for 27 April Europe Reality: Spot availability tight, price rises seen throughout Q1 Reality: PET producers keep prompt spot firm, may see some upstream reductions on Q2 as feeds, Asia softens Asia Reality: Early sales boom in Q1, but softer upstream prices pressure PET sellers in March Reality: Demand for new customers present in Q1 www.icis.com 13
Outlook and expectations www.icis.com 14
US: Mossi & Ghisolfi and US Anti-dumping duty (ADD) Mossi & Ghisolfi July 2011: announces Corpus Christi, Texas, as site for 1m t/pa PET and 1.2m t/pa PTA plant April 2013: construction begins, expected finish: December 2015 Labour costs push costs from $1.1bn to an estimated $2.4bn to complete PET market over-supplied, impacted by sugar tax and recycled PET October 2017: 12 M&G subsidiaries file for bankruptcy protection in USA 2018: Taiwanese Far Eastern Investment bought Apple Grove facility, could see product by end of the year Anti-dumping Duty Looking increasingly likely to be implemented ADD countries represent a significant amount of US imports Expectation impacting market sentiment, reluctance to buy from ADD countries Lead times for delivery heard longer, buyers seeking alternative, possibly regional alternatives www.icis.com 15
CFR China US$/tonne Asia: MEG prices have steadily moved higher 950 2017 started on high Downstream polyester performance improves 900 850 Low inventory levels Over-purchase of MEG? Decline in MEG inventory levels 800 Average Price 750 2016 US$655 2017 US$849 700 650 Weak Q2 in 2016 and 2017 600 550 2016 started from bottom Lacklustre polyester performance 500 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017 www.icis.com 16
Polyester strength boosted China MEG imports in 2017 10 9 8 7 6 5 4 3 2 1 0 2010 2011 2012 2013 2014 2015 2016 2017 Source: China customs data www.icis.com 17
Asia: Spot MEG price drivers set to change Forward/Futures market: Forward trading such as futures and swaps are increasingly popular in China, adding complexity to the market. Market Sentiment: Market sentiment drives prices and reaction to news and events can cause sharp price movement China Government Policies: Policies may directly or indirectly have an impact on prices both in the short-term and long term. For example, environmental checks tighter credit policies and implementation of Anti-dumping duties (ADD) Supply/Demand: Inventory levels of MEG and Polyester are closely monitored Performance of the polyester sector closely related to MEG prices www.icis.com 18
Europe: Supply shortages into Q2 European PET market remains tight despite some restarts March shutdowns in Spain and Germany Some PET sellers sold out for March Imports not expected until May; Americas remain attractive markets for exporters Peak demand season may see further increases for just-in-time deliveries Picture source: imagebroker/rex/shutterstock www.icis.com 19
Upcoming planned outages (source: ICIS Live Supply & Disruption Tracker) www.icis.com 20
R-PET: Ever-growing pressure to improve www.icis.com 21
R-PET: Challenges and opportunities for 2018 The EU aiming for 55% of plastics used in packaging to be recycled by 2030 Plastics waste vs. food waste Combating decline in quality of bales Calls for better harmonisation around collection and sorting in Europe USA adapting to China plastics ban amid temporary SEA import boom Impact of Chain ban in countries in Europe, such as UK, still being assessed Photo source: Rex Features www.icis.com 22
Questions: Slido.com Contacts Matt Tudball Head of European Markets matt.tudball@icis.com Pavle Popovic Market Reports European R-PET pavle.popovic@icis.com Caroline Murray Senior Editor European PTA and PET caroline.murray@icis.com Hazel Goh Market Reports Asia PET, PX, PTA hazel.goh@icis.com Amanda Hay Market Editor US PET, R-PET amanda.hay@icis.com www.icis.com 23