Insight Focus
PET and PTA Futures retreated Friday as US imposed new trade tariffs, as macros turn bearish. Asian PET resin export prices also softened impacted by slower demand and falling feedstock costs. Forward curves have now moved from backwardation to flat, even small premium through to 2026.
PTA Futures and Forward Curve
PTA Futures eased back towards the end of last week as global commodities and crude pricing faltered because of the new US trade tariffs and their perceived impact of global economics.
Crude oil prices surged last week moving from around USD 67/bbl for Brent to over USD 72/bbl on the back of talk of new Russian sanctions, before retreating again on Friday back down to below USD 70/bbl.
PX-N CFR spread narrowed by around USD 22/tonne, as weaker global drivers and slowdown in demand from lower PTA production dragged on fundamentals.
However, PTA saw improvement as several plants either shutdown unexpectedly or moved to maintenance, helping to maintain keep fundamentals relatively balanced. PTA-PX CFR spread increased USD 3/tonne on last week to average USD 82/tonne.
With softer off-season polyester demand, PTA trade has been relatively modest and likely to pressure the PTA-PX spread further in the coming weeks, with producers adjusting production in accordance.
The PTA forward curve remains flat through to the beginning of 2026, having previously been backwardated for much of H1 2025. The Sept’25 contract is now at just a RMB 10/tonne discount to the current month’s contract, and Jan’26 with a RMB 28/tonne premium.
MEG Futures and Forward Curve
MEG Futures also experienced a significant downturn, under pressure from the broader bearish sentiment in global commodities, with main month contracts also down over 2.5% versus the previous week.
East China main port inventories also continued to shrink, falling by around 10.1% to just 443,000 tonnes, resulting from delayed import arrivals due to widespread port closures amid weather disruptions.
Whilst short-term port congestion exists, delayed July cargoes will mean increased import arrivals in August, and an inventory build for the month, a rarity in recent months.
Higher domestic MEG operating rates will also mean supply and demand fundamentals may trend towards over supply in August.
The MEG Futures forward curve kept relatively flat with the Sept’25 contract flat against the current month and the Jan’26 holding a RMB 31/tonne premium.
PET Resin Export – Raw Material Spread and Forward Curve
Chinese PET resin export prices also followed softening raw material costs, with an average of USD 785/tonne FOB China by Friday, down a further USD 10/tonne on the week.
The average weekly PET resin physical differential against raw material future costs kept relatively flat at a weekly average of positive USD 8/tonne last week. By Friday, the daily differential was at positive USD 14/tonne due to intra-daily crude price movement.
The raw material cost forward curve has entirely flattened out, with Sept’25 on par with current month, and Jan’25 holding just a USD 5/tonne premium.
PET Resin Futures and Forward Curve
PET Resin Futures also retreated as the main Sept’25 contract months dropped by over 2.5% versus the previous week.
The current main month fell to RMB 5,910/tonne (USD 821/tonne), down around USD 24/tonne from last week (including the foreign exchange adjustment).
The average weekly premium of the Sept’25 PET Futures over Sept’25 Raw Material Futures fell to USD 18/tonne, down by USD 3/tonne. By Friday, the daily premium stood at USD 18/tonne.
The PET Resin Futures forward curve has steadily moved from flat to contango over the last week, and is now showing a forward premium, having been in backwardation for the majority of the last six months.
Sept’25 was at a RMB 24/tonne (USD 3/tonne) premium over the current month; Jan’25 had RMB 76/tonne (USD 11/tonne) premium.
Concluding Thoughts
Chinese PET resin export prices have broadly followed feedstock costs lower over the last week, with the average weekly physical differential remaining relatively unchanged.
However, off-season is now in sight and despite some PET resin producers talking about being sold-out for August, buyers are also becoming increasingly cautious around restocking.
The reduction in PET resin operating rates over the last month has helped support spreads to a certain degree, the upcoming off-season will unavoidably see the physical differential under pressure.
Average Chinese PET resin operating rates are now around 71% with no plans for near-term increases or new facilities due to come on-stream.
Although underlying crude values remain highly volatile, with forward curves now moving flat to slight contango, expectations are for PET resin export pricing to see a modest downward trend, before recovering back within current trading range.
Export demand remains weak. However, with reversals in the freight market, producers may see a later summer uptick in demand, particularly if prices continue to fall.
For PET hedging enquiries, please contact the risk management desk at MKirby@czarnikow.com.
For research and analysis questions, please get in touch with GLamb@czarnikow.com.
