PET Market Gains Momentum on Cost Drivers: Downstream Trends in Focus

On January 10, U.S. President Joe Biden introduced stringent sanctions on Russia's energy sector, targeting its two largest oil companies and 183 tankers. These measures aim to curtail Russia's primary funding source for the Ukraine conflict. The sanctions also block energy-related entities and restrict Russia’s ability to earn dollars from energy exports.  

Cost Surge Across the PET Chain  

Higher crude oil costs have driven gains across the polyester value chain. PX and PTA futures contracts rose by over 2%, while bottle-grade PET resin and short fiber posted smaller gains, under 2%. Ethylene glycol (MEG) saw limited growth due to abundant spot supply.  

The recent sharp rise in PX prices has significantly influenced polyester pricing. Tight margins prompted unexpected capacity reductions at several PX plants. Additionally, soaring gasoline and aromatics prices in China, such as toluene and mixed xylenes, led to their diversion for blending purposes, further bolstering PX price hikes. As the trading cycle transitions to March-April, plant maintenance schedules are expected to tighten PX supply, supporting further price increases.  

Outlook: Momentum Hinges on Downstream Dynamics  

In the short term, crude oil prices will remain supported by cold weather and sanctions on Russia, while PX prices are poised to rise further due to supply constraints and blending demand. The polyester chain is expected to see sustained cost-driven price growth, but downstream demand will play a pivotal role in determining how far this momentum can extend.  

Over the medium term, as weather-related factors subside and the oil market stabilizes, prices may face downward pressure. Key developments to monitor include U.S. energy policies and market adjustments to Russia’s oil exports as buyers adapt to the sanctions.