US tariff announcement halts PET trading activity

US polyethylene terephthalate market participants continue to digest the US announcement that imports of PET and recycled PET will now be subject to full tariffs, halting trading activity.

The tariffs are effective from Sept. 8.

According to several market sources, no new bids and offers were heard in the domestic and import markets following the tariff announcement, as players continue to assess their position and confusion surrounding the applicable tariff rates remains.

"Sellers don't want to underquote and buyers don't want to pay a wrong tariff amount," a broker said. "So, the market is awaiting clarity."

However, after the tariff announcement, market sentiment has turned bullish. Most market participants expect prices to increase, as imported material sellers factor in tariffs, and demand for domestic material is expected to increase.

"The market will need to adapt to different trade dynamics," a source said.

The US has been a net importer of PET resin, importing nearly 1.5 million mt in 2024, according to ITC data. However, expectations for higher domestic production levels rose as a major PET complex under construction in Corpus Christi, Texas, was set to reduce that import need. But the project was paused in the latter half of 2023 due to high inflation, construction and labor costs that exceeded original expectations. As a result, the US still relies on imports for feedstock -- paraxylene and purified terephthalic acid -- as well as for PET resin.

Sources have said domestic PET production is unlikely to arise. In June, PET producer Alpek announced it would cease operations at its Cedar Creek facility in Fayetteville, North Carolina. The site had an installed capacity of 170,000 mt/year of PET resin.

Price disparity between imported and domestic material has been an underlying trend in the PET markets. Thin margins limited domestic sellers' ability to lower prices and increase competitiveness with imported materials. However, with the new set of tariffs, price disparity between imported and domestic PET is expected to narrow.

In previous months, the PET market consistently struggled with low demand due to macroeconomic headwinds and trade uncertainties.

"I can handle 3-4 cents/lb higher," a buyer said. "[Domestic material] is 6-7 cents/lb higher."

According to some market participants, tariffs could be a short-term solution. For domestic production to increase, market players will need to invest in manufacturing infrastructure. "US plants are old," a source said. "Current capacity is not enough."

According to some market participants, the defined cost structure of domestic and imported PET will speed up price recovery, compared to recycled PET.

"Virgin PET has a more defined cost structure," a source said. Its "price will increase faster compared to recycled PET's undefined cost structure."

Platts assessed US spot PET price at $1,080/mt (49 cents/lb) DDP US West Coast on Sept. 10, stable on the week, considering market feedback of stable prices in the week as participants digest trade shifts.