Home > Industry News > Latin American economies affect PET markets, cheap Asian imports add pressure
Latin American economies affect PET markets, cheap Asian imports add pressure
The Latin American polyethylene terephthalate (PET) market is going through a trying time severely impacted by the regional economies and the global slowdown caused by the tariff war between the US and China.
Uncertainties at the regional level stem from disagreements in political views that affect trade between the countries, and depressed economies that translate into inflation, higher interest rates and operating costs.
Demand for PET resin is weak across the region. Although warmer weather should start soon (except in Mexico), there are no expectations for increased buying interest this month, given the global slowdown in all markets and reduced purchasing power in the region.
The US-China trade war has weakened markets across the world and affected confidence, slowing business activity and adding pressure on Asian PET export prices.
Prices for Asian imports have been trending down since last September, with the exception of two weeks when a bullish sentiment emerged in feedstock paraxylene and PET pellets in May.
In Argentina, the dilapidated economic situation continues to weigh heavily on the resin market resulting in weakened demand and downward price pressure.
The devaluation of the local currency against the US dollar translates into instability and uncertainty regarding business transactions, especially when trying to finance purchases in 30/60/90 days.
In Brazil, the market remains sluggish on uncertainties created by the direction of the new government regarding privatization, environmental issues and open trade with offshore nations. Furthermore, the country is suffering the impact of the economic crisis in Argentina, which has traditionally kept a close business relationship with Brazil.
Domestic resin prices are holding steady, unchanged from the previous week.
In Colombia, domestic PET prices remain flat from previous weeks despite the influx of weaker prices for imported Asian resin.
Offers of Asian PET have been softening since May, with the lowest prices seen for Chinese product. China PET is being offered at $940/tonne CFR Cartagena, almost $60/tonne lower than offers heard in late August.
Weaker Asian prices are the result of the escalation of the trade war between the US and China, which has slowed business activity globally and has made trading between those two nations less attractive, pushing resin stocks higher.
Offers of Mexican and Brazilian product in Colombia were about $130/tonne higher at $1,070/tonne CFR Cartagena.
Colombian buying interest remains sluggish, amid expectations of softer domestic prices in October.
In Mexico, low buying interest prompted offers into South America, but Asian competition remained strong as prices in that region have been declining for the last year except for a short-lived bullish trend in late May that lasted two weeks.
Inventories are long and they are likely to remain that way as the summer season in the Northern Hemisphere is coming to an end soon.
PET resins can be broadly classified into bottle, fibre or film grade, named according to the downstream applications. Bottle grade resin is the most commonly traded form of PET resin and it is used in bottle and container packaging through blow molding and thermoforming. Fibre grade resin goes into making polyester fibre, while film grade resin is used in electrical and flexible packaging applications.
PET can be compounded with glass fibre for the production of engineering plastics.