Who is making money in the polyester chain? Changes and challenges in 2022

Depending on the origin and destination, the cost of freight today represents almost one-third of the cfr value/price of exports imports by America or Europe from Asia. Raw materials (PX, PTA, MEG, PIA) and PET are negotiated and priced differently in each region, and the Asian import parity, among others, is a benchmark for setting prices in other regions.

Tight PET markets in Europe and America, supply chain and logistic disruptions had provided a positive supply/demand scenario with margin increases expected for all the products in the chain for 2022 contractual deliveries. The increase in energy prices has impacted each product in the chain differently, as well as to a different extent in each region. Not only the figures for the adders or discounts will change in 2022, but also the new scenario could result in changes in the pricing mechanism. In Europe, current uncertainties and limited visibility has discouraged PET producers to conclude negotiations for 2022 deliveries.

All freely monthly-negotiated products/quantities in Europe and North America have already improved margins based on tight markets and higher cost of freight. Isopthalic acid (PIA) may be an example, with regional producers in Europe and the US defending a reasonable premium above a pure parity import levels to justify the regional supplies. MEG ECP (European Contract Price) is settled monthly. The chart shows MEG values in Asia and contractual prices in Europe. The ECP is the result of two settlements at the same level by different sellers/buyers. Spot values in Asia, supply/demand in Europe (spot prices), the cost structure and others are taken into account. A discount negotiated once a year is applied monthly to get net prices for contractual deliveries. On the contrary, the most representative contract volumes in North America use the Asian reference with discounts negotiated annually, the figure of which depends on the supply/demand balance, freight cost and others. Based on tight MEG regional markets in 2021 and higher cost for 2022, decreasing discounts are expected in North America and Europe.